20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F

¨	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
	OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2008
	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________
	OR
¨	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report __________

Commission file number 000-50826

KONGZHONG CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

N/A	Cayman Islands
(Translation of Registrant’s Name Into English)	(Jurisdiction of Incorporation or Organization)

35th Floor, Tengda Plaza

No. 168 Xizhimenwai Street

Beijing, China 100044

(Address of Principal Executive Offices)

Jay Chang

Telephone: (+86-10) 8857-6000

Fax: (+86-10) 8857-5891

Email: ir@kongzhong.com

35th Floor, Tengda Plaza

No. 168 Xizhimenwai Street

Beijing 100044

The People’s Republic of China

(Name, Telephone, Email and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Ordinary shares, par value US$0.0000005 per share*	The NASDAQ Stock Market LLC
American Depositary Shares, each representing 40 ordinary shares	(The NASDAQ Global Select Market)

*  Not for trading, but only in connection with the listing on The NASDAQ Global Select Market of American Depositary Shares, or ADSs, each representing 40 ordinary shares.

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

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2008, 1,434,232,520 ordinary shares, par value US$0.0000005 per share, were issued and outstanding.

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

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨   No x

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

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

U.S. GAAP x

International Financial Reporting Standards as issued by the International Accounting Standards Board ¨

Other ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17  ¨ Item 18  ¨

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

TABLE OF CONTENTS

		Page
FORWARD-LOOKING STATEMENTS		ii
PART I		1
Item 1.	Identity of Directors, Senior Management and Advisers	1
Item 2.	Offer Statistics and Expected Timetable	1
Item 3.	Key Information	1
Item 4.	Information on the Company	26
Item 4A.	Unresolved Staff Comments	51
Item 5.	Operating and Financial Review and Prospects	51
Item 6.	Directors, Senior Management and Employees	73
Item 7.	Major Shareholders and Related Party Transactions	80
Item 8.	Financial Information	88
Item 9.	The Offer and Listing	88
Item 10.	Additional Information	89
Item 11.	Quantitative and Qualitative Disclosures About Market Risks	94
Item 12.	Description of Securities Other than Equity Securities	95
PART II		96
Item 13.	Defaults, Dividend Arrearages and Delinquencies	96
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	96
Item 15.	Controls and Procedures	97
Item 16A.	Audit Committee Financial Expert	99
Item 16B.	Code of Ethics	99
Item 16C.	Principal Accountant Fees and Services	99
Item 16D.	Exemptions from the Listing Standards for Audit Committees	100
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	100
Item 16F.	Change in Registrant’s Certifying Accountant.	100
Item 16G.	Corporate Governance.	100
PART III		101
Item 17.	Financial Statements	101
Item 18.	Financial Statements	101
Item 19.	Exhibits	101
SIGNATURE		108

i

FORWARD-LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Such forward-looking statements include, without limitation, statements that are not historical facts relating to:

· our financial performance and business operations;

· our ability to successfully execute our business strategies and plans;

· the state of our relationship with telecommunications operators in the People’s Republic of China, or the PRC;

· our dependence on the substance and timing of the billing systems of the telecommunications operators in the PRC for our performance;

· our development and capital expenditure plans;

· the expected benefit and future prospects of our strategic alliances and acquisitions, and our ability to cooperate with our alliance partners or integrate acquired businesses;

· management estimations with respect to revenues from our wireless value-added services, or WVAS, mobile games and our wireless Internet businesses;

· the development of our latest product offerings, including but not limited to offerings in our WVAS, mobile games and wireless Internet businesses;

· the development of the regulatory environment and changes in the policies or guidelines of the PRC telecommunications operators;

· the effects of the restructuring of the telecommunications industry in the PRC as announced by the Ministry of Industry and Information Technology, or the MII (which also refers to its predecessor, the Ministry of Information Industry prior to the PRC government restructuring in March 2008), the National Development and Reform Commission and the Ministry of Finance of the PRC in May 2008; and

· competitive pressures and future growth in the WVAS, mobile games, wireless Internet, mobile advertising, telecommunications and related industries in the PRC.

The words “forecast,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “will,” “would” and similar expressions, as they relate to us, are intended to identify a number of these forward-looking statements.

These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual results may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the risk factors set forth in “Item 3 — Key Information — Risk Factors” and the following:

· any changes in our relationship with telecommunications operators in the PRC;

ii

· any changes in the regulatory regime or the policies for the PRC telecommunications industry, including changes in the structure or functions of the primary industry regulator, the MII, or its policies, or the policies or other regulatory measures of other relevant government or industry authorities relating to, among other matters, the granting and approval of licenses, procedures for customers to access and subscribe to WVAS or mobile games, restrictions on wireless Internet content, or the introduction of new technology platforms, products and services;

· the effects of competition on the demand for or the price of our products or services;

· any changes in customer demand or usage preference for our products or services;

· any changes in the telecommunications operators’ systems for billing users of our WVAS or mobile games or remitting payments to us;

· any changes in technologies related to telecommunications, WVAS, mobile games or wireless Internet or applications based on such technologies;

· any changes in political, economic, legal or social conditions in the PRC, including the PRC government’s specific policies with respect to foreign investment and entry by foreign companies into the telecommunications, WVAS, mobile games or wireless Internet market, economic growth, inflation, foreign exchange or the availability of credit; and

· changes in population growth or gross domestic product, or GDP, growth or the impact of those changes on the demand for our products or services.

We do not intend to update or otherwise revise the forward-looking statements in this annual report, whether as a result of new information, future events or otherwise. Because of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this annual report might not occur in the way we expect, or at all. You should not place undue reliance on any forward-looking information.

iii

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not Applicable.

Item 2. Offer Statistics and Expected Timetable

Not Applicable.

Item 3. Key Information

Selected Financial Data

The following selected historical consolidated financial data should be read in conjunction with our audited historical consolidated financial statements, the notes thereto and “Item 5 — Operating and Financial Review and Prospects.” The selected historical consolidated statement of operations data for the years ended December 31, 2006, 2007 and 2008 and the selected historical consolidated balance sheet data as of December 31, 2007 and 2008 set forth below are derived from our audited historical consolidated financial statements included elsewhere in this annual report. The selected historical consolidated statement of operations data for the years ended December 31, 2004 and 2005 and the selected historical consolidated balance sheet data as of December 31, 2004, 2005 and 2006 set forth below are derived from our audited historical consolidated financial statements, which are not included in this annual report.

Our audited historical consolidated financial statements have been prepared and presented in accordance with the generally accepted accounting principles in the United States, or U.S. GAAP.

	For the year ended December 31,
Consolidated statements of operations data	2004			2005			2006 (2)			2007			2008
	(in thousands of U.S. dollars, except shares and per shares data)
Revenues	$	47,969.2		$	77,752.8		$	106,769.2		$	74,016.9		$	96,689.7
WVAS		47,185.6			74,111.8			103,974.2			70,178.8			86,911.7
Mobile games		783.6			3,041.0			2,506.0			2,835.9			7,743.3
WIS		—			—			289.0			1,002.2			2,034.7
Cost of revenues		(15,704.8	)		(31,323.1	)		(47,665.4	)		(36,495.6	)		(51,612.5	)
WVAS		(15,011.7	)		(29,207.4	)		(45,863.4	)		(34,440.3	)		(46,985.4	)
Mobile games		(693.1	)		(2,115.7	)		(1,266.0	)		(1,375.9	)		(3,479.8	)
WIS		—			—			(536.0	)		(679.4	)		(1,147.3	)
Gross profit		32,264.4			46,429.7			59,103.8			37,521.3			45,077.2
Operating expenses:
Product development		(4,483.4	)		(8,530.8	)		(12,026.2	)		(12,535.2	)		(15,180.8	)
Selling and marketing		(3,287.9	)		(5,389.8	)		(16,755.2	)		(18,094.2	)		(21,338.9	)
General and administrative		(4,704.6	)		(7,607.0	)		(9,105.2	)		(7,221.0	)		(11,640.0	)
Provision for impairment of goodwill and intangibles		—			—			—			—			(21,623.3	)
Class action lawsuit settlement and legal expenses		—			(4,843.4	)		—			—			—
Total operating expenses		(12,475.9	)		(26,371.0	)		(37,886.6	)		(37,850.4	)		(69,783.0	)
(Loss) Income from operations		19,788.5			20,058.7			21,217.2			(329.1	)		(24,705.8	)
Other (expenses) income, net		(23.9	)		6.5			(49.1	)		—			—
Interest income, net		604.7			2,639.5			3,866.9			3,810.0			4,897.4
Gain on sales of investment		—			—			1,240.8			207.6			—
Net (loss) income before income taxes		20,369.3			22,704.7			26,275.8			3,688.5			(19,808.4	)
Income tax expense		—			530.4			1,584.2			856.8			851.9
Net (loss) income	$	20,369.3		$	22,174.3		$	24,691.6		$	2,831.7		$	(20,660.3	)
Net income (loss) per share:
Basic	$	0.02		$	0.02		$	0.02		$	0.00		$	(0.01	)
Diluted	$	0.02		$	0.02		$	0.02		$	0.00		$	(0.01	)
Weighted average shares used in calculating net income per share:
Basic		903,010,929			1,377,102,380			1,399,872,743			1,423,156,120			1,424,581,293
Diluted (1)		1,250,640,982			1,424,683,570			1,418,252,296			1,430,910,421			1,424,581,293

1

(1) As of December 31, 2004, 2005, 2006, 2007 and 2008, we had 33,260,000, nil, 60,464,840, 82,346,060 and 137,452,493 ordinary share equivalents, respectively, outstanding that could potentially dilute income per share in the future, but that were excluded in the computation of diluted income per share in the periods, because the exercise prices of such ordinary share equivalents were above the average market values of our ordinary shares in 2004, 2005, 2006 and 2007 and the inclusion of such ordinary share equivalents would have an anti-dilutive effect in 2008 due to a net loss per share in 2008.

(2) The amounts of share-based compensation included in operating expenses for 2006, 2007 and 2008 reflect the adoption of Statement of Financial Accounting Standard No. 123 (revised 2004), or SFAS 123(R), “Share-Based Payment,” effective on January 1, 2006. If our company had applied the fair value recognition provisions of SFAS 123(R) to prior periods, it would have reported net income of $19.5 million and $20.7 million for 2004 and 2005, respectively, and net income per share (diluted) of $0.02 and $0.01 for 2004 and 2005, respectively.

	As of December 31,
Consolidated balance sheet data	2004		2005		2006		2007		2008
	(in thousands of U.S. dollars)
Cash and cash equivalents	$	90,714.1	$	117,141.5	$	131,402.0	$	122,342.7	$	136,054.3
Accounts receivable, net		10,198.8		10,833.9		11,568.6		14,992.9		16,196.0
Property and equipment, net		2,484.2		3,116.4		3,100.8		4,498.1		3,369.3
Acquired intangible assets, net		—		260.6		1,997.6		1,266.3		673.4
Long-term investment		—		500.0		—		—		2,963.0
Goodwill		—		1,169.1		15,835.9		34,918.7		15,683.1
Total assets		104,372.7		135,083.2		166,741.0		181,891.9		178,852.4
Total current liabilities		4,443.6		11,285.3		10,821.5		11,293.1		18,108.7
Total shareholders’ equity		99,808.3		123,773.7		155,777.0		170,475.8		160,688.2
Total liabilities, minority interests and shareholders’ equity		104,372.7		135,083.2		166,741.0		181,891.9		178,852.4

	For the year ended December 31,
Consolidated cash flow data	2004			2005			2006			2007			2008
	(in thousands of U.S. dollars)
Net cash (used in) provided by:
Operating activities	$	15,844.7		$	29,569.0		$	28,010.2		$	3,315.3		$	12,521.5
Investing activities		(2,430.2	)		(4,081.7	)		(17,916.5	)		(18,720.1	)		(4,811.9	)
Financing activities		73,555.5			205.8			2,190.3			152.2			(759.3	)

Exchange Rate Information

We present our historical consolidated financial statements in U.S. dollars. In addition, this annual report contains translations of certain Renminbi amounts to U.S. dollar amounts for transactions denominated in Renminbi. Unless otherwise specified or indicated by context, the translations of Renminbi amounts into U.S. dollar amounts have been made at the rate of RMB6.8353 = US$1.00, the base exchange rate set by the People’s Bank of China, China’s central bank, at 0:00 a.m., Beijing time, on December 31, 2008. The translations are not a representation that the Renminbi amounts could actually be converted to U.S. dollars at this rate. For a discussion of the exchange rates used for the presentation of our financial statements, see note 2 to our financial statements.

The People’s Bank of China sets and publishes daily a base exchange rate with reference primarily to the supply and demand of Renminbi against a basket of currencies in the market during the prior day. The People’s Bank of China also takes into account other factors such as the general conditions existing in the international foreign exchange markets. Although PRC governmental policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current account items, conversion of Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or security, requires the approval of the State Administration for Foreign Exchange and other relevant authorities. We make no representation that the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.

2

The noon buying rate in New York City for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York was RMB 6.8250 = US$1.00 on April 24, 2009. The following table sets forth the high and low noon buying rates between Renminbi and U.S. dollars for each of the periods shown:

	Noon Buying Rate RMB per $1.00
Period	High		Low
October 2008		6.8521		6.8171
November 2008		6.8373		6.8220
December 2008		6.8842		6.8225
January 2009		6.8403		6.8225
February 2009		6.8470		6.8241
March 2009		6.8438		6.8240
April 2009 (through April 24, 2009)		6.8361		6.8250

The following table sets forth the average noon buying rates between Renminbi and U.S. dollars for each of 2004, 2005, 2006, 2007, 2008 and 2009 (through April 24, 2009), calculated by averaging the noon buying rates on the last day of each month of the periods shown:

Period	Average Noon Buying Rate RMB per $1.00
2004		8.2768
2005		8.1826
2006		7.9579
2007		7.5806
2008		6.9193
2009 (through April 24, 2009)		6.8342

Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

3

Risk Factors

You should consider carefully all of the information in this annual report, including the risks and uncertainties described below. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In such an event, the trading price of our ADSs, could decline and you might lose all or part of your investment.

Risks Relating to Our Business

We depend on China Mobile and other PRC telecommunications operators for the majority of our revenues, and any loss or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations and the loss of the majority of our revenues.

We derive substantially all of our revenues from the provision of WVAS and mobile games through the networks of the PRC telecommunications operators. We rely primarily on the networks of China Mobile Communications Corporation, or China Mobile, to deliver our services. For each of the two years ended December 31, 2007 and December 31, 2008, we derived 75% of our total revenues from our cooperation arrangements with China Mobile. The remainder of our revenues is derived from cooperation arrangements with China United Telecommunications Corporation, or China Unicom (which acquired China Network Communications Group Corporation, or China Netcom, in October 2008), and China Telecommunications Corporation, or China Telecom.

Through Beijing AirInbox Information Technologies Co., Ltd., or Beijing AirInbox, Beijing Boya Wuji Technologies Co., Ltd., or Beijing Boya Wuji, Beijing Wireless Interactive Network Technologies Co., Ltd., or Beijing WINT, Beijing Chengxitong Information Technology Co., Ltd., or Beijing Chengxitong, Beijing Xinrui Technology Co., Ltd., or BJXR, and Shanghai Mailifang Communications Ltd., or Mailifang, as the case may be, we have entered into a series of cooperation agreements with China Mobile and other PRC telecommunications operators and their provincial subsidiaries to provide WVAS and mobile games through the telecommunications operators’ networks. Pursuant to our agreements with the telecommunications operators, the telecommunications operators bill and collect fees from phone users for the WVAS and mobile games we provide. Our agreements with the telecommunications operators are generally for terms of one year or less and they do not all have automatic renewal provisions. We usually renew these agreements or enter into new ones when the prior agreements expire, but on occasion the renewals or new contracts can be delayed by periods of one month or more.

Furthermore, telecommunications operators may discontinue the use of external WVAS providers such as our company. If any of the PRC telecommunications operators ceases to cooperate with us, it is unlikely that such operator’s customers will continue to use our services. In particular, if China Mobile ceases to cooperate with us, it is unlikely that we will be able to build up sufficient new customers through the networks of other PRC telecommunications operators to develop a customer base comparable to that which we have developed through China Mobile. Due to our reliance on China Mobile and other PRC telecommunications operators to deliver our WVAS and mobile games to our customers, any loss or deterioration of our relationship with China Mobile or other PRC telecommunications operators may result in severe disruptions to our business operations, the loss of the majority of our revenues and a material adverse effect on our financial condition and results of operations.

In addition, in May 2008, in order to optimize the allocation of telecommunications resources in the PRC and improve the competitive landscape, the MII, the National Development and Reform Commission and the Ministry of Finance jointly announced a policy initiative to further reform the PRC telecommunications industry by encouraging the formation of three telecommunications services providers of comparable scale and standing, each with nationwide network resources, full-service capabilities and competitive strength, by way of a series of restructuring transactions. Under this initiative, China Unicom acquired China Netcom, China Telecom purchased the code-division multiple access, or CDMA, network and related business from China Unicom and China Mobile acquired China Tietong Telecommunications Corporation, a fix-line telecommunications services provider, in 2008. In January 2009, the MII issued licenses for operating businesses on the third-generation standard, or 3G, of wireless telecommunications transmissions to China Mobile, China Unicom and China Telecom. We cannot predict at this point the precise impact that the restructuring transactions or the issuance of the 3G licenses may have on our business and prospects, particularly our relationship with China Mobile and other PRC telecommunications operators. While we are currently assessing the impact that the restructuring transactions or the issuance of the 3G licenses may have on us, we cannot assure you that any potential change in the telecommunications industry in the PRC would not impact our relationship with telecommunications operators or such change would not have a material adverse effect on our business or results of operations.

4

The termination or alteration of our cooperation agreements with China Mobile or other PRC telecommunications operators would materially and adversely impact our business operations and financial conditions.

Our negotiating leverage with China Mobile and other PRC telecommunications operators is limited because China Mobile and other PRC telecommunications operators operate the telecommunications networks through which we deliver our products and services to mobile phone users. Our revenues and profitability could be materially and adversely affected if China Mobile or other PRC telecommunications operators decide to change the terms of the cooperation agreements with us, such as materially increase their transmission fees or service fees or do not comply with the terms of such agreements.

In addition, China Mobile or other PRC telecommunications operators could impose monetary penalties upon us or even terminate cooperation with us under the terms of the cooperation agreements with us, for a variety of reasons, such as the following:

· if we fail to achieve the performance standards established by the relevant operator from time to time;

· if we breach certain provisions under the agreements, which include, in many cases, the obligation not to deliver content that violates the relevant operator’s policies and applicable law; or

· if the relevant operator receives a high level of customer complaints about our services.

Due to our dependence on our relationship with China Mobile and other PRC telecommunications operators, any termination or material alteration of our cooperation agreements with China Mobile or other PRC telecommunications operators would materially and adversely impact our business operations and financial conditions.

We cannot guarantee that China Mobile or any of the other PRC telecommunications operators will not impose penalties upon us in the future, and such penalties could have a material impact on our results of operations. In August 2004, China Mobile notified us that it had imposed sanctions on 22 WVAS providers, including us. In our case, the notice stated that China Mobile had determined that one of our interactive voice response, or IVR, services in early June 2004 had contained inappropriate content. For this infraction, China Mobile suspended until the end of 2004 approval of our new applications for new products and services on all platforms and also suspended joint promotions with us. In addition, China Mobile suspended for one year, until June 30, 2005, the approval of our applications to operate on new platforms.

Significant changes in the policies or guidelines of China Mobile or other PRC telecommunications operators with respect to services provided by us may result in lower revenues or additional costs for us and materially adversely affect our business operations, financial condition or results of operations.

China Mobile or other PRC telecommunications operators may from time to time issue policies or guidelines, requesting or stating their preferences for certain actions to be taken by all WVAS providers using their networks. Due to our reliance on China Mobile and other PRC telecommunications operators, a significant change in their policies or guidelines may result in lower revenues or additional operating costs for us. We cannot assure you that our financial condition and results of operations will not be materially adversely affected by policy or guideline changes by China Mobile or other PRC telecommunications operators.

For example, since the second half of 2004, China Mobile and its provincial subsidiaries have been gradually implementing a series of policies designed to improve customer service and satisfaction. These policies include:

5

· not charging customers on their monthly statements for multimedia messaging service, or MMS, that cannot be delivered because of network or handset problems;

· canceling monthly subscriptions of customers who have not accessed their WVAS subscriptions for a certain period of time;

· implementing more complicated procedures for customers to confirm new monthly subscriptions to certain WVAS; and

· removing from subscriber lists those customers who fail to pay China Mobile or the provincial subsidiaries, or who cannot be billed because they use pre-paid telecommunications service cards.

On July 6, 2006, China Mobile announced a series of additional measures with respect to the billing of customers of WVAS on its network, with focus on customers’ monthly subscriptions to WVAS. Among the measures announced by China Mobile, those which have had a significant impact on our results of operations and financial condition are summarized as follows:

· beginning July 10, 2006, for any new monthly subscriptions to WVAS, China Mobile sends customers two reminder notices prior to charging monthly subscription fees in the customers’ monthly mobile phone bills, and customers must confirm twice, once in response to each reminder, that they wish to subscribe to those services on a monthly basis. Previously, China Mobile sent one reminder notice immediately after a monthly subscription order was placed, and customers needed to confirm only once;

· customers enjoy a free trial period of 11 to 41 days, depending on the day of the month on which they place their monthly subscriptions. Previously, customers enjoyed a free trial period of three to 11 days; and

· China Mobile cancels wireless application protocol, or WAP, monthly subscriptions that have not been active for more than four months.

During the fourth quarter of 2006, other PRC telecommunications operators also began implementing new policies requiring double confirmation of monthly subscriptions. In May 2007, China Mobile started to send to its customers’ handsets notices of transmission fees to be incurred by using general packet radio services, or GPRS, when those customers launched their browsers, which discouraged some customers from purchasing our WAP products or visiting our wireless Internet sites Kong.net and Ko.cn.

Mainly because of these new policies and measures of the telecommunications operators, our WVAS revenues in 2007 decreased 32.5% as compared to 2006. We cannot assure you that China Mobile or other PRC telecommunications operators will not introduce additional requirements with respect to the procedures for ordering monthly subscriptions or single-transaction downloads of our WVAS, notifications to customers, the billing of customers or other consumer-protection measures, or adopt other policies that may require significant changes in the way we promote and sell our WVAS and develop our wireless Internet sites, any of which new requirements or policies could have a material adverse effect on our financial condition and results of operations.

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Competition with the competing services offered by China Mobile and other PRC telecommunications operators may lower our revenues and materially adversely affect our business operations, financial condition and results of operations.

The PRC telecommunications operators have launched services competing with ours. For example, China Mobile has begun to develop and market its own MMS and WAP products that compete with ours. The PRC telecommunications operators may launch additional competing services in the future. Similar to our practice, China Mobile and other PRC telecommunications operators have entered into cooperation agreements with mobile handset manufactures to pre-load their icons and codes in new handsets to make it easier for handset users to access and subscribe to the WVAS provided by China Mobile and other telecommunications operators. Furthermore, in the past, China Mobile entered into strategic alliances with selected handset manufacturers pursuant to which it embedded menus in their handsets for all the best-selling products on China Mobile’s MonternetÔ wireless portal, including certain of our products. However, beginning in May 2007, China Mobile has promoted only its own WVAS products in such menus and not those of ours or other third-party WVAS providers. In addition, we have developed our own wireless Internet sites, Kong.net and Ko.cn, which are independent of the wireless Internet portals of China Mobile and other PRC telecommunications operators and which China Mobile and other PRC telecommunications operators may view as engaging in direct competition with their Internet sites. Competition with the competing services offered by China Mobile and other PRC communications operators may lower our revenues and harm our relationship with China Mobile and other PRC telecommunications operators, which may materially adversely affect our business operations, financial condition and results of operations.

Our dependence on the substance and timing of the billing systems of the telecommunications operators and their subsidiaries may require us to estimate portions of our reported revenues and cost of revenues for WVAS and mobile games. As a result, subsequent adjustments may have to be made to our financial statements.

As we do not bill our WVAS and mobile games customers directly, we depend on the billing systems and records of the telecommunications operators to record the volume of our WVAS and mobile games provided, bill our customers, collect payments and remit to us our portion of the fees. We record revenues based on monthly statements from the telecommunications operators confirming the value of our services that the telecommunications operators billed to customers during the month. It is our practice to release our unaudited quarterly financial statements to the market. Due to our past experience with the timing of receipt of the monthly statements from the operators, we expect that we may need to rely on our own internal estimates for the portion of our reported revenues and cost of revenues for which we will not have received monthly statements. In such an instance, our internal estimates would be based on our own internal data of expected revenues and related fees from services provided. As a result of reliance on our internal estimates, we may overstate or understate our revenues and cost of revenues for the relevant reporting period, and may be required to make adjustments in our financial reports when we actually receive the telecommunications operators’ monthly statements for such period. We endeavor to reduce the discrepancy between our revenue estimates and the revenues calculated by the telecommunications operators and their subsidiaries, but we cannot assure you that such effort will be successful. Moreover, to the extent that the telecommunications operators may take longer to send us monthly statements, we may be required to increase our reliance on our internal estimates when preparing our quarterly financial statements. For example, beginning with the statement for April 2007, it has taken China Unicom on average about 105 days as compared to about 40 days it previously had taken to send us a statement after the end of each month. As a result, estimated revenues may account for a larger proportion of our reported revenues during 2007 and 2008 than in previous years. If we are required to make adjustments to our quarterly financial statements in subsequent quarters, it could adversely affect market sentiment toward us.

In addition, we generally do not have the ability to independently verify or challenge the accuracy of the billing systems of the telecommunications operators. We cannot assure you that any negotiations between us and telecommunications operators to reconcile billing discrepancies would be resolved in our favor or that our results of operations would not be adversely affected as a result. See “Item 5 — Operating and Financial Review and Prospects — Critical Accounting Policies — Revenue Recognition.”

Our effort to develop additional distribution channels for our WVAS and mobile games may not succeed or may be restricted or halted by the MII or the telecommunications operators.

Cooperation with mobile handset manufacturers has provided us with an important distribution channel for our WVAS and mobile games. We pre-load into the menus of certain mobile handsets our mobile games, WAP icons and short codes for products offered on the MMS, short messaging service, or SMS, JavaÔ and IVR platforms. A consumer who buys a new handset pre-loaded with our mobile games, icons and codes can access and subscribe to our services quickly and easily. Over the years, cooperation with mobile handset manufacturers has become one of the most important distribution channels for us and a significant portion of our revenues is derived from such cooperation. However, in recent years, China Mobile and other PRC telecommunications operators have entered into cooperation agreements with mobile handset manufacturers similar to our agreements with mobile handset manufactures. We cannot guarantee that mobile handset manufacturers will continue their cooperation with us or maintain their current revenue-sharing arrangements with us.

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In addition, we cannot guarantee that the MII, China Mobile or other PRC telecommunications operators will not restrict or halt our cooperation with the mobile handset manufacturers. For example, in addition to pre-loading our mobile games, WAP icons and MMS, SMS, JavaÔ and IVR short codes into the menus of selected mobile handsets, until recently we also embedded our icons and codes in selected handsets. On April 11, 2007, the MII issued a notice barring the production of mobile handsets with embedded icons and codes that cannot be changed or deleted by consumers. We have altered our arrangements with mobile handset manufacturers to comply with the notice, which took effect on June 1, 2007. Although mobile handset manufacturers are still permitted to pre-load our icons into the handset menus as long as such icons can be changed, such as change to other WVAS providers’ icons, or deleted, we cannot assure you that the MII will not expand its regulation to bar pre-loading icons and codes in the future.

Beginning in May 2007, China Mobile has promoted only its own WVAS products and not those of ours or other third-party value-added service providers in the embedded menus of those handsets with whose manufacturers China Mobile has entered into strategic alliance. We cannot assure you that China Mobile or other telecommunications operators will not take other steps to limit or halt our use of mobile handsets as a distribution channel. Any further actions by the telecommunications operators or the MII to limit or halt our use of mobile handsets as a distribution channel could materially adversely affect our revenues and growth of revenues.

We have made significant effort in developing our mobile games business, based on the expectation that such business could contribute a significant part of our revenues in the future, but our mobile games business has a short operating history, which may make it difficult for us to evaluate such business, and the mobile games market in the PRC is subject to many uncertainties, which may prevent us from generating significant revenues from offering mobile games.

We have made significant effort in recent years, especially in 2008, in developing our mobile games business, which includes our downloadable mobile games and online mobile games.Prior to 2008, we operated in two segments, WVAS and WIS. As our mobile games business grows, it has required separate management in respect of decision making, allocation of resources and assessment of performance. We anticipate that mobile games could provide significant contributions to our future revenues. As a result, we started to have three operating segments in 2008, WVAS, mobile games and WIS. However, our mobile games business, especially our online mobile games, has a short operating history. We launched our first online mobile game on China Mobile’s Online Game Platform in September 2008. As a result, we have limited financial data that can be used to evaluate our mobile games business and its potential to generate revenues in the future. Moreover, our past success and financial data regarding the mobile games segment may not be indicative of our future performance. We cannot guarantee that we will be successful in developing our mobile games business, which will depend, among other things, on our abilities to:

· respond to market developments, including the development of new platforms and technologies, and changes in pricing and distribution models;

· maintain and diversify our distribution channels, including through our own wireless Internet sites and handset manufacturers;

· develop new high-quality mobile games that can achieve significant market acceptance, and timely improve our existing mobile games to extend their life spans and to maintain their competitiveness in the mobile games market;

· supplement our internally developed mobile games by acquiring mobile games from third-party mobile games developers or cooperating with third-party mobile games developers to jointly develop mobile games;

· develop and upgrade our technologies;

· execute our business and marketing strategies successfully; and

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· attract, integrate, retain and motivate qualified personnel.

In addition, the mobile games market is an emerging market in the PRC. The growth of this market and the level of demand and market acceptance of our mobile games are subject to many uncertainties. The development of this market and our ability to derive revenues from this market depend on a number of factors, some of which are beyond our control, including but not limited to:

· the growth rate of mobile data services in the PRC;

· changes in consumer demographics and public tastes and preferences;

· potential competition from established companies that develop and operate personal-computer-based online games and may enter the mobile online game market; and

· the popularity and price of new mobile games and merchandise and premium features embedded in games that we and our competitors may launch and distribute in the future.

Due to the uncertainties in connection with our mobile games business in particular and the mobile games market in the PRC generally, we cannot guarantee that our mobile games business would contribute significantly to our future revenues. Our failure to successfully develop this business could have a material adverse effect on our business operations, financial condition and results of operations.

Our effort to develop our wireless Internet sites is based on the expectation that the sale of advertising on our wireless Internet sites could become a more significant part of our future revenues, but the mobile advertising market is subject to many uncertainties that could prevent us from generating significant revenues from advertising.

We have expended significant effort in recent years in developing our wireless Internet sites, Kong.net and Ko.cn, with the expectation that the sale of advertising on these sites will provide more significant contributions to future revenues. However, the growth of mobile advertising in the PRC is subject to many uncertainties. Many of our current and potential advertisers have limited experience with wireless Internet sites as an advertising medium, have not traditionally devoted a significant portion of their advertising expenditures to mobile advertising, and may not find mobile advertising to be effective for promoting their products or services relative to traditional print, broadcast or Internet media. Our ability to generate and maintain significant advertising revenue will depend on a number of factors, many of which are beyond our control, including but not limited to:

· the development and retention of a large base of wireless Internet users possessing demographic characteristics attractive to advertisers;

· the maintenance and enhancement of our brand in a cost-effective manner;

· the level of competition and its impact on mobile advertising prices;

· changes in government policies or the policies of the PRC telecommunications operators that could curtail or restrict our mobile advertising services;

· the acceptance of mobile advertising as an effective way for advertisers to market their business;

· the development of independent and reliable means of verifying levels of mobile advertising and wireless Internet traffic; and

· the effectiveness of our advertising delivery, tracking and reporting systems.

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If any developments impede the establishment of the wireless Internet generally as an accepted medium for advertising or the ability of our wireless Internet sites specifically to attract significant advertising, our ability to generate increased mobile advertising revenue could be negatively affected.

We face increasing competition in the PRC from providers of WVAS, mobile games and wireless Internet services, which could reduce our market share and materially adversely affect our financial condition and results of operations.

The PRC WVAS market has seen increasingly intense competition. The MII reported on its website that more than 1,700 service providers held nationwide licenses as of April 8, 2009 to supply WVAS on the PRC telecommunications operators’ networks. We compete with these companies primarily on the basis of brand, price, type and timing of service offerings, content, customer service, business partners and distribution channel relationships. We also compete for experienced and talented employees. While we believe that we have certain advantages over our competitors, some of them may have more human and financial resources and a longer operating history than we do. For example, Internet portal companies that provide WVAS may have an advantage over us with their more established brand names, user base and Internet distribution channels. Furthermore, our competitors may be able to develop or exploit new technologies faster than we can, or offer a broader range of products and services than we are presently able to offer.

The development, distribution and sale of mobile games are also highly competitive in the PRC. We compete for customers, primarily on the basis of game quality, brand and price. We compete for telecommunications operators to distribute our mobile games, primarily on the basis of the popularity of our games among customers, our historical performance, perception of our sales potential and our relationships with content and brand licensors. We compete for content and brand licensors who supply game content and brands, primarily on the basis of the economic terms, such as royalty rates, of our cooperation agreements with the licensors, the licensors’ perception of our ability to develop games and pre-load games in mobile handsets, our speed of execution, diversity of distribution channels and relationships with telecommunications operators. We also compete for experienced and talented employees in the mobile games business. Furthermore, the entry of new competitors, such as developers of personal-computer-based online games, major media companies, traditional video game developers, content aggregators, mobile software providers and independent mobile games developers, would likely intensify competition in the mobile games market. Growing competition in this market could make it difficult for us to maintain and increase our market share and have a material adverse effect on our business operations, financial condition and results of operations.

In addition, barriers to entry of wireless Internet services are relatively low and current and new competitors can launch new wireless Internet sites at a relatively low cost. We compete with the operators of other wireless Internet sites for visitors, employees and advertisers, and also compete with traditional media companies such as newspapers, television networks and radio stations for advertisers.

Also, China Mobile has begun to develop and market its own MMS, WAP and other wireless Internet services that compete with ours. Other PRC telecommunications operators may decide to do the same. If the PRC telecommunications operators decide to enter the mobile games market, they may refuse or limit the distribution of some or all of our mobile games or deny us access to all or parts of their networks. The PRC telecommunications operators’ Internet sites also compete with our wireless Internet sites. Growing competition from the telecommunications operators could have a material adverse effect on our business operations, financial condition and results of operations.

We have a limited operating history and operate in an evolving and highly dynamic market, which may make it difficult for you to evaluate our business.

We were incorporated in May 2002. Because we have a limited operating history and operate in an evolving and highly dynamic market, the revenues and income potential of our business and markets are unproven and our historical operating results may not be useful to you for evaluating our business or predicting our future operating results. In addition, we face numerous risks, uncertainties, expenses and difficulties frequently encountered by companies at an early stage of development. Some of these risks and uncertainties relate to our ability to:

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· maintain our current cooperation arrangements and develop new cooperation arrangements upon which our business depends;

· increase the number of our users by expanding the type, scope and technical sophistication of the content and services we offer;

· respond effectively to competitive pressures;

· increase awareness of our brand and continue to build user loyalty; and

· attract and retain qualified management and employees.

We cannot predict whether we will meet internal or external expectations of our future performance. If we are not successful in addressing these risks and uncertainties, our business, financial condition and results of operations may be materially adversely affected.

Our historical financial information may not be indicative of our future results of operations.

We historically experienced rapid growth in our business in some years in part due to the growth in the WVAS industry in the PRC, and such industry growth may not be indicative of future growth. In addition, we are developing new businesses such as mobile games and wireless Internet services, or WIS. We cannot assure you that our historical financial information is indicative of our future operating or financial performance, or that our profitability will be resumed and sustained.

Our operating results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly and annual revenues and costs and expenses as a percentage of our revenues may be significantly different from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause the price of our ADSs to fall. Any of the risk factors listed in this “Risk Factors” section, and in particular, any of the possible developments indicated below, could cause our operating results to fluctuate from quarter to quarter:

· any changes in our relationship with telecommunications operators in the PRC;

· any changes in the regulatory regime or the policies for the PRC telecommunications industry, including changes in the structure or functions of the primary industry regulator, MII, or its policies, or the policies or other regulatory measures of other relevant government or industry authorities relating to, among other matters, the granting and approval of licenses, procedures for customers to access and subscribe to WVAS or mobile games, restrictions on wireless Internet content, or the introduction of new technology platforms, products and services;

· the effects of competition on the demand for or the price of our products or services;

· any changes in customer demand or usage preference for our products or services;

· any changes in the telecommunications operators’ systems for billing users of our WVAS or mobile games or remitting payments to us;

· any changes in technologies related to telecommunications, WVAS, mobile games or wireless Internet or applications based on such technologies;

· any changes in political, economic, legal or social conditions in the PRC, including the PRC government’s specific policies with respect to foreign investment and entry by foreign companies into the telecommunications, WVAS, mobile games or wireless Internet market, economic growth, inflation, foreign exchange or the availability of credit; and

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· changes in population growth or GDP growth or the impact of those changes on the demand for our products or services.

The trading price of our ADSs has been volatile and may continue to be volatile regardless of our operating performance.

The trading price of our ADSs has been and may continue to be subject to wide fluctuations. During the period from July 9, 2004, the first day on which our ADSs were listed on Nasdaq, until April 24, 2009, the closing prices of our ADSs ranged from $2.44 to $15.04 per ADS and the closing price on April 24, 2009 was $6.44 per ADS. The market price for our ADSs may continue to be volatile and subject to wide fluctuations in response to factors including, among others, the following:

· China Mobile and other PRC telecommunications operators’ future policies and measures taken toward WVAS providers;

· actual or anticipated fluctuations in our quarterly operating results;

· changes in financial estimates by securities research analysts;

· conditions in the WVAS, mobile games, wireless Internet, mobile advertising and mobile games markets;

· changes in the economic performance or market valuations of other companies that are perceived to be comparable to us;

· announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;

· addition or departure of key personnel;

· fluctuations of exchange rates between RMB and the U.S. dollar;

· intellectual property litigation;

· general conditions in the global financial markets; and

· general economic or political conditions in the PRC.

The stock market in general and the market prices for Internet and wireless Internet related companies with operations in the PRC in particular, have experienced volatility that has sometimes been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our ADSs, regardless of our operating performance. In addition, sales of our ADSs in the public market, or the perception that such sales could occur, could cause the market price of our ADSs to decline. Certain of our executive officers who hold our shares or ADSs may sell their shares or ADSs subject to applicable volume and other restrictions under Rule 144 of the Securities Act. To the extent that such shares or ADSs are sold into the market, the market price of our ADSs could decline.

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Our business and growth prospects may be severely disrupted if we lose the services of our key personnel, and we may not be able to grow effectively if we cannot attract and retain skilled management.

Our future success depends heavily upon the continued service of our key executives. In particular, we rely on the expertise and experience of Leilei Wang, the Chairman of our Board of Directors and our Chief Executive Officer, in our business operations, and on his personal relationships with the regulatory authorities, our clients, our suppliers, the telecommunications operators and our operating companies, Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR, Tianjin Mammoth Technology Co., Ltd., or Tianjin Mammoth, and Mailifang. If Leilei Wang becomes unable or unwilling to continue in his present positions, or if he joins a competitor or forms a competing company in contravention of his employment agreement, we may not be able to replace him easily, our business may be significantly disrupted and our financial condition and results of operations may be materially adversely affected.

In addition, the incentives to attract and retain employees, in particular skilled management personnel, provided by our equity incentive plans may not be as effective as in the past, in light of the volatility of market conditions and the price of our ADSs in recent years. If we do not succeed in attracting skilled management personnel or retaining or motivating existing management personnel, we may be unable to manage or develop our business effectively.

If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the value-added telecommunications industry, we could be subject to severe penalties.

In December 2001, in order to comply with the PRC’s commitments with respect to its entry into the World Trade Organization, or the WTO, the State Council of the PRC promulgated the Administrative Rules for Foreign Investments in Telecommunications Enterprises, or the 2001 Telecom FIE Rules. In September 2008, the State Council promulgated the Decision of the State Council on Amending Provisions on the Administrative Rules for Foreign Investments in Telecommunications Enterprises, or the Decree of the State Council No. 534, or together with the 2001 Telecom FIE Rules, the Telecom FIE Rules. The Telecom FIE Rules set forth detailed requirements with respect to capitalization, investor qualifications and application procedures in connection with the establishment of a foreign-invested telecommunications enterprise. Pursuant to the Telecom FIE Rules, the ultimate ownership interest of a foreign investor in a foreign-funded telecommunications enterprise that provides value-added telecommunications services, including Internet content services, shall not exceed 50%.

We and our subsidiaries, KongZhong Information Technologies (Beijing) Co., Ltd., or KongZhong Beijing, KongZhong China Co., Ltd., or KongZhong China, and Anjian Xingye Technology (Beijing) Co., Ltd., or Beijing Anjian Xingye, are considered foreign persons or foreign-invested enterprises under PRC laws. As a result, we operate our WVAS, mobile games and wireless Internet sites in the PRC through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT (since February 2005), Beijing Chengxitong (since November 2005), BJXR (since January 2006) and Mailifang (since April 2009), each of which is owned by PRC citizens or entities. We do not have any equity interest in these operating companies and instead enjoy the economic benefits of them through contractual arrangements, including agreements on provision of loans, provision of services and certain corporate governance and shareholder rights matters. These operating companies conduct substantially all of our operations and generate substantially all of our revenues. They also hold the licenses and approvals that are essential to our business.

There are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations, including but not limited to the laws and regulations governing the validity and enforcement of our contractual arrangements. Accordingly, we cannot assure you that PRC regulatory authorities will not determine that our contractual arrangements with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang violate PRC laws or regulations.

If we or our operating companies were found to violate any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violation, including, without limitation, the following:

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· levying fines;

· confiscating our or our operating companies’ income;

· revoking our or our operating companies’ business license;

· shutting down our or our operating companies’ servers or blocking our or our operating companies’ websites;

· restricting or prohibiting our use of the proceeds from our initial public offering to finance our business and operations in the PRC;

· requiring us to revise our ownership structure or restructure our operations; and/or

· requiring us or our operating companies to discontinue our respective businesses.

Any of these or similar actions could cause significant disruptions to our business operations or render us unable to conduct our business operations and may materially adversely affect our business, financial condition and results of operations.

Our contractual arrangements with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang may not be as effective in providing operational control as direct ownership of these businesses and may be difficult to enforce.

PRC laws and regulations currently restrict foreign ownership of companies that provide value-added telecommunications services, which include WVAS, mobile games and Internet content services. As a result, we conduct substantially all of our operations and generate substantially all of our revenues through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang pursuant to a series of direct or indirect contractual arrangements with them and their respective shareholders. These agreements may not be as effective in providing control over our operating companies as direct ownership. In particular, our operating companies could fail to perform or make payments as required under the contractual agreements, and we will have to rely on the PRC legal system to enforce these agreements, which we cannot be certain would be effective.

Failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business, our results of operations and the market price of our ADSs.

We are subject to reporting obligations under the U.S. securities laws. We are required by the U.S. Securities and Exchange Commission, or SEC, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act, to include a report by our management on our internal control over financial reporting in our Annual Reports on Form 20-F that contains an assessment by management of the effectiveness of our internal control over financial reporting. In addition, our Annual Reports on Form 20-F shall include an independent registered public accounting firm’s attestation report on the effectiveness of our internal control over financial reporting.

Although our management and an independent registered public accounting firm have concluded that our internal controls over our financial reporting were effective as of December 31, 2008,the end of the period covered by this annual report, we may fail to maintain effective internal controls over financial reporting in the future, in which case we and the independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. In addition, even if our management concludes at the end of future reporting periods that our internal controls are effective, the independent registered public accounting firm may disagree. If such independent registered public accounting firm is not satisfied with our internal control over financial reporting or the level at which our internal control over financial reporting is documented, designed or operated, or if such independent registered public accounting firm interprets the requirements, rules or regulations differently from us, then it may issue an adverse opinion. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our consolidated financial statements, which ultimately could have a material adverse effect on the market price of our ADSs. We also may need to incur significant costs and use significant management and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements.

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Moreover, internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud. Therefore, even effective internal control over financial reporting can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal control over financial reporting, including any failure to implement required new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed, we could fail to meet our reporting obligations, and there could be a material adverse effect on the market price of our ADSs.

Business growth and a rapidly changing operating environment may strain our limited resources.

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

· develop and quickly introduce new services, adapt our existing services and maintain and improve the quality of all of our services, particularly as new mobile technologies such as 3G are introduced;

· effectively maintain our relationships with China Mobile and other PRC telecommunications operators;

· expand the percentage of our revenues that are recurring and are derived from monthly subscription-based services;

· enter into and maintain relationships with desirable content providers;

· continue training, motivating and retaining our existing employees, attract new employees and integrate new employees, including into our senior management;

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

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

We may need additional capital and may not be able to obtain such capital on acceptable terms.

Capital requirements are difficult to plan in our rapidly changing industry. We currently expect that we will need capital to fund our future acquisitions, service development, technological infrastructure and sales and marketing activities. Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:

· investors’ perceptions of, and demand for, securities of telecommunications value-added services companies;

· conditions of the U.S. and other capital markets in which we may seek to raise funds;

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· our future results of operations, financial condition and cash flows;

· PRC governmental regulation of foreign investment in value-added telecommunications companies;

· economic, political and other conditions in the PRC; and

· PRC governmental policies relating to foreign currency borrowings.

Any failure by us to raise additional funds on terms favorable to us, or at all, may have a material adverse effect on our business, financial condition and results of operations. For example, we may not be able to carry out parts of our growth strategy to acquire assets, technologies and businesses that are complementary to our existing business or necessary to maintain our growth and competitiveness.

The dividends and other distributions on equity we may receive from our subsidiaries are subject to restrictions under PRC law or agreements that our subsidiaries may enter into with third parties.

We are a holding company. Our wholly-owned subsidiaries, KongZhong Beijing, KongZhong China and Beijing Anjian Xingye, have entered into contractual arrangements with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang through which we conduct business and receive revenues in the form of service fees. We rely on dividends and other distributions on equity paid by KongZhong Beijing, KongZhong China and Beijing Anjian Xingye, as well as service fees from Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang, for our cash requirements in excess of any cash raised from investors and retained by us. If any of KongZhong Beijing, KongZhong China or Beijing Anjian Xingye incurs debt in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

Furthermore, PRC law requires that payment of dividends by each of KongZhong Beijing, KongZhong China and Beijing Anjian Xingye can be made only out of their respective net income, if any, determined in accordance with PRC accounting standards and regulations. Under the PRC law, KongZhong Beijing, KongZhong China and Beijing Anjian Xingye also are required to set aside no less than 10% of their respective after-tax net income each year as reserve funds unless such reserve funds have reached 50% of their respective registered capital, and these reserves are not distributable as dividends. See note 15 to our historical consolidated financial statements included in this annual report. Any limitation on the payment of dividends by our subsidiaries could have a material adverse effect our ability to grow, fund investments, make acquisitions, pay dividends, and otherwise fund and conduct our business.

In addition, under the PRC enterprise income tax law that took effect on January 1, 2008 and its implementation regulation, a non-PRC-resident enterprise’s net income originating from “sources within the PRC” will be subject a 20% enterprise income tax, or EIT, rate. Whether a dividend payment constitutes income from “sources within the PRC” is determined by the location of the enterprise which pays the dividend. Income tax on dividends from the PRC payable to a non-PRC-resident enterprise is at a rate of 10%. As a result, KongZhong Beijing, Beijing Anjian Xingye and KongZhong China may be required to withhold all or part of such income tax when paying us dividends. See “Item 5 — Operating and Financial Review and Prospects — Taxation.”

The discontinuation of any of the preferential tax treatments available to us in the PRC or the rejection of our application for preferential tax treatments could adversely affect our business, operating results and financial condition.

The PRC national and local governments have provided various incentives to our subsidiaries and operating companies that are incorporated in the PRC, such as KongZhong Beijing, Beijing AirInbox, Tianjin Mammoth and BJXR due to their status as high technology enterprises. These subsidiaries and operating companies must continue to meet a number of criteria in order to continue to qualify for the preferential tax treatments currently available to them. Moreover, the government could determine at any time to eliminate or reduce the scale of such preferential tax policies. Under the PRC enterprise income tax law that took effect on January 1, 2008 and its implementation regulation, KongZhong China, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong and Beijing Shiyuan Leya Culture Communication Co., Ltd., or Beijing Shiyuan Leya, were subject to a statutory income tax rate of 25% for 2008. Each of KongZhong China, Beijing WINT and Beijing Chengxitong is in the process of applying for the status of high technology enterprises. If the applicationsare approved, a preferential income tax rate of 15% would be applied to them in 2009. However, we are not certain that such application will be approved. See “Item 5 — Operating and Financial Review and Prospects — Taxation.” Any discontinuation, reduction or rejection of any of the preferential tax treatments could adversely affect our business, operating results and financial condition.

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We were classified as a passive foreign investment company, or PFIC, for 2008, which resulted in adverse United States Federal income tax consequences to U.S. holders of our ADSs and may result in additional adverse United States Federal income tax consequences to such holders in subsequent years.

Based upon an analysis of the value of our assets as of December 31, 2008, we were a PFIC during 2008 for U.S. Federal income tax purposes. We have substantial passive assets in the form of cash and cash equivalents, and can provide no assurance that we will not continue to be classified as a PFIC in 2009 or future taxable years. The determination of whether we would continue to be a PFIC would be principally based upon:

· the composition of our assets, including goodwill, the amount of which will depend, in part, on our total net assets and the market value of our ordinary shares and ADSs, which is subject to change; and

· the amount and nature of our income from time to time.

We have limited control over these variables. Further, with regards to any additional capital markets or corporate finance transactions we might conduct in the future, we cannot, at this stage, specify the timing, amounts or the particular uses of the net proceeds. As a result, we cannot provide any assurance as to how the net proceeds of any such transactions would impact whether we are classified as a PFIC in any future periods.

In respect of any taxable year during which we are a PFIC, U.S. investors will be subject to adverse U.S. Federal income tax consequences (and may be subject to adverse U.S. Federal income tax consequences in subsequent years as well). For further discussion regarding our status as a PFIC, please see “Item 10 — Additional Information — Taxation — United States Taxation — PFIC Rules.” U.S. investors are urged to consult their own tax advisors regarding the application of the PFIC rules to their particular circumstances.

We have issued to Nokia Growth Partners II, L.P. a convertible senior note with an aggregate principal amount of $6,775,400 and a warrant to purchase up to 80 million of our ordinary shares, and the conversion of the note and/or the exercise of the warrant could result in substantial dilution to the holders of our ordinary shares and ADSs and may depress the price of our ADSs.

In March 2009, we issued to Nokia Growth Partners II, L.P., or NGP, a convertible senior note due in 2014 with an aggregate principal amount of $6,775,400, or the convertible senior note, and a warrant to purchase up to 80 million of our ordinary shares, exercisable within five years, or the warrant. The convertible senior note could be converted into up to 76 million of our ordinary shares based on the current conversion price, $0.08915 per ordinary share, subject to possible adjustments. If the convertible senior note is converted and/or the warrant exercised, the holders of our ordinary shares and ADSs may experience substantial dilution and the market price of our ADSs could decline. The sale of the ordinary shares issued upon such conversion or exercise, or the perception that such convertible senior note might be converted, the warrant might be exercised or the ordinary shares issued upon such conversion or exercise might be sold, could also adversely affect the market price of our ADSs. Furthermore, we may issue additional securities in the future that may have a dilutive effect to the holders of our ordinary shares and ADSs.

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We are subject to certain covenants in connection with the issuance of the convertible senior note and the warrant, and such covenants could have a material adverse effect on our business, financial condition and results of operations.

In connection with the issuance of the convertible senior note and the warrant to NGP, we have agreed on certain covenants. As long as NGP holds the convertible senior note or the warrant and maintains ownership of an aggregate amount of not less than 78 million of our ordinary shares comprised of the ordinary shares into which the convertible senior note is converted or convertible and for which the warrant is exercised or exercisable, we cannot, without the prior written consent of NGP, (i) authorize or issue any security senior to or pari passu with the convertible senior note or any security senior to our ordinary shares; (ii) enter into any agreement for indebtedness, including guarantees and like contingent obligations or (iii) authorize or issue any ordinary shares for an amount less than $0.125 per ordinary share, or $5.00 per ADS, such that the amounts of securities or obligations described in (i), (ii) and (iii) would exceed $10,000,000, either individually or in the aggregate. Under the same conditions, we cannot, without the prior written consent of NGP, change the terms of the convertible senior note or warrant; engage in any related party transaction, other than those in the ordinary course of business, with any of our executive officers, Directors, any holder of 5% or more of our voting shares as reflected in our Register of Members or the Schedule 13D or 13E filed with the SEC, or any affiliate of our company, executive officers, Directors or such holders of our voting shares; or make any recommendation to holders of our ordinary shares or ADSs or take other actions by our Board of Directors that would materially and adversely affect NGP’s rights under the convertible senior note or warrant or the ordinary shares issuable upon their respective conversion or exercise, subject to applicable laws, including laws governing the fiduciary duties of our Board of Directors, and our Amended and Restated Memorandum of Association as adopted on June 11, 2004, or Memorandum, and our Amended and Restated Articles of Association as adopted on September 6, 2005, or Articles of Association.

If we materially breach any of the above covenants and if such material breach continues for 30 days, NGP may declare the principal amount of the convertible senior note then outstanding plus any accrued but unpaid interest due and payable, and such action by NGP could have a material adverse effect on our business, financial condition and results of operations.

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

We believe the copyrights, service marks, trademarks, trade secrets and other intellectual property we use are important to our business, and any unauthorized use of such intellectual property by third parties may adversely affect our business and reputation. We rely on the intellectual property laws and contractual arrangements with our employees, clients, business partners and others to protect such intellectual property rights. Third parties may be able to obtain and use such intellectual property without authorization. Furthermore, the validity, enforceability and scope of protection of intellectual property in the WVAS, mobile games and wireless Internet industries in the PRC is uncertain and still evolving, and these laws may not protect intellectual property rights to the same extent as the laws of some other jurisdictions, such as the United States. Moreover, litigation may be necessary in the future to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources, and have a material adverse effect on our business, financial condition and results of operations.

Due to the manner in which we obtain, collect, produce and aggregate content and applications for our WVAS, mobile games and wireless Internet sites, and because our services may be used for the distribution of information, claims may be filed against us for defamation, negligence, copyright or trademark infringement or other violations. In addition, third parties could assert claims against us for losses in reliance on information distributed by us. When we license third-party content or other intellectual properties, we rely on the licensor’s representations and warranties of its rights or titles to the content or intellectual properties. Although we perform reasonable due diligence, we cannot guarantee that such a licensor actually has the legal rights or titles to the content or intellectual properties that we distribute or use. We cannot guarantee that third parties will not assert claims against us or challenge the validity of our license agreements. If we are found to have infringed any intellectual property rights of others, we may be enjoined from using such intellectual property, and we may incur licensing fees or be forced to develop alternative intellectual property. We may also incur significant costs in investigating and defending the claims even if they do not result in liability. We have not purchased liability insurance for these types of claims.

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We are not able to register the Chinese name of our service mark “KongZhong Network” in the PRC, and we may not be able to effectively prevent its unauthorized use by third parties.

We are unable to register the Chinese name of “KongZhong Network” as our service mark because it is deemed a generic term under existing PRC trademark laws and regulations, which prohibit registration of generic terms as trademarks or service marks. As a result, we may not be able to effectively prevent the unauthorized use of the Chinese name of our service mark, “KongZhong Network,” and our brand name and reputation may be adversely affected by such unauthorized use.

Future acquisitions may have an adverse effect on our ability to manage our business.

Selective acquisitions form part of our strategy to further expand our business. We made three acquisitions in 2005, one in 2006, nil in 2007, nil in 2008and two in 2009 to the date of March 31, 2009. If we are presented with appropriate opportunities, we may acquire additional businesses, technologies, services or products that are complementary to our business. Any acquisition and the subsequent integration of new companies into ours require significant attention from our management, in particular to ensure that the acquisition does not disrupt our relationships with the telecommunications operators or affect our users’ opinion of our services and customer support, and to ensure that the acquisition is effectively integrated with our existing operations. The diversion of our management’s attention and any difficulties encountered in any integration process could have an adverse effect on our ability to manage our business. Acquisitions may expose us to risks, including risks associated with the assimilation of new operations, services and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, the inability to generate sufficient revenues to offset the costs and expenses of acquisitions and potential loss of, or harm to, relationships with employees and content providers. Given the sophisticated technologies used in the WVAS, mobile games and wireless Internet industries, the successful, cost-effective integration of other businesses’ technology platforms and services into our own will also be a critical and highly complicated aspect of any acquisition. Acquisitions may also result in potentially dilutive issuances of equity securities.

In addition, we are required under generally accepted accounting principles to review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Factors that may be considered a change in circumstances indicating that the carrying value of our amortizable intangible assets may not be recoverable include a decline in stock price and market capitalization and slower growth rates in our industry. We may be required to record a charge to earnings in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined. For example, in the third quarter of 2008, we recorded a provision of $21.62 million for impairment of goodwill associated with the WVAS segment. As of December 31, 2008, our goodwill and amortizable intangible assets arising from acquisitions were approximately $16.36 million.

We have limited business insurance coverage.

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

We may incur significant costs and management time to avoid being considered an investment company under the Investment Company Act of 1940.

The United States Investment Company Act of 1940, or the 1940 Act, provides generally that a company is an investment company which must register as such under the 1940 Act and comply with its regulations if:

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· the company is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities; or

· more than 40% of the value of the company’s total assets is represented by investment securities.

The 1940 Act contains substantive regulations with respect to investment companies, including restrictions on their capital structure, operations, transactions with affiliates and other matters that would be incompatible with our operations. We may therefore have to incur significant costs and management time to avoid investment company status and may suffer other adverse consequences if we are deemed to be an investment company under the 1940 Act.

Based upon an analysis of the value of our assets as of December 31, 2008, we do not believe we will be considered an investment company during 2008. The determination of whether we will be an investment company will be based primarily upon the composition and value of our assets, which are subject to change, particularly when market conditions are volatile. As a result, we could inadvertently become an investment company. We can give no assurance as to our investment company status under the 1940 Act in the future.

We are controlled by a small group of our existing shareholders, whose interests may differ from other holders of our ordinary shares or ADSs.

Leilei Wang and Nick Yang, our senior officers, own 17.7% and 16.0% of our outstanding ordinary shares, respectively. Accordingly these shareholders acting together will have significant influence in determining the outcome of any corporate transaction or other matter submitted to the holders of our ordinary shares and ADSs for approval, including mergers, consolidations, the sale of all or substantially all of our assets, election of Directors and other significant corporate actions. They will also have significant influence in preventing or causing a change in control. In addition, without the consent of these shareholders, we may be prevented from entering into transactions that could be beneficial to us. The interests of these shareholders may differ from the interests of the other holders of our ordinary shares or ADSs.

Our Articles of Association contain anti-takeover provisions that could adversely affect the rights of holders of our ordinary shares and ADSs.

Our Articles of Association include certain provisions that could limit the ability of others or discourage a third party to acquire control of our company and thus deprive holders of our ordinary shares and ADSs of the opportunity to sell their ordinary shares or ADSs at a premium over the prevailing market price. Such provisions provide for, among others, the following:

· a classified board structure, with three classes of board members and each class having a three-year term;

· authority of our Board of Directors, or the Board, to issue up to a total of 1,000,000,000,000 ordinary shares, with or without preferred, deferred or other special rights or restrictions, whether with regard to dividend, voting, return of capital or otherwise and to such persons, at such time and on such other terms as the Directors think proper;

· power of our Board to elect Directors either as an addition to the existing Directors or to fill a vacancy resulting from death, resignation, retirement, disqualification, removal from office or any other reason; and

· the Directors’ discretion to decline to register any transfer of ordinary shares without assigning any reason therefore.

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Risks Relating to Our Industry

Our ability to generate revenues could suffer if the PRC market for WVAS does not develop as anticipated.

The WVAS market in the PRC has evolved rapidly in recent years, with the introduction of new and advanced services, development of consumer preferences, changes in policies and guidelines initiated by the MII and the telecommunications operators, market entry by new competitors and adoption of new strategies by existing competitors. Accordingly, it is extremely difficult to accurately predict consumer acceptance and demand for various existing and potential new offerings and services, and the future size, as well as composition and growth, of these markets. Furthermore, given the limited history and rapidly evolving nature of our markets, we cannot predict the price that wireless users will be willing to pay for our services or whether users will have concerns about security, reliability, cost and quality of service associated with WVAS. If acceptance of our WVAS is different from what we anticipate, our ability to maintain or increase our revenues and net income could be materially and adversely affected.

The laws and regulations governing the WVAS, mobile games, Internet and wireless Internet industries in the PRC are developing and subject to future changes. Substantial uncertainties exist as to the interpretation and implementation of those laws and regulations.

Although WVAS and mobile games are subject to general regulation as telecommunication services, we believe that currently there are no PRC laws at the national level specifically governing WVAS and mobile games, such as our services related to SMS, MMS, WAP, Java™, IVR and color ring back tones, or CRBT.

Beijing AirInbox operates Internet websites and wireless Internet sites in the PRC. In recent years, the PRC government has begun to promulgate laws and regulations applicable to Internet-related services and activities, many of which are relatively new and untested and subject to future changes. In addition, various regulatory authorities of the central PRC government, such as the State Council, the MII, the State Administration of Industry and Commerce, or SAIC, the State Administration of Radio, Film and Television, or SARFT, and the Ministry of Public Security, are empowered to issue and implement rules to regulate certain aspects of Internet-related and wireless Internet-related services and activities. Furthermore, some local governments also have promulgated local rules applicable to Internet companies operating within their respective jurisdictions. As the Internet industry itself is at an early stage of development in the PRC, it is likely that new laws and regulations will be promulgated in the future to address issues that may arise from time to time. As a result, uncertainties exist regarding the interpretation and implementation of current and future PRC Internet laws and regulations. We cannot assure you that we will not be found in violation of any current or future PRC laws or regulations due to these uncertainties, in which case we could be subject to various penalties, including redressing the violations, confiscation of income, imposition of fines or even suspension of our operations.

In July 2006, the MII issued the Circular on Strengthening the Administration of Foreign Investment in the Operation of Value-added Telecommunications Business. In the circular, the MII reiterated the existing regulations regarding foreign investment in telecommunications business, which require foreign investors to set up foreign-invested enterprises and obtain a business operating license for Internet content provision, or ICP license, in order to conduct any value-added telecommunications business in the PRC. Under this circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing resources, sites or facilities to foreign investors that conduct value-added telecommunications business illegally in the PRC. Furthermore, the relevant trademarks and domain names that are used in the value-added telecommunications business shall be owned by the local ICP license holder or its shareholders. This circular further requires each ICP license holder to have the necessary facilities for its approved business operations and to maintain such facilities in the regions covered by its license. In addition, all value-added telecommunications service providers are required to maintain network and information security in accordance with the standards set forth under relevant PRC regulations. Due to the lack of further interpretation from the regulator, it remains unclear what impact the above circular will have on us or other PRC Internet companies that have adopted the same or similar corporate and contractual structures as ours.

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On December 20, 2007, the SARFT and the MII jointly promulgated the Regulations on Administration of Internet-based Audio-video Programming Service, or Internet-based Audio-video Regulations, which became effective as of January 31, 2008. The Internet-based Audio-video Regulations require providers of Internet-based audio-video programming services in the PRC to obtain the License for Disseminating Audio-video Programs over Information Networks, or the Internet-based Audio-video License, or complete registration procedures. To obtain such license or complete such registration, such provider must, among others, be a limited liability company that is either wholly-owned or controlled by the state. Pursuant to explanations of the Internet-based Audio-video Regulations provided by the responsible persons at the SARFT and the MII in a press conference, providers who engaged in Internet-based audio-video programming services before the promulgation of the Internet-based Audio-video Regulations and who have not violated any other laws or regulations shall be eligible to register their business and continue their operations. However, given the short history of the Internet-based Audio-video Regulations and the lack of interpretations and precedents, we cannot assure you that we will be qualified to apply for the Internet-based Audio-video License or complete the required registration, and we cannot assure you that we will be granted the Internet-based Audio-video License or be able to complete such registration.

In addition, each of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, BJXR and Beijing Chengxitong has obtained a telecommunications and information services operating license for their Internet content businesses from the Beijing Telecommunications Administration Bureau. In addition, each of Beijing AirInbox, Beijing WINT, BJXR, Beijing Chengxitong and Mailifanghas obtained a nationwide value-added telecommunications license from the MII in order to provide services in multiple provinces, autonomous regions and municipalities. If any of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, BJXR, Beijing Chengxitong or Mailifang fails to obtain or maintain any required licenses or permits, it may be subject to various penalties, including redressing the violations, confiscation of income, imposition of fines or even suspension of its operations. Any of these measures could materially disrupt our operations and materially and adversely affect our financial condition and results of operations.

See “Item 4 — Information on the Company — Regulation.”

The PRC government or the telecommunications operators may prevent us from distributing, and we may be subject to sanctions for, content that any of them believes is inappropriate.

The PRC has promulgated regulations governing telecommunications service providers, Internet access and the distribution of news and other information. In the past, the PRC government has stopped the distribution of information over the Internet that it believes violates PRC law, including content that it deems to be obscene, to incite violence, to endanger national security, to be contrary to the national interest or to be defamatory.

The telecommunications operators also have their own policies that restrict the distribution by WVAS providers and wireless Internet sites of content they deem inappropriate. For instance, they have punished certain providers for distributing content deemed by them to be obscene. Such punishments have included censoring of content, delays in payments of fees by the telecommunications operators to the offending service provider, forfeiture of fees owed by the telecommunications operators to the offending service provider and suspension of the service on the telecommunications operators’ networks. Accordingly, even if we comply with PRC governmental regulations relating to licensing and foreign investment restrictions, if the PRC government or the telecommunications operators were to take any action to limit or prohibit the distribution of information we provide or to limit or regulate any current or future content or services available to our users, our revenues could be reduced, traffic to our wireless Internet sites decreased and our reputation harmed. For example, in August 2004, China Mobile notified us that one of our IVR services in early June 2004 had contained inappropriate content. For this infraction, China Mobile suspended until the end of 2004 approval of new applications from us for new products and services on all platforms and also suspended joint promotions with us. In addition, China Mobile suspended for one year, until June 30, 2005, approval of our applications to operate on new platforms. We cannot assure you that we will not be subject to sanctions in the future for violating content-related regulations of the PRC government or policies of any of the telecommunications operators.

Unexpected network interruptions, security breaches or computer virus attacks could have a material adverse effect on our business, financial condition and results of operations.

Any failure to maintain the satisfactory performance, reliability, security and availability of our network infrastructure may cause significant harm to our reputation and our ability to attract and maintain users. Major risks involved in such network infrastructure include, among others, any breakdowns or system failures resulting in a prolonged shutdown of all or a material portion of our servers, including failures which may be attributable to sustained power outages, or effort to gain unauthorized access to our systems causing loss or corruption of data or malfunctions of software or hardware.

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Our network systems are vulnerable to damage from fire, flood, power loss, telecommunications failures, computer viruses, hackings and other similar events. Any network interruption or inadequacy that causes interruptions in the availability of our services or deterioration in the quality of access to our services could reduce our user satisfaction and our competitiveness. In addition, any security breach caused by hacking, which involves effort to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could have a material adverse effect on our business, financial condition and results of operations. We do not maintain insurance policies covering losses relating to our systems and we do not have business interruption insurance.

The growth of our business may be adversely affected due to public concerns over the security and privacy of confidential user information.

The growth of our business may be inhibited if the public concern over the security and privacy of confidential user information transmitted over the Internet and wireless networks is not adequately addressed. Our services may decline and our business may be adversely affected if significant breaches of network security or user privacy occur.

If we are unable to respond successfully to technological or industry developments, our business may be materially adversely affected.

The WVAS, mobile games, wireless Internet, mobile advertising and telecommunications industries are characterized by rapid advances in technology, industry standards and customer demands. New technologies, industry standards or market demands may render our existing products, services or technologies less competitive or even obsolete. Telecommunications operators in the PRC are currently in the process of introducing 3G telecommunications services. Responding and adapting to 3G and other technological developments and standard changes in our industry may require substantial time, effort and capital investment. If we are unable to respond successfully to technology, industry and market developments, such developments may materially adversely affect our business, results of operations and competitiveness.

Risks Relating to the People’s Republic of China

Substantially all of our assets are located in the PRC and substantially all of our revenues are derived from our operations in the PRC. Accordingly, our results of operations and prospects are subject, to a significant extent, to the economic, political and legal developments in the PRC.

Changes in the PRC’s economic, political and social conditions, as well as government policies, could affect our business. Although the PRC has been one of the world’s fastest-growing economies in terms of GDP since 1978, we cannot assure you that such growth will be sustained in the future. Moreover, any negative development in the economies of the United States, the European Union and certain Asian countries may adversely affect economic growth in the PRC.

In addition, the PRC economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC economy has experienced significant growth over the past decades, 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 may benefit the overall PRC economy but have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. The PRC government has implemented certain measures, including recent interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity in the PRC, including a slower growth or decline in demand in WVAS, mobile games, wireless Internet and mobile advertising businesses, which in turn could adversely affect our operating results and financial conditions.

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Although the PRC government has implemented measures since the late 1970s emphasizing the use 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 productive assets in the PRC is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. It also exercises significant control over PRC 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. We cannot assure you that the PRC’s economic, political or legal systems will not develop in a way that is detrimental to our business, results of operations and prospects.

Government control of currency conversion may adversely affect our financial condition and results of operations.

We receive substantially all of our revenues in Renminbi, which currently is not a freely convertible currency. A portion of these revenues must be converted into other currencies to meet our foreign currency obligations including, among others, payment of dividends declared, if any, in respect of our ordinary shares.

Under the PRC’s existing foreign exchange regulations, our subsidiaries, KongZhong Beijing, Beijing Anjian Xingye, KongZhong China and Wukong Shentong Search Co., Ltd., or Wukong Shentong, are able to pay dividends in foreign currencies without prior approval from the State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, we cannot assure you that the PRC government will not take measures in the future to restrict access to foreign currencies for current account transactions.

Foreign exchange transactions under the capital accounts of our subsidiaries, KongZhong Beijing, Beijing Anjian Xingye, KongZhong China and Wukong Shentong, and of our operating companies, Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, Beijing Chengxitong, BJXR and Mailifang, continue to be subject to significant foreign exchange controls and require the approval of PRC governmental authorities, including the SAFE. In particular, if KongZhong Beijing, Beijing Anjian Xingye or KongZhong China borrow foreign currency loans from us or other foreign lenders, these loans must be registered with SAFE, and if we finance KongZhong Beijing, Beijing Anjian Xingye or KongZhong China by means of additional capital contributions, these capital contributions must be approved by certain government authorities including the Ministry of Commerce or its local counterparts. In addition, if we finance Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, Beijing Chengxitong, BJXR or Mailifang by loans, we must obtain approval from SAFE. These limitations could affect the ability of KongZhong Beijing, Beijing Anjian Xingye, KongZhong China, Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, Beijing Chengxitong, BJXR or Mailifang to obtain foreign exchange through debt or equity financing.

PRC regulations relating to offshore investment activities by PRC residents may increase the administrative burden we face and create regulatory uncertainties that could restrict our overseas and cross-border investment activity, and a failure by holders of our ordinary shares or ADSs who are PRC residents to make any required applications and filings pursuant to such regulations may prevent us from being able to distribute profits and could expose us and the PRC resident holders of our ordinary shares or ADSs to liability under PRC law.

The SAFE has promulgated regulations that require PRC residents and PRC corporate entities to register with and obtain approvals from relevant PRC government authorities in connection with their direct or indirect offshore investment activities. These regulations may apply to holders of our ordinary shares and ADSs who are PRC residents in connection with our prior and any future offshore acquisitions.

The SAFE regulation required registration by March 31, 2006 of direct or indirect investments previously made by PRC residents in offshore companies prior to the implementation of the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-Raising and Reverse Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies on November 1, 2005. If a PRC holder of our ordinary shares or ADSs with a direct or indirect stake in an offshore parent company fails to make the required SAFE registration, the PRC subsidiaries of such offshore parent company may be prohibited from making distributions of profit to the offshore parent and from paying the offshore parent proceeds from any reduction in capital, share transfer or liquidation in respect of the PRC subsidiaries. Furthermore, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for evasion of foreign exchange restrictions.

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Those of our Directors and senior officers who are holders of our ordinary shares or ADSs and PRC residents have informed us that they have made the necessary applications and filings, as required under this regulation. However, as these regulations are still relatively new and there is uncertainty concerning the reconciliation of the new regulation with other approval requirements, it is unclear how the regulation, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended, implemented or enforced by the relevant government authorities. The failure or inability of the PRC resident holder of our ordinary shares or ADSs to obtain any required approvals or make any required registrations may subject us to fines and other legal sanctions, and prevent us from being able to make distributions or pay dividends, as a result of which our business operations and our ability to distribute profits to you could be materially adversely affected.

Fluctuation of the Renminbi could adversely affect the value of and dividends payable on our ADSs.

The value of the Renminbi fluctuates and is subject to changes in PRC 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 PRC government’s new policy, the Renminbi is permitted to fluctuate within a managed band against a basket of certain foreign currencies. Although daily fluctuations of the Renminbi against the basket of currencies are currently limited to 0.5% per day, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the long term. We cannot guarantee that the Renminbi will not be permitted to enter into a full float, which also may result in a significant appreciation or depreciation of the Renminbi against the U.S. dollar. Because we receive substantially all of our revenues in Renminbi and a majority of our cash and cash equivalents are denominated in Renminbi, any fluctuation in the exchange rate against the U.S. dollar will affect our balance sheet and earnings per share in U.S. dollar terms and the value of dividends, if any, payable on, our ordinary shares in U.S. dollar terms and the value of any U.S. dollar-denominated investments we may make in the future. As of December 31, 2008, we had cash and cash equivalents in the amount of $136.05 million. A 1.0% appreciation of the Renminbi against the U.S. dollar will result in an estimated increase of approximately $1.05 million in our total amount of cash and cash equivalents, and a 1.0% appreciation of the U.S. dollar against the Renminbi will result in a decrease of approximately $1.03 million in our total amount of cash and cash equivalents. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk.

Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.

The PRC legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which decided legal cases have little precedential value. Although legislation in the PRC over the past 30 years has significantly improved the protection afforded to various forms of foreign investment and contractual arrangements in the PRC, these laws, regulations and legal requirements are relatively new and their interpretation and enforcement involve uncertainties, which could limit the legal protection available to us and foreign investors, including you. In addition, the PRC government may enact new laws or amend current laws that may be detrimental to our current contractual arrangements with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang, which may in turn have a material adverse effect on our business operations.

You may experience difficulties in effecting service of legal process and enforcing judgments against us and our management.

We are a company incorporated under the laws of the Cayman Islands, and our subsidiary and substantially all of our assets are located outside the United States. In addition, most of our Directors and officers and their assets are located outside the United States. As a result, it may not be possible to effect service of process within the United States upon our Directors or officers, including with respect to matters arising under U.S. Federal securities laws or applicable state securities laws.

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Our PRC legal counsel, King & Wood, has advised us that the PRC does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States, the United Kingdom or most other Western countries. As a result, recognition and enforcement in the PRC of judgments of a court obtained in those jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

We have been advised by Maples and Calder, our Cayman Islands legal advisers, that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, or any state thereof, a judgment obtained in the United States, or any state thereof, will be recognized and enforced in the courts of the Cayman Islands under common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided that such judgment (i) was given by a foreign court of competent jurisdiction; (ii) imposes on the debtor a liability to pay a liquidated sum for which the judgment has been given; (iii) is final; (iv) is not in respect of taxes, a fine or a penalty; and (v) was not obtained in a manner and is not of a kind of enforcement that is contrary to natural justice or the public policy of the Cayman Islands.

Any future outbreak of Severe Acute Respiratory Syndrome, avian influenza or any other epidemic in the PRC may have a material adverse effect on our business operations, financial condition and results of operations.

From December 2002 to June 2003, the PRC and certain other countries experienced an outbreak of a new and highly contagious form of atypical pneumonia that became known as severe acute respiratory syndrome, or SARS. On July 5, 2003, the World Health Organization declared that SARS had been contained. However, after this declaration, a number of isolated new cases of SARS have been reported, most recently in central PRC in April 2004. In addition, in recent years, a number of Asian and European countries, including the PRC, have reported cases of humans being infected with a strain of avian influenza or bird flu known as H5N1, which is often fatal to humans. Any outbreak of any of these diseases or other highly dangerous communicable diseases in the PRC in the future may disrupt our business operations and have a material adverse effect on our financial condition and results of operations. In addition, health or other government regulations may require temporary closure of our offices, or the offices of our advertisers, content providers or partners, which may severely disrupt our business operations and have a material adverse effect on our financial condition and results of operations. We have not adopted any written preventive measures or contingency plans to combat any future outbreak of SARS, bird flu or any other epidemic.

Item 4. Information on the Company

History and Development of the Company

We were incorporated on May 6, 2002 under the laws of the Cayman Islands as Communication Over The Air Inc., an exempted limited liability company. In March 2004, we changed our name to KongZhong Corporation. We are headquartered in Beijing, the PRC, and provide WVAS, mobile games and wireless Internet sites to mobile phone users throughout the PRC. In January 2007, we established a wholly-owned subsidiary, Monkey King Search Corporation, or Monkey King, under the laws of Cayman Islands in an effort to develop our wireless search business. Monkey King in turn established its own wholly-owned subsidiary, Wukong Shentong, under the laws of the PRC. After developing our wireless search business through Monkey King and Wukong Shentong for a period of time, in September 2008, we decided to terminate our project of developing wireless search business and liquidate Monkey King and Wukong Shentong. We are currently in the process of liquidating Wukong Shentong and plan to liquidate Monkey King in 2009. In July 2008, we liquidated Beijing Shuziyuansu Advertising Co., Ltd., a company formerly owned by two of our operating companies, Beijing Boya Wuji and Beijing WINT, because it had not had any operating activity since its incorporation in September 2005. In July 2008, BJXR, one of our operating companies, established its own subsidiary, Beijing Shiyuan Leya, which operates certain types of our WVAS business.

We conduct our business in the PRC solely through our wholly-owned subsidiaries, KongZhong Beijing, KongZhong China and Beijing Anjian Xingye. In order to meet domestic ownership requirements under PRC law, which restrict us and our subsidiaries, as foreign or foreign-invested companies, respectively, from operating certain value-added telecommunications and Internet services, we operate WVAS, mobile games and wireless Internet sites through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang, all of which are based in the PRC and are wholly-owned by PRC citizens. We do not have any equity interests in Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR or Mailifang, but enjoy the economic benefits of these companies through a series of contractual arrangements as described below.

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Our principal executive office is located at 35th Floor, Tengda Plaza, No. 168, Xizhimenwai Street, Beijing, 100044, the PRC. Our telephone number is (8610) 8857-6000. The address of our primary website is www.KongZhong.com and the address of our primary wireless Internet site is Kong.net. Information contained on our website or our wireless Internet site does not constitute a part of this annual report.

In July 2004, we completed the initial public offering of our ADSs representing our ordinary shares and listed the ADSs on the Nasdaq Global Market, or Nasdaq. Effective January 1, 2008, our ADSs are listed on the Nasdaq Global Select Market.

Investments and Acquisitions

On May 12, 2005, our operating companies, Beijing AirInbox and Beijing WINT, signed an agreement with the original shareholders of Tianjin Mammoth to acquire 95% and 5%, respectively, of the equity interest in Tianjin Mammoth for an aggregate consideration of RMB6 million, or approximately $724,944, of which $675,379 was paid in 2005 and the remaining balance of $49,565 was paid in June 2006. The acquisition was concluded on May 24, 2005. Tianjin Mammoth was founded in June 2002 and has become a well-known mobile game developer in the PRC. Since the acquisition, Tianjin Mammoth has primarily developed games for KongZhong affiliates.

In November 2005, we entered into a definitive agreement with Beijing Chengxitong, its original shareholders and our designees pursuant to which the original shareholders transferred 100% of the equity interest in Beijing Chengxitong, a WVAS provider in Hubei province, for a purchase price of RMB14.45 million (approximately $1.79 million), consisting of RMB4.4 million (approximately $0.54 million) in cash and RMB10.05 million (approximately $1.24 million) satisfied by waiving receivables from former shareholders of Beijing Chengxitong. Of the $0.54 million in cash, $0.50 million was paid in 2005 and the remaining balance of $0.04 million was paid in January 2006. In July 2006, we changed Beijing Chengxitong’s registered address from Wuhan, Hubei province, to Beijing and consequently changed its name from Wuhan Chengxitong to Beijing Chengxitong.

In January 2006, we sold all of our 10% equity interest in eFriendsNet Entertainment Corp., or EFN, a leading social networking company in the PRC, for an immediate cash consideration of $1.7 million. We received an additional payment of $0.2 million in February 2007 pursuant to a payment mechanism in the sale agreement that provided for an additional payment if certain financial performance milestones are met by EFN after the completion of the sale of our equity interest.

In January 2006, we entered into a definitive agreement to acquire 100% of Sharp Edge, a company incorporated in the British Virgin Islands and based in Beijing, which provided WVAS on the SMS, IVR and CRBT technology platforms through its operating entity, BJXR. We waived $0.83 million in receivables from former shareholders of Sharp Edge, and paid cash consideration of $7 million, $11 million and $17 million during the first quarter of 2006, the third quarter of 2006 and the first quarter of 2007, respectively. Following our acquisition, we deregistered Sharp Edge and became the direct owner of its wholly-owned PRC subsidiary, Beijing Anjian Xingye.

In January 2008, we entered into a definitive agreement with HiU! Media, a company incorporated in the Cayman Islands and based in the PRC, which provides residential community direct marketing advertising network and residential community marketing solutions in the PRC, to acquire 9.87% of the total equity interest of HiU! Media for a consideration of $1.5 million. We completed the investment in January 2008. We accounted for this investment using the cost method. For a further description of this transaction, see “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions.”

In May 2008, we entered into a definitive agreement with Beijing Xin Chuang Hang Yuan Technology Co., Ltd., or XCHY, a company that provides electronic coupons on mobile phones, to acquire 19.9% of the total equity interest of XCHY for a consideration of $1.5 million. We completed the investment in July 2008.

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In January 2009, we entered into a definitive agreement to acquire 100% of Sigma Interactive Inc., or Sigma, a company incorporated in the British Virgin Islands and based in Beijing, for a total consideration of $1.0 million. Sigma is engaged in the business of developing technology solutions for mobile Internet, including the development of the on-device portal platform. The acquisition was completed in January 2009.

In March 2009, we issued to NGP a convertible senior note due in 2014 with an aggregate principal amount of $6,775,400. The convertible senior note could be converted into our ordinary shares. The current conversion price is $0.08915 per ordinary share, subject to possible adjustments. NGP also received a warrant to purchase up to 80 million of our ordinary shares at $0.125 per ordinary share, exercisable within five years. The convertible senior note would initially pay an annual interest at a rate of 8%, subject to reduction to 6% based on our financial performance. The convertible senior note could be redeemed, by paying the principal amount then outstanding plus any accrued by unpaid interest, at our company’s option after three years. We have agreed to certain covenants in connection with our issuance of the convertible senior note and warrant to NGP. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — We are subject to certain covenants in connection with the issuance of the convertible senior note and the warrant, and such covenants could have a material adverse effect on our business, financial condition and results of operations.” The issuance of the convertible senior note and warrant was completed in March 2009.

In March 2009, we entered into a definitive agreement with Mailifang, its original shareholders and our designees pursuant to which the original shareholders would transfer 100% of the equity interest in Mailifang to us for a total consideration of RMB14.13 million (approximately $2.07 million), consisting of RMB5.05 million (approximately $0.74 million) in cash and RMB9.08 million (approximately $1.33 million) satisfied by waiving receivables from the original shareholders of Mailifang. Mailifang is engaged in the business of developing mobile games. The acquisition was completed in April 2009.

Our Corporate Structure

The chart below sets forth our corporate and share ownership structure as of April 24, 2009.

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(1) We do not have any ownership interest in Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, BJXR, Beijing Chengxitong, Beijing Shiyuan Leya or Mailifang. Our wholly-owned subsidiaries have entered into a series of contractual arrangements with these companies and/or their respective shareholders.

(2) We are currently in the process of liquidating Wukong Shentong.

PRC regulations currently restrict foreign ownership of companies that provide value-added telecommunications services, which include WVAS. See also “— Regulation.” To comply with PRC regulations, we conduct substantially all of our wireless value-added operations through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR, Beijing Shiyuan Leya and Mailifang, which are wholly-owned by PRC citizens or entities.

Beijing AirInbox was established in April 2002 with Yunfan Zhou, our former Chief Executive Officer, Songlin Yang, the uncle of Nick Yang, the Vice Chairman of our Board of Directors and the President and Chief Technology Officer of our company, and Leilei Wang, one of our initial investors,holding 35%, 35% and 30%, respectively, of the total equity interest of Beijing AirInbox. In September 2003, Leilei Wang transferred 15% of the equity interest in Beijing AirInbox to Yunfan Zhou and the other 15% he owned to Zhen Huang, the wife of Nick Yang. In April 2004, the registered capital of Beijing AirInbox was increased from RMB2.0 million (approximately $0.3 million) to RMB10.0 million (approximately $1.2 million). The increased registered capital was contributed from Songlin Yang and Yang Cha, one of our former employees, for RMB3.5 million (approximately $0.4 million) and RMB4.5 million (approximately $0.5 million), respectively. In October 2006, Yang Cha and Yunfan Zhou transferred their equity interests to our employees Linguang Wu and Guijun Wang, respectively, with the result that Linguang Wu holds 45% and Guijun Wang holds 10% of the total equity interest in Beijing AirInbox.

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Beijing Boya Wuji was established in March 2004 with each of Yunfan Zhou and Zhen Huang holding 50% of its total equity interest. In January 2005, Beijing AirInbox acquired 40% of the total equity interest of Beijing Boya Wuji from Yunfan Zhou and 40% from Zhen Huang, with the result that Beijing AirInbox held 80% of Beijing Boya Wuji, and Yunfan Zhou and Zhen Huang each held 10%. In October 2006, Yunfan Zhou and Zhen Huang transferred each of their 10% equity interests to Beijing AirInbox, resulting in Beijing AirInbox holding 100% of the equity interest in Beijing Boya Wuji.

Beijing WINT was 40% owned by Yang Yang, one of our employees, and 60% owned by Hai Qi, our former Senior Vice President of Sales and Marketing who left our company on February 29, 2008. In September 2008, Hai Qi transferred his 60% equity interest to Jingye Sun, one of our employees, and Li Ai, one of our former employees, respectively, with the result that Yang Yang holds 40%, Jingye Sun holds 30% and Li Ai holds 30% of the total equity interest in Beijing WINT.

Tianjin Mammoth is 95% owned by Beijing AirInbox and 5% owned by Beijing WINT.

BJXR is 51% owned by Guijun Wang and 49% owned by Yang Li, both of whom are our employees.

Beijing Chengxitong is 90% owned by Yang Li and 10% owned by Xuelei Wu, both of whom are our employees.

Beijing Shiyuan Leya is 100% owned by BJXR.

Mailifang is 90% owned by Xu Guo and 10% owned by Yang Yang, both of whom are our employees.

We do not have any equity interests in Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, Beijing Chengxitong, BJXR, Beijing Shiyuan Leya or Mailifang but instead enjoy the economic benefits of these companies through a series of contractual arrangements, which we and our subsidiaries, KongZhong Beijing and Beijing Anjian Xingye, have entered into with these companies and/or their respective shareholders as described below. For a further description of each of these agreements, see “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions.”

As part of these contractual arrangements, we have entered into loan agreements with each of the shareholders of Beijing AirInbox, pursuant to which long-term loans were provided to each of these shareholders to be invested exclusively in Beijing AirInbox. Each shareholder has also agreed to repay these loans only in the form of a transfer of all of his or her interest in Beijing AirInbox to either KongZhong Beijing or our designees to the extent allowed by PRC law under certain circumstances. We currently do not plan to extend any additional loans to the shareholders of Beijing AirInbox or to extend any loans to the shareholders of our other operating companies. See “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions.”

Each of Beijing AirInbox, Beijing WINT, Beijing Chengxitong and Mailifang and their respective shareholders also has entered into an exclusive share option agreement with KongZhong Beijing. Pursuant to these agreements, each of the shareholders of Beijing AirInbox, Beijing WINT, Beijing Chengxitong and Mailifang has granted an exclusive option to KongZhong Beijing or our designees to purchase all or part of such shareholder’s equity interest in Beijing AirInbox, Beijing WINT, Beijing Chengxitong or Mailifang, as the case may be, in accordance with PRC law, and has covenanted not to encumber such equity interest in any manner other than as permitted by KongZhong Beijing.

KongZhong Beijing has entered into business operation agreements with each of Beijing AirInbox, Beijing WINT, Beijing Chengxitong, Mailifang and their respective shareholders. Pursuant to these agreements, Beijing AirInbox, Beijing WINT, Beijing Chengxitong, Mailifang and their respective shareholders agreed to appoint individuals designated by KongZhong Beijing to the management team of Beijing AirInbox, Beijing WINT, Beijing Chengxitong and Mailifang and to refrain from taking certain actions that may materially affect these companies’ operations. Each of the shareholders of Beijing AirInbox, Beijing WINT, Beijing Chengxitong and Mailifang also has executed an irrevocable power of attorney in favor of individuals designated by KongZhong Beijing. Pursuant to these powers of attorney, those designated individuals have full power and authority to exercise all of such shareholders’ rights with respect to their equity interests in Beijing AirInbox, Beijing WINT, Beijing Chengxitong or Mailifang.

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KongZhong Beijing has entered into technical and consulting services agreements with each of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong and Mailifang. Pursuant to these technical and consulting services agreements, KongZhong Beijing provides certain technical and consulting services to Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong and Mailifang in exchange for service fees. Each of the shareholders of Beijing AirInbox, Beijing WINT, Beijing Chengxitong and Mailifang has entered into an equity pledge agreement with KongZhong Beijing, pursuant to which these shareholders pledged their respective interests in Beijing AirInbox, Beijing WINT, Beijing Chengxitong or Mailifang, as the case may be, to guarantee the performance of such companies’ payment obligations under the respective technical and consulting services agreements.

KongZhong China has entered into a technical and consulting services agreement with Beijing AirInbox, pursuant to which KongZhong China provides certain technical and consulting services to Beijing AirInbox in exchange for service fees.

BJXR and its shareholders have entered into exclusive share option agreements with our subsidiary, Beijing Anjian Xingye. Pursuant to these agreements, each of the shareholders of BJXR has granted an exclusive option to Beijing Anjian Xingye or our designees to purchase all or part of such shareholder’s equity interest in BJXR in accordance with the PRC law, and has covenanted not to encumber such equity interest in any manner other than as permitted by Beijing Anjian Xingye.

Beijing Anjian Xingye has entered into a business operation agreement with BJXR and its shareholders. Pursuant to this agreement, BJXR and its shareholders agreed to appoint individuals designated by Beijing Anjian Xingye to the management team of BJXR, and to refrain from taking certain actions that may materially affect BJXR’s operations. Each of the shareholders of BJXR also has executed an irrevocable power of attorney in favor of individuals designated by Beijing Anjian Xingye. Pursuant to these powers of attorney, those designated individuals have full power and authority to exercise all of such shareholders’ rights with respect to their equity interests in BJXR.

Beijing Anjian Xingye has entered into an exclusive technical and consulting services agreement with BJXR. Pursuant to this agreement, Beijing Anjian Xingye provides technical and consulting services to BJXR in exchange for service fees. Each of the shareholders of BJXR has entered into an equity pledge agreement with Beijing Anjian Xingye, pursuant to which these shareholders pledged their respective interests in BJXR to guarantee the performance of BJXR’s payment obligations under the exclusive technical and consulting services agreement.

In the opinion of our PRC legal counsel, King & Wood, the ownership structures of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang, our contractual arrangements with these companies and their respective shareholders and the businesses and operations of these companies as described in this annual report are in compliance with all existing PRC laws and regulations and are enforceable in accordance with their terms and conditions. In addition, our PRC legal counsel is of the opinion that, with respect to Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang, no consent, approval or license, other than those already obtained, is required under any of the existing PRC laws and regulations for the effectiveness and enforceability of the ownership structures, contractual arrangements, businesses and operations of these companies, with the exception that Beijing AirInbox is required to obtain licenses pursuant to the Internet News Information Services Regulations and the Internet-based Audio-video Regulations for which Beijing AirInbox’s applications are pending. However, there are substantial uncertainties regarding the interpretation and implementation of current PRC laws and regulations. See “— Regulation” and “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC government restrictions on foreign investment in the value-added telecommunications industry, we could be subject to severe penalties,” and “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — Our contractual arrangements with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang may not be as effective in providing operational control as direct ownership of these businesses and may be difficult to enforce.” As discussed in those risk factors, certain events may cause us to lose the benefits and control intended to be created by these arrangements.

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Capital Expenditures and Divestitures

See “Item 5 — Operating and Financial Review and Prospects — Capital Expenditures” for information concerning our principal capital expenditures since our inception and those planned for 2009. We have not undertaken any significant divestitures and do not have any significant divestitures currently in progress.

Business Overview

We are one of the leading providers of WVAS and mobile games to mobile phone users and a wireless media company providing news, content, community and mobile advertising services through our wireless Internet sites in the PRC. We began providing WVAS on the networks of China Mobile in 2002. Since 2004 we have provided WVAS on the networks of China Unicom, China Telecom and China Netcom, the other major telecommunications operators in the PRC. Since 2004, we have started our wireless Internet sites to provide WIS. In 2008, we began reporting our mobile games business as a stand-alone operating segment, while it was previously reported as part of our WVAS business.

Our Business

We provide interactive entertainment, media and community services to mobile phone users through 2G technology platforms, including SMS, IVR and CRBT, and through 2.5G technology and operating platforms, including WAP, MMS and Java™ , which offer higher quality graphics, richer content and more interactivity than 2G wireless services. With the development of 3G services in the PRC, we plan to develop and offer services tailored to 3G technology platforms in the future.

We deliver a broad range of services that users can access directly from their mobile phones, by using our access code or by choosing an icon or a game pre-loaded in select models of handsets; from a telecommunications operator’s portal or website; and from our wireless Internet websites, including Kong.net and Ko.cn. Substantially all of our services are ordered or accessed by users directly through their mobile phones and all services are delivered through mobile phones. Our services are organized in three major categories, consisting of:

· Interactive entertainment. Our interactive entertainment services include mobile games, pictures, karaoke, electronic books and mobile phone personalization features, such as ringtones, wallpaper, clocks and calendars.

· Media. Our media services provide content such as domestic and international news, entertainment, sports, fashion, lifestyle and other special interest areas.

· Community. Our community services include interactive chat, message boards, dating and networking.

Although users can purchase our value-added services and downloadable mobile games on a single-transaction basis or on a monthly subscription basis, the majority of our services are offered on single-transaction basis in 2008. We provide our services mainly pursuant to our cooperation arrangements with the telecommunications operators and their provincial subsidiaries, the terms of which are generally for one year or less. We do not directly bill our users, and depend on the billing systems and records of the telecommunications operators to bill and collect all fees. We generally do not have the ability to independently verify the accuracy of the billing systems of the telecommunications operators. As the telecommunications operators do not provide us with a detailed revenue breakdown on a service-by-service basis, we depend on our internal data management system to monitor revenues derived from each of our services. We make our business decisions based on our internal data, taking into account our historical experience in reconciling our internal data to our actual results of operations and other factors including strategic considerations. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — Our dependence on the substance and timing of the billing systems of the telecommunications operators and their subsidiaries may require us to estimate portions of our reported revenues and cost of revenues for WVAS and mobile games. As a result, subsequent adjustments may have to be made to our financial statements.”

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The following diagram illustrates how our services are provided through technology platforms to users.

We continuously produce and source new content that appeals to our target consumers for value-added services. Utilizing software we have developed, our experienced editors and producers edit, redesign and repackage our content for our different services and technology platforms in a manner that appeals to consumers and ensures a consistent user experience across different mobile handset models. We obtain our content through in-house writers, freelance writers and third-party suppliers. Through contractual arrangements, we have exclusive rights over the content produced by our in-house writers, the content specifically produced for us by freelance writers and some of the content sourced from third-party suppliers.

Our WVAS Business

The following are the three major WVAS areas on which we focus:

· Interactive Entertainment. We offer a wide range of interactive entertainment products, including mobile games, karaoke, electronic books and mobile phone personalization features, such as ringtones, wallpaper, icons, clocks and calendars. We provide our interactive entertainment services through all of our technology platforms. Mobile phone users can download on demand or subscribe for regular downloads of our interactive entertainment services. Some of our most popular interactive entertainment products include:

– Pictures and Logos. Mobile phone users can download pictures and logos to personalize the background of their mobile phone screens. Such pictures include cartoons, pets and scenic photos.

– Polyphonic Ringtones. Our ringtones enable a mobile phone user to personalize their ringtones using the melodies of their favorite songs or special sound effects.

· Media. Users can download our media content on either a single-transaction basis or a monthly subscription basis. Media content covers international and domestic news, entertainment, sports, fashion, lifestyle and other special interest areas. Some of our most popular media services include:

– News. We offer international and domestic news, delivered in a format easy for the reader to peruse. Our WAP version enables users to easily search for news that interests them.

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– Entertainment. Our entertainment magazine focuses on high-profile celebrities and includes star biographies, interviews and photos.

– Sports. Our sports magazine features sports news, game scores and information about sports stars.

· Community. Users can engage in community-oriented activities such as interactive chatting, message boards, dating and networking. Users may access our community services on a monthly subscription basis or single-transaction basis. Some of our most popular community services include:

– Chat. We offer a variety of chat services. For instance, we have a virtual reality game that allows mobile phone users to choose the lifestyle they dream of and interact with the city’s other inhabitants/players.

– Photo Albums. Our photo albums allow mobile users to post and arrange their photos taken with their mobile handsets into albums accessible via their handsets. Utilizing the WAP technology platform, mobile users can access photo albums in a manner similar to accessing photo albums on the Internet.

Our Mobile Games Business

We offer mobile games based on 2.5G platforms, including WAP and Java™. In 2005, we established a dedicated mobile games product development team to develop and publish 2.5G mobile games and also acquired Tianjin Mammoth, a mobile games developer. Our mobile games include both downloadable and online mobile games. As of December 31, 2008, we had a library of over 40 internally developed mobile games.

We began developing online mobile games in 2006 and 2007. Our online mobile games are generally offered free of charge for mobile phone users. We derive revenues from users who desire to purchase merchandise or premium features embedded in the games to enhance their gaming experience. Our internally developed mobile on-line games, e 3-Kingdom and Tian Jie (Reincarnation) On-line, were named “Most Popular Mobile Networking Game” at the 2006 and 2007 China Joy Best Games Contests, respectively. Tian Jie (Reincarnation) On-linewas awarded as one of the “Best Ten Self-Developed Mobile Games in China” at the China Game Industry Annual Forum in January 2008. Tian Jie (Reincarnation) On-line was launched on China Mobile’s Mobile Online Game Platform on September 10, 2008. In addition, Tianjin Mammoth received the “Best Mobile Game Developer” award at the 2007 China Joy Best Games Contests.

Our mobile games business was previously reported as part of our WVAS business. We have treated our mobile games business as a stand-alone operating segment since 2008 as we expect to expend more effort to develop our mobile games business and anticipate our mobile games business to make a more significant contribution to our total revenues. Our mobile games business has achieved continuous growth and we believe it is an important part of our effort to grow our business over the long term. We intend to develop internally the majority of our mobile games. However, in order to expand our mobile games business and increase our market share, we also plan to actively identify quality mobile games to be purchased or licensed from third parties and cooperate with third parties to jointly develop mobile games.

Our WIS Business

In 2004, we launched a wireless Internet site that customers can visit from their mobile phones through their browsers while using 2.5G mobile networks. Our original wireless Internet domain name, or URL, was cota.cn before the URL was changed to Kong.net in 2006. Kong.net is independent of the telecommunications operators’ portals, including China Mobile’s Monternet™ portal. Through Kong.net, we offer news, community services, games and other interactive media and entertainment services to our customers free of charge. We also sell advertising space on Kong.net in the form of text-link, banner and button advertisements. We conducted major advertising campaigns in each of 2006, 2007 and 2008 to drive traffic to Kong.net and promote recognition of Kong.net and our corporate brand.

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In March 2007, we launched the new wireless Internet community site Ko.cn. Users can register at Ko.cn to access their own virtual space with features such as personalized domain names, friend networks, chat rooms, photo albums and blogs.

In September 2007, we entered into a cooperation agreement with the National Basketball Association of the United States, or the NBA, and launched the official Chinese NBA mobile website, cn.NBA.com, the first official NBA site on mobile phones in the PRC.

In January 2008, we entered into a strategic alliance agreement with China Sports Industry Group Co., Ltd. to jointly explore business opportunities for developing sports-related content for mobile phones, including WVAS and wireless Internet sites.

In 2008, we also entered into cooperation agreements with Infront Sports & Media (China) Co., Ltd. to operate the official mobile websites for the Men’s Professional League of the Chinese Basketball Association, China’s National Basketball Teams and China’s National Football Teams.

In 2008, we had cooperation arrangements with over 70 content providers, including the NBA, China Interactive Sports, the operator of www.Sports.cn, www.Olympic.cn, 51job, Inc., the PRC’s largest recruitment services provider, Xinhua News Agency, Beijing Mapabc, a digital map provider, SouFun.com, a real estate portal and Hexun.com, an on-line financial news provider, to include selected content from these providers on Kong.net.

Our wireless Internet business is a new business and strategic initiative that we are undertaking with the aim of further expanding our product offerings, strengthening our competitive advantages, increasing corporate brand awareness and preparing ourselves for the development of 3G services in the PRC. We believe that mobile phone users demand increasing amounts of information and entertainment and that wireless Internet sites offer the most convenient means to satisfy this demand. Although the traffic from the users’ mobile phones to the wireless Internet sites is still carried by telecommunications operators, our wireless Internet business does not rely on the telecommunications operators for billing and collection, and is not as heavily affected by the policies or guidelines of telecommunications operators as our WVAS business. We believe this strategic initiative will continue to be a key focus of our effort in 2009.

We began to generate advertising revenues in 2006 and achieved continuous growth in 2007 and 2008. Although we do not expect that mobile advertising on our wireless Internet sites would make a significant contribution to our total revenues in the short term, we believe that they would eventually become a more significant revenue source if the volume of traffic to our wireless Internet sites becomes sufficiently large and the mobile advertising market grows steadily. In 2009, we plan to complement our mobile advertising business by offering paid services such as mobile games and virtual items to Kong.net users, leveraging our existing payment platforms and customer base of our WVAS and mobile games businesses.

Our Technology Platforms for WVAS and Mobile Games

2G Wireless Standard Services

We deliver our 2G services primarily through the SMS, IVR and CRBT technology platforms.

· Short Messaging Services (SMS). SMS is the basic form of mobile messaging service, and is supported by substantially all mobile phone models currently sold. Users can receive our products and services, which include news, jokes, weather forecasts and short stories, through their mobile phones on a single-transaction or a monthly subscription basis. We launched and began receiving revenues from SMS in July 2002.

· Interactive Voice Response (IVR). IVR services allow users to access voice content from their mobile phones, including music, chat, foreign-language instruction and novels. We launched and began receiving revenues from IVR services in December 2003.

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· Color Ring Back Tones (CRBT). CRBT allow a mobile phone user to customize the sound that callers hear when calling the user’s mobile phone. We offer a variety of entertaining content, including pre-recorded messages, movie dialogues and soundtracks and a wide range of classical and popular music. We launched and began receiving revenues from our CRBT services in October 2003.

2.5G Wireless Standard Services

We deliver our 2.5G services primarily to users of mobile phones that either are based on the global system for mobile communication, or GSM, standard and utilize GPRS, technology or are based on the CDMA standard and utilize CDMA 1x technology, in both cases through the WAP, MMS and Java™ technology platforms.

· Wireless Application Protocol (WAP). WAP allows users to browse content on their mobile phones so that users can request and receive information in a manner similar to accessing information on Internet websites using personal computers. We provide our WAP services primarily over China Mobile’s GPRS networks. Our WAP services allow users to download color and animated pictures, logos and wallpaper, interactive mobile games, customized ringtones and other Internet content. We launched WAP services in May 2002, but did not begin to receive revenues for such services until September 2002, when China Mobile began to allow service providers to charge fees for WAP services.

· Multimedia Messaging Services (MMS). MMS is a messaging service that we deliver over GPRS networks and that, in the PRC, allows up to 50 kilobytes of data to be transmitted in a single message, compared to 140 bytes of data via SMS. As a result, MMS enables users to download colorful pictures and advanced ringtones. We launched MMS services in October 2002, but did not begin to receive revenues for such services until April 2003, when China Mobile started to allow service providers to charge fees for MMS. Our monthly subscription services automatically send information to users’ mobile phones, and include news, beauty, celebrity photographs and special collectible items. Our services that can be downloaded on a single-transaction basis include pictures, screensavers, ringtones and special sound effects.

· Java™. Java™ technology allows mobile phone users to play interactive and networked mobile games, perform karaoke and download applications, such as screensavers and clocks, to customize their mobile phone settings. We launched services based on the Java™ programming language in September 2003, but did not begin to receive revenues for such services until November 2003, when China Mobile started to allow service providers to charge fees for Java™ services.

Since 2005, we have pursued a diversified growth strategy and our objective has been and remains providing services based on both the 2G and 2.5G technology platforms. As a result of our continuous effort in developing and promoting 2G services, and also due to our acquisition of Sharp Edge, which derives most of its revenues from the provision of 2G services, the portion of our total revenues from 2G services grew from 27.3% in 2005 to 51.2% in 2006, 62.7% in 2007 and 63.4% in 2008.

Strategic Relationships

We have established cooperation arrangements with telecommunications operators, mobile handset manufacturers, content providers and other business partners to produce, promote and market our services. We provide our WVAS mainly pursuant to cooperation agreements with China Mobile. Since 2004, we also have provided our WVAS through China Unicom’s mobile network and each of China Netcom’s and China Telecom’s Personal Handyphone Systems, or PHS systems, which are based on fixed-line networks. In addition, we cooperate with several PRC leading mobile handset manufacturers, which make select handset models with a WVAS icon in the handset’s menu that enables users to access our services directly. We pay service fees to the telecommunications operators, mobile handset manufacturers, mobile handset distributors, content providers and other partners, where relevant.

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Telecommunications Operators

China Mobile is the world’s largest mobile telecommunications network operator in terms of subscribers, with 457 million subscribers as of December 31, 2008, according to China Mobile’s public filings with the SEC. Our working relationship with China Mobile is critical to the operation and continued development of our business. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business —We depend on China Mobile and other PRC telecommunications operators for the majority of our revenues, and any loss or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations and the loss of the majority of our revenues.” We provide WVAS in 31 Chinese provinces or provincial-level municipalities pursuant to cooperation agreements with China Mobile and its provincial subsidiaries. Generally, these agreements have terms of one year or shorter, but renew automatically unless either party objects. We were one of the first wireless service providers to work with China Mobile to develop and offer WAP, MMS and Java™. We continue to jointly develop and promote WVAS with China Mobile and its provincial subsidiaries, which is generally more cost-effective and far-reaching than if we were to promote these services through traditional advertising.

In addition to our cooperation agreements with China Mobile and its provincial subsidiaries, we have entered into cooperation agreements pursuant to which we provide 2G and 2.5G services on the networks of China Unicom and 2G services on the networks of China Netcom and China Telecom. Aggregate revenues from the cooperation agreements with these three telecommunications operators amounted to 24%, 25% and 23% of our total revenues during the years ended December 31, 2006, 2007 and 2008, respectively.

We charge our customers content fees, which vary among our different services, on either a single-transaction or a monthly subscription basis. We establish the fees paid by our customers in consultation with the telecommunications operators and, in turn, pay a portion of these fees to the telecommunications operators through which our services are provided.

Pursuant to our agreements with the subsidiaries of China Mobile, we generally pay to China Mobile subsidiaries 15% of the fees we generate from providing our services to customers through such subsidiaries’ networks, with the exception of IVR services, with respect to which we pay to China Mobile subsidiaries 30% of the fees we generate. China Mobile subsidiaries also offer to provide us with customer services or customer services packaged with marketing and promotional services in return for an additional 15% or 35%, respectively, of the fees we generate from providing our services through such subsidiaries’ networks. However, because we maintain our own customer service and sales and marketing capabilities, we generally do not contract with China Mobile subsidiaries for such services. In addition, China Mobile subsidiaries deduct a net transmission charge from our portion of the fees for services provided on the MMS and SMS platforms. Such transmission charge is equivalent to the transmission fee set forth in the table below multiplied by the number of messages we send through the telecommunications operator’s network minus the number of messages we receive from users requesting our services.

Pursuant to our agreements with China Unicom and its subsidiaries, we generally pay each China Unicom subsidiary 15% to 52% of the fees we generate from providing our services to customers through such subsidiary’s network, with the exception of IVR services, with respect to which we pay 52%.

Pursuant to our agreements with China Telecom and China Netcom and their respective subsidiaries, we generally pay each China Telecom and China Netcom subsidiary 15% to 50% of the fees we generate from providing our services to customers through such subsidiary’s network, with the exception of IVR services, with respect to which we pay 50%.

The following table sets forth the principal fees that we charged our customers for our services and the service and transmission fees that we paid to the telecommunications operators as of December 31, 2008:

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	Fees we charged customers				Fees we paid telecommunication operators
	Transaction fee per unit (1)		Monthly subscription fee		Service fees		Transmission fee (2)
	(in RMB (3), except percentages)
WAP		1.00-3.00		1.00-8.00		15%-50%		N/A
MMS		0.50-3.00		5.00-30.00		15%		0.15-0.20
Java™		1.00-15.00		1.00-15.00		15%		N/A
SMS		0.10-3.00		2.00-20.00		15%-50%		0.02-0.08
IVR		0.10-3.00		10.00		20%-54%		N/A
CRBT		0.10-4.00		0.10-10.00		15%-50%		N/A

(1) Transaction fees are per download for WAP, MMS, Java™, SMS and CRBT services and per minute for IVR service.

(2) A transmission fee is assessed for each message we send in excess of the number of messages we receive. The amount of the transmission fees for each month depends on the volume of messages sent in that month. No transmission fees are assessed for WAP, JAVAÔ, IVR or CRBT services.

(3) Our fees are charged in Renminbi. The noon buying rate certified by the Federal Reserve Bank of New York was RMB6.8225 = $1.00 on December 31, 2008.

In May 2008, the PRC government announced its policy initiative to restructure the PRC telecommunications industry, and a series of related transactions were completed in 2008. In addition, a 3G license was issued to each of China Mobile, China Unicom and China Telecom. While we are currently assessing the impact that this restructuring may have on us, potential changes in the telecommunications industry in the PRC could impact our relationship with telecommunications operators and thus have a material adverse effect on our business and results of operations. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business —We depend on China Mobile and other PRC telecommunications operators for the majority of our revenues, and any loss or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations and the loss of the majority of our revenues.”

We rely primarily on the telecommunications operators to provide billing and collection services for us. Each telecommunications operator incorporates the fees for our services into the invoices that such operator sends to its customers on a monthly basis. We receive monthly statements from each of the telecommunications operators, which indicate the aggregate amount of fees that were charged to customers for services that we provided. For a description of our revenue recognition policy, see “Item 5 — Operating and Financial Review and Prospects — Critical Accounting Policies — Revenue Recognition.” Also see “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — We depend on China Mobile and other PRC telecommunications operators for the majority of our revenues, and any loss or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations and the loss of the majority of our revenues.”

Material Contracts with Telecommunications Operators

The term of our contracts with the telecommunications operators is generally one year or shorter. When such contracts expire, we rely on the automatic renewal clauses contained in such contracts, execute an extension or enter into new contracts. On occasion, the renewal or the execution of new contracts can be delayed by several months. Based on our experience, in the event that a contract expires and is not promptly renewed, the telecommunications operator typically continues to honor the expired contract until such time that an extension is executed or a new contract is signed. We cannot assure you that any telecommunications operator will in fact continue to honor an expired contract. The specific termination and other material provisions of our more significant contracts with the telecommunications operators are set forth below.

Beijing AirInbox has entered into a cooperation agreement with China Mobile to provide WAP services to customers nationwide on the Monternet™ portal during the period from January 1, 2008 through December 31, 2008. We are in the process of renewing such agreement. Pursuant to this agreement, Beijing AirInbox pays China Mobile a service fee of 15% of the revenues generated from providing WAP services to customers. Beijing AirInbox may not provide the same content that it provides to China Mobile under this agreement to other operators or WAP sites. Any violation of such provision entitles China Mobile to terminate this agreement. Beijing AirInbox also has entered into contracts with certain provincial subsidiaries of China Mobile that provide access to Beijing AirInbox’s WAP services through the provincial subsidiaries’ WAP portals.

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Beijing AirInbox has entered into a cooperation agreement with China Mobile to provide MMS services on China Mobile’s nationwide network during the period from June 18, 2008 through December 31, 2008. The cooperation agreement was automatically renewed for one more year upon expiration. Pursuant to this agreement, Beijing AirInbox pays China Mobile a service fee of 15% of the revenues generated from providing MMS services to customers, plus net transmission charges. Beijing AirInbox may not provide the same content that it provides to China Mobile under this agreement to other telecommunications operators. Any violation of such provision entitles China Mobile to terminate this agreement.

Beijing AirInbox has entered into a cooperation agreement with China Mobile to provide IVR services on China Mobile’s nationwide network during the period from November 1, 2008 through November 1, 2009. The cooperation agreement can be automatically renewed for six months upon expiration. Pursuant to this agreement, Beijing AirInbox pays China Mobile a service fee of 30% of the revenues generated from providing IVR services to customers.

Beijing AirInbox has entered into a cooperation agreement with China Mobile to provide SMS services on China Mobile’s nationwide network during the period from May 1, 2008 through April 30, 2009. The cooperation agreement can be automatically renewed for six months upon expiration. Pursuant to this agreement, Beijing AirInbox pays China Mobile a service fee of 15% of the revenues generated from providing SMS services to customers.

In September 2007, Beijing AirInbox entered into a cooperation agreement with China Unicom to provide WVAS to its customers on China Unicom’s mobile communication network and data service platform. The service fees payable by Beijing AirInbox to China Unicom vary with the type of WVAS that are provided. This cooperation agreement was initially effective from September 1, 2007 to June 30, 2008 and was automatically renewed for one year.

In June 2007, Beijing AirInbox entered into a cooperation agreement with China Telecom to provide SMS services on China Telecom’s nationwide network and SMS service platform. The service feespayable by Beijing AirInbox to China Telecom vary with the contents of SMS service that are provided. This cooperation agreement was initially effective from June 5, 2007 to June 5, 2008 and was automatically renewed for one year.

Mobile Handset Manufacturers

We have established distribution arrangements with mobile handset manufacturers, including Nokia, Motorola, Samsung, Lenovo, Sony Ericsson, Jin Tongxin, Guangli Technical, Shenzhen Taisida, Youxinda, Amoi and other major international and domestic handset manufacturers. Pursuant to these distribution arrangements, we pre-load into the menu of certain mobile handsets our mobile games, WAP icons and MMS, SMS, JAVAÔ and IVR short codes, which enable customers to access our WVAS quickly and easily. We pay the mobile handset manufacturers 35% to 70% of the net revenues that we receive from the telecommunications operators, generally after deducting the telecommunications operators’ service fees, with respect to our mobile games and WVAS that are accessed by means of the pre-loaded icons and short codes. The terms of these agreements are generally for one year, and pertain to specific mobile handset models. In addition, we also leverage our relationships with the mobile handset manufacturers to enter into joint marketing programs.

In addition to pre-loading our mobile games, icons and short codes into selected mobile handsets, until recently we also embedded our icons and codes in selected handsets. On April 11, 2007, the MII issued a notice barring the production of mobile handsets with embedded icons and codes that cannot be changed or deleted by customers. We have altered our arrangements with mobile handset manufacturers to comply with the notice, which took effect on June 1, 2007. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — Our effort to develop additional distribution channels for our WVAS and mobile games may not succeed or may be halted by the MII or the telecommunications operators.”

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Content Providers

We have entered into licensing agreements with content providers. Pursuant to these agreements, we contract with our content providers to use their content for a fixed licensing fee or for a certain percentage, generally 10% to 80%, of the net cash we receive from telecommunications operators with respect to products and services that contain the licensed content, generally after deducting the fees paid to our distribution partners. These arrangements are typically for one or two years and are not exclusive, except for the content specifically produced for us by our freelance writers and certain content from our third-party content providers. We currently license news content from the Xinhua News Agency, www.qianlong.com and China Foto Press, among others, and license music content from EMI, Music Publishing China, HBstars and Avex Asia Limited. We use the music that we license in our CRBT, song dedication, song listening, mobile karaoke, true ringtone and music video streaming and download services. We also have signed agreements giving us exclusive rights in the PRC to develop wireless value-added products and services based on the voice of the Chinese actor Ge You and the content of the movies “Painted Skin” and “If You Are The One.” In addition, we have entered into licensing agreements with Gameloft, IN-FUSIO and Tianjin Yaxun to provide their games to mobile phone users in the PRC.

We have also entered into agreements with content providers to obtain premium contents for our wireless Internet sites. Pursuant to these agreements, we use the contents for a fixed license fee or for a certain percentage, generally 30% to 70%, of the net revenues we receive from the mobile advertising that contains the licensed contents, or sometimes both. We currently license contents from the NBA, China Sports Industry Group Co., Ltd., Infront Sports & Media (China) Co., Ltd., Xinhua PR Newswire, Dow Jones & Company, Finet Group Limited and other content providers.

Product Development

Our product development team focuses on constantly creating innovative products that use the latest standards and technologies with respect to our WVAS, mobile games and wireless Internet sites. China Mobile started operating its 2.5G network in May 2002. The 2.5G standard enables WVAS providers to send more data in a shorter period of time, thereby facilitating the transmission of more advanced data services. We were one of the first WVAS providers to work with China Mobile to develop and offer MMS and WAP services and have continued to be a leading developer of innovative services compatible with these technology platforms. We have a dedicated mobile games development team that develops games for Java™ and other mobile games platforms. At the same time, we have increased our product development team’s emphasis on developing and supporting our 2G products, including IVR and CRBT, which we distribute on the networks of China Mobile, China Unicom and China Telecom. In addition, a portion of our product development team focuses on products and services for the wireless Internet sites we are operating, including Kong.net, Ko.cn and cn.NBA.com. We believe that our timely delivery of new services that meet telecommunications operators’ specifications demonstrates our technical capabilities and strengthens our cooperation relationship with the telecommunications operators.

In addition to developing a range of innovative services, we also have developed a variety of programming tools that allow us to enhance customers’ enjoyment of our services. For instance, in response to the current lack of a standard operating system among mobile phones produced by different manufacturers in the PRC, which may result in inconsistent experiences for customers accessing our services through different handset models, we have developed software tools that allow our services to be readily adapted for use on most mobile phones on the market. Such tools reduce the cost of adapting our services to new models of mobile phones and optimize the user experience in terms of format and presentation of our services.

The number of our product development employees increased to 477as of December 31, 2008 from 444 as of December 31, 2007.

Sales, Marketing and Customer Service

We are committed to establishing our KongZhong name as a well-recognized and reputable brand not only among our customers and users, but also among telecommunications operators, key industry players and owners of brand names. We sell our WVAS and mobile games principally through the telecommunication operators, as well as other distribution partners. We market through our website, promotional events, direct marketing and media advertising. We provide support and technical services to China Mobile, China Unicom and China Telecom and to our customers and users.

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Sales and Marketing

We focus on marketing our KongZhong brand name, as we believe branding is important in the wireless Internet business. In 2007, we increased our effort on advertising in traditional media such as television, billboards, newspapers and magazines as well as through the Internet to promote the wireless Internet sites we are operating, including Kong.net, Ko.cn and cn.NBA.com, and our corporate brand name, KongZhong. We conducted a major advertising campaign in the first half of 2007 and have started to cooperate with the NBA to promote cn.NBA.com since the second half of 2007. In 2008, we increased our effort in joint activities to promote our brand and business conducted in cooperation with the telecommunications operators.

We utilize our leading position among providers of WVAS and our knowledge of our customers to attract joint promotion arrangements with brand owners seeking effective channels of publicity among trend-conscious consumers. Through select distribution channels, we target young and fashion-driven consumers who we believe set trends for consumer products and services in the PRC. For example, we promoted the movie “The Promise” pursuant to a joint promotional arrangement under which we offered exclusive WVAS containing pictures and other content relating to the movie. In addition, we market through traditional offline media venues, such as through newspapers, magazines and flyers.

A majority of our revenues are derived from services provided through the networks of China Mobile. Accordingly, we devote significant resources to maintaining, expanding and strengthening our relationship with China Mobile and its subsidiaries. In addition, we have strengthened our sales and marketing of 2G services, which we provide through the networks of China Mobile as well as other telecommunications operators. As of December 31, 2008, our sales and marketing department consisted of 152 persons strategically located in 27 provinces across the PRC to work closely with the telecommunications operators at the provincial and local levels, where pricing and other important decisions on marketing and operations are made. Our localized sales team helps us gain insight into developments in the local markets and the competitive landscape, as well as new market opportunities.

We also continuously seek alternative distribution channels, such as mobile handset manufacturers and mobile handset distributors. Our sales force also works with other distribution partners to promote our services.

To motivate our sales professionals, a portion of their compensation is based on the usage of our services in their respective regions. Sales quotas are assigned to all sales personnel according to quarterly sales plans. We also continuously explore other joint marketing strategies in order to maximize our cooperation arrangements and resources.

In addition, we have created an advertising sales team in our sales and marketing department that focuses on selling advertising at Kong.net, Ko.cn and cn.NBA.com. Beginning in 2007, members of this team have received sales commissions instead of the performance-based bonuses paid to other members of the sales and marketing department.

Customer Service

We view both the telecommunications operators and end users of our services as customers. Customer service is key to building our brand and our relationships with the telecommunications operators. We train our customer service representatives with an emphasis on customer satisfaction. Our customer service center handles calls, faxes and e-mails from our end users, as well as inquiries forwarded from the telecommunications operators. Our customer service representatives interact on a regular basis with, and provide training materials to, customer service representatives of telecommunications operators to enhance our customers’ experience with our services. As of December 31, 2008, our customer service department consisted of 65 persons strategically located in 9 provinces across the PRC.

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Competition

We face significant competition in the WVAS, mobile games, wireless Internet and mobile advertising markets in the PRC. The MII has reported on its website that, as of April 8, 2009, more than 1,700 service providers held nationwide licenses to supply content and services on the PRC telecommunications operators’ networks. China Mobile has begun to develop and market its own MMS and WAP products that compete with ours. Other PRC telecommunications operators may decide to do the same. We compete with these companies primarily on the basis of brand, the type and timing of service offerings, content and business partner and channel relationships. The telecommunications operators may also decide to enter the mobile games market in the future. Other potential competitors in this market include developers of personal-computer-based online games, major media companies, traditional video game developers, content aggregators, mobile software providers and independent mobile games developers. In addition to competition for products, services and distribution channels, we also compete for experienced and talented employees.

Some of our competitors may have more human and financial resources and a longer operating history than us. For example, Internet portals providing WVAS may have an advantage over us with their longer operating history, more established brand name, larger user base and Internet distribution channels. Furthermore, some competitors may be able to develop or exploit new technologies faster than us, or offer a broader range of products and services than we are presently able to offer.

In addition, barriers to entry of wireless Internet services are relatively low and current and new competitors can launch new wireless Internet sites at a relatively low cost. The PRC telecommunications operators also operate their own wireless Internet sites. We compete with the operators of other wireless Internet sites for visitors, employees and advertisers, and also compete with traditional media companies such as newspapers, television networks and radio stations for advertisers.

See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — We face increasing competition in the PRC from providers of WVAS, mobile games and wireless Internet services, which could reduce our market share and materially adversely affect our financial condition and results of operations.”

2G Wireless Standard Services

Competition is particularly intense in the 2G-based WVAS market in the PRC as the barriers to entry are relatively low compared to the 2.5G market. Our primary competitors in this market include Internet portals, such as Sina Corporation, Sohu.com Inc. and TOM Online Inc., or TOM Online, and providers focused on WVAS, such as Tencent Technology Limited and Linktone Limited.

2.5G Wireless Standard Services

Our primary competitors in the 2.5G WVAS  and mobile games market in the PRC include Internet portals, such as Sina Corporation and TOM Online, as well as providers focused on WVAS and mobile games, such as Tencent Technology Limited and Glu Mobile Inc. We also face increasing competition from China Mobile in the 2.5G WVAS market.

3G Wireless Standard Services

3G wireless services are still at an early stage of development in the PRC, but future competitors in the 3G market could include existing competitors in 2G and 2.5G services, as well as established fixed-line Internet companies that may not currently have any 2G or 2.5G service offering.

Wireless Internet Business

Our primary competitors in the wireless Internet market in the PRC include Internet portals, such as Sina Corporation and Tencent Technology Limited, as well as independent operators of wireless Internet sites and PRC telecommunications operators who operate their own wireless Internet portals, such as China Mobile. Since there is currently no reliable and accurate third-party monitoring of wireless Internet traffic in the PRC, detailed data of traffic on the major wireless Internet sites are not available.

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Intellectual Property and Proprietary Rights

We regard our copyrights, trademarks, trade secrets and other intellectual property rights as critical to our business. We rely on trademark and copyright law, trade secret protection, non-competition, confidentiality and licensing agreements with our senior officers, clients, partners and others to protect our intellectual property rights. Despite our effort to protect our proprietary rights, we cannot be certain that the steps we have taken will prevent misappropriation of our content or technology, particularly in foreign countries where the relevant laws may not protect our proprietary rights as fully as in the United States. For a description of the regulations applicable to our industry in the PRC, see “— Regulation.”

We have registered KongZhong Network as a commercial website with the SAIC. As a result, no one else may operate a website, whether commercial or otherwise, using the name of KongZhong Network. We also have registered our logo, the KongZhong thumb, and certain of our product names as trademarks in the PRC, and have applied to register our wireless Internet portal logo, the K palm, as a trademark in the PRC. Our trademarks are registered in the name of Beijing AirInbox. In addition, Beijing AirInbox is the registered owner of a number of domain names, the principal ones of which are www.kongzhong.com, www.kongzhong.com.cn, www.kongzhong.net, www.kongzhong.net.cn, www.cota.com.cn, www.cota.cn, ko.cn and Kong.net.

We are unable to register the Chinese name of “KongZhong Network” as our service mark in the PRC because it is deemed a generic term under existing PRC trademark laws and regulations, which prohibit registration of generic terms as trademarks or service marks. However, we do not expect to face a proliferation of counterfeit services or products without any legal remedy as we may seek a remedy for piracy under the PRC’s Anti-Unfair Competition Law, by bringing a suit against a third party that uses the Chinese name of “KongZhong Network” if the overall design or appearance of that third party’s services is substantially the same as that of the well-known or established services provided by us. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — We may not be able to adequately protect our intellectual property, and we may be exposed to infringement claims by third parties.”

Information Technology Systems and Infrastructure

We maintain most of our servers at the premises of Beijing Telecommunication Corporation, which is the administrator of the central hub of the ChinaNet backbone. We also maintain servers at other Internet data centers, including Beijing Mobile Communication Company Limited, Chongqing Mobile Communication Company Limited and Hangzhou Mobile Communication Company Limited. We believe that utilizing these hosting partners provides significant operating benefits, such as protecting our systems from power loss, break-ins and other potential external causes of service interruption. In addition, we back up all of our data. We believe we will be able to increase our server capacity as needed to accommodate future growth.

Employees

General

Our senior management and many of our employees have had prior experience in the Internet portal or telecommunications-related industries. Our employees receive a base salary and a performance-based bonus. Our bonuses are available to all employees and the amounts of such bonuses are calculated based on the performance ranking of the employee. We have a broad-based equity incentive plan pursuant to which we grant stock options and restricted share units, or nonvested shares, from time to time to employees who have passed their initial probation period. We also offer internal training programs tailored to different job requirements to help enhance our employees’ talents and skills. We believe that these initiatives have contributed to the growth of our business.

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In July 2006, we announced plans to reduce our workforce by approximately 15% as a result of the anticipated negative impact of China Mobile’s announcement of its new billing measures. Such plans were completed by September 30, 2006. As of December 31, 2008, we had 772 employees, all in the PRC. The table below sets forth the number of our employees by function as of the end of the periods indicated:

	As of December 31,
	2006					2007					2008
	Number		% of Total			Number		% of Total			Number		% of Total
Sales, marketing and business development		276		34.6	%		212		26.4	%		152		20	%
Customer service		77		9.7	%		69		8.6	%		65		8	%
Product development		371		46.5	%		444		55.2	%		477		62	%
Networking operation		25		3.1	%		26		3.2	%		26		3	%
General and administrative		49		6.1	%		53		6.6	%		52		7	%
Total		798		100.0	%		804		100.0	%		772		100	%

We believe that we maintain a good working relationship with our employees and we have not experienced any significant labor disputes or any difficulty in recruiting staff for our operations. Our employees are not represented through any collective bargaining agreements or by labor unions.

Employee Benefits Plan

Our full-time employees in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees. The PRC labor regulations require us to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were $2,583,427, $646,515 and $404,074 for the years ended December 31, 2006, 2007 and 2008, respectively. The decreases in 2007 and 2008mainly resulted from the reduction of certain welfare benefits in response to the adverse impacts on our business and financial condition of the new policies adopted by the telecommunications operators since the second half of 2006.

We have granted stock options to our employees pursuant to our KongZhong Corporation 2002 Equity Incentive Plan, or the 2002 Plan, and our KongZhong Corporation 2006 Equity Incentive Plan, or the 2006 Plan, as described in “Item 6 — Directors, Senior Management and Employees — Stock Options.”

Properties

Our principal executive office currently occupies approximately 6,807 square meters of office space in Beijing, the PRC, primarily under leases that will expire in August 2009. In addition, we lease sales offices in 11 provinces throughout the PRC.

Legal Proceedings

We and certain of our Directors, officers and shareholders were named as defendants in six related securities class action lawsuits filed in the United States District Court for the Southern District of New York. These lawsuits were brought on behalf of a putative class of shareholders who purchased or otherwise acquired our ADSs pursuant to our initial public offering between July 9, 2004 and August 17, 2004. The complaints asserted that our prospectus filed with the United States SEC was false and misleading because it failed to disclose certain adverse facts related to sanctions subsequently imposed by China Mobile on us. The complaints alleged violations of Sections 11, 12(a) and 15 of the Securities Act. The court selected the lead plaintiff in these actions, and a consolidated amended complaint was filed with the United States District Court for the Southern District of New York on April 14, 2005. On September 13, 2005, we reached an agreement in principle to settle the action. On November 9, 2005, we entered into a stipulation of settlement pursuant to which the plaintiffs agreed to dismiss with prejudice the class action claims and we agreed to pay $3.5 million into a settlement fund for persons who purchased or sold our ADSs between July 9, 2004 and August 17, 2004. The court approved the settlement at a fairness hearing on April 14, 2006. In the first quarter of 2006, we paid the $3.5 million settlement payment into an escrow account. We believe that we have been in compliance with securities laws and made appropriate and necessary disclosures in our prospectus dated July 9, 2004 at the time of the initial public offering. We agreed to this settlement solely to avoid the expense, distraction and uncertainty associated with continued litigation without admitting any fault, liability or wrongdoing.

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Despite our effort to comply with the intellectual property rights of third parties, we cannot be certain that we have not, and will not, infringe on the intellectual property rights of others, which may subject us to legal proceedings and claims in the ordinary course of our business from time to time. Such legal proceedings or claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. In addition, we may also initiate litigation to protect our intellectual property rights. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — We may not be able to adequately protect our intellectual property, and we may be exposed to infringement claims by third parties.”

Regulation

The telecommunications industry, including computer information and Internet access services, is highly regulated by the PRC government. Regulations issued or implemented by the State Council, the MII, and other relevant government authorities cover virtually every aspect of telecommunications network operations, including entry into the telecommunications industry, the scope of permissible business activities, interconnection and transmission line arrangements, tariff policy and foreign investment.

The MII, under the leadership of the State Council, is responsible for, among other things:

· formulating and enforcing telecommunications industry policy, standards and regulations;

· granting licenses to provide telecommunications and Internet services;

· formulating tariff and service charge policies for telecommunications and Internet services;

· supervising the operations of telecommunications and Internet service providers; and

· maintaining fair and orderly market competition among operators.

In September 2000, the State Council promulgated the Telecommunications Regulations, or the Telecom Regulations. The Telecom Regulations categorize all telecommunications businesses in the PRC as either infrastructure telecommunications businesses or value-added telecommunications businesses, with WVAS classified as value-added telecommunications businesses. The Telecom Regulations also set forth extensive guidelines with respect to different aspects of telecommunications operations in the PRC.

In December 2001, in order to comply with the PRC’s commitments with respect to its entry into the WTO, the State Council promulgated the 2001 Telecom FIE Rules. In September 2008, the State Council promulgated the Decree of the State Council No. 534 to amend certain provisions of the 2001 Telecom FIE Rules. The Telecom FIE Rules set forth detailed requirements with respect to capitalization, investor qualifications and application procedures in connection with the establishment of a foreign-invested telecommunications enterprise. Pursuant to the Telecom FIE Rules, the ultimate capital contribution ratio of the foreign investor(s) in a foreign-funded telecommunications enterprise that provides value-added telecommunications services shall not exceed 50%. In addition, all principal investors in such an enterprise must themselves be telecommunications operators. Pursuant to the Foreign Investment Industrial Guidance Catalogue, as of October 31, 2007, the permitted foreign investment ratio of value-added telecommunications services is no more than 50%. To comply with these PRC regulations, we conduct substantially all of our operations through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang, which are wholly-owned by PRC citizens or entities and incorporated in the PRC. We do not have any equity interests in these operating companies, but instead enjoy the economic benefits of these operating companies through a series of contractual arrangements, which we and our wholly-owned subsidiaries, KongZhong Beijing and Beijing Anjian Xingye, have entered into with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang and their respective shareholders as described in “— Our Corporate Structure” and “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions.” In the opinion of King & Wood, our PRC legal counsel, the ownership structures of, and each of our contractual agreements with, these operating companies comply with all existing PRC laws and regulations, including the Telecom FIE Rules.

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In July 2006, the MII issued the Circular on Strengthening the Administration of Foreign Investment in and Operation of Value-added Telecommunications Business. In the circular, the MII reiterated the existing regulations regarding foreign investment in telecommunications business, which require foreign investors to set up foreign-invested enterprises and obtain an ICP license in order to conduct any value-added telecommunications business in the PRC. Under this circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing resources, sites or facilities to foreign investors that conduct value-added telecommunications business illegally in the PRC. Furthermore, the relevant trademarks and domain names that are used in the value-added telecommunications business shall be owned by the local ICP license holder or its shareholders. This circular further requires each ICP license holder to have the necessary facilities for its approved business operations and to maintain such facilities in the regions covered by its license. In addition, all value-added telecommunications service providers are required to maintain network and information security in accordance with the standards set forth under relevant PRC regulations. Due to the lack of further necessary interpretation from the regulator, it remains unclear what impact the above circular will have on us or other PRC Internet companies that have adopted the same or similar corporate and contractual structures as ours.

In addition to the regulations promulgated by the central PRC government, some local governments have also promulgated local rules applicable to Internet or other value-added telecommunications companies operating within their respective jurisdictions. In Beijing, the Beijing Municipal Administrative Bureau of Industry and Commerce, or the Beijing AIC, has promulgated a number of Internet-related rules. In 2000, the Beijing AIC adopted the Administrative Rules on Filing Commercial Websites, which require owners of the domain names of commercial websites located within Beijing to file their website names and commercial websites with the Beijing AIC.

Regulation of Internet Content Services

Subsequent to the State Council’s promulgation of the Telecom Regulations and the Internet Information Services Administrative Measures, or the Internet Information Measures, in September 2000, the MII and other regulatory authorities formulated and implemented a number of Internet-related regulations, including but not limited to the Internet Electronic Bulletin Board Service Administrative Measures, or the BBS Measures. The Internet Information Measures require that commercial Internet content providers must obtain an Internet information license from the appropriate telecommunications authorities in order to carry on any commercial Internet content operations within the PRC. Internet content operators must display their operating license numbers in a conspicuous location on their home page. Internet content operators are obliged to police their websites in order to remove categories of harmful content that are broadly defined. This obligation reiterates Internet content restrictions that have been promulgated by other ministries over the past few years. In addition, the Internet Information Measures also provide that Internet content operators which operate in sensitive and strategic sectors, including news, publishing, education, health care, medicine and medical devices, must obtain additional approvals from the relevant authorities in charge of those sectors as well. Of particular note to foreign investors, the Internet Information Measures stipulate that Internet content operators must obtain the consent of the MII prior to establishing an equity or cooperative joint venture with a foreign partner. The BBS Measures provide that any Internet content operator engaged in providing online BBS is subject to a special approval and filing process with the relevant governmental telecommunications authorities.

Certain local governments have promulgated local rules applicable to Internet companies operating within their respective jurisdictions. In Beijing, the Beijing AIC has promulgated a number of Internet-related rules. In 2004, the Beijing AIC adopted the Administrative Rules on Filing Commercial Websites, which require owners of the domain names of commercial websites located within Beijing to file their website names and commercial websites with the Beijing AIC.

Each of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT and BJXR has a telecommunications and information services operating license for their Internet content businesses from the Beijing Telecommunications Administration Bureau. These licenses are subject to standard annual reviews.

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Regulation of WVAS

Pursuant to the Telecom Regulations, a commercial operator of Internet content services must obtain an operating license. Other than this requirement, PRC legislation on wireless telecommunications is generally aimed at regulating equipment and infrastructure rather than applications and value-added service providers.

The Administrative Measures for Telecommunications Business Operating Licenses, or Telecom License Measures, were promulgated by the MII on December 26, 2001. The Telecom License Measures confirm that there are two types of telecommunications operations licenses for operators in the PRC (including foreign-invested telecommunications enterprises), namely, licenses for infrastructure services and licenses for value-added services, for which a distinction is made as to whether a license is granted for intra-provincial or nationwide activities. An appendix to the license details the permitted activities of the enterprise to which it was granted. An approved telecommunications service operator must conduct its business, for both infrastructure and value-added services types of businesses, according to the specifications recorded on its Telecom Business Operating License. The MII is the competent approval authority for foreign-invested telecommunications enterprises and for granting nationwide licenses to value-added telecommunications enterprises.

Other than a general classification of wireless information services as value-added telecommunications services by an appendix to the Telecom Regulations, as amended, there is currently no nationwide legislation that specifically addresses the provision of WVAS, such as SMS, MMS, WAP, Java™, IVR or CRBT services. At this time, it is uncertain when national legislation might be enacted to regulate this business.

Each of Beijing AirInbox and Beijing Boya Wuji has obtained a value-added telecommunications business operation permit in order to operate wireless value-added businesses in Beijing. Each of Beijing AirInbox, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang has obtained a nationwide value-added telecommunications license from the MII in order to provide services in multiple provinces, autonomous regions and municipalities. These licenses are subject to standard annual review.

Regulation of Internet Culture Activities

On May 10, 2003, the Ministry of Culture of the PRC promulgated the Interim Provisions on the Administration of Internet Culture, or the Internet Culture Measures, which became effective as of July 1, 2003. On July 1, 2004, the Ministry of Culture promulgated the Decision of the Ministry of Culture on Amending the Interim Provisions on the Administration of Internet Culture, or the Amendment Decision. The Internet Culture Measures and the Amendment Decision require Internet content providers that engage in Internet culture activities to obtain an Internet culture business operations license from the Ministry of Culture in accordance with the Internet Culture Measures and the Amendment Decision. The term “Internet culture activities” is defined in the Internet Culture Measures and the Amendment Decision as activities in connection with the provision of Internet cultural products and services, which mainly include: (1) producing, reproducing, importing, selling (either on a wholesale or retail basis), leasing or broadcasting Internet cultural products; (2) publishing cultural products on the Internet or distributing cultural products through the Internet to such consumer electronics as computers, fixed telephones, mobile phones, radios, television sets and video game machines for consumption by Internet users; and (3) holdingexhibitions of and competitions involving Internet cultural products.

Beijing AirInbox has obtained an Internet culture business operations license from the Ministry of Culture.

Regulation of Information Security and Censorship

PRC legislation concerning information security and censorship specifically prohibits the use of Internet infrastructure where it results in a breach of public security, the provision of socially destabilizing content or the divulgence of state secrets.

· “A breach of public security” includes a breach of national security or disclosure of state secrets; infringement on state, social or collective interests or the legal rights and interests of citizens; or illegal or criminal activities.

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· “Socially destabilizing content” includes any action that incites defiance or violation of PRC laws; incites subversion of state power and the overturning of the socialist system; fabricates or distorts the truth, spreads rumors or disrupts social order; advocates cult activities; or spreads feudal superstition, involves obscenities, pornography, gambling, violence, murder, or horrific acts or instigates criminal acts.

· “State secrets” are defined as “matters that affect the security and interest of the state.” The term covers such broad areas as national defense, diplomatic affairs, policy decisions on state affairs, national economic and social development, political parties and “other state secrets that the State Secrecy Bureau has determined should be safeguarded.”

According to the aforementioned legislation, it is mandatory for Internet companies in the PRC to complete security filing procedures with the local public security bureau and for them to update their filings regularly with the local public security bureau regarding information security and censorship systems for their websites. In this regard, the Measures for the Administration of Commercial Website Filing, promulgated in October 2004 by the Beijing AIC, state that websites must comply with the following requirements:

· they must file with the Beijing AIC and obtain electronic filing marks;

· they must place the filing marks on their websites’ homepages; and

· they must register their website names with the Beijing AIC.

We have successfully filed our websites and website names with the Beijing AIC. Accordingly, we have obtained an electronic registration mark.

Regulation of Advertisements

The principle regulations governing advertisements in the PRC are the Advertising Law (1996) and the Administrative Regulations of Advertisements (1987), pursuant to which an entity conducting advertising activities as a supplementary business must obtain a permit from the local AIC and specifically mention advertising activities as a permitted business activity in such entity’s business license. The SAIC is the government agency responsible for regulating advertising activities in the PRC. The Advertising Law (1996) and the Administrative Regulations of Advertisements (1987) do not contain, and the SAIC has not promulgated, regulations specifically aimed at mobile advertising through SMS or MMS services.

As part of our non-telecommunications operator marketing activities, we have developed integrated marketing campaigns with traditional media companies and multinational corporations through certain cross-selling effort with these companies. Beijing AirInbox has applied to the Beijing AIC to amend its business license to specify that the mobile advertising business is a permitted business activity and Beijing AIC has informed Beijing AirInbox that this is not necessary because Beijing AirInbox’s business license already permits it to undertake the mobile advertising activities that it presently conducts. We cannot assure you that the SAIC or Beijing AIC will not require Beijing AirInbox to obtain an advertising permit from the Beijing AIC and specifically mention advertising activities as a permitted business in its business license in the future. In such an event, failure to comply could result in penalties including being banned from engaging in online advertising activities, confiscation of illegal earnings and fines.

Regulation of News Dissemination

On November 17, 2000, the Internet News Measures were promulgated by the State Council News Office and the MII. These measures stipulate that general websites established by non-news organizations may publish news released by certain official news agencies if such websites satisfy the requirements set forth in Article 9 of the measures and have acquired the requisite approval, but may not publish news items produced by themselves or news sources from elsewhere. All the news that we publish and disseminate originates from official news agencies approved by the PRC government.

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On September 25, 2005, the State Council News Office and the MII jointly promulgated the Administrative Regulations for Internet News Information Services, or Internet News Information Services Regulations. According to the Internet News Information Services Regulations, the term “news information” means current affairs and political types of news information, including reports or comments on politics, economy, military affairs, diplomacy and other social and public affairs, as well as reports or comments related to unexpected social events, and the term “Internet news information services” includes publication of news information, provision of current affairs and political types of electronic messaging services and release of current affairs and political types of communication information to the public through the Internet. The Internet News Information Services Regulations specify that Internet news information service providers established by non-news organizations must apply for approval from the State Council News Office, through its provincial offices, to be allowed to engage in providing Internet news information service in relation to the news information released by official news agencies. Such Internet news information providers shall also enter into cooperation agreements with those official news agencies pursuant to which the general websites will publish news information provided by the official news agencies, and such cooperation agreements shall be submitted to the local provincial offices of the State Council News Office for record. Beijing AirInbox has submitted an application for a license pursuant to the Internet News Information Services Regulations and is awaiting a reply.

Regulation of Online Publications

The General Administration of Press and Publication, or GAPP, is the government agency responsible for regulating publishing activities in the PRC. On June 27, 2002, the MII and GAPP jointly promulgated the Tentative Internet Publishing Administrative Measures, or the Internet Publishing Measures, which took effect on August 1, 2002. The Internet Publishing Measures require Internet publishers to secure approval from GAPP. The term “Internet publishing” is defined as an act of online dissemination whereby Internet information service providers select, edit and process works created by themselves or others (including content from books, newspapers, periodicals, audio and video products, electronic publications, and other sources that have already been formally published or works that have been made public in other media) and subsequently post the same on the Internet or transmit the same to users via the Internet for browsing, using or downloading by the public.

GAPP and the MII have not specified whether the aforementioned approval in the Internet Publishing Measures is applicable to dissemination of works through SMS, MMS, WAP, Java™, IVR, CRBT or other wireless technologies. If, in the future, GAPP and the MII clarify that the Internet Publishing Measures are applicable to wireless value-added telecommunications services operators or issue new regulations or rules regulating wireless publishing, we may need to apply for a license or permit from governmental agencies in charge of publishing. We cannot assure you that such application would be approved by the relevant governmental agencies.

Regulation of Internet-Based Audio-Video Programming Services

On December 20, 2007, the SARFT and the MII jointly promulgated the Internet-based Audio-video Regulations, which became effective as of January 31, 2008. The Internet-based Audio-video Regulations are applicable to the public dissemination of Internet-based, including wireless Internet-based, audio-video programming services within the territory of the PRC. Activities covered by the Internet-based Audio-video Regulations include producing, compiling, integrating and public dissemination over the Internet of audio or video programs, as well as aiding others to upload and disseminate such programs.

Providers of Internet-based Audio-video programming services are required to obtain the Internet-based Audio-video License or complete registration procedures as required in the Internet-based Audio-video Regulations.

Pursuant to the Internet-based audio-video Regulations, such provider must:

· be a limited liability company that is either wholly-owned or majority-controlled by the state, without any violation of law or regulation within three years before the application date;

· have measures that ensure the safe dissemination of audio-video programs and protect against security breaches;

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· have audio-video programming resources that are appropriate for their businesses and in compliance with laws and regulations;

· possess technical competence, network resources and lawful funds that are appropriate for their businesses;

· retain professionals who are appropriate for their businesses, and its major investors and operators did not violate any law or regulation within three years before the application date;

· have network technical designs that comply with laws and regulations and industry standards and guidance;

· be in compliance with plans, layouts and business guidelines issued by the departments in charge of radio, film and television operations under the State Council; and

· be in compliance with laws and administrative regulations.

Pursuant to explanations of the Internet-based Audio-video Regulations provided by the responsible persons at the SARFT and the MII in a press conference, providers who engaged in Internet-based audio-video programming services before the promulgation of the Internet-based Audio-video Regulations and who have not violated any other laws or regulations shall be eligible to register their business and continue their operations. However, given the short history of the Internet-based Audio-video Regulations and the lack of interpretations and precedents, we cannot assure you that we will be qualified to apply for the Internet-based Audio-video License, or complete the required registration and we can not assure you that we will be granted the Internet-based Audio-video License.

Regulation of Foreign Exchange Control

The principal regulations governing foreign exchange in the PRC are the Foreign Exchange Control Regulations (Amended in 2008) and the Administration of Settlement, Sale and Payment of Foreign Exchange Regulations (1996), or together, the Exchange Regulations.Under the Exchange Regulations, the Renminbi is freely convertible into foreign exchange for current account items, including the distribution of dividends. Conversion of Renminbi for capital account items, such as direct investment, loans, security investment and repatriation of investment, however, is still subject to the approval of SAFE.

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

In October 2005, SAFE issued the Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or Notice 75, which took effect on November 1, 2005. Notice 75 supersedes prior SAFE regulations promulgated in January and April of 2005. In May 2007, SAFE issued the Notice of the State Administration of Foreign Exchange on Operating Procedures Concerning Notice on Issues Relating to the Administration of Foreign Exchange in Fund-raising and Return Investment Activities of Domestic Residents Conducted via Offshore Special Purpose Companies, or Notice 106. Notices 75 and 106 require PRC residents to register with the relevant local SAFE branch in connection with their establishment or control of an offshore entity established for the purpose of overseas equity financing involving onshore assets or equity interests held by them and direct investment through such an offshore entity in the PRC. The term “PRC residents,” as used in Notice 75, includes not only PRC citizens but also other persons who habitually reside in the PRC for economic benefit. Such PRC residents are required to register with the relevant SAFE branch before establishing or taking control of such an offshore entity and complete amended registrations with the relevant SAFE branch upon (i) injection of equity interests or assets of an onshore enterprise into the offshore entity, (ii) subsequent overseas equity financing by such offshore entity, or (iii) any material change in the shareholding or capital of the offshore entity, such as changes in share capital, share transfers and long-term equity or debt investments, and providing security. The PRC residents who have already incorporated or gained control of offshore entities that had completed onshore investments in the PRC before Notice 75 took effect must register with the relevant local SAFE branch on or before March 31, 2006. In addition, such PRC residents are required to repatriate into the PRC all of their dividend profits or capital gains from their shareholdings in the offshore entity within 180 days of their receipt of such profits or gains.

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The registration and amendment procedures set forth by Notices 75 and 106 are prerequisites for other approval and registration procedures necessary for capital inflow from the offshore entity, such as inbound investment or shareholders loans, or capital outflow to the offshore entity, such as the payment of profits or dividends, liquidating distributions, equity sale proceeds or the return of funds upon a capital reduction.

A number of terms and provisions in Notices 75 and 106 remain unclear. Because of uncertainty over how Notices 75 and 106 will be interpreted and implemented, we cannot predict how they will affect our business operations or future strategies. For example, our present and prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as remitting dividends and foreign currency-denominated borrowings, may be subject to compliance with requirements of Notices 75 and 106 by the PRC resident holders of our ordinary shares and ADSs. Despite our effort to fully comply with the SAFE regulations, we cannot assure you that we will obtain, or receive waivers from, any necessary approvals or not be found in violation of the SAFE regulations or any other related foreign exchange regulations. In particular, we cannot assure you that we will be able to cause all the present or prospective PRC resident holders of our ordinary shares or ADSs to comply with all SAFE regulations. A failure by the PRC resident holders of our ordinary shares or ADSs to comply with Notices 75 and 106 or our inability to secure required approvals or registrations may subject us to fines or legal sanctions, limit our subsidiaries’ ability to make distributions or pay dividends, restrict our overseas or cross-border investment activities or affect our ownership structure, any of which could affect our business and prospects.

Item 4A.  Unresolved Staff Comments

Not applicable.

Item 5.     Operating and Financial Review and Prospects

The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the related notes thereto included elsewhere in this annual report. Our audited consolidated financial statements have been prepared in accordance with U.S. GAAP. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information provided in “Item 3 — Key Information — Risk Factors.”

Overview

We are one of the leading providers of WVAS and mobile games to mobile phone users and a wireless media company providing news, content, community and mobile advertising services through our wireless Internet sites in the PRC. We provide interactive entertainment, media and community services through multiple technology platforms to mobile phone users. We offer a range of data and voice services through 2G technology platforms, including SMS, IVR and CRBT. We also provide a range of our services through 2.5G technology and operating platforms, including WAP, MMS and Java™, which offer higher quality graphics, richer content and interactivity compared to 2G wireless services. With the development of 3G services in the PRC, we plan to offer services tailored to 3G technology platforms in the future.

In addition, we maintain wireless Internet sites, including Kong.net, which we launched in 2004, Ko.cn, which we launched in 2007, and cn.NBA.com, which we launched in 2007 with the NBA and have operated for the NBA. Through our wireless Internet sites, we offer news, community, games and other interactive media and entertainment services to our customers free of charge. Our mobile advertising product offerings primarily consist of text-link, banner and button advertisements that appear on the pages of Kong.net, Ko.cn and cn.NBA.com.

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We were incorporated under the laws of the Cayman Islands on May 6, 2002. Our revenues for the year ended December 31, 2008 were $96.7 million, whereas our revenues for the year ended December 31, 2007 were $74.0 million. Our net loss for the year ended December 31, 2008 was $20.7 million, compared to a net income of $2.8million for the year ended December 31, 2007.

We have devoted significant resources to product development in order to analyze consumer demands and to expand the range of our service offerings to attract new customers and increase usage among our existing customers. Although we reduced the size of our product development team in 2006 in response to a decline in our revenues following China Mobile’s change in customer billing policies, we expanded our product development team in 2007 and continued to do so in 2008. In addition, we have endeavored to increase our product development efficiency by coordinating it more closely with sales and marketing. In this way, our product developers can align their effort more closely with market trends.

We have also committed significant resources since our founding to building our sales and marketing team, which we believe has been crucial in promoting our brand and placing our services in the hands of users by building our relationships with telecommunications operators and other distribution channels. Our sales and marketing team consisted of 155 persons in 26 provinces as of December 31, 2005, increased to 276 persons in 27 provinces as of December 31, 2006, primarily as the result of our acquisition of Sharp Edge, and consisted of 212 persons in 27 provinces as of December 31, 2007. In 2008, we focused on enhancing the efficiency and productivity of our sales and marketing team by recruiting more experienced staff, while reducing the headcount to 152 persons in 27 provinces as of December 31, 2008.

We have a limited operating history on which to base an evaluation of our business and prospects. Our prospects should be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in the early stages of their development, particularly in new and rapidly evolving markets such as the WVAS, mobile games, wireless Internet and mobile advertising markets.

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

· growth of the WVAS, mobile games, wireless Internet and mobile advertising markets in the PRC;

· change in the number, scope and terms of our cooperation arrangements with the telecommunications operators, content providers, mobile handset manufacturers, mobile handset distributors and other key players in the PRC’s mobile telecommunications industry;

· changes in government or telecommunications operator regulatory policies;

· development of competing services from China Mobile, other PRC telecommunications operators and other enterprises in the PRC WVAS, mobile games, wireless Internet market and mobile advertising markets;

· technological advancement of the mobile telecommunications market, including the adoption of 2.5G, 3G and subsequent standards of mobile handsets and networks, in the PRC;

· attractiveness and variety of our products and services;

· our product development effort to capitalize on market opportunities; and

· effectiveness of our marketing and promotional activities.

In order to reduce the risk that our results of operations and financial conditions will be overly dependent upon, and disproportionately impacted by, any particular service offering, technology platform or telecommunications operator, we have sought to broaden the range of our services, expand our distribution channels, cultivate new relationships with telecommunications operators, and develop our wireless Internet sites, including Kong.net and Ko.cn, which are less dependent on the telecommunications operators. Meanwhile, we are also building our relationships with China Unicom and China Telecom in order to broaden the base of our operations.

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In May 2008, the PRC government announced its policy initiative to restructure the PRC telecommunications industry, and a series of related transactions were completed in 2008. In addition, a 3G license was issued to each of China Mobile, China Unicom and China Telecom. While we are currently assessing the impact that this restructuring may have on us, potential changes in the telecommunications industry in the PRC could impact our relationship with telecommunications operators and thus have a material adverse effect on our business and results of operations. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business —We depend on China Mobile and other PRC telecommunications operators for the majority of our revenues, and any loss or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations and the loss of the majority of our revenues.”

Prior to 2008, we operated in two segments, WVAS and WIS. As our mobile games business grows, it has required separate management in respect of decision making, allocation of resources and assessment of performance. We anticipate that mobile games could provide significant contributions to our future revenues. As a result, we started to have three operating segments in 2008, WVAS, mobile games and WIS. The segment reports for 2006 and 2007 have been restated.

Revenues

The following table sets forth the historical consolidated revenues attributable to services derived from the WVAS, mobile games and WIS segments in terms of amount and as a percentage of our total revenues for the periods indicated:

	For the year ended December 31,
	2006					2007					2008
	Amount		Percentage of revenues			Amount		Percentage of revenues			Amount		Percentage of revenues
	(in thousands of U.S. dollars, except percentages)
WVAS	$	103,974.2		97.4	%	$	70,178.8		94.8	%	$	86,911.7		89.9	%
Mobile games		2,506.0		2.3	%		2,835.9		3.8	%		7,743.3		8.0	%
WIS		289.0		0.3	%		1,002.2		1.4	%		2,034.7		2.1	%
Total	$	106,769.2		100.0	%	$	74,016.9		100.0	%	$	96,689.7		100.0	%

The following table sets forth the historical consolidated revenues attributable to services derived from each of our 2G and 2.5G technology platforms in terms of amount and as a percentage of our total revenues for the periods indicated:

	For the year ended December 31,
	2006					2007					2008
	Amount		Percentage of revenues			Amount		Percentage of revenues			Amount		Percentage of revenues
	(in thousands of U.S. dollars, except percentages)
2G services
SMS	$	43,308.8		40.6	%	$	31,339.9		42.3	%	$	42,228.8		43.7	%
IVR		6,443.5		6.0	%		10,047.9		13.6	%		10,312.7		10.7	%
CRBT and others		4,933.0		4.6	%		4,983.8		6.7	%		8,711.7		9.0	%
Total		54,685.3		51.2	%		46,371.6		62.6	%		61,253.2		63.4	%
2.5G services
WAP	$	26,154.2		24.5	%	$	10,554.2		14.3	%	$	8,994.1		9.3	%
MMS		23,134.7		21.7	%		13,253.0		17.9	%		16,664.4		17.2	%
Total	$	49,288.9		46.2	%	$	23,807.2		32.2	%	$	25,658.5		26.5	%
Total WVAS revenues	$	103,974.2		97.4	%	$	70,178.8		94.8	%	$	86,911.7		89.9	%

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WVAS Revenues

Prior to 2004, we generated all of our revenues from fees paid by mobile phone users who use our services through China Mobile’s network. Starting from 2004, we began to cooperate with China Unicom, China Netcom and China Telecom and receive revenues from services provided on their networks. In January 2006, we acquired Sharp Edge, which derived most of its revenues from China Unicom, China Netcom and China Telecom. The revenues we derived from these three telecommunications operators amounted to 23%, 25% and 24% of our total revenues during each of the years ended December 31, 2008, 2007 and 2006, respectively, compared to 5% of our total revenues during the year ended December 31, 2005. Some of our contracts are with the telecommunications operator parent companies and are nationwide, while other contracts are with the respective operators’ provincial subsidiaries. Users in the coastal provinces of the PRC constitute the most significant portion of our customer base. As a result, we allocate additional resources to these provinces, including maintaining sales offices in most of these provinces.

We recognize revenues derived from our services before deducting the service fees and the net transmission charges that we pay to the telecommunications operators. Fees for our services are charged on either a single-transaction or monthly subscription basis and vary according to the type of services delivered. For a description of our fees and arrangements with the telecommunications operators, see “Item 4 — Information on the Company — Our Business — Strategic Relationships — Telecommunications Operators.” We recognize all revenues in the period in which the services are performed. For a description of our revenue recognition policy, see “— Critical Accounting Policies.”

As telecommunications operators do not provide us with a detailed revenue breakdown on a service-by-service basis, we depend on our internal data management system to monitor revenues derived from each of our services. We make our business decisions including research and development of new services and reallocation of resources to popular services based on our internal data, taking into account other factors including strategic considerations.

Since the second half of 2004, China Mobile and its provincial subsidiaries have been gradually implementing a series of policies designed to improve customer service and satisfaction. These policies include:

· not recognizing revenues to us and other service providers for MMS messages that cannot be delivered because of network or handset problems,

· canceling monthly subscriptions of customers who have not accessed their WVAS subscriptions for a certain period of time,

· implementing more complicated procedures for customers to confirm new subscriptions to certain WVAS, and

· removing from subscriber lists those customers who fail to pay China Mobile or the provincial subsidiaries, or who cannot be billed because they use pre-paid telecommunications service cards.

On July 6, 2006, China Mobile announced a series of additional measures with respect to the billing of customers of WVAS on its network, with focus on customers’ monthly subscriptions to WVAS. Among the measures announced by China Mobile, those which have had a significant impact on our results of operations and financial condition are summarized as follows:

· beginning July 10, 2006, for any new monthly subscriptions to WVAS, China Mobile sends customers two reminder notices prior to charging monthly subscription fees in the customers’ monthly mobile phone bills, and customers must confirm twice, once in response to each reminder, that they wish to subscribe to those services on a monthly basis. Previously, China Mobile sent one reminder notice immediately after a monthly subscription order was placed, and customers needed to confirm only once;

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· customers enjoy a free trial period of 11 to 41 days, depending on the day of the month on which they place their monthly subscriptions. Previously, customers enjoyed a free trial period of three to 11 days; and

· China Mobile cancels WAP monthly subscriptions that have not been active for more than four months.

During the fourth quarter of 2006, other PRC telecommunications operators also began implementing new policies requiring double confirmation of monthly subscriptions. In May 2007, China Mobile started to send to its customers’ handsets notices of transmission fees to be incurred by using GPRS when those customers launched their browsers, which discouraged some customers from purchasing our WAP products or visiting our wireless Internet sites Kong.net and Ko.cn.

As a result of these new measures, monthly subscriptions no longer account for the majority of our WVAS revenues.Also mainly because of these new measures, our WVAS revenues in 2007 decreased to $70.2 million from $104.0 million in 2006.  However, as a result of our ongoing effort in developing and promoting our services, our WVAS revenues in 2008 increased to $86.9 million from $70.2 million in 2007.

We cannot assure you that China Mobile or other PRC telecommunications operators will not introduce additional requirements with respect to the procedures for ordering monthly subscriptions or single-transaction downloads of our WVAS, notifications to customers, the billing of customers or other consumer-protection measures, or adopt other policies that may require significant changes in the way we promote and sell our WVAS and do business, any of which new requirements or policies could have a material adverse effect on our financial condition and results of operations. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — Significant changes in the policies or guidelines of China Mobile or other PRC telecommunications operators with respect to services provided by us may result in lower revenues or additional costs for us and materially adversely affect our business operation, financial condition or results of operations.”

Mobile Games Revenues

Mobile games revenues include revenues from mainly two types of games, the traditional downloadable games, such as those on the JavaÔ platform, and the online mobile games under the massively multiplayer online role-playing game, or MMORPG, model. As a result of our effort in developing our mobile games business, decreases in 2.5G data tariffs and the increased penetration of higher-end handsets capable of playing mobile games, our mobile games revenues increased to $7.7 million in 2008 from $2.8 million in 2007 and $2.5 million in 2006.

Revenues from downloadable mobile games accounted for 100%, 100% and 80% of our total mobile games revenues in 2006, 2007 and 2008, respectively. In 2008, revenues from online mobile games were derived mainly from one game, Tian Jie (Reincarnation) On-line. We plan to diversify the offerings of our mobile games and expect our mobile games revenues to continue to increase in 2009, both in absolute terms and as a percentage of our total revenues, as we continue to intensify our product development effort and expand our distribution channels.

WIS Revenues

WIS revenues include mainly mobile advertising revenues, which are generated from advertisements placed on Kong.net, Ko.cn and cn.NBA.com. As a result of our effort in developing more attractive features and content on our wireless Internet sites and decreases in 2.5G data tariffs, which in turn resulted in increased traffic to our wireless Internet sites, our mobile advertising revenues increased to $1.9 million in 2008 from $0.9 million in 2007 and $0.3 million in 2006. We expect our mobile advertising revenues to continue to increase in 2009 as we continue our effort in developing more attractive features and content on our wireless Internet sites. In addition, in 2009 we plan to complement our mobile advertising business by offering paid services such as mobile games and virtual items to Kong.net users.

Cost of Revenues

Our cost of revenues includes WVAS cost of revenues, mobile games cost of revenues and WIS cost of revenues.

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WVAS Cost of Revenues

Our WVAS cost of revenues includes the following:

· Service fees payable by us to the telecommunications operators. In the case of China Mobile and its subsidiaries, service fees are generally 15% of the revenues with an additional 15% when the China Mobile operator provides customer services for us or an additional 35% when the China Mobile operator provides a package of customer services, marketing and promotional services for us. In the case of China Unicom and China Telecom, service fees are in the range of 15%-52%, varying according to the service platform. We are not obligated to pay the service fees to the telecommunications operators if the customers cannot be billed or do not pay the telecommunications operators;

· Net transmission charges payable by us to the telecommunications operators, calculated as the number of messages we send to customers in any given month, minus the number of messages we receive from customers regarding our services in that month, multiplied by a per-message transmission fee. We are obligated to pay the telecommunications operators the net transmission charges even if the customers cannot be billed or do not pay the telecommunications operators;

· Payments to content providers for the use of their content, and to mobile handset manufacturers and other industry partners with whom we have cooperation arrangements, in the form of a fixed fee or a percentage of our aggregate net cash received from the telecommunications operators with respect to services provided through the cooperation arrangements; and

· Bandwidth leasing charges and depreciation and facility costs relating to equipment used to provide WVAS.

Our total WVAS cost of revenues for the years ended December 31, 2008, 2007 and 2006 was $47.0 million, $34.4 million and $45.9 million, respectively. As a percentage of our WVAS revenues, our WVAS cost of revenues for the years ended December 31, 2008, 2007 and 2006 was 48.6%, 46.5% and 43.0%, respectively. During the year ended December 31, 2008, as a percentage of our WVAS cost of revenues, service fees to the telecommunications operators represented 38.4%, payments to handset manufacturers represented 28.1%, net transmission charges to the telecommunications operators represented 4.0%, payments to content providers represented 15.5%, payment to other cooperation partners represented 6.7% and bandwidth leasing charges, depreciation and other facility costs represented 7.3%.

Our WVAS cost of revenues increased in 2008 as a result of an increase in the volume of our services and the related revenues. As our overall WVAS revenues increased, the amount that we paid to telecommunications operators in service fees and net transmission charges also increased. The service fees that we paid to other business partners, including mobile handset manufacturers and media partners, also grew as we sought to diversify our non-operator distribution channels and as revenues of WVAS delivered through non-operator partners increased as a percentage of our total WVAS revenues.

As part of our business strategy, we intend to continue to pursue more cooperation arrangements with business partners such as handset manufacturers because such arrangements make it easier for customers to access our products and services and are a cost-effective way to increase our market share as compared to traditional advertising. However, because we generally pay higher rates of service fees, in terms of percentages of revenues generated from cooperation arrangements, to such business partners than those paid to telecommunications operators, this strategy may result in a decrease in our gross profit margin.

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Mobile Games Cost of Revenues

Our mobile games cost of revenues consists mainly of service fees and net transmission chargesto the telecommunications operators, payments to content providers for the use of their content and bandwidth leasing charges.

Total mobile games cost of revenues for the years ended December 31, 2008, 2007 and 2006 was $3.5 million, $1.4 million and $1.3 million, respectively. The increase in 2008 resulted largely from an increase in our overall mobile games business and associated service fees paid to telecommunications operators. To a lesser extent, the increase was also due to an increase in the payments to content providers and licensors and higher bandwidth leasing charges associated with our online mobile games.

We intend to develop internally the majority of our mobile games because such games tend to have lower cost of revenues. However, in order to expand our mobile games business and increase our market share, we also plan to actively identify quality mobile games to be purchased or licensed from third parties.

WIS Cost of Revenues

Our WIS cost of revenues includes mainly depreciation, facility maintenance and commissions paid to the advertising sales team for generating mobile advertising revenues.

Total WIS cost of revenues for the years ended December 31, 2008, 2007 and 2006 was $1.1 million, $0.7 million and $0.5 million, respectively.

The increases from 2006 to 2007 and from 2007 to 2008 mainly resulted from increases in our WIS business and related revenues. We expect our WIS cost of revenues to increase in 2009 as our WIS business continues to grow.

Operating Expenses

Our operating expenses include product development, sales and marketing and general and administrative expenses.

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

	For the year ended December 31,
	2006					2007					2008
	Amount		Percentage of revenues			Amount		Percentage of revenues			Amount		Percentage of revenues
	(in thousands of U.S. dollars, except percentages)
Product development	$	12,026.2		11.3	%	$	12,535.2		16.9	%	$	15,180.8		15.7%
Sales and marketing		16,755.2		15.7	%		18,094.2		24.4	%		21,338.9		22.1%
General and administrative		9,105.2		8.5	%		7,221.0		9.8	%		11,640.0		12.0%
Provision for impairment of goodwill and intangibles		—		—			—		—			21,623.3		22.4%
Total	$	37,886.6		35.5	%	$	37,850.4		51.1	%	$	69,783.0		72.2%

Product Development Expenses

Our product development expenses consist primarily of compensation and benefits for our product development team. Our product development expenses for the years ended December 31, 2008, 2007 and 2006 were $15.2 million, $12.5 million and $12.0 million, respectively. We expect our product development expenses to increase in 2009 because we plan to continue increasing our effort to develop our wireless Internet sites and mobile games.

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Sales and Marketing Expenses

Our sales and marketing expenses consist primarily of expenses associated with sponsoring promotional events and compensation and benefits for our sales, marketing and customer service teams. Our sales and marketing expenses for the years ended December 31, 2008, 2007 and 2006 were $21.3 million, $18.1 million and $16.8 million, respectively. We expect our sales and marketing expenses to continue to increase in 2009 because we plan to continue increasing our effort to promote our wireless Internet sites and mobile games.

General and Administrative Expense

Our general and administrative expenses consist primarily of business taxes, compensation and benefits for general management, finance and administrative personnel, professional fees and other office expenses. Our general and administrative expenses for the years ended December 31, 2008, 2007 and 2006 were $11.6 million, $7.2 million and $9.1 million, respectively. We expect our general and administrative expenses to increase if our business grows in future periods because higher revenues will incur higher business taxes and we may incur more expenses relating to employee compensation.

Provision for Impairment of Goodwill and Intangible

As of December 31, 2008, the fair value of the goodwill in our WVAS segment had decreased significantly, mainly due to the rapid deterioration of the global capital markets and, as a result, the significant drop in our market capitalization. A goodwill test in the third quarter of 2008 found that the goodwill in the WVAS segment was impaired, thus necessitating a charge of $21,623,279. We re-evaluated the goodwill impairment during our annual goodwill impairment test in December 2008 and determined that there was no additional goodwill impairment as of December 31, 2008.

Critical Accounting Policies

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

Revenue Recognition

Our revenues are primarily derived from providing wireless interactive entertainment, media and community value-added services to customers of the PRC telecommunications operators. The fees for such services are determined by us in consultation with the telecommunications operators, are charged on a single-transaction basis or on a monthly subscription basis and vary according to the type of services delivered.

We deliver WVAS to users through the telecommunications operators’ networks and we rely upon the telecommunications operators to provide us with billing and collection services. We record revenues based on monthly statements from the telecommunications operators confirming the value of our services that they billed to users in the month. China Mobile and its provincial subsidiaries usually send such statements within 30 days after the end of each month.

The billing and collection cycles of China Unicom, China Telecom, China Netcom and their respective subsidiaries are generally somewhat longer than those of China Mobile. During 2006, we generally received statements from China Unicom within 40 days after the end of each month, and from China Telecom and China Netcom within 70 days after the end of each month. Beginning with the statement for April 2007, it has taken China Unicom about 105 days as compared to 40 days it had previously taken to send us a statement after the end of each month. We cannot assure you that the length of the billing cycle will not increase further in the future.

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It is our practice to release our unaudited quarterly financial statements to the market. Due to our past experience with the timing of receipt of the monthly statements from the operators, we expect that we may need to rely on our own internal estimates for the portion of our reported revenues and cost of revenues for which we will not have received monthly statements. In such an instance, our internal estimates would be based on our own internal data of expected revenues and related fees from services provided. As a result of reliance on our internal estimates, we may overstate or understate our revenues and cost of revenues for the relevant reporting period. Our internal estimates of revenues and cost of revenues for any period are subsequently adjusted in our financial reports when we actually receive the monthly statements for such period.

In 2007 and 2008, estimated revenues generally accounted for less than 5% of our reported quarterly revenues and less than 1% of our reported annual revenues. Our estimates are based on:

· our internal data management system;

· our past experience; and

· our verbal communications with the telecommunications operators.

We internally tabulate the value of a WVAS that we have provided based in part on delivery confirmations sent to us by the networks of the PRC telecommunications operators with respect to each delivery of our services to a user within 72 hours of delivery. We record these confirmations in our internal data management system. There has historically been a discrepancy between the value that we estimate and the value that we are entitled to receive based on the monthly statements provided by the telecommunications operators. This discrepancy varies across different technology platforms and arises for various reasons, including the following:

· Late notification of delinquent customers. The telecommunications operators may from time to time classify certain customers as delinquent customers for non-payment of services. The telecommunications operators request all service providers to cease delivering services to customers once they are classified as delinquent. However, time lags often exist between when a customer is classified as delinquent and when we receive such information from the telecommunications operators. As a result, we occasionally provide services to these delinquent customers for which the telecommunications operators will not make payments to us.

· Customer database out of synchronization. Customers may cancel their subscriptions through the telecommunications operators. Although we synchronize our and the telecommunications operators’ databases of customer information on an ongoing basis, our databases are not always completely in synchronization with those of the telecommunications operators. As a result, until our databases are synchronized with those of the telecommunications operators, we could provide services to customers who have cancelled their subscriptions, for which we are not entitled to receive revenues.

· Duplicate billing. China Mobile typically generates system identification numbers to identify customers who use our WAP services, rather than directing the real phone numbers to us. Occasionally the platform operators inadvertently generate multiple identification numbers for one mobile number. In such case, the multiple bills for the multiple identification numbers have to be eliminated from the monthly statement the telecommunications operators provide to us.

· Delivery failure. When telecommunications operators send us delivery confirmations within 72 hours of our delivery of value-added services, the confirmations will indicate three possible outcomes: success, failure, or unknown. Our internal system recognizes successful confirmations as services provided. As a result, there exist discrepancies between our records and the monthly statement provided by the telecommunications operators for confirmations marked as “unknown” where our services were successfully delivered or where the confirmation was incorrect.

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· Unbillable users. In 2005, certain provincial subsidiaries of China Mobile began to offer 2.5G services to customers who receive mobile telephone services on a pre-paid basis. Such customers may subscribe to our services or download our products, and our internal databases do not distinguish between these and other customers. However, the telecommunications operators do not yet have any means to bill these pre-paying customers for the WVAS that they receive. As a result, the telecommunications operators’ monthly statements do not include fees for such users.

In addition, the telecommunications operators remit to us amounts net of an allowance they have made for the doubtful debts in respect of the amounts due to us from our customers. They also net their fees for the services they provide to us, including billing and collection services, and net transmission charges from their remittances to us. Certain telecommunications operators do not provide an itemized analysis of their remittances and we are therefore unable to determine what allowance, if any, for doubtful or bad debts should be recorded for our services delivered through such telecommunications operators. Accordingly, recognition of revenues is based upon the amounts reported on the telecommunications operators’ monthly statements to us, which are net of doubtful debts and represent the amounts we reasonably believe will be collected.

Because of the factors set out above, we would multiply our internal tabulation of expected revenues from telecommunications operators from whom we have not received monthly statements by a realization factor applicable to the relevant telecommunications operator and service and determined according to the average discrepancy over the previous 12 months between our internal tabulations of expected revenues and the actual revenues based on the monthly statements. In addition, our employees verbally communicate with the telecommunications operators’ billing personnel regarding the estimated revenues for the period in question. We may or may not get additional comfort from such verbal communications. We endeavored to reduce the discrepancy between our revenue estimates and the revenues calculated by telecommunications operators and their subsidiaries. We cannot assure you that our effort will be successful.

In 2008, the average time from our receipt of statements from the telecommunication operators until they paid us the amounts due under such statements was approximately 62 days. We cannot assure you that our period to collect accounts receivables will not increase in the future.

We evaluate our cooperation arrangements with the telecommunications operators to determine whether to recognize our revenues on a gross basis or net of the service fees and net transmission charges paid to the telecommunications operators. Our determination is based upon an assessment of whether we act as a principal or agent when providing our services. We have concluded that we act as principal in the arrangement. Factors that support our conclusion mainly include:

· we are the primary obligor in the arrangement;

· we are able to establish prices within price caps prescribed by the telecommunications operators to reflect or react to changes in the market;

· we determine the service specifications of the services we will be rendering;

· we are able to control the selection of our content suppliers; and

· the telecommunications operators usually will not pay us if users cannot be billed or if users do not pay the telecommunications operators for services delivered and, as a result, we bear the delivery and billing risks for the revenues generated with respect to our services.

Based on these factors, we believe that recognizing revenues on a gross basis is appropriate. However, as noted above, our reported revenues are net of bad debt charges that have been deducted by the telecommunications operators.

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We generate revenues from offering two kinds of mobile games, downloadable mobile games and online mobile games. Downloadable games are delivered and the related revenues are recognized in the same manner as our WVAS. Our online mobile games are generally free of charge for mobile phone users. We recognize revenues when we deliver the merchandise or premium features embedded in the games that users purchase to enhance their gaming experience.

WIS is delivered through our wireless Internet portals such as Kong.net. As long as the collection of fees appears probable, we recognize advertising revenues associated with those sites on a pro rata basis over the period during which advertisements are displayed on the sites.

Stock-based Compensation Expense

Our stock-based employee compensation plans are described in more detail under “Item 6 — Directors, Senior Management and Employees — Stock Options.” We grant stock options and restricted share units to our employees and we record a compensation charge on a pro rata basis over the vesting periods of the related options and restricted share units, which are generally four years.

Starting from January 1, 2006, we adopted SFAS 123(R) to account for share-based compensation. We have used the modified prospective transition method and therefore have not restated the results from prior periods.

The historical pro forma net income (loss) and pro forma net income (loss) per share that we used in calculating the fair value of the options granted to employees prior to January 1, 2006 may not be representative of the pro forma effects in future years of net income (loss) and earnings per share for the following reasons:

· The number of future shares to be issued under these plans is not known; and

· The assumptions used to determine the fair value can vary significantly.

Goodwill

In December 2006, 2007 and 2008, we performed annual impairment assessments of the carrying value of the goodwill recorded in connection with various acquisitions as required under Statement of Financial Accounting Standards No. 142, or SFAS 142, “Goodwill and Other Intangible Assets.” In accordance with SFAS 142, we compared the carrying value of each of our reporting units that existed at those times to their estimated fair value. In December 2006, December 2007 and December 2008, we had one, twoandthree reporting units, respectively, as determined and identified in accordance with SFAS 142. We estimated the fair values of our reporting units primarily using the income approach valuation methodology that includes the discounted cash flow method, taking into consideration the market approach and certain market multiples as a validation of the values derived using the discounted cash flow methodology. The discounted cash flows for each reporting unit were based on discrete four year financial forecasts developed by our management for planning purposes. Cash flows beyond the four-year forecast were estimated using a terminal value calculation, which incorporated historical and forecasted financial trends for each identified reporting unit and considered long-term earnings growth rates for publicly-traded peer companies. Specifically, the income approach valuations included reporting unit cash flow discount rate of 24.5% and terminal value growth rate of 3%. Publicly-available information regarding the market capitalization of our company was also considered in assessing the reasonableness of the cumulative fair values of our reporting units estimated using the discounted cash flow methodology.

In estimating the fair value of a reporting unit, based on a present value of estimated future cash flow method, we have taken into consideration the overall and industry-specific economic conditions and trends, market risk and historical financial information of our company. Major management assumptions adopted in a goodwill impairment test in 2008 were as follows:

· there will be no major changes in the existing political, legal, fiscal and economic conditions in the PRC;

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· except for the new enterprise income tax law that took effect on January 1, 2008, there will be no major changes in the current tax law in the PRC and all applicable laws and regulations will be complied with;

· exchange rates and interest rates will not differ materially from those presently prevailing;

· each reporting unit will retain and have competent management, key personnel, and technical staff to support its ongoing operations;

· the annual revenue growth rate will be at the range of 9% to 15% and the cost and expense structure will remain consistent with historical trends in the coming four years, with reference to the overall and industry specific economic conditions and trends, the historical financial performance and the up-to-date business performance;

· the availability of finance will not be a constraint on the forecasted growth of operations; and

· industry trends and market conditions for related industries will not deviate significantly from economic forecasts.

We perform goodwill assessment for each reporting unit level at least once a year. We have two reporting units, the WVAS segment and mobile games segment, that have a significant amount of goodwill. In 2008, the fair value of the goodwill in our WVAS segment had decreased significantly, mainly due to the rapid deterioration of the global capital markets and, as a consequence, the significant drop in our market capitalization. A goodwill test in the third quarter of 2008 found that the goodwill in the WVAS segment was impaired, thus necessitating a charge of $21,623,279.We re-evaluated the goodwill impairment during our annual goodwill impairment test in December 2008 and determined that there was no additional goodwill impairment as of December 31, 2008.

Going forward, we will continue to test goodwill for impairment on an annual basis or more frequently if an event occurs or circumstances change that could more likely than not reduce the fair value of the goodwill below its carrying amount.

Income taxes

Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are classified as current or non-current depending on their individual characteristics. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

In June 2006, the Financial Accounting Standards Board, or FASB, issued Interpretation No. 48, or FIN 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for fiscal years beginning after December 15, 2006, with early adoption permitted. We have adopted FIN 48 since January 1, 2007. The adoption of FIN 48 did not result in a cumulative adjustment on January 1, 2007 and had no significant impact on our accounting for income taxes for the years ended December 31, 2007 and 2008. We did not incur any interest or penalties related to potential underpaid income tax expenses, and also do not expect to have a significant increase or decrease on the unrecognized tax benefits within 12 months from December 31, 2008.

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Recently Issued Accounting Standards

In September 2006, FASB issued Statement of Financial Accounting Standards No. 157, or SFAS 157, “Fair Value Measurements.”  Effective January 1, 2008, our company adopted the measurement and disclosure requirements contained in SFAS 157 other than those requirements related to nonfinancial assets and liabilities in accordance with guidance from FASB Staff Position 157-2, “Effective Date of FASB Statement No. 157,” which delayed the effective date of SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until the beginning of fiscal year 2009. Our company does not believe that the adoption of SFAS 157 for nonfinancial assets and liabilities would have a significant effect on our consolidated financial position or results of operations.

In December 2007, the FASB issued Statement of Financial Accounting Standard No. 141R, or SFAS 141R, “Business Combination,” to improve reporting and creating greater consistency in the accounting and financial reporting of business combinations. The standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. Our company does not believe that the adoption of SFAS 141R would have a significant effect on our consolidated financial position or results of operations.

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

In April 2008, the FASB issued FASB Staff Position FAS 142-3, or FSP 142-3, “Determination of the Useful Life of Intangible Assets.” FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” FSP 142-3 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The guidance for determining the useful life of a recognized intangible asset in the FSP 142-3 shall be applied prospectively to intangible assets acquired after the effective date. Our company does not believe that the adoption of FSP 142-3 would have a significant effect on our consolidated financial position or results of operations.

At the November 24, 2008 meeting, the FASB ratified the consensus reached by its Emerging Issues Task Force in Issue No. 08-6, or EITF 08-6, “Equity Method Investment Accounting Considerations.” Because of the significant changes to the guidance on subsidiary acquisitions and subsidiary equity transactions and the increased use of fair value measurements as a result of SFAS 141R and SFAS 160, questions have arisen regarding the application of that accounting guidance to equity method investments. EITF 08-6 provides guidance for entities that acquire or hold investments accounted for under the equity method. This issue is effective for transactions occurring in fiscal years and interim periods beginning on or after December 15, 2008. Early adoption is not permitted. Our company does not believe that the adoption of EITF 08-6 would have a significant effect on our consolidated financial position or results of operations.

In November 2008, the FASB ratified Emerging Issue Task Force Issue No. 08-7, or EITF 08-7, “Accounting for Defensive Intangible Assets.” EITF 08-7 applies to defensive intangible assets, which are acquired intangible assets that the acquirer does not intend to actively use but intends to hold to prevent its competitors from obtaining access to them. As these assets are separately identifiable, EITF 08-7 requires an acquiring entity to account for defensive intangible assets as a separate unit of accounting which should be amortized to expense over the period the asset diminished in value. Defensive intangible assets must be recognized at fair value in accordance with SFAS 141R and SFAS 157. EITF 08-7 is effective for financial statements issued for fiscal years beginning after December 15, 2008. Our company does not believe that the adoption of EITF 08-7 would have a significant effect on our consolidated financial position or results of operations.

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In April 2009, the FASB issued FASB Staff Position FAS 115-2/FAS 124-2, or FSP 115-2/124-2, “Recognition and Presentation of Other-Than-Temporary Impairments.” FSP 115-2/124-2 amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP 115-2/124-2 does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. FSP 115-2/124-2 will be effective on April 1, 2009. It does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP 115-2/124-2 requires comparative disclosures only for periods ending after initial adoption. Our company does not believe that the adoption of FSP 115-2/124-2 would have a significant effect on our consolidated financial position or results of operations.

In April 2009, the FASB issued FASB Staff Position FAS 157-4, or FSP 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157, when the volume and level of activity for the asset or liability have significantly decreased. It also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP 157-4 emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. FSP 157-4 will be effective on April 1, 2009 and will be applied prospectively. It does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP 157-4 requires comparative disclosures only for periods ending after initial adoption. Our company does not believe that the adoption of FSP 157-4 would have a significant effect on our consolidated financial position or results of operations.

Results of Operations

Year ended December 31, 2008 compared to year ended December 31, 2007

The following table sets forth, for the periods presented, certain data from our consolidated results of operations. This information should be read in conjunction with the consolidated financial statements and related notes contained elsewhere in this annual report.

	For the year ended December 31,
	2006						2007						2008
	Amount			Percentage of revenues			Amount			Percentage of revenues			Amount			Percentage of revenues
	(in thousands of U.S. dollars, except percentages)
Revenues
2G(1) and others	$	54,685.3			51.2	%	$	46,371.6			62.6	%	$	61,253.2			63.4%
2.5G(2)		49,288.9			46.2	%		23,807.2			32.2	%		25,658.5			26.5%
WVAS		103,974.2			97.4	%		70,178.8			94.8	%		86,911.7			89.9%
Mobile games(3)		2,506.0		2.3		%		2,835.9			3.8	%		7,743.3			8.0%
WIS		289.0		0.3		%		1,002.2			1.4	%		2,034.7			2.1%
Total revenues		106,769.2			100.0	%		74,016.9			100.0	%		96,689.7			100.0%
Cost of revenues
WVAS		(45,863.4	)		(43.0	%)		(34,440.3	)		(46.5	%)		(46,985.5	)		(48.6%)
Mobile games		(1,266.0	)		(1.2	%)		(1,375.9	)		(1.9	%)		(3,479.8	)		(3.6%)
WIS		(536.0	)		(0.5	%)		(679.4	)		(0.9	%)		(1,147.3	)		(1.2%)
Total cost of revenues		(47,665.4	)		(44.6	%)		(36,495.6	)		(49.3	%)		(51,612.5	)		(53.4%)
Gross profit (loss)
WVAS		58,110.8			54.4	%		35,738.5			48.3	%		39,926.3			41.3%
Mobile games		1,240.0			1.2	%		1,460.0			2.0	%		4,263.5			4.4%
WIS		(247.0	)		(0.2	%)		322.9			0.4	%		887.4			0.9%
Total Gross profit		59,103.8			55.4	%		37,521.4			50.7	%		45,077.2			46.6%
Operating expenses:
Product development		(12,026.2	)		(11.3	%)		(12,535.2	)		(16.9	%)		(15,180.8	)		(15.7%)
Sales and marketing		(16,755.2	)		(15.7	%)		(18,094.2	)		(24.4	%)		(21,338.9	)		(22.1%)
General and administrative		(9,105.2	)		(8.5	%)		(7,221.0	)		(9.8	%)		(11,640.0	)		(12.0%)

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	For the year ended December 31,
	2006						2007						2008
	Amount			Percentage of revenues			Amount			Percentage of revenues			Amount			Percentage of revenues
	(in thousands of U.S. dollars, except percentages)
Goodwill impairment loss		—			—			—			—			(21,623.3	)		(22.4%)
Total operating expenses		(37,886.6	)		(35.5	%)		(37,850.4	)		(51.1	%)		(69,783.0	)	(72.2%)
Income (loss) from operations		21,217.2			19.9	%		(329.1	)		(0.4	)%		(24,705.8	)	(25.6%)
Other expense, net		(49.1	)		(0.0	%)		—			—			—			—
Interest income, net		3,866.9			3.6	%		3,810.0			5.1	%		4,897.4		5.1％
Gain on sales of investment		1,240.8			1.2	%		207.6			0.3	%		-			—
Income before tax expense		26,275.8			24.6	%		3,688.5			5.0	%		(19,808.4	)	(20.5%)
Income tax		1,584.2			1.5	%		856.8			1.2	%		851.9		0.9%
Net (loss) income	$	24,691.6			23.1	%	$	2,831.7			3.8	%	$	(20,660.3	)	(21.4%)

(1) Includes SMS, IVR and CRBT. We began to provide SMS, IVR and CRBT services on a paid basis in July 2002, December 2003 and October 2003, respectively.

(2) Includes WAP and MMS. We began to provide WAP and MMS services on a paid basis in September 2002 and April 2003, respectively.

(3) Includes downloadable mobile games and online mobile games. We began to provide downloadable mobile games and online mobile games on a paid basis in May 2002 and August 2007, respectively.

Year ended December 31, 2008 compared to year ended December 31, 2007

Revenues. Our WVAS revenues increased to $96.7 million in 2008 from $74.0 million in 2007. The increase in our WVAS revenues was primarily due to our effort in developing and promoting our 2G services. Our 2.5G revenues increased by 7.8% to $25.7 million in 2008 from $23.8 million in 2007 and our 2G revenues increased by 32.1% to $61.3 million in 2008 from $46.4 million in 2007.

Our mobile games revenues increased to $7.7 million in 2008 from $2.8 million in 2007 primarily due to our effort in developing our mobile games business in 2008.

Our WIS revenues increased to $2.0 million in 2008 from $1.0 million in 2007 primarily due to our continuing effort in developing our wireless Internet sites.

Cost of Revenues. Our WVAS cost of revenues increased to $47.0 million in 2008 from $34.4 million in 2007. The increase was mainly due to an increase in the amount that we paid to the PRC telecommunications operators in service fees and transmission charges as our WVAS revenues increased.

Our mobile games cost of revenues increased to $3.5 million in 2008 from $1.4 million in 2007 mainly due to an increase in the volume of our mobile games business.

Our WIS cost of revenues increased to $1.1 million in 2008 from $0.7 million in 2007 mainly due to an increase in the volume of our WIS business.

Gross Profit. Our WVAS gross profit in 2008 increased from 2007 primarily due to the increase in the volume of our services and related revenues. We achieved a gross profit of $39.9 million in 2008, compared to $35.7 million in 2007. Our WVAS gross profit as a percentage of total revenues decreased to 41.3% in 2008 from 48.3% in 2007 in part due to an increase in the percentage of revenues derived from 2G services, which have a lower gross profit margin. Our WVAS gross profit margin decreased also because we paid a higher percentage of our revenues to the mobile handset manufacturers, content providers and other business partners in 2008 as compared to 2007.

Our mobile games gross profit increased to $4.3 million in 2008 from $1.5 million in 2007 primarily due to an increase in the volume of our mobile games business and related revenues.

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Our WIS gross profit increased to $0.9 million in 2008 from $0.3 million in 2007 primarily due to an increase in the volume of our WIS business and related revenues.

Operating Expenses. Our operating expenses increased to $69.8 million in 2008, which includes the $21.6 million provision for the impairment of goodwill, from $37.9 million in 2007.

Our product development expenses increased to $15.2 million in 2008 from $12.5 million in 2007 primarily due to increased employee compensation, office rental and expenses connected to the development of our wireless Internet sites and our mobile games business. Product development expenses as a percentage of our total revenues decreased to 15.7% in 2008 from 16.9% in 2007. The number of our product development employees increased to 477 as of December 31, 2008 from 444 as of December 31, 2007.

Our sales and marketing expenses increased to $21.3 million in 2008 from $18.1 million in 2007 as a result of increased sales and marketing expenditures in promoting the KongZhong brand and marketing our wireless Internet sites and increased expenses in connection with the promotion of our WAP services. As a result of our effort to improve efficiency by recruiting more experienced staff, our sales and marketing team decreased to 152 employees as of December 31, 2008 from 212 employees as of December 31, 2007, and our customer service team decreased to 65 employees as of December 31, 2008 from 69 employees as of December 31, 2007.

Our general and administrative expenses increased by $4.4 million to $11.6 million in 2008 from $7.2 million in 2007. The increase was primarily due to an increase in business taxes as a result of our increased revenues and our foreign exchange loss resulting from the depreciation of the value of euro, in which a portion of our cash and cash equivalents were denominated, against U.S. dollar, our reporting currency. Our general and administrative staff consisted of 52 employees as of December 31, 2008, compared to 53 employees as of December 31, 2007.

Our provision for goodwill impairment was $21.6 million in 2008. The carrying amount of our goodwill as of December 31, 2008 was $15.7 million.

Income Tax. Income tax decreased in 2008 mainly due to the decrease in our pre-tax income and the decrease in the standard income tax rate.

Year ended December 31, 2007 compared to year ended December 31, 2006

Revenues. Our WVAS revenues decreased to $70.2 million in 2007 from $104.0 million in 2006. The decrease in our WVAS revenues was largely due to the adverse impact of the new policies adopted by the PRC telecommunications operators since the second half of 2006. As a result of these new policies, our quarterly WVAS revenues declined since the third quarter of 2006 until the third quarter of 2007. Starting from the third quarter of 2007, our quarterly WVAS revenues have increased. This increase is primarily due to our effort in developing and promoting our 2G services. Our 2.5G revenues decreased by 51.7% to $23.8 million in 2007 from $49.3 million in 2006, and our 2G revenues decreased by 15.2% to $46.4 million in 2007 from $54.7 million in 2006.

Our mobile games revenues increased to $2.8 million in 2007 from $2.5 million in 2006 primarily due to our effort in developing our mobile games business in 2007.

Our WIS revenues increased to $1.0 million in 2007 from $0.3 million in 2006 primarily due to our effort in developing our wireless Internet sites in 2007.

Cost of Revenues. Our WVAS cost of revenues decreased to $34.4 million in 2007 from $45.9 million in 2006. As our WVAS revenues decreased, the amount that we paid to the PRC telecommunications operators in service fees and net transmission charges also decreased. The service fees that we paid to other business partners, including mobile handset manufacturers, also decreased as a result of the decrease in our revenues, but the percentage of our net revenues we paid to such business partners as service fees increased.

Our mobile games cost of revenues increased to $1.4 million in 2007 from $1.3 million in 2006 mainly due to an increase in the volume of our mobile games business.

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Our WIS cost of revenues increased to $0.7 million in 2007 from $0.5 million in 2006 mainly due to an increase in the volume of our WIS business.

Gross Profit. Our WVAS gross profit in 2007 decreased from 2006 primarily due to the decrease in the volume of our services and related revenues. We achieved a gross profit of $35.7 million in 2007, compared to $58.1 million in 2006. Our WVAS gross profit as a percentage of total revenues decreased to 48.3% in 2007 from 54.4% in 2006 in part due to the higher percentage of revenues derived from 2G services, which have a lower gross profit margin. Our WVAS gross profit margin decreased also because we paid a higher percentage of our net revenues to the mobile handset manufacturers, content providers and other business partners in 2007 as compared to 2006.

Our mobile games gross profit increased to $1.5 million in 2007 from $1.2 million in 2006 primarily due to an increase in the volume of our mobile games business and related revenues.

Our WIS gross profit increased to $0.3 million in 2007 from a gross loss of $0.2 million in 2006 primarily due to an increase in the volume of our WIS business and related revenues.

Operating Expenses. Our operating expenses remained at $37.9 million in each of 2006 and 2007.

Our product development expenses increased to $12.5 million in 2007 from $12.0 million in 2006 primarily due to an increase in the size of our WIS product development team. Product development expenses as a percentage of our total revenues also increased to 16.9% in 2007 from 11.3% in 2006. The number of our product development employees increased to 444 as of December 31, 2007 from 371 as of December 31, 2006.

Our sales and marketing expenses increased to $18.1 million in 2007 from $16.8 million in 2006 mainly due to our effort to promote the KongZhong brand and our wireless Internet sites. As a result of our effort to improve efficiency by recruiting more experienced staff, our sales and marketing team decreased to 212 employees as of December 31, 2007 from 276 employees as of December 31, 2006, and our customer service team decreased to 69 employees as of December 31, 2007 from 77 employees as of December 31, 2006.

Our general and administrative expenses decreased to $7.2 million in 2007 from $9.1 million in 2006 mainly because of our cost-controlling effort, a decrease in business tax as a result of a decrease in our revenues and our foreign exchange gain resulting from the appreciation of the value of euro, in which a portion of our cash and cash equivalents were denominated, against U.S. dollar, our reporting currency. Our general and administrative staff consisted of 53 employees as of December 31, 2007, compared to 49 employees as of December 31, 2006.

Gain on Sales of Investment. In December 2004, we signed an agreement with eFriendsNet Entertainment Corp., or EFN, a leading social networking company in the PRC, to purchase 10% of the total equity interest in EFN for $0.5 million. We completed the investment in March 2005. In January 2006, we sold all our shares in EFN for an immediate cash consideration of $1.7 million. We received an additional payment of $0.2 million in February 2007 pursuant to a payment mechanism in the sale agreement that provides for an additional payment if certain financial performance milestones are met by EFN after the completion of the sale of our equity interest.

Income Tax. Income tax decreased in 2007 mainly due to the decrease in the volume of our services and related revenues and the decrease in our operating profit.

Liquidity and Capital Resources

Cash Flows and Working Capital

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

	For the year ended December 31,
	2006			2007			2008
	(in thousands of U.S. dollars)
Net cash provided by operating activities	$	28,010.2		$	3,315.3		$	12,521.5
Net cash used in investing activities		(17,916.5	)		(18,720.1	)		(4,811.9	)
Net cash provided by (used in) financing activities		2,190.3			152.2			(759.3	)
Effect of exchange rate changes		1,976.5			6,193.3			6,761.3
Net (decrease) increase in cash and cash equivalents		14,260.5			(9,059.3	)		13,711.6
Cash and cash equivalents, beginning of year		117,141.5			131,402.0			122,342.7
Cash and cash equivalents, end of year	$	131,402.0		$	122,342.7		$	136,054.3

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Prior to our initial public offering in July 2004, our primary sources of liquidity were capital contributions from our founders, private placements of preferred shares to investors and cash generated from operating activities. Since the completion of our initial public offering, our primary sources of liquidity have been cash flow from operating activities and the proceeds of our initial public offering. We used a portion of the proceeds of our public offering to expand our business through acquisitions in 2006, 2008 and 2009, and we anticipate that additional proceeds may be used to fund more acquisition activities. As of December 31, 2007 and December 31, 2008, our cash and cash equivalents were $122.3 million and $136.05 million, respectively.

We do not bill or collect payment from users of our services directly, but instead depend on the billing systems and records of China Mobile and other PRC telecommunications operators to record the volume of our services provided, charge our customers, collect payments and remit to us our revenues, minus transmission fees and service fees. If China Mobile or any other PRC telecommunications operator ceases to continue to cooperate with us, we will explore further cooperation with other telecommunications service providers and explore alternative billing systems to collect bills from customers.

Net cash provided by operating activities was $12.5 million in 2008 compared to $3.3 of net cash provided by operating activities in 2007. The increase resulted mainly from the increase in the volume of our services and related revenues, income from operations and improved net working capital management in 2008.

Net cash used in investing activities decreased to $4.8 million in 2008 from $18.7 million in 2007. The amounts in both years represent mainly the payments of cash consideration in 2007 for our acquisition of Sharp Edge and in 2008 for our investment in HiU! Media and acquisition of XCHY.

Net cash used for financing activities in 2008 was $0.8million, which represents mainly payments for our share repurchase plan announced on October 27, 2008.

In March 2009, we issued to NGP a convertible senior note due in 2014 with an aggregate principal amount of $6,775,400. We are required to pay the principal amount of the convertible senior note then outstanding plus any accrued but unpaid interest on March 18, 2014. Our convertible senior note would initially pay an annual interest at a rate of 8%, subject to reduction to 6% based on the financial performance of our company. The accrued interest is payable on each of January 15 and July 15 of each year until the principal amount is fully repaid. NGP has the right to declare the principal amount then outstanding plus any accrued but unpaid interest due before its due date upon the occurrence of certain events. Such events include a material default on any of our material debt instruments; the decrease of the ratio between our total current assets less our total current liabilities on one hand and the sum of the then outstanding principal amount and accrued but unpaid interest on the other hand to less than 2.5; default in the payment of any interest under the convertible senior note when due and payable and such default continues for 30 days; commencement of any action or proceeding to make any assignment for the benefit of creditors, or any bankruptcy, liquidation, dissolution, termination of existence or other similar action, voluntarily or involuntarily, of our company, KongZhong Beijing or KongZhong China; or involvement of our company or any of our Directors or executive officers in litigation or regulatory or governmental investigations, actions or proceedings, that NGP reasonably expects, after consultation with our company, will have a material adverse effect on the Nokia brand. In addition, our material breach of any of the covenants in connection with the convertible senior note and warrant could also entitle NGP to declare the principal amount of the convertible senior note then outstanding plus any accrued but unpaid interest due and payable. See “Item 3 — Key Information — Risk Factors — Risks Relating to Our Business — We are subject to certain covenants in connection with the issuance of the convertible senior note and the warrant, and such covenants could have a material adverse effect on our business, financial condition and results of operations.”

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We believe that our current cash and cash equivalents and cash flow from operations will be sufficient to meet our anticipated cash needs, including for working capital purposes, capital expenditures and various contractual obligations, for at least the next 12 months. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If these sources are insufficient to satisfy our cash requirements, we may seek to sell additional debt securities or equity or to obtain a credit facility. The sale of additional convertible debt securities or equity securities could result in additional dilution to holders of our ordinary shares and ADSs. The incurrence of indebtedness would result in incurring debt service obligations, which could result in operating and financial covenants that would restrict our operations. Given our short operating history, we currently do not have any lines of credit or loans with any commercial banks. As a result, we are unlikely to rely on any bank loans to meet our liquidity needs. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

We are a holding company with no operations of our own. Our operations are conducted through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, BJXR, Beijing Chengxitong or Mailifang and our subsidiaries in the PRC. As a result, our ability to pay dividends and to finance any debt that we may incur is dependent upon license and service fees paid by Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, BJXR, Beijing Shiyuan Leya, Beijing Chengxitong or Mailifang and dividends and other distributions paid by our subsidiaries. If our subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends to us. In addition, PRC legal restrictions permit payment of dividends to us by our subsidiaries only out of the net income from our subsidiaries, if any, determined in accordance with PRC accounting standards and regulations. Under PRC law, our subsidiaries are also required to set aside up to 10% of their after-tax net income, if any, each year to fund certain reserve funds. These reserve funds are not distributable as cash dividends. See “Item 3 — Key Information — Risk Factors — The dividends and other distributions on equity we may receive from our subsidiaries are subject to restrictions under PRC law or agreements that our subsidiaries may enter into with third parties.”

Indebtedness

As of December 31, 2008, we did not have any indebtedness, and we did not have any material debt securities or material mortgages or liens. In March 2009, we issued to NGP a convertible senior note due in 2014 with an aggregate principal amount of $6,775,400. The convertible senior note would initially pay an annual interest at a rate of 8%, subject to reduction to 6% based on the financial performance of our company.

We intend to meet the majority of our future funding needs through cash flow generated from operating activities and our current cash and cash equivalents. Our treasury objective is to maintain safety and liquidity of our cash. Therefore, we have kept our cash and cash equivalents in short-term deposits and short-term government and high-grade corporate notes.

Our indebtedness as of each of December 31, 2006, 2007 and 2008 was nil.

Our operations in the PRC are subject to business tax at the rate of 3% to 8% on PRC taxable revenues as defined by the related PRC tax rules and regulations. We have calculated our PRC taxable revenues after deducting certain costs of revenues, including service fees, transmission charges payable to the telecommunications operators and business cooperation fees. We believe that our calculation of our PRC taxable revenues is consistent with PRC tax rules and regulations. However, we cannot assure you that PRC tax authorities in the future will not require changes in our calculation of taxable revenues for historical periods, which could have a material adverse impact on our financial position and results of operations.

Except as described above, as of December 31, 2008, we did not have any outstanding loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities or other similar indebtedness, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, finance leases or purchase commitments, guarantees or other material contingent liabilities.

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Contractual Obligations and Commercial Commitments

The following table sets forth our contractual obligations as of December 31, 2008:

	Payments due by period
	Total		Within
			Less than 1 year		1-3 years		3-5 years		More than 5 years
			(in thousands of U.S. dollars)
Short-Term Debt Obligations	$	—	$	—	$	—	$	—	$	—
Long-Term Debt Obligations		—		—		—		—		—
Capital (Finance) Lease Obligations		—		—		—		—		—
Operating Lease Obligations		1,050.0		1,050.0		—		—		—
Purchase Obligations		3,605.9		3,358.8		247.1		—		—
Other contractual commitments		—		—		—		—		—
Total	$	4,655.90	$	4,408.80	$	247.1	$	—	$	—

We entered into certain leasing arrangements relating to our office premises in March 2008. Our operating lease obligations as of March 31, 2009 were $1.3 million in 2009. As of December 31, 2008, we did not have any long-term debt obligations, short-term debt obligations or capital lease obligations.

In March 2009, we issued to NGP a convertible senior note due in 2014 with an aggregate principal amount of $6,775,400. We are required to pay the principal amount of the convertible senior note then outstanding plus any accrued but unpaid interest on March 18, 2014. Our convertible senior note would initially pay an annual interest at a rate of 8%, subject to reduction to 6% based on the financial performance of our company. The accrued interest is payable on each of January 15 and July 15 of each year until the principal amount is fully repaid. NGP has the right to declare the principal amount then outstanding plus any accrued but unpaid interest due before its due date upon the occurrence of certain events of default. See “— Liquidity and Capital Resources — Cash Flows and Working Capital.”

Capital Expenditures

Our total capital expenditures in 2008, 2007, and 2006 were $1.9 million, $1.9 million and $2.5 million, respectively. We did not have any material commitment for capital expenditures as of December 31, 2008. We currently do not have any material capital expenditures in progress.

Our capital expenditures are spent primarily on servers, computers, office equipment, leasehold improvement and vehicles. In general, there is a positive correlation between our revenues and the amount of traffic that passes through our servers and transmission equipment. From time to time we need to purchase additional servers and transmission equipment as a result of increased business traffic. Our purchase of personal computers is primarily driven by headcount increases.

As the telecommunications operators do not provide us with detailed revenue breakdown on a service-by-service basis, we depend on our internal database system to monitor revenues derived from each of our services. We make our business decisions based on our internal data, taking into account other factors including strategic considerations.

Off-balance Sheet Arrangements

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

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Taxation

The Cayman Islands currently do not levy any taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. In addition, pursuant to Section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Council that (i) no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our operations and (ii) no tax to be levied on profits, income gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable by us on or in respect of our shares, debentures or other obligations or by way of the withholding in whole or in part of any relevant payment as defined in Section 6(3) of the Tax Concessions Law (1999 Revision). This undertaking is for a period of 20 years from May 21, 2002.

Under the applicable tax laws in effect in the PRC before January 1, 2008, companies established in the PRC were generally subject to a statutory tax rate of 33%. However, various preferential tax treatments, including reduced tax rates and other measures, were available to foreign-invested enterprises and companies that met certain criteria. Although KongZhong Beijing, KongZhong China, Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Tianjin Mammoth, Beijing Chengxitong, BJXR and Beijing Anjian Xingye were incorporated in the PRC and thus subject to various state and local income tax laws, they benefited from the preferential tax treatments as high technology enterprises before January 1, 2008. KongZhong Beijing’s net income was tax-exempt until the end of 2005 and subject to a 7.5% EIT rate for 2006 and 2007. KongZhong China’s net income was tax-exempt until the end of 2007. Beijing AirInbox’s net income was tax-exempt until the end of 2004 and subject to a 7.5% EIT rate for 2005, 2006 and 2007. Beijing Boya Wuji’s net income was tax-exempt until the end of 2006 and subject to a 7.5% EIT rate for 2007. Beijing WINT’s net income was tax-exempt until the end of 2006 and subject to a 7.5% EIT rate for 2007. Tianjin Mammoth’s net income was subject to a 15% EIT rate until 2007. Beijing Chengxitong’s net income was subject to a 33% EIT rate for 2004 and 2005, was tax-exempt for 2006 after moving to Beijing and was subject to a 7.5% EIT rate for 2007. BJXR’s net income was tax-exempt until the end of 2006 and subject to a 7.5% EIT rate for 2007. Beijing Anjian Xingye’s net income was tax-exempt for 2007.

On March 16, 2007, the PRC National People’s Congress adopted the 2008 PRC Enterprise Income Tax Law, or the New EIT Law, which became effective on January 1, 2008. Under the New EIT Law, all enterprises in the PRC, including foreign-invested enterprises, are subject to a statutory EIT rate of 25%, thus revoking many of the tax exemptions, reductions and other preferential treatments previously available to foreign-invested enterprises. On December 6, 2007, the State Council promulgated the Regulation on the Implementation of the Enterprise Income Tax Law of the People’s Republic of China, or the New EIT Implementation Regulation, which also took effect on January 1, 2008.

According to the New EIT Law and the New EIT Implementation Regulation, preferential tax treatments, including a preferential EIT rate of 15%, will continue to be available to enterprises that are classified as “high and new technology enterprises strongly supported by the state” or conduct business in certain encouraged sectors. Under the Administrative Measures on Designation of High and New Technology Enterprises, which became effective on January 1, 2008, KongZhong Beijing, Beijing AirInbox, BJXR and Tianjin Mammoth were qualified as high and new technology enterprises and would be subject to a 15% EIT rate from 2008 to 2010. They currently would have the option to renew for an additional three-year period their status as high and new technology enterprises after 2010 through a simplified and streamlined application process. After 2013, they would have to apply for their status as new and high technology enterprises without the benefit of the simplified and streamlined application process.

According to the New EIT Law and the New EIT Implementation Regulation, KongZhong China, Beijing Anjian Xingye, Wukong Shentong, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong and Beijing Shiyuan Leya would be subject to a 25% EIT rate from 2008 onward and Mailifang would also be subject to a 25% EIT rate from 2009 onward. Each of KongZhong China, Beijing WINT and Beijing Chengxitong is in the process of applying for the status of high and new technology enterprises. If the applications are approved, a preferential EIT rate of 15%would be applied to them in 2009.

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Under the New EIT Law, enterprises are classified as either resident or non-resident. A resident enterprise refers to one that is incorporated under the PRC law or under the law of a jurisdiction outside the PRC with its “de facto management organization” located within the PRC. Non-resident enterprise refers to one that is incorporated under the law of a jurisdiction outside the PRC with its “de facto management organization” located also outside of the PRC, but which has either set up institutions or establishments in the PRC or has income originating from the PRC without setting up any institution or establishment in the PRC. Under the New EIT Implementation Regulation, “de facto management organization” is defined as the organization of an enterprise through which substantial and comprehensive management and control over the business, operations, personnel, accounting and properties of the enterprise are exercised. Under the New EIT Law and the New EIT Implementation Regulation, a resident enterprise’s global net income will be subject to a 25% EIT rate. Uncertainties exist with respect to how the New EIT Law applies to our overall operations and, more specifically, with respect to the determination of tax residency for certain of our legal entities incorporated outside the PRC. Additional guidance is expected to be released by the Chinese government in the near future that may clarify how to determine an enterprise’s tax residency under the New EIT Law. Despite the present uncertainties resulting from the limited guidance on this issue, we do not believe that our legal entities incorporated outside the PRC should be treated as residents under the New EIT Law. Even if one or more of our legal entities incorporated outside the PRC were characterized as tax residents in the PRC, we would not expect any significant impact on our net current tax payable balance and net deferred tax balance because none of such legal entities had a profit in 2008.

In addition, the New EIT Law and the New EIT Implementation Regulation provide that, in some circumstances, an income tax rate of 20% would be applied to dividends payable to foreign investors. However, dividend income received by a resident enterprise from another resident enterprise is exempted from the EIT. Under the New EIT Law and the New EIT Implementation Regulation, a non-resident enterprise’s net income originating from “sources within the PRC” will be subject to a 20% EIT rate. Under the New EIT Implementation Regulation, whether a dividend payment constitutes income from “sources within the PRC” is determined by the location of the enterprise which pays the dividend. Income tax on dividends from the PRC payable to a non-PRC-resident enterprise is at a rate of 10%. As a result, KongZhong Beijing, Beijing Anjian Xingye, KongZhong China and Wukong Shentong may be required to withhold all or part of such income tax when paying us dividends. The aggregate undistributed earnings of our subsidiaries and our PRC operating companies and their subsidiaries that are available for distribution to us as of December 31, 2007 are considered to be indefinitely reinvested under APB Opinion No. 23, “Accounting for Income Tax – Special Areas” and, accordingly, no provision has been made for the dividend withholding taxes that would be payable upon the distribution of those amounts to us under the New EIT Law and New EIT Implementation Regulation. The PRC tax authorities have also clarified that distributions made out of retained earnings derived from income before January 1, 2008 will not be subject to such withholding tax.

Beijing Boya Wuji recorded net losses in 2004 and 2005 and KongZhong China recorded a net loss in 2005, which they were permitted to carry forward for five years to offset future net income from the end of the period in which the loss was recorded. Each of Beijing Boya Wuji and KongZhong China recorded net profits in 2006 that were sufficient to realize the full tax benefit of the carry-forward net losses.

The following table summarizes the various PRC income tax rates and tax concessions applicable to each of our subsidiaries and operating companies as of December 31, 2008:

	Chinese	Concession from	Year of
	statutory	Chinese statutory	commencement
PRC entities	income tax rate	income tax	of tax holiday
	(%)
KongZhong Beijing	15	50% tax relief in 2008	2003
KongZhong China	25	None	N/A
Beijing Anjian Xingye	25	None	N/A
Wukong Shentong Search	25	None	N/A
Beijing AirInbox	15	None	N/A
Beijing Boya Wuji	25	None	N/A
Beijing WINT	25	None	N/A
Beijing Chengxitong	25	None	N/A
Beijing Xinrui	15	50% tax relief in 2008	2004
Tianjin Mammoth	15	None	N/A
Beijing Shiyuan Leya	25	None	N/A

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In addition, our revenues are subject to business taxes. Since August 2003, each of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong and BJXR is subject to a 3% business tax for WVAS, an aggregate of 8% of business tax and cultural business construction fee for mobile advertising services and 5% business tax for other services. Each of KongZhong Beijing, KongZhong China, Tianjin Mammoth and Beijing Anjian Xingye is subject to a 5% business tax. In future periods, we expect that a substantial portion of our revenues will be generated through Beijing AirInbox, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang. In addition, pursuant to the arrangements that KongZhong Beijing has entered into with each of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong and Mailifang, that KongZhong China has entered into with Beijing AirInbox, and that Beijing Anjian Xingye has entered into with BJXR, each of Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang pays us service fees. The amount of such payments will be subject to the 5% business tax payable by KongZhong Beijing, KongZhong China and Beijing Anjian Xingye. See “Item 7 — Major Shareholders and Related Party Transactions — Related Party Transactions.”

PRC business tax is levied on PRC taxable revenues as defined by the related PRC tax rules and regulations. We have calculated our PRC taxable revenues after deducting certain costs of revenues, including service fees, transmission charges payable to the telecommunications operators and business cooperation fees. We believe that our calculation of our PRC taxable revenues is consistent with PRC tax rules and regulations. However, we cannot assure you that PRC tax authorities in the future will not require changes in our calculation of taxable revenues for historical periods, which could have a material adverse impact on our financial position and results of operations.

Item 6. Directors, Senior Management and Employees

General

The functions and powers of our Board include, among others:

· convening shareholders’ meetings and reporting its work to shareholders at such meetings;

· implementing shareholders’ resolutions;

· determining our business plans and investment proposals;

· formulating our profit distribution plans and loss recovery plans;

· formulating our debt and finance policies and proposals for the increase or decrease in our issued capital and the issuance of debentures;

· formulating our major acquisition and disposal plans, and plans for merger, division or dissolution;

· formulating proposals for any amendments to our Memorandum and Articles of Association; and

· exercising any other powers conferred by the shareholders’ meetings or under our Memorandum and Articles of Association.

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Directors and Senior Officers

The following table sets forth certain information concerning our Directors and senior officers. The business address of each of our Directors and executive officers is 35th Floor, Tengda Plaza, No. 168 Xizhimenwai Street, Beijing, 100044, the PRC.

Name	Age	Position
Leilei Wang	36	Chairman of the Board of Directors, Chief Executive Officer
Nick Yang	33	Vice Chairman of the Board of Directors, President, Chief Technology Officer
Xiaoxin Chen	36	Independent Director
Xiaolong Li	43	Independent Director
Hope Ni	36	Independent Director
Jay Chang	37	Chief Financial Officer
Xin Wang	35	Chief Operating Officer
Tai Fan	37	Chief Investment Officer

Leilei Wang, 36, has served as the Chairman of the Board of Directors of our company and our Chief Executive Officer since October 2008. His current Board term expires in 2010. Mr. Wang was the chief executive officer of TOM Online from September 2003 to September 2008. Between 1999, when Mr. Wang joined TOM Group Limited, or TOM Group, TOM Online’s parent company, and 2003, Mr. Wang held various management positions within TOM Group. Mr. Wang graduated in 1996 from the Electronic Engineering Department of Tsinghua University with a bachelor’s degree in Electronic Technology and Information.

Nick Yang, 33, one of our founders, has served as the President and Chief Technology Officer of our company since our inception in May 2002 and as the Vice Chairman of our Board of Directors since August 2008. His current Board term expires in 2011. Prior to establishing our company, Mr. Yang served as the vice president of technology and chief technology officer of Sohu.com Inc. from October 2000 to March 2002. In June 1999, Mr. Yang co-founded ChinaRen Inc. and served as the chief technology officer until October 2000, when ChinaRen Inc. merged into Sohu.com Inc. Mr. Yang serves as a director of HiU! Media and holds a senior management position at Beijing Hui Chuang Xin YingTechnology Co. Ltd., or Hui Chuang Xin Ying. Mr. Yang holds a master’s degree in Electrical Engineering from Stanford University and a bachelor’s degree from the University of Michigan.

Xiaoxin Chen, 36, has been an Independent Director of our company since September 2008. His current Board term expires in 2010. Mr. Chen has been a managing partner of Zeniphs China Capital, a private equity fund, since late 2007. Before joining the fund, Mr. Chen was the chief financial officer of Oak Pacific Interactive, or OPI, a leading next generation Internet platform provider that offers web 2.0 communities, content creation and distribution, gaming and integrated communication in the PRC. Before joining OPI, Mr. Chen was an investment banker at Citigroup Hong Kong. Mr. Chen is also an independent director of Abax Global Capital (Hong Kong) Ltd. Mr. Chen received his bachelor’s degree in Operations Research and Industrial Engineering (summa cum laude) from Cornell University and his MBA degree from Stanford Graduate School of Business and was a recipient of the 2000 Arjay Miller Scholar Award upon graduation.

Xiaolong Li, 43, has been an Independent Director of our company since October 2008. His current Board term expires in 2011. Mr. Li is the founder of Net 263 Ltd. and has been its chairman of the board of directors since 1999. Before founding Net 263 Ltd., Mr. Li was the founder and executive director of Beijing Jingxun Public Information Technology Co., Ltd. from November 1997 to 1999. From October 1992 to November 1997, Mr. Li was the founder and chairman of Beijing Haicheng Telecom Co., Ltd. Mr. Li is a director at the following companies in addition to our company: Beijing Haicheng Telecom Co., Ltd., Beijing Capital On-line Co., Ltd. and Shanghai Dacheng Network Technology Co., Ltd.Mr. Li holds a bachelor’s degree in Computer Science from Beijing Industry University.

Hope Ni, 36, has been an Independent Director of our company since January 2007. Her current Board term expires in 2009. Ms. Ni has been the chairman of the board of directors of China Fundamental Acquisition Corp. since May 2008. Until January 2008, Ms. Ni served as the chief financial officer and secretary for Comtech Group Inc., a Nasdaq Select Global Market-listed company (Nasdaq: COGO) and a leading provider of customized module and subsystem design solutions in the PRC, which she joined in August 2004. Prior to joining Comtech, Ms. Ni spent six years as a practicing attorney at Skadden, Arps, Slate, Meagher & Flom LLP in New York and Hong Kong, specializing in corporate finance, during which she was actively involved in the initial public offerings and New York Stock Exchange/Nasdaq listings of a number of major global PRC-based companies. Prior to that, Ms. Ni worked at Merrill Lynch’s investment banking division in New York. Ms. Ni is also an independent director at ATA Inc., a Nasdaq-listed company (Nasdaq: ATAI). Ms. Ni received her J.D. degree from the University of Pennsylvania Law School and her bachelor’s degree in Applied Economics and Business Management from Cornell University.

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Jay Chang, 37, has served as the Chief Financial Officer of our company since February 2009. Before joining our company, Mr. Chang was the president and chief financial officer of 56.com, a leading online video provider in the PRC. Before that, he was the chief financial officer of TOM Online for over two years. Prior to TOM Online, for nearly six years, Mr. Chang was the director of equity research at Credit Suisse, responsible for covering the Internet and telecommunications sectors in the PRC. Mr. Chang graduated in 1994 from University of Washington with a bachelor’s degree in Electrical Engineering.

Xin Wang, 35, has served as the Chief Operating Officer of our company since November 2008. Before joining our company, Mr. Wang was the founder and chief executive officer of Mobile Media Network Technology Co., Ltd. Mr. Wang was the president of Sina Wireless, in charge of Sina.com’s wireless business from 2003 to 2006. Before that, he was the founder and chief operating officer of Meme Star, a WVAS company later acquired by Sina.com. Mr. Wang also worked in sales departments at China Netcom Group Corporation and Huawei Technologies Co., Ltd. after graduating from China South East University with a bachelor’s degree in Radio Engineering.

Tai Fan, 37, has served as the Chief Investment Officer of our company since March 2009. Since August 2002, Mr. Fan has served as the vice president of the department of finance at Beijing Super Channel, a subsidiary of TOM Online, and as an executive vice president of TOM Online. Prior to joining TOM Online, Mr. Fan served as the financial controller of Xin De Telecom and was an auditor at KPMG. Mr. Fan graduated in 2003 from the State University of New Jersey, Rutgers with an EMBA and in 1994 from Beijing College of Economics with a bachelor’s degree in Accounting.

There is no family relationship between any of our Directors or senior officers.

Yunfan Zhou, one of our co-founders who had served as the Chairman of our Board of Directors and our Chief Executive Officer since May 2002, left our company in October 2008. Hanhui Sun, who had served as our Chief Financial Officer since February 2007, resigned from his position in February 2009 but is staying with our company until April 30, 2009 for a transition period. Charlie Y. Shi, who has been a Director of our company since October 2002 and an Independent Director since April 2004, resigned from his directorship in October 2008 but is serving as an advisor to our company. Tom (Hui) Zhang, who has been an Independent Director of our company since January 2006, left our company in September 2008.

As a Nasdaq listed company, we are required by the Nasdaq Listing Rules to have a majority of our Board comprised of independent directors. Our Independent Directors currently are Hope Ni, who was elected by our Board to take the place of Hanhui Sun, who resigned effective January 16, 2007; Xiaoxin Chen, who was elected by our Board to take the place of Hui (Tom) Zhang, who resigned effective September 16, 2008; and Xiaolong Li, who was elected to a three-year term at the annual general meeting of our company in 2008. Our Independent Directors held executive sessions at which only Independent Directors were present once each quarter of 2008.

Our Memorandum and Articles of Association provide for three classes of Directors, each with three-year terms. Retiring Directors are eligible for re-election. Each of our executive Directors has entered into a service contract with us, while other Directors have entered into no such agreements.

In 2008, each of our Independent Directors who served on three committees received $30,000 for each year of service. In addition, we granted restricted share units covering 480,000 of our ordinary shares to each of our Independent Directors. Such restricted share units are granted at the start of each Director’s three-year term of service and vest quarterly in 12 equal tranches as long as such Director is continuing his Board service.

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Each of our senior officers has entered into an employment agreement and a non-compete agreement with us. Pursuant to the employment agreements, each of our senior officers is entitled to receive a basic salary and may also receive an annual bonus if a certain level of performance has been achieved. All senior officers are bound by the confidentiality and non-competition provisions in their respective employment agreements and non-compete agreements with us. Our senior officers receive no benefits upon termination of service.

Board Practices

To enhance our corporate governance, our Board established three board committees: an audit committee, a nominations committee and a compensation committee, which are comprised solely of Independent Directors. Our Independent Directors held one meeting each quarter at which only Independent Directors were present.

Audit Committee

We have established an audit committee in accordance with the Nasdaq Listing Rules, which reviews our internal accounting procedures and considers and reports to our Board with respect to other auditing and accounting matters, including the selection of an independent registered public accounting firm, the scope of annual audits, fees to be paid to the independent registered public accounting firm and the performance of the independent registered public accounting firm. The committee has a formal written charter that sets forth its duties and powers. The current members of our audit committee are Xiaoxin Chen, Xiaolong Li and Hope Ni, each of whom is an Independent Director. Our Board has determined that each of Mr. Chen and Ms. Ni is an audit committee financial expert within the meaning of the U.S. securities laws. Our audit committee met at least once in each quarter of 2008.

Nominations Committee

We have established a nominations committee, which identifies individuals qualified to become Directors and recommends Director nominees to be approved by our Board. The committee has a formal written charter that sets forth its duties and powers. The current members of our nominations committee are Xiaoxin Chen and Xiaolong Li, each of whom is an Independent Director.

Compensation Committee

We have established a compensation committee to determine the salaries and benefits of our Directors and senior officers. The committee has a formal written charter that sets forth its duties and powers. The current members of our compensation committee are Xiaoxin Chen and Xiaolong Li, each of whom is an Independent Director.

Compensation of Directors, Senior Officers and Employees

Our senior officers receive compensation in the form of salaries, annual bonuses and stock options. We have entered into service agreements with each of our senior officers. None of these service agreements provides benefits to our senior officers upon termination. The aggregate remuneration paid and benefits in kind granted to our senior officers for the years ended December 31, 2008 and December 31, 2007 were approximately $0.9 million and $0.6 million, respectively. In addition, the aggregate remuneration paid to our non-executive Directors was $100,000 and $80,000, respectively, for the years ended December 31, 2008 and 2007.

In 2008, the total amount set aside or accrued by us or our subsidiaries to provide housing, medical and pension benefits, unemployment insurance and staff welfare for employees, including our executive Directors and senior officers, was $0.3 million.

Stock Options and Restricted Share Units

Our 2002 Plan and 2006 Plan are intended to provide incentives to our Directors, officers and employees as well as consultants and advisers of our company and its present or future parent company or subsidiaries, or any related corporations.

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KongZhong Corporation 2002 Equity Incentive Plan

The 2002 Plan was approved by our shareholders at a meeting held on June 6, 2002. Pursuant to the 2002 Plan, we originally reserved a total of 70,000,000 ordinary shares for issuance under two categories of options: incentive stock options, which may be granted to officers and employees of our company and any present or future parent or subsidiary of our company, or the related corporations, and non-qualified options, which may be granted to any employee, officer, Director, consultant or adviser of our company and the related corporations. We increased the number of ordinary shares reserved for issuance under the 2002 Plan to 105,000,000 on February 15, 2004, and to 137,000,000 on September 6, 2005. Both increases have been approved by our shareholders.

As of December 31, 2008, under the 2002 Plan, we had granted options to purchase an aggregate of 236,090,280 of our ordinary shares, as adjusted by cancellations following initial grants and our share split, of which options to purchase 128,694,160 ordinary shares had lapsed and 16,749,360 were exercisable at exercise prices ranging from $0.0025 to $0.0875 per ordinary share. The exercise prices represent the fair market values of the underlying ordinary shares on the dates the options were granted.

During 2008, under the 2002 Plan, we granted options to purchase 50,950,280 of our ordinary shares, options to purchase 68,161,060 of our ordinary shares lapsed and options to purchase 18,760 of our ordinary shares were exercised. In October 2008, we cancelled all options granted between February 2004 to November 2007 that were then outstanding and granted new options at the then fair market price under the 2002 Plan. The new options would vest in 16 equal quarterly tranches beginning one calendar quarter after the grant date. For the other options granted in 2008, the vesting schedule for the incentive stock options provides for 25% of the options to vest on the first anniversary of the date of the grant, and the remaining 75% to vest in 12 equal quarterly tranches beginning one calendar quarter after the date of such anniversary. With respect to the options that we have granted to our Independent Directors, the options are vested in 12 equal quarterly tranches beginning one calendar quarter after the grant date. The expiration date for each option is ten years from the date of grant.

KongZhong Corporation 2006 Equity Incentive Plan

The 2006 Plan was approved by our shareholders at our annual general meeting on October 12, 2006. Pursuant to the 2006 Plan, we originally reserved a total of 40,000,000 ordinary shares for issuance in respect of stock options, restricted share units and other forms of equity compensation. We increased the number of ordinary shares reserved for issuance under the 2006 Plan to 180,000,000 on December 18, 2008. This increase has been approved by our shareholders.

As of December 31, 2008, under the 2006 Plan, we had granted an aggregate of 141,880,000 restricted share units, as adjusted by cancellations following initial grants, of which 7,670,000 had lapsed.

During 2008, under the 2006 Plan, we granted restricted share units covering 104,600,000 of our ordinary shares, restricted share units covering 3,150,000 of our ordinary shares lapsed and restricted share units covering 11,612,500 of our ordinary shares were exercised. With respect to the restricted share units that we have granted to our employees, the vesting schedule provides for 25% of the restricted share units to vest on the first anniversary of the date of the grant, and the remaining 75% to vest in 12 equal quarterly tranches beginning one calendar quarter after the date of such anniversary. With respect to the restricted share units that we have granted to our Independent Directors and advisors, the restricted share units are vested in 12 equal quarterly tranches beginning one calendar quarter after the grant date. The expiration date for each restricted share unit is ten years from the date of grant.

Our Board administers the 2002 Plan and 2006 Plan and has wide discretion in awarding stock options, restricted share units and other forms of equity compensation. Subject to the provisions of the 2002 Plan and 2006 Plan, our Board determines who will be granted equity compensation, the type and timing of equity compensation to be granted, the vesting schedule and other terms and conditions of the equity compensation, including the exercise price of the stock options. On December 30, 2005, our Board, following the recommendation of the compensation committee, approved a resolution authorizing our chief executive officer to grant up to 8,000,000 stock options to non-officer employees without prior written approval by the compensation committee or the Board.

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Generally, if an outstanding equity compensation award granted under the 2002 Plan and 2006 Plan has not vested by the date of termination of the grantee’s employment with us, no further tranches of the grantee’s equity compensation award will become exercisable following the date of such cessation of employment, and the grantee’s already vested but unexercised equity compensation awards will terminate after a period of 90 days from such cessation of employment.

Our Board may terminate or amend the 2002 Plan and 2006 Plan at any time; provided, however, that our Board must seek our shareholders’ approval with respect to certain major modifications to the 2002 Plan and 2006 Plan, and, if such amendment or termination would adversely affect the rights of a grantee under any option granted, the approval of such grantee would be required. Without further action by our Board, the 2002 Plan will terminate on June 6, 2012 and the 2006 Plan will terminate on October 11, 2016.

The 2002 Plan and 2006 Plan provide for acceleration of awards upon the occurrence of certain consolidations, mergers, acquisitions or sale of all or substantially all assets or shares of our company. In any such case, our Board shall take, among others, one or more of the following actions: accelerate the date of exercise of such options or any tranche of such options, provide a fixed period of time that the grantees must exercise such options or terminate all options in exchange for cash payment.

The following table sets forth information on stock options and restricted share units that have been granted and are outstanding as of December 31, 2008, pursuant to the 2002 Plan and the 2006 Plan.

	Ordinary shares underlying options									Restricted Share Units
Name of grantee	2008 option grants			Pre-2008 option grants		Expiration date		Exercise price per share (US dollars) (1)		2008 grants			Pre-2008 grants			Expiration date
Directors and Senior Officers
Leilei Wang		—			—		—		—		48,000,000	(2)		—		Dec. 18, 2018
Xin Wang		—			—		—		—		42,400,000	(3)		—		Dec. 18, 2018
Xiaoxin Chen		—			—		—		—		440,000			—		Sep. 15, 2018
Xiaolong Li		—			—		—		—		480,000			—		Oct. 19, 2018
Hope Ni		—			—		—		—		-			200,000	(4)	Feb. 13, 2017
Charlie Y. Shi		—			—		—		—		1,240,000	(5)		—		Oct. 19, 2018
Hanhui Sun		2,000,000	(6)		—	Oct. 23, 2018			0.07025		—			2,625,000	(7)	Feb. 13,  2017 to Nov. 11, 2017
Other employees (comprising 140 individuals)		45,055,280			12,479,360	June 30, 2012 to Dec. 18, 2018		0.0025 to 0.0875			12,000,000	(8)		14,852,500	(8)	Feb. 13,  2017  to Dec. 18,  2018
Total		47,055,280			12,479,360						104,560,000			17,677,500

(1) The exercise price per share of options granted represents the fair market value of the underlying ordinary shares on the date the options were granted.

(2) Leilei Wang was granted 48,000,000 restricted share units on December 19, 2008, of which 25% will vest on December 19, 2009, and the remaining 75% will vest in 12 equal tranches beginning from March 19, 2010 and continuing at the end of each subsequent three-month period. As of December 31, 2008, no restricted share units were vested.

(3) Xin Wang was granted 42,400,000 restricted share units on December 19, 2008, of which 25% will vest on December 19, 2009, and the remaining 75% will vest in 12 equal tranches beginning from March 19, 2010 and continuing at the end of each subsequent three-month period. As of December 31, 2008, no restricted share units were vested.

(4) Hope Ni was granted 480,000 restricted share units on February 14, 2007, which vest in 12 equal tranches beginning on May 14, 2007 and continuing at the end of each subsequent three-month period. As of December 31, 2008, 280,000 restricted share units were vested.

(5) Charlie Y. Shi was granted 480,000 restricted share units on February 14, 2007, which vest in 12 equal tranches beginning on May 14, 2007 and continuing at the end of each subsequent three-month period. When he resigned as an Independent Director in October 2008, his 204,000 unvested restricted shares were immediately cancelled. Charlie Shi was appointed as an advisor of our company and granted 1,240,000 restricted share units on October 20, 2008, which vest in 12 equal tranches beginning on October 20, 2009 and continuing at the end of each subsequent three-month period. As of December 31, 2008, no such restricted share units were vested.

(6) Hanhui Sun resigned as the Chief Financial Officer of our company in February 2009 but is staying on with our company until April 30, 2009 for transition. Hanhui Sun was granted 2,000,000 options on October 24, 2008, which vest in 16 equal tranches beginning on January 24, 2009 and continuing at the end of each subsequent three-month period. His unvested options would be cancelled when he leaves our company and his vested but unexercised options would expire on July 30, 2009.

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(7) Hanhui Sun resigned as the Chief Financial Officer of our company in February 2009 but is staying on with our company until April 30, 2009 for transition.Hanhui Sun was granted 2,000,000 restricted share units on February 14, 2007, 25% of which vested on February 14, 2008 and the remaining 75% of which vest in 12 equal tranches beginning from May 14, 2008 and continuing at the end of each subsequent three-month period. Another 2,000,000 restricted share units were granted to Hanhui Sun on November 12, 2007, 25% of which vested on November 12, 2008 and the remaining 75% of which vest in 12 equal tranches beginning from February 12, 2009 and continuing at the end of each subsequent three-month period. As of December 31, 2008, 1,375,000 restricted share units were vested. His unvested restricted share units would be cancelled when he leaves our company.

(8) We granted restricted share units covering 141,880,000 of our ordinary shares on February 14, June 26, November 12, 2007 and December 19, 2008. As of December 31, 2008, 7,670,000 were cancelled because the recipients left our company and 122,237,500 remained outstanding.

Stock-based Compensation Expense

Starting from January 1, 2006, we adopted SFAS 123(R) to account for share-based compensation. We have used the modified prospective transition method and therefore have not restated the results from prior periods.

We recorded stock-based compensation expenses of $1.6 million, $2.6 million and $2.3 million for 2006, 2007 and 2008, respectively.

Share Ownership

Under U.S. securities law, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be the beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of securities as to which such person has no economic interest.

As of March 31, 2009, the following Directors and officers held beneficial ownership of ordinary shares in our company.

Name	Number of shares beneficially owned		Of which, shares underlying equity compensation awards that will vest within 60 days		% of our issued share capital as of March 13, 2009 (1)
Leilei Wang		253,257,440		—		17.7	%
Nick Yang		230,127,000		—		16.0	%
Xiaoxin Chen		80,000		—		*
Xiaolong Li		80,000		40,000		*
Hope Ni		360,000		40,000		*
Hanhui Sun (2)		1,875,000		250,000		*
Charlie Y. Shi (3)		646,666		103,333		*
Hui (Tom) Zhang (4)		240,000		—		*

(1) Adjusted to reflect the issuance of ordinary shares upon full exercise of all outstanding options and restricted share units granted under the 2002 Plan and 2006 Plan.

(2) Hanhui Sun resigned as the Chief Financial Officer of our company in February 2009 but is staying on with our company until April 30, 2009 for transition.

(3) Charlie Y. Shi resigned as an Independent Director of our company in October 2008 but is serving as an advisor.

(4) Hui (Tom) Zhang resigned as an Independent Director of our company in October 2008.

*       Less than one percent.

Employees

See “Item 4 — Information on the Company — Employees.”

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Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

The table below sets forth certain information with respect to the beneficial owners of 5% or more of our ordinary shares as of the dates indicated:

	Shares beneficially owned as of July 8, 2004 (immediately prior to our initial public offering)					Shares beneficially owned as of the date of the shareholder’s most recent public filing or communication with our company
Name	Number		Percent			Number		Percent
Leilei Wang(1)		0		0	%		253,257,440		17.7	%
Nick Yang		287,500,000		27.4	%		230,127,000		16.0	%
Samuel Shin Fang(2)		87,500,000		8.3	%		82,618,920		5.8	%
Fu Lam Wu(3)		81,666,660		7.8	%		73,081,460		5.1	%
IDG-Accel China Growth Fund II L.P.(4)		0		0	%		96,736,400		6.7	%
IDG-Accel China Growth Fund II Associates L.P.(4)		0		0	%		96,736,400		6.7	%
IDG-Accel China Growth Fund GP II Associates Ltd.(4)		0		0	%		96,736,400		6.7	%
IDG-Accel China Investors II L.P.(4)		0		0	%		96,736,400		6.7	%
Patrick J. McGovern(4)		0		0	%		96,736,400		6.7	%
Quan Zhou(4)		0		0	%		96,736,400		6.7	%
Renaissance Technologies LLC(5)		0		0	%		77,376,000		5.4	%
James H. Simons(5)		0		0	%		77,376,000		5.4	%
Nokia Growth Partners II, L.P.(6)		0		0	%		156,000,000		9.8	%
N.G. Partners II, L.L.C.(6)		0		0	%		156,000,000		9.8	%
John Gardner(6)		0		0	%		156,000,000		9.8	%
Paul Asel(6)		0		0	%		156,000,000		9.8	%

(1) As of March 31, 2009. Leilei Wang holds his shares in our company through Right Advance Management Ltd., or Right Advance Management, a British Virgin Islands company, which he controls. Pursuant to a share purchase agreement dated September 27, 2008, Mobileren Inc., or Mobileren, a personal holding company controlled by Yunfan Zhou, our former Chief Executive Officer, agreed to sell to Right Advance Management, and Right Advance Management agreed to purchase from Mobileren, 183,500,000 of our ordinary shares.

(2) As of March 31, 2009. Samuel Shin Fang is beneficial owner of our shares through four entities, which reported the following shareholding: eGarden I, a Cayman Islands company, 44,740,760 ordinary shares; Calver Investments Limited, a Channel Islands company, 27,924,440 ordinary shares; SF Capital Ltd., a British Virgin Islands company, 4,341,720 ordinary shares; and Luzon Investments Ltd., a Channel Islands company, 5,612,000 ordinary shares. eGarden I is 50% owned by Luzon Investments Ltd., which Mr. Fang wholly owns. Mr. Fang owns 100% of Calver Investments Ltd. and SF Capital Ltd.

(3) As of March 31, 2009. Fu Lam Wu holds her shares in our company through Lucky Dragon Holdings Group Ltd., a British Virgin Islands company, which she wholly owns.

(4) As of February 6, 2009. IDG-Accel China Growth Fund II L.P., or IDG Fund LP, a limited partnership organized under the laws of Cayman Islands, is the record owner of 89,422,880 shares in our company. IDG-Accel China Investors II L.P., or IDG Investors LP, a limited partnership organized under the laws of the Cayman Islands, is the record owner of 7,313,520 shares in our company. The general partner of IDG Fund LP is IDG-Accel China Growth Fund II Associates L.P., or IDG Associates LP, a limited partnership organized under the laws of Cayman Islands. The general partner of IDG Associates LP is IDG-Accel China Growth Fund GP II Associates Ltd., or IDG GP, a limited liability company incorporated under the laws of Cayman Islands. The general partner of IDG Investors LP is IDG GP. The directors and executive officers of IDG GP are Patrick J. McGovern and Quan Zhou. Pursuant to a share purchase agreement dated September 27, 2008, Mobileren agreed to sell to IDG Fund LP and IDG Investors LP, and IDG Fund LP and IDG Investors LP agreed to purchase from Mobileren, 66,556,800 and 5,443,200 of our ordinary shares, respectively.

(5) As of February 13, 2009. James H. Simons is a control person of Renaissance Technologies LLC, a limited liability company organized under the laws of the State of Delaware.

(6) As of March 27, 2009. Upon the conversion of the convertible senior note and exercise of the warrant it received from our company in March 2009, NGP, a limited partnership organized under the laws of the State of Delaware, would beneficially own 156 million of our ordinary shares. N.G. Partners II, L.L.C., a limited liability company organized under the State of Delaware, is the general partner of NGP. John Gardner and Paul Asel are managing members of N.G. Partners II, L.L.C.

None of the major shareholders has voting rights that differ from the voting rights of other shareholders.

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As of December 31, 2008, there were 1,434,232,520 ordinary shares issued and outstanding. Citibank, N.A., the depositary under our ADS deposit agreement, has advised us that as of December 31, 2008, 22,942,063 ADSs, representing 917,682,520 ordinary shares, were held of record by Cede & Co. and four other registered shareholders. We have no further information as to ordinary shares held or beneficially owned by U.S. persons.

To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons, severally or jointly. We are not aware of any arrangement which may at a later date result in a change of control of our company.

Related Party Transactions

Contractual Arrangements relating to our Operating Companies

In order to comply with PRC regulations, we operate our business in the PRC through Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR, Beijing Shiyuan Leya and Mailifang, companies that are wholly-owned by PRC citizens. We have entered into a series of contractual arrangements with Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijing Chengxitong, BJXR and Mailifang and their respective shareholders, including agreements on provision of loans, provision of services and certain corporate governance and shareholder rights matters.

Below is a summary of the material provisions of these agreements.

Loan Agreements. On March 31, 2004, we entered into a loan agreement with Yunfan Zhou, Songlin Yang and Zhen Huang, pursuant to which we amended and restated the terms and conditions of our long-term loans in the total principal amount of RMB2.2 million (approximately $281,737) that we provided to Yunfan Zhou, Songlin Yang and Zhen Huang, in the proportion of their shareholding percentages in Beijing AirInbox. The loans are interest-free and the proceeds have been invested into Beijing AirInbox as a capital contribution by the borrowers. Pursuant to the loan agreement, each of the borrowers agreed to transfer his or her interest in Beijing AirInbox to KongZhong Beijing when permitted under PRC law as repayment of the loan. Each of the borrowers also undertook to us that the loan will become due and payable if, among other things, (i) either Yunfan Zhou or Nick Yang resigns or is removed from office by KongZhong Beijing or its affiliates, (ii) the respective borrower commits a criminal offense, (iii) any third party raises against the respective borrower a claim of more than RMB0.5 million (approximately $64,031), (iv) foreign investment in a telecommunications value-added services business is permitted and the relevant government authorities start approving such foreign investment, or (v) the borrower dies or becomes incapacitated. In addition, the loan shall be repaid only in the form of a transfer of each borrower’s entire equity interest in Beijing AirInbox to us or, if transfer of ownership to us is prohibited under applicable law, to our designees. Upon the transfer of each borrower’s equity interest in Beijing AirInbox, any proceeds from the transfer shall be used to offset his or her loan repayment obligation to us or our designees. The term of the loan agreement is ten years, automatically renewable at our option. Pursuant to an amendment to the loan agreement among Yunfan Zhou, Songlin Yang, Zhen Huang and Guijun Wang, dated October 16, 2006, Guijun Wang replaced Yunfan Zhou as a party to the loan agreement and assumed all the rights and obligations of Yunfan Zhou under the loan agreement.

On March 31, 2004, we entered into a loan agreement with Yang Cha, one of our former employees, and Songlin Yang, pursuant to which we have agreed to grant loans to Yang Cha in the amount of RMB4.4 million (approximately $563,474) and to Songlin Yang in the amount of RMB3.4 million (approximately $435,412). These loans are interest-free and the proceeds are to be exclusively invested into Beijing AirInbox as contribution to the capital increase in Beijing AirInbox by Yang Cha and Songlin Yang. The terms and conditions of this loan agreement are substantially the same as the loan agreement that we entered into with Yunfan Zhou, Songlin Yang and Zhen Huang on March 31, 2004. Pursuant to an amendment to the loan agreement among Songlin Yang, Linguang Wu and Yang Cha, dated October 16, 2006, Songlin Yang and Linguang Wu replaced Yang Cha as a party to the loan agreement and assumed all the rights and obligations of Yang Cha under the loan agreement.

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Capital Contribution Transfer Agreements. On June 29, 2006, Linguang Wu, Guijun Wang, Hai Qi and Yang Yang entered into a capital contribution transfer agreement. Pursuant to the agreement, each of Linguang Wu and Guijun Wang transferred 30% of the equity interest in Beijing WINT to Hai Qi. Upon the closing of this capital contribution transfer agreement, Hai Qi holds 60% and Yang Yang holds 40% of the total equity interest of Beijing WINT. On September 5, 2008, Hai Qi, Jingye Sun, Li Ai and Yang Yang entered into a capital contribution transfer agreement. Pursuant to the agreement, Hai Qi transferred 30% of the equity interest in Beijing WINT to each of Jingye Sun and Li Ai. Upon the closing of this capital contribution transfer agreement, Jingye Sun holds 30%, Li Ai holds 30% and Yang Yang holds 40% of the total equity interest of Beijing WINT.

On October 16, 2006, Yang Cha, Yunfan Zhou, Linguang Wu, Guijun Wang, Songlin Yang and Zhen Huang entered into a capital contribution transfer agreement. Pursuant to the agreement, Yang Cha transferred his capital contribution of RMB4.5 million (approximately $0.5 million) in Beijing AirInbox to Linguang Wu and Yunfan Zhou transferred his capital contribution of RMB1.0 million (approximately $0.1 million) in Beijing AirInbox to Guijun Wang. Upon the closing of this capital contribution transfer agreement, Linguang Wu holds 45%, Guijun Wang holds 10%, Songlin Yang holds 42% and Zhen Huang holds 3% of the total equity interest of Beijing AirInbox.

On October 27, 2006, Beijing AirInbox, Zhen Huang and Yunfan Zhou entered into a capital contribution transfer agreement. Pursuant to this agreement, each of Zhen Huang and Yunfan Zhou transferred their respective 10% equity interests in Beijing Boya Wuji to Beijing AirInbox in exchange for RMB100,000 (approximately $12,806). Upon the closing of this capital contribution transfer agreement, Beijing AirInbox holds 100% of the total equity interest of Beijing Boya Wuji.

On March 27, 2009, Shaoying Zhang and Yanli You, who originally owned 55% and 45%, respectively, of the total equity interest of Mailifang, entered into a capital contribution transfer agreement with Xu Guo and Yang Yang. Pursuant to this agreement, Shaoying Zhang transferred 55% of the equity interest of Mailifang to Xu Guo and Yanli You transferred 35% and 10%, respectively, of the equity interest of Mailifang to Xu Guo and Yang Yang. Upon the closing of this capital contribution transfer agreement, Xu Guo holds 90% and Yang Yang holds 10% of the total equity interest of Mailifang.

Option Agreements. KongZhong Beijing, Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, who are the current shareholders of Beijing AirInbox, entered into an amended and restated option agreement with KongZhong Beijing on October 16, 2006 pursuant to which each of Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu granted KongZhong Beijing an option to purchase their respective equity interests in Beijing AirInbox at the price of RMB100,000 (approximately $12,806) per one percent of its registered capital. The term of this agreement is the earlier of: (i) ten years from the date of the agreement; and (ii) the date on which all of the equity interest of Beijing AirInbox has been purchased by KongZhong Beijing. This agreement supersedes the amended and restated exclusive option agreement entered into among KongZhong Beijing, Yunfan Zhou, Songlin Yang, Yang Cha and Zhen Huang on May 10, 2004.

Yunfan Zhou and Zhen Huang, who were the shareholders of Beijing Boya Wuji, entered into an exclusive option agreement with KongZhong Beijing on March 31, 2004, pursuant to which each of these shareholders granted KongZhong Beijing an exclusive option to purchase their respective equity interests in Beijing Boya Wuji. Following the acquisition by Beijing AirInbox of 100% of the equity interest in Beijing Boya Wuji, KongZhong Beijing, Yunfan Zhou and Zhen Huang entered into a termination agreement pursuant to which the exclusive option agreement was terminated with effect from October 27, 2006.

Yang Yang and Hai Qi, a former shareholder of Beijing WINT, entered into an option agreement with KongZhong Beijing on June 29, 2006 pursuant to which each of Yang Yang and Hai Qi granted KongZhong Beijing an option to purchase their respective equity interests in Beijing WINT for the lower of: (i) the lowest price permitted by PRC laws, or (ii) the value of the audited net assets of Beijing WINT. The term of this agreement was until all the equity interests held by these shareholders have been purchased by KongZhong Beijing as permitted by PRC laws. This agreement superseded the exclusive option agreement entered into among KongZhong Beijing, Yang Yang, Linguang Wu and Guijun Wang on February 28, 2005. Subsequently, Yang Yang, Jingye Sun and Li Ai, who are the current shareholders of Beijing WINT, entered into an option agreement with KongZhong Beijing on September 5, 2008 pursuant to which each of Yang Yang, Jingye Sun and Li Ai granted KongZhong Beijing an option to purchase their respective equity interests in Beijing WINT for the lower of: (i) the lowest price permitted by PRC laws, or (ii) the value of the audited net assets of Beijing WINT. The term of this agreement is until all the equity interests held by these shareholders have been purchased by KongZhong Beijing as permitted by PRC laws. This agreement supersedes the exclusive option agreement entered into among KongZhong Beijing, Yang Yang, Linguang Wu and Guijun Wang on June 29, 2006.

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Yang Li and Xuelei Wu, who are the shareholders of Beijing Chengxitong, entered into an exclusive option agreement with KongZhong Beijing on November 21, 2005, pursuant to which each of these shareholders granted KongZhong Beijing an exclusive option to purchase their respective equity interests in Beijing Chengxitong for the lower of: (i) the lowest price permitted by PRC laws, or (ii) the amount of the audited net assets of Beijing Chengxitong. The term of this agreement is until the date all of the equity interests in Beijing Chengxitong have been purchased by KongZhong Beijing.

Yang Li and Guijun Wang, who are the shareholders of BJXR, entered into an exclusive option agreement with Beijing Anjian Xingye on January 28, 2006, pursuant to which each of these shareholders granted Beijing Anjian Xingye an exclusive option to purchase their respective equity interests in BJXR at the lowest price permitted by the then PRC law. The term of this agreement is until the date all of the equity interests in BJXR have been purchased by Beijing Anjian Xingye.

Xu Guo and Yang Yang, who are the shareholders of Mailifang, entered into an exclusive option agreement with Mailifang and KongZhong Beijing on April 1, 2009, pursuant to which each of these shareholders granted KongZhong Beijing an exclusive option to purchase their respective equity interests in Mailifang for the lower of: (i) the lowest price permitted by PRC laws, or (ii) the amount of the audited net assets of Mailifang. The term of this agreement is until the date all of the equity interests in Mailifang have been purchased by KongZhong Beijing.

Technical and Consulting Services Agreements. Beijing AirInbox entered into a technical and consulting services agreement with KongZhong Beijing on March 31, 2004, pursuant to which KongZhong Beijing will provide ongoing technical and consulting services to Beijing AirInbox. The services to be provided under the agreement include, among others, network and website design and maintenance, research and development and consulting on sales, marketing, customer services, human resources, market research and public relations. The service fees will be calculated quarterly, based on a certain percentage of the revenues of Beijing AirInbox for such quarter. KongZhong Beijing may partially waive any quarterly payment as long as: (i) the cash and cash equivalents owned by Beijing AirInbox is below RMB100 million (approximately $12,806,229); and (ii) the payment of service fees by Beijing AirInbox is no less than RMB5 million (approximately $640,311) for such quarter. The term of this agreement is for ten years from the date of execution, automatically renewable at KongZhong Beijing’s option.

Beijing AirInbox entered into a technical and consulting services agreement with KongZhong China on July 1, 2006, pursuant to which KongZhong China will provide technical consulting and services to Beijing AirInbox. The services to be provided under the agreement include, among others, maintenance of the machine room and website, network services and maintenance of such services, integrated security services for the website, designing and implementation of the website network, installation of the server and 24 hours’ daily maintenance, development and testing of new products, marketing of new products, creation, designing, updating and maintenance of the web pages, maintenance of the clients’ service platform, training of employees, market analysis and public relations. The service fees will be calculated monthly, based on a certain percentage of the fees received by Beijing AirInbox during each month. The term of this agreement is for ten years from the date of execution. This agreement is automatically renewable unless KongZhong China gives its written consent to terminate the agreement three months prior to expiration of the agreement.

Beijing Boya Wuji entered into an exclusive technical and consulting services agreement with KongZhong Beijing on March 31, 2004, pursuant to which KongZhong Beijing will provide certain technical and consulting services to Beijing Boya Wuji on an exclusive basis. The services to be provided under the agreement include, among others, network and website design and maintenance, research and development and consulting services on sales, marketing, customer services, human resources, market research and public relations. The service fees will be calculated quarterly, based on a certain percentage of the revenues of Beijing Boya Wuji for such quarter, provided that Beijing Boya Wuji is profitable. The term of the agreement is for ten years from the date of execution, automatically renewable at KongZhong Beijing’s option.

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Beijing WINT entered into an exclusive technical and consulting services agreement with KongZhong Beijing on February 28, 2005, pursuant to which KongZhong Beijing will provide certain technical and consulting services to Beijing WINT on an exclusive basis. The services to be provided under the agreement include, among others, network and website design and maintenance, research and development and consulting services on sales, marketing, customer services, human resources, market research and public relations. The service fees will be calculated monthly, based on a certain percentage of the revenues of Beijing WINT for such month. The term of the agreement is until KongZhong Beijing is dissolved according to PRC law.

Beijing Chengxitong entered into an exclusive technical and consulting services agreement with KongZhong Beijing on November 21, 2005, pursuant to which KongZhong Beijing will provide certain technical and consulting services to Beijing Chengxitong on an exclusive basis. The services to be provided under the agreement include, among others, network and website design and maintenance, research and development and consulting services on sales, marketing, customer services, human resources, market research and public relations. The service fees will be calculated monthly, based on a certain percentage of the revenues of Beijing Chengxitong for such month. The term of the agreement is until KongZhong Beijing is dissolved according to PRC law.

BJXR entered into an exclusive technical and consulting services agreement with Beijing Anjian Xingye on January 26, 2006, pursuant to which Beijing Anjian Xingye will provide certain technical and consulting services to BJXR on an exclusive basis. The services to be provided under the agreement include, among others, network and website design and maintenance, research and development and consulting services on sales, marketing, customer services, human resources, market research and public relations. The service fees will be calculated quarterly, based on a certain percentage of the revenues of BJXR. The term of the agreement is until Beijing Anjian Xingye is dissolved according to PRC law or elects to terminate the agreement.

Mailifang entered into an exclusive technical and consulting services agreement with KongZhong Beijing on April 1, 2009, pursuant to which KongZhong Beijing will provide certain technical and consulting services to Mailifang on an exclusive basis. The services to be provided under the agreement include, among others, network and website design and maintenance, research and development and consulting services on sales, marketing, customer services, human resources, market research and public relations. The service fees will be calculated monthly, based on a certain percentage of the revenues of Mailifang for such month. The term of the agreement is until KongZhong Beijing is dissolved according to PRC law.

Equity Pledge Agreements. Yunfan Zhou, Songlin Yang, Yang Cha and Zhen Huang, who were the shareholders of Beijing AirInbox, entered into an amended and restated equity pledge agreement with KongZhong Beijing on May 10, 2004. Pursuant to a capital contribution transfer agreement under which Yang Cha and Yunfan Zhou transferred their capital contributions to Linguang Wu and Guijun Wang, Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, the current shareholders of Beijing AirInbox, entered into an amended and restated equity pledge agreement with KongZhong Beijing on October 16, 2006. Under this agreement, each of these shareholders pledged all of his or her interest in Beijing AirInbox to KongZhong Beijing to guarantee the performance by Beijing AirInbox of its obligations under the exclusive technical and consulting services agreement, dated March 31, 2004, between Beijing AirInbox and KongZhong Beijing. The term of the agreement is from the date on which the pledges are recorded on the shareholder’s register of Beijing AirInbox until all the obligations of Beijing AirInbox guaranteed under this agreement have been fully performed.

Yunfan Zhou and Zhen Huang, who were the shareholders of Beijing Boya Wuji, entered into an equity pledge agreement with KongZhong Beijing on March 31, 2004. Pursuant to this agreement, each of these shareholders pledged all of his or her interest in Beijing Boya Wuji to KongZhong Beijing to guarantee the performance by Beijing Boya Wuji of its obligations under the exclusive technical and consulting services agreement, dated March 31, 2004, between Beijing Boya Wuji and KongZhong Beijing. Following the acquisition by Beijing AirInbox of 100% of the equity interest of Beijing Boya Wuji, KongZhong Beijing, Yunfan Zhou and Zhen Huang entered into a termination agreement on October 27, 2006 pursuant to which the equity pledge agreement was terminated with effect from the same date.

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Yang Yang, Linguang Wu and Guijun Wang, who were the shareholders of Beijing WINT, entered into an equity pledge agreement with KongZhong Beijing on February 28, 2005. Pursuant to a capital contribution transfer agreement under which each of Linguang Wu and Guijun Wang transferred their equity interest in Beijing WINT to Hai Qi, Yang Yang and Hai Qi, the then shareholders of Beijing WINT, entered into an equity pledge agreement with KongZhong Beijing and Beijing WINT on June 29, 2006. Pursuant to a capital contribution transfer agreement under which Hai Qi transferred his equity interest in Beijing WINT to Jingye Sun and Li Ai, Yang Yang, Jingye Sun and Li Ai, the current shareholders of Beijing WINT, entered into an equity pledge agreement with KongZhong Beijing and Beijing WINT on September 5, 2008. Under this agreement, each of these shareholders pledged all of his or her interest in Beijing WINT to KongZhong Beijing to guarantee the performance by Beijing WINT of its obligations under the exclusive technical and consulting services agreement dated February 28, 2005 between KongZhong Beijing and Beijing WINT, and the business operation agreement and share option agreement dated September 5, 2008 between Beijing WINT, its shareholders and KongZhong Beijing. The term of this agreement is from the date on which the pledges are recorded on the shareholders’ register of Beijing WINT until all obligations of Beijing WINT guaranteed under this agreement have been fully performed and KongZhong Beijing confirms the same in writing. This agreement supersedes the equity pledge agreement entered into among Yang Yang, Hai Qi, Beijing WINT and KongZhong Beijing on June 29, 2006.

Yang Li and Xuelei Wu, the shareholders of Beijing Chengxitong, entered into an equity pledge agreement with KongZhong Beijing on November 21, 2005. Pursuant to this agreement, each of these shareholders of Beijing Chengxitong pledged all of his or her interest in Beijing Chengxitong to KongZhong Beijing to guarantee the performance by Beijing Chengxitong of its obligations under the exclusive and technical consulting services agreement, the business operation agreement and the option agreement dated November 21, 2005 among Beijing Chengxitong and its shareholders and KongZhong Beijing. The term of this agreement is until all the obligations of Beijing Chengxitong guaranteed under this agreement have been fully performed and Beijing Chengxitong confirms the same in writing.

Yang Li and Guijun Wang, the shareholders of BJXR, entered into an equity pledge agreement with Beijing Anjian Xingye on January 28, 2005. Pursuant to this agreement, each of these shareholders of BJXR pledged all of his or her interest in BJXR to Beijing Anjian Xingye to guarantee the performance by BJXR of its obligations under the exclusive and technical consulting services agreement and the business operation agreement dated January 26, 2006 and the option agreement dated January 28, 2006 among BJXR and its shareholders and Beijing Anjian Xingye. The term of this agreement is until all the obligations of BJXR guaranteed under this agreement have been fully performed and Beijing Anjian Xingye confirms the same in writing.

Xu Guo and Yang Yang, the shareholders of Mailifang, entered into an equity pledge agreement with Mailifang KongZhong Beijing onApril 1, 2009. Pursuant to this agreement, each of these shareholders of Mailifang pledged all of his or her interest in Mailifang to KongZhong Beijing to guarantee the performance by Mailifang of its obligations under the exclusive and technical consulting services agreement, the business operation agreement and the option agreement dated March 27, 2009among Mailifang, its shareholders and KongZhong Beijing. The term of this agreement is until all the obligations of Mailifang guaranteed under this agreement have been fully performed and Mailifang confirms the same in writing.

Business Operation Agreements. Beijing AirInbox, its then shareholders, Yunfan Zhou, Songlin Yang, Yang Cha and Zhen Huang, and KongZhong Beijing entered into an amended and restated business operation agreement on May 10, 2004. On October 16, 2006, following the execution of a capital contribution transfer agreement, the new shareholders of Beijing AirInbox, Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, entered into an amended and restated business operation agreement with Beijing AirInbox and KongZhong Beijing. This agreement supersedes the amended and restated business operation agreement of May 10, 2004. Pursuant to the October 16, 2006 agreement, Beijing AirInbox and its shareholders agreed that, without the prior written consent of KongZhong Beijing or its designees, Beijing AirInbox will not engage in any transactions which may materially affect its assets, obligations, rights or operations, including (i) conducting any business which is beyond the ordinary scope of business; (ii) borrowing money or incurring any debt from any third party; (iii) changing or dismissing any directors or senior officers; (iv) selling or acquiring any assets or rights valued at more than RMB0.2 million (approximately $25,612), including but not limited to intellectual property rights; (v) providing guarantees for any third party with its assets or intellectual property rights or any other guarantee or incurring any obligations over its assets; (vi) amending the articles of association or changing the business scope of Beijing AirInbox; (vii) changing the normal operational process or amending any material bylaws of Beijing AirInbox and (viii) assigning to any third party its rights or obligations under this agreement. In addition, Beijing AirInbox and its shareholders will appoint the designees of KongZhong Beijing as the directors and chief director of Beijing AirInbox, and the senior officers of KongZhong Beijing as the general manager, chief financial officer and other senior officers of Beijing AirInbox. Each of the shareholders has also agreed to execute a power of attorney to grant the designees of KongZhong Beijing authority to exercise all of his or her shareholder rights in Beijing AirInbox. The term of this agreement is for ten years from the date of execution and is automatically renewable unless KongZhong Beijing gives written notice three months prior to expiration of the agreement.

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Beijing WINT, its then shareholders, Yang Yang, Hai Qi, and KongZhong Beijing entered into a business operation agreement on June 29, 2006. On September 5, 2008, following the execution of a capital contribution transfer agreement, the new shareholders of Beijing WINT, Yang Yang, Jingye Sun and Li Ai, entered into a business operation agreement with Beijing WINT and KongZhong Beijing. This agreement supersedes the business operation agreement of June 29, 2006. Pursuant to the September 5, 2008 agreement, Beijing WINT and its shareholders agreed that, without the prior written consent of KongZhong Beijing or its designees, Beijing WINT will not engage in any transactions which may materially affect its assets, obligations, rights or operations, including (i) conducting any business which is beyond the ordinary scope of business; (ii) borrowing money or incurring any debt from any third party; (iii) changing or dismissing any directors or senior officers; (iv) selling or acquiring any assets or rights valued at more than RMB0.2 million (approximately $25,612), including but not limited to intellectual property rights; (v) providing guarantees for any third party with its assets or intellectual property rights or any other guarantees or incurring any obligations over its assets; (vi) amending the articles of association or changing the business scope of Beijing WINT; (vii) changing the normal operational process or amending any material bylaws of Beijing WINT and (viii) assigning to any third party its rights or obligations under this agreement. In addition, Beijing WINT and its shareholders will appoint the designees of KongZhong Beijing as the directors and president of Beijing WINT, and the nominees of KongZhong Beijing as the general manager, chief financial officer and other senior officers of Beijing WINT. Each of the shareholders has also agreed to execute a power of attorney to grant the designees of KongZhong Beijing authority to exercise all of the respective shareholder’s rights in Beijing WINT. The term of this agreement is for ten years from the date of execution and is automatically renewable unless KongZhong Beijing gives written notice three months prior to expiration of the agreement.

Beijing Chengxitong, its shareholders, Yang Li, Xuelei Wu and KongZhong Beijing entered into a business operation agreement on November 21, 2005. Pursuant to this agreement, Beijing Chengxitong and its shareholders agreed that, without the prior written consent of KongZhong Beijing or its designees, Beijing Chengxitong will not engage in any transactions that may have a material adverse effect on its assets, liabilities, equity or operations, including (i) conducting any business that is beyond normal business operations; (ii) lending to or assuming any obligations of a third party; (iii) replacing or dismissing any directors or senior officers; (iv) selling or purchasing any assets or rights valued at more than RMB0.2 million (approximately $25,612); (v) incurring any security interest over its assets and intellectual property on behalf of any third party; (vi) amending the articles of association or changing the business scope of Beijing Chengxitong; (vii) changing the normal operations or amending any material internal guidelines of Beijing Chengxitong and (viii) assigning any rights and obligations under this agreement to any third party. In addition, Beijing Chengxitong and its shareholders will appoint the designees of KongZhong Beijing as directors, general manager and other senior officers of Beijing Chengxitong. Each of the shareholders has also agreed to execute a power of attorney to grant the designees of KongZhong Beijing full power and authority to exercise all of the respective shareholders’ rights in Beijing Chengxitong. The term of the agreement is until KongZhong Beijing is dissolved according to PRC law or until KongZhong Beijing shall terminate the agreement by issuing written notice 30 days prior to the date of termination.

BJXR, its shareholders, Yang Li and Guijun Wang, and Beijing Anjian Xingye entered into a business operation agreement on January 26, 2006. Pursuant to this agreement, BJXR and its shareholders agreed that, without the prior written consent of Beijing Anjian Xingye or its designees, BJXR will not engage in any transactions that may have a material adverse effect on its assets, liabilities, equity or operations, including (i) conducting any business that is beyond normal business operations, (ii) lending to or assuming any obligations of a third party, (iii) replacing or dismissing any directors or senior officers, (iv) selling or purchasing any assets or rights valued at more than RMB0.2 million (approximately $25,612), (v) incurring any security interest over its assets and intellectual property on behalf of any third party, (vi) amending the articles of association or changing the business scope of BJXR, (vii) changing the normal operations or amending any material internal guidelines of BJXR, and (viii) assigning any rights and obligations under this agreement to any third party. In addition, BJXR and its shareholders will appoint the designees of Beijing Anjian Xingye as directors, general manager and other senior officers of BJXR. Each of the shareholders has also agreed to execute a power of attorney to grant the designees of Beijing Anjian Xingye full power and authority to exercise all of the respective shareholders’ rights in BJXR. The term of the agreement is until Beijing Anjian Xingye is dissolved according to PRC law or until Beijing Anjian Xingye shall terminate the agreement by issuing written notice 30 days prior to the date of termination.

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Mailifang, its shareholders, Xu Guo, Yang Yang and KongZhong Beijing entered into a business operation agreement on April 1, 2009. Pursuant to this agreement, Mailifang and its shareholders agreed that, without the prior written consent of KongZhong Beijing or its designees, Mailifang will not engage in any transactions that may have a material adverse effect on its assets, liabilities, equity or operations, including (i) conducting any business that is beyond normal business operations, (ii) lending to or assuming any obligations of a third party, (iii) replacing or dismissing any directors or senior officers, (iv) selling or purchasing any assets or rights valued at more than RMB0.2 million (approximately $29,274), (v) incurring any security interest over its assets and intellectual property on behalf of any third party, (vi) amending the articles of association or changing the business scope of Mailifang, (vii) changing the normal operations or amending any material internal guidelines of Mailifang, and (viii) assigning any rights and obligations under this agreement to any third party. In addition, Mailifang and its shareholders will appoint the designees of KongZhong Beijing as directors, general manager and other senior officers of Mailifang. Each of the shareholders has also agreed to execute a power of attorney to grant the designees of KongZhong Beijing full power and authority to exercise all of the respective shareholders’ rights in Mailifang. The term of the agreement is until KongZhong Beijing is dissolved according to PRC law or until KongZhong Beijing shall terminate the agreement by issuing written notice 30 days prior to the date of termination.

Powers of Attorney. Each of Yunfan Zhou, Songlin Yang, Yang Cha and Zhen Huang, the then shareholders of Beijing AirInbox, executed an irrevocable power of attorney on May 10, 2004, granting Yunfan Zhou or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing AirInbox. Pursuant to the capital contribution transfer agreement, dated October 16, 2006, under which Yang Cha and Yunfan Zhou transferred their equity interests in Beijing AirInbox to Linguang Wu and Guijun Wang, each of Linguang Wu and Guijun Wang executed an irrevocable power of attorney on October 16, 2006, granting Yunfan Zhou or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing AirInbox. Yunfan Zhou executed an undertaking letter on October 13, 2008 with Linguang Wu, Songlin Yang, Guijun Wang and Zhen Huang, the shareholders of Beijing AirInbox, to confirm that such shareholders revoked the power of attorney they previously granted to Yunfan Zhou. Each of Linguang Wu, Songlin Yang, Guijun Wang and Zhen Huang executed an irrevocable power of attorney on October 13, 2008, granting Leilei Wang or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing AirInbox.

Each of Yang Yang, Linguang Wu and Guijun Wang, the then shareholders of Beijing WINT, executed an irrevocable power of attorney on March 1, 2005, granting Yunfan Zhou or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing WINT. Pursuant to the capital contribution transfer agreement, dated June 29, 2006, under which each of Linguang Wu and Guijun Wang transferred their equity interests in Beijing WINT to Qi Hai, Qi Hai executed an irrevocable power of attorney on June 29, 2006, granting Yunfan Zhou or any other designee of KongZhong Beijing full power and authority to exercise all of his rights as a shareholder in Beijing WINT. Pursuant to the capital contribution transfer agreement, dated September 5, 2008, under which Hai Qi transferred his equity interest in Beijing WINT to Jingye Sun and Li Ai, each of Jingye Sun and Li Ai executed an irrevocable power of attorney on September 5, 2008, granting Yunfan Zhou or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing WINT. Yunfan Zhou executed an undertaking letter on October 13, 2008 with Yang Yang, Jingye Sun and Li Ai, the shareholders of Beijing WINT, to confirm that such shareholders revoked the power of attorney they previously granted to Yunfan Zhou. Each of Yang Yang, Jingye Sun and Li Ai executed an irrevocable power of attorney on October 13, 2008, granting Leilei Wang or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing WINT.

Each of Yang Li and Xuelei Wu, the shareholders of Beijing Chengxitong, executed an irrevocable power of attorney on November 21, 2005, granting Yunfan Zhou or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing Chengxitong. Yunfan Zhou executed an undertaking letter on October 13, 2008 with Yang Li and Xuelei Wu to confirm that they revoked the power of attorney they previously granted to Yunfan Zhou. Each of Yang Li and Xuelei Wu executed an irrevocable power of attorney on October 13, 2008, granting Leilei Wang or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Beijing Chengxitong.

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Each of Yang Li and Guijun Wang, the shareholders of BJXR, executed an irrevocable power of attorney on January 26, 2006, granting Yunfan Zhou or any other designee of Anjian Xingye full power and authority to exercise all of his or her rights as a shareholder in BJXR. Yunfan Zhou executed an undertaking letter on October 13, 2008 with Yang Li and Guijun Wang to confirm that they have revoked the power of attorney they previously granted to Yunfan Zhou. Each of Yang Li and Guijun Wang executed an irrevocable power of attorney on October 13, 2008, granting Leilei Wang or any other designee of Anjian Xingye full power and authority to exercise all of his or her rights as a shareholder in BJXR.

Each of Xu Guo and Yang Yang, the shareholders of Mailifang, executed an irrevocable power of attorney on April 1, 2009, granting Leilei Wang or any other designee of KongZhong Beijing full power and authority to exercise all of his or her rights as a shareholder in Mailifang.

Investment in HiU! Media

On January 11, 2008, we entered into a definitive agreement to acquire 9.87% of the total equity interest of HiU! Media for a consideration of $1.5 million. HiU! Media, a company incorporated in the Cayman Islands and based in the PRC, provides marketing and advertising networks and solutions targeting residential communities in the PRC. Prior to the transaction, Nick Yang, the Vice Chairman of our Board of Directors and the President and Chief Technology Officer of our company, had been a director and a significant shareholder of HiU! Media. As a result, he was excluded from our Board’s deliberation and decision with respect to the acquisition of the equity interest in HiU! Media. Subsequent to the closing of the transaction in January 2008, Nick Yang has continued to act as a director for and remains a significant shareholder of HiU! Media. We accounted for this investment by using the cost method.

Sale of Used Car

In October 2008, our company sold a used car to the wife of Yunfan Zhou, the former Chairman of our Board of Directors and Chief Executive Officer, for RMB200,000. The Audit Committee approved this sale.

Services for Wireless Search Business

While our company is in the process of terminating our project of developing wireless search business, Hui Chuang Xin Ying, a company controlled by Nick Yang, the Vice Chairman of our Board of Directors and the President and Chief Technology Officer of our company, has been providing certain technical services to our company to maintain the wireless search engine on Kong.net since September 2008. Hui Chuang Xin Yinghas not charged our company for its services.

Item 8. Financial Information

See “Item 18 — Financial Statements.”

Item 9. The Offer and Listing

Market and Share Price Information

Our ADSs, each representing 40 of our ordinary shares, have been listed on Nasdaq since July 9, 2004. Our ADSs trade under the symbol “KONG.” Nasdaq is the principal trading market for our ADSs, which are not listed on any other exchanges in or outside the United States.

The high and low closing prices of our ADSs on Nasdaq since listing are as follows:

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	Price per ADS (US$)
	High		Low
Annual:
2004(1)		11.97		5.33
2005		14.48		6.80
2006		15.04		5.56
2007		9.53		3.53
2008		6.89		2.44
Quarterly:
First Quarter, 2007		9.53		6.68
Second Quarter, 2007		7.28		4.73
Third Quarter, 2007		8.53		3.53
Fourth Quarter, 2007		8.46		4.49
First Quarter, 2008		6.89		4.33
Second Quarter, 2008		5.18		3.73
Third Quarter, 2008		4.20		3.51
Fourth Quarter, 2008		3.68		2.44
First Quarter, 2009		5.28		3.47
Monthly:
October 2008		3.60		2.44
November 2008		3.42		2.83
December 2008		3.68		3.23
January 2009		4.39		3.47
February 2009		5.03		3.85
March 2009		5.28		4.63
April 2009 (through April 24, 2009)		6.64		5.06

(1) Our ADSs commenced trading on the Nasdaq Global Market on July 9, 2004.

Item 10. Additional Information

Share Capital

Not applicable.

Memorandum and Articles of Association

On September 6, 2005, our shareholders at an annual general meeting voted to amend our articles of association to (i) set a three-year term for Directors, whose terms previously had not been limited by the articles of association, (ii) create a Board with three classes of Directors, (iii) authorize the Board to appoint Directors in addition to the existing Directors, up to a total of 11 Directors, and (iv) allow shareholders to remove any Director during his term only for negligence or other reasonable cause. Our shareholders also voted to amend our articles of association to authorize the Board to cause us to repurchase our own shares from time to time. These amendments may have the effect of delaying, deferring or preventing a change of control of our company.

The section entitled “Description of Share Capital” contained in our registration statement on Form F-1 (File No. 333-116172) is incorporated herein by reference.

Material Contracts

Other than the contracts described in “Item 4 — Information on the Company — Investments and Acquisitions” and “Item 7 — Major Shareholders and Related Party Transactions,” we and our operating companies have not entered into any material contracts that are not in the ordinary course of business within the two years preceding the date of this annual report.

Exchange Controls

The Cayman Islands currently have no exchange control restrictions.

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Taxation

The following discussion of the material Cayman Islands and United States Federal income tax consequences of an investment in the ADSs is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible tax consequences relating to an investment in the ADSs, such as the tax consequences under state, local and other tax laws.

Cayman Islands Taxation

To the extent the following discussion relates to Cayman Islands law with respect to income tax consequences of an investment in our ADSs, it represents the opinion of Maples and Calder.

The Cayman Islands currently have no exchange control restrictions and no income, corporate or capital gains tax, estate duty, inheritance tax, gift tax or withholding tax applicable to us or to any holder of ADSs. Accordingly, any payment of dividends or any other distribution made on the ordinary shares will not be subject to taxation in the Cayman Islands, no Cayman Islands withholding tax will be required on such payments to any shareholder and gains derived from the sale of ordinary shares will not be subject to Cayman Islands capital gains tax. The Cayman Islands are not party to any double taxation treaties.

We have received an undertaking from the Governor-in-Council of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, for a period of 20 years from the date of such undertaking (which was May 21, 2002), no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations will apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax will be payable (i) on or in respect of our shares, debentures or other obligations or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by us.

United States Taxation

This section describes the material United States Federal income tax consequences to a U.S. holder (as defined below) of the acquisition, ownership and disposition of our ADSs. It applies to you only if you hold your ADSs as capital assets for tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

· a bank;

· a dealer in securities or currencies;

· a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings;

· a tax-exempt organization;

· an insurance company;

· a person liable for alternative minimum tax;

· a person that actually or constructively owns 10% or more of our voting stock;

· a person that holds ADSs that are a hedge or that are hedged against currency risks or as part of a straddle or a conversion transaction; or

· a person whose functional currency is not the U.S. dollar.

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This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis. There is currently no comprehensive tax treaty between the United States and the Cayman Islands. In addition, this section is based in part upon the representations of the depositary bank and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

You are a U.S. holder if you are a beneficial owner of ADSs and you are:

· a citizen or resident of the United States;

· a domestic corporation;

· an estate whose income is subject to United States Federal income tax regardless of its source; or

· a trust if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

If a partnership holds the ADSs, the United States Federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership. A partner in a partnership holding the ADSs should consult its tax advisor with regard to the United States Federal income tax treatment of its investment in the ADSs.

You should consult your own tax advisor regarding the United States Federal, state and local tax consequences of owning and disposing of the ADSs in your particular circumstances.

This discussion addresses only United States Federal income taxation.

In general, and taking into account the earlier assumptions, for United States Federal income tax purposes, if you hold ADSs, you will be treated as the owner of the shares represented by those ADSs. Exchange of shares for ADSs, and ADSs for shares, generally will not be subject to United States Federal income tax.

Taxation of Dividends

Under the United States Federal income tax laws, and subject to the PFIC rules discussed below, if you are a U.S. holder, the gross amount of any dividend we pay out of our current or accumulated earnings and profits (as determined for United States Federal income tax purposes) is subject to United States Federal income taxation. If you are a non-corporate U.S. holder, dividends paid to you in taxable years beginning before January 1, 2011 that constitute qualified dividend income will be taxable to you at a maximum tax rate of 15% provided that you hold the ADSs for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date and meet other holding period requirements. Dividends we pay with respect to the ADSs generally will not be qualified dividend income for any distribution in any year that we are a PFIC or in the year following a year in which we were a PFIC. Those dividends will be taxable to you at ordinary income tax rates. For all other years, dividends we pay with respect to the ADSs generally will be qualified dividend income, provided that, in the year that you receive the dividend, the ADSs are readily tradable on an established securities market in the United States.

The dividend is taxable to you when the depositary bank receives the dividend, actually or constructively. The depositary will be in constructive receipt of the dividend when the dividend is made unqualifiedly subject to the demand of the depositary. The dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. Distributions in excess of current and accumulated earnings and profits, as determined for United States Federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the ADSs and thereafter as capital gain. If the dividend is declared and paid in a foreign currency, the amount of the dividend distribution that you must include in your income as a U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the spot foreign currency/U.S. dollar rate on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Therefore, since the value of the foreign currency may decrease before you actually convert the currency into U.S. dollars, you may actually be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will ultimately receive. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitation purposes.

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Dividends will be income from sources outside the United States, and, depending on your circumstances, will be either passive income or general income for purposes of computing the foreign tax credit allowable to you.

Taxation of Capital Gains

Subject to the PFIC rules discussed below, if you are a U.S. holder and you sell or otherwise dispose of your ADSs, you will recognize capital gain or loss for United States Federal income tax purposes equal to the difference between the U.S. dollar value of the amount that you realize and your tax basis, determined in U.S. dollars, in your ADSs. Capital gain of a non-corporate U.S. holder that is recognized in a taxable year beginning before January 1, 2011 is generally taxed at a maximum rate of 15% where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. Your ability to deduct capital losses is subject to limitations.

PFIC Rules

We believe that the ADSs are likely to be treated as stock of a PFIC for United States Federal income tax purposes.

In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which you held your ADSs:

· at least 75% of our gross income for the taxable year is passive income; or

· at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income.

Passive income generally includes dividends, interest, royalties, rents (not including certain rents and royalties derived in the active conduct of a trade or business), annuities and gains from assets that produce passive income. If a foreign corporation owns directly or indirectly at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, and as receiving directly its proportionate share of the other corporation’s income.

Based upon an analysis of the value of our assets as of December 31, 2008, we were a PFIC during 2008 for U.S. Federal income tax purposes. As a result, in general, if you are a U.S. holder, you will be subject to the special PFIC tax rules or, if you make a mark-to-market election, the mark-to-market rules.

Special PFIC Tax Rules

If you are a U.S. holder and do not make a mark-to-market election, you will be subject to special rules with respect to:

· any gain you realize on the sale or other disposition of your ordinary shares or ADSs (including the pledging of your ordinary shares or ADSs as security for a loan); and

· any excess distribution that we make to you (generally, any distributions to you during a single taxable year that are greater than 125% of the average annual distributions received by you in respect of the ordinary shares or ADSs during the three preceding taxable years or, if shorter, your holding period for the ordinary shares or ADSs).

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Under these rules:

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

· the amount allocated to the taxable year in which you realized the gain or excess distribution will be taxed as ordinary income;

· the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year; and

· the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such prior year.

Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.

Mark-to-Market Rules

The special PFIC tax rules described above will not apply to you if you make an effective mark-to-market election, that is, you elect to mark-to-market annually the gains and losses in our ADSs, and our ADSs are treated as “marketable stock.” We believe that our ADSs are and will continue to be “marketable stock” as long as they continue to be traded on Nasdaq, other than in de minimis quantities, on at least 15 days during each calendar quarter. Under the mark-to-market rules, you will include as ordinary income each year the excess, if any, of the fair market value of your ADSs at the end of the taxable year over your adjusted basis in your ADSs. These amounts of ordinary income will not be eligible for the favorable tax rates applicable to qualified dividend income or long-term capital gains. You may also take ordinary losses in respect of the excess, if any, of the adjusted basis of your ADSs over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). Your basis in the ADSs will be adjusted to reflect any such income or loss amounts. Your gain, if any, recognized upon the sale of your ADSs will be taxed as ordinary income. The mark-to-market election will generally apply to any taxable year in which we are treated as a PFIC and you hold our ADSs.

In addition, notwithstanding any election you make with regard to the ADSs, dividends that you receive from us will not constitute qualified dividend income to you if we are a PFIC either in the taxable year of the distribution or the preceding taxable year. Dividends that you receive that do not constitute qualified dividend income are not eligible for taxation at the 15% maximum rate applicable to qualified dividend income. Instead, you must include the gross amount of any such dividend paid by us out of our accumulated earnings and profits (as determined for United States Federal income tax purposes) in your gross income and it will be subject to tax at rates applicable to ordinary income.

Your ADSs will be treated as stock in a PFIC if we were a PFIC at any time during your holding period in your ADSs, even if we are not currently a PFIC. For purposes of this rule, if you make a mark-to-market election with respect to your ADSs, you will be treated as having a new holding period in your ADSs beginning on the first day of the first taxable year beginning after the last taxable year for which the mark-to-market election applies.

Please consult your tax advisor as to the availability and tax consequences of a mark-to-market election.

If you own ADSs during any year that we are a PFIC, you must file Internal Revenue Service Form 8621.

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Dividends and Paying Agents

Not applicable.

Statement by Experts

Not applicable.

Documents on Display

You can read and copy documents referred to in this annual report that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges.

Subsidiary Information

Not applicable.

Item 11. Quantitative and Qualitative Disclosures About Market Risks

Interest Rate Risk

Our exposure to market risk for changes in interest rates relates primarily to the interest income generated by our cash deposits with our banks. We have not used any derivative financial instruments in our investment portfolio. Interest earning instruments carry a degree of interest rate risk. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. However, our future interest income may fall short of expectations due to changes in interest rates.

Foreign Currency Risk

While our reporting currency is the U.S. dollar, the majority of our revenues, costs and liabilities are denominated in Renminbi. As of December 31, 2008, about 63% of our assets were denominated in Renminbi. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be impacted by fluctuations in the exchange rate between U.S. dollars and Renminbi.

The value of the Renminbi fluctuates and is subject to changes in PRC political and economic conditions. On July 21, 2005, the People’s Bank of China introduced a managed floating exchange rate regime based on market demand and supply with reference to a basket of currencies. Daily fluctuations of the Renminbi against the basket of currencies were limited to 0.3% per day until May 21, 2007, when the floating band was widened to 0.5% per day, according to an announcement by the People’s Bank of China. The Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the long term. We cannot guarantee that the Renminbi will not be permitted to enter into a full float, which also may result in a significant appreciation or depreciation of the Renminbi against the U.S. dollar. Because we receive substantially all of our revenues in Renminbi and a majority of our cash and cash equivalents are denominated in Renminbi, any fluctuation in the exchange rate against the U.S. dollar will affect our balance sheet and earnings per share in U.S. dollar terms as well as the value of, and dividends, if any, payable on, our ordinary shares in U.S. dollar terms and the value of any U.S. dollar-denominated investments we may make in the future. As of December 31, 2008, we had cash and cash equivalents in the amount of $136.05 million. A 1.0% appreciation of the Renminbi against the U.S. dollar will result in an estimated increase of approximately $1.05 million in our total amount of cash and cash equivalents, and a 1.0% appreciation of the U.S. dollar against the Renminbi will result in a decrease of approximately $1.03 million in our total amount of cash and cash equivalents.

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In recent years, the government of the PRC has been under international pressure to revalue the Renminbi in order to encourage Chinese imports of foreign products. Because we receive substantially all of our revenues in Renminbi, any fluctuation in the exchange rate between U.S. dollars and Renminbi will affect our balance sheet and earnings per share in U.S. dollar terms as well as the value of, and dividends, if any, payable on, our ordinary shares in U.S. dollar terms. See “Item 3 — Key Information — Risk Factors — Risks Relating to the People’s Republic of China — Fluctuation of the Renminbi could adversely affect the value of and dividends payable on our ADSs.”

As part of our cash management, we converted a small portion of our cash and cash equivalents in U.S. dollars into euros in 2007. We converted such cash and cash equivalents back into U.S. dollars in 2008. As a result, we currently do not have any cash or cash equivalent in currencies other than U.S. dollar or Renminbi. To date, we have not entered into any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk and may in the future experience economic loss as a result of any foreign currency exchange rate fluctuations.

Inflation

From our inception to 2006, the PRC did not experience significant inflation. However, according to the China Statistical Bureau, the PRC’s overall national inflation rate, as represented by the general consumer price index, increased from 1.8% in 2006 to 4.8% in 2007 and decreased to 4.5% in 2008. We do not expect the inflation rate to increase in the coming year. Inflation generally affects us by increasing the cost of our personnel, technology, content and rent. As we intend to meet our future funding needs through cash flow generated from operating activities and the proceeds from our initial public offering, we do not believe inflation will have a material effect on our financing cost.

Item 12. Description of Securities Other than Equity Securities

Not applicable.

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PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

None.

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

Material Modifications to the Rights of Security Holders

On September 6, 2005, our shareholders at an annual general meeting voted to amend our articles of association to (i) set a three-year term for Directors, whose terms previously had not been limited by the articles of association, (ii) create a Board with three classes of Directors, (iii) authorize the Board to appoint Directors in addition to the existing Directors, up to a total of 11 Directors, and (iv) allow shareholders to remove any Director during his term only for negligence or other reasonable cause. Our shareholders also voted to amend our articles of association to authorize the Board to cause us to repurchase our own shares from time to time. These amendments may have the effect of delaying, deferring or preventing a change of control of our company.

In connection with the issuance of our convertible senior note and warrant to NGP, we have agreed on certain covenants. As long as NGP holds the convertible senior note or the warrant and maintains ownership of an aggregate amount of not less than 78 million of our ordinary shares comprised of the ordinary shares into which the convertible senior note is converted or convertible and for which the warrant is exercised or exercisable, we cannot, without the prior written consent of NGP, (i) authorize or issue any security senior to or pari passu with the convertible senior note or any security senior to our ordinary shares; (ii) enter into any agreement for indebtedness, including guarantees and like contingent obligations or (iii) authorize or issue any ordinary shares for an amount less than $0.125 per ordinary share, or $5.0 per ADS, such that the amounts of securities or obligations described in (i), (ii) and (iii) would exceed $10,000,000, either individually or in the aggregate. Under the same conditions, we cannot, without the prior written consent of NGP, change the terms of the convertible senior note or warrant; engage in any related party transaction, other than those in the ordinary course of business, with any of our executive officers, Directors, any holder of 5% or more of our voting shares as reflected in our Register of Members or the Schedule 13D or 13E filed with the SEC, or any affiliate of our company, executive officers, Directors or such holders of our voting shares; or make any recommendation to holders of our ordinary shares or ADSs or take other actions by our Board of Directors that would materially and adversely affect NGP’s rights under the convertible senior note or warrant or the ordinary shares issuable upon their respective conversion or exercise, subject to applicable laws, including laws governing the fiduciary duties of our Board of Directors, and our Memorandum and Articles of Association.

Use of Proceeds

The following “Use of Proceeds” information relates to our registration statement on Form F-1 (File No. 333-116172) filed by us in connection with our initial public offering. The registration statement became effective on July 8, 2004.

The net proceeds to us from our initial public offering, after deducting fees and expenses, were $73,434,703. As of December 31, 2008, we spent $37.3 millionof the net proceeds to expand our business through acquisitions, $13.8million on general corporate purposes, and $0.8 million on our share repurchase plan. We anticipate that the remaining proceeds from our initial public offering would be used to fund additional acquisition activities or for general corporate purposes. In addition, up to $9.2 million of the remaining proceeds from our initial public offering may be used to fund the share repurchase plan.The following table sets forth our use of the net proceeds of our initial public offering as of December 31, 2008:

Use of Proceeds	Amount (in thousands of U.S. dollars)
Acquisition of or investment in other businesses		37,300
General corporate purposes		13,821
Share repurchase		759

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Item 15. Controls and Procedures

Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this annual report. They have concluded that, as of the end of the fiscal year covered by this annual report, our disclosure controls and procedures were designed, and were effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and were also effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of 17 CFR 240.a13a-15 or 240.15d that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act for our company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles, and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance with respect to consolidated financial statement preparation and presentation, and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

As required by Section 404 of the Sarbanes-Oxley Act and related rules as promulgated by the SEC, our management assessed the effectiveness of the internal control over financial reporting as of December 31, 2008 using criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, our management has concluded that the internal control over financial reporting was effective as of December 31, 2008 based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

97

Attestation Report of the Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of KongZhong Corporation

We have audited the internal control over financial reporting of KongZhong Corporation, its subsidiaries and variable interest entities (collectively, the “Company”) as of December 31, 2008, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2008 of the Company and our report dated April 24, 2009, expressed an unqualified opinion on those consolidated financial statements.

/s/ Deloitte Touche Tohmatsu CPA Ltd.

Beijing, The People’s Republic of China

April 24, 2009

98

Item 16A. Audit Committee Financial Expert

Our Board determined that Hope Ni and Xiaoxin Chen, who are our Independent Directors, according to the requirements of the U.S. securities laws and the Nasdaq Listing Rules, are audit committee financial experts within the meaning of the U.S. securities laws. See “Item 6 — Directors and Senior Management and Employees.”

Item 16B. Code of Ethics

We have adopted a code of ethics that applies to all our employees, including our chief executive officer, chief financial officer, president and financial controller. We have filed the code of ethics as an exhibit to this annual report and have posted the text of such code on our Internet website at http://ir.kongzhong.com/codeofethics.htm.

Item 16C. Principal Accountant Fees and Services

Deloitte Touche Tohmatsu CPA Ltd. has served as our independent registered public accounting firm for each of the fiscal years ended on December 31, 2006, 2007 and 2008, for which audited financial statements appear in this annual report on Form 20-F. The independent registered public accounting firm is elected annually by our shareholders at our annual general meeting. The audit committee will propose to our shareholders at the 2009 annual general meeting that Deloitte Touche Tohmatsu CPA Ltd. be elected as our auditor for fiscal year 2009.

Audit Fees

The aggregate fees billed in each of 2006, 2007 and 2008 for professional services rendered by the independent registered public accounting firm for the audit of our annual financial statements or services that are normally provided by the accountant in connection with statutory or regulatory filings or engagements were $0.3 million, $0.6 million and $0.7 million, respectively.

Audit-Related Fees

The aggregate fees billed in each of 2006, 2007 and 2008 for assurance and related services rendered by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the caption “Audit Fees” above were $1,542, $27,764 and $38,294, respectively.

Tax Fees

The aggregate fees billed in each of 2006, 2007 and 2008 for professional services relating to tax compliance, tax advice and tax planning rendered by the independent registered public accounting firm were approximately $55,000, $59,000 and nil, respectively.

All Other Fees

The aggregate fees billed in each of 2006, 2007 and 2008 for products and services provided by the independent registered public accounting firm, other than the services reported above under the captions “Audit Fees,” “Audit-Related Fees” and “Tax Fees,” were nil in all three years.

Audit Committee’s Pre-approval Policies and Procedures

The Audit Committee of our Board is directly responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firms. Pursuant to the Audit Committee Charter adopted by the Board on June 11, 2004, the committee has the authority and responsibility to appoint, retain and terminate an independent registered public accounting firm (subject, if applicable, to ratification by our ordinary share holders), and has sole authority to approve all audit engagement fees and terms. The Audit Committee has the power to pre-approve, or to adopt appropriate procedures to pre-approve, all audit and non-audit services to be provided by the independent registered public accounting firms, and to consider whether the outside auditor’s provision of non-audit services to us is compatible with maintaining the independence of the outside auditors. The Audit Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent registered public accounting firms, provided that such approvals are presented to the Audit Committee at its next scheduled meeting.

99

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

Not applicable.

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

Period	Total Number of ADSs Purchased		Average Price Paid Per ADS		Total Number of ADSs Purchased as Part of Publicly Announced Plan(1)		Maximum Number of ADSs that May Yet be Purchased Under the Plan
November 2008 (November 20, 2008 to November 30, 2008)		43,996	$	3.1594		43,996		4,456,004
December 2008 (December 1, 2008 to December 31, 2008)		179,094	$	3.4064		223,090		4,276,910
January 2009 (January 1, 2009 to January 31, 2009)		109,083	$	3.4612		332,173		4,167,827
February 2009 (February 1, 2009 to February 28, 2009)		33,915	$	4.4589		366,088		4,133,912
March 2009 (March 1, 2009 to March 31, 2009)		202,906	$	4.9103		568,994		3,931,006
April 2009 (April 1, 2009 toApril 24, 2009)		0	$	0		568,994		3,931,006

(1) The share repurchase plan, for up to $10 million worth of ADSs, was publicly announced on October 27, 2008. Unless otherwise terminated, the plan is set to expire on December 31, 2009.

Item 16F. Change in Registrant’s Certifying Accountant.

Not applicable.

Item 16G. Corporate Governance.

Not applicable.

100

PART III

Item 17. Financial Statements

We have elected to provide financial statements and related information specified in Item 18.

Item 18. Financial Statements

See “Index to Consolidated Financial Statements for the Years Ended December 31, 2006, 2007 and 2008” for a list of all financial statements filed as part of this annual report.

Item 19. Exhibits

Number	Description of Exhibit
1.1(4)	Amended and Restated Articles of Association, as adopted on September 6, 2005.
1.2(1)	Amended and Restated Memorandum of Association, as adopted on June 11, 2004.
2.1(1)	Specimen of share certificate.
2.2(2)	Form of Deposit Agreement among the registrant, Citibank, N.A., as depositary, and Holders and Beneficial Holders of American Depositary Shares evidenced by American Depositary Receipts thereunder, including the form of American Depositary Receipt.
4.1(1)	Shareholders Agreement.
4.2(1)	Loan Agreement among KongZhong Corporation, as the lender, and Yunfan Zhou, Songlin Yang and Zhen Huang, each as a borrower, dated March 31, 2004.
4.3(5)	Amendment to Loan Agreement among KongZhong Corporation, Songlin Yang, Zhen Huang, Guijun Wang and Yunfan Zhou, dated October 16, 2006.
4.4(1)	Loan Agreement among KongZhong Corporation, as the lender, and Yang Cha and Songlin Yang, as the borrowers, dated March 31, 2004.
4.5(5)	Amendment to Loan Agreement among KongZhong Corporation, Songlin Yang, Linguang Wu and Yang Cha, dated October 16, 2006.
4.6(1)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated March 31, 2004.
4.7(5)	Exclusive Technical and Consulting Services Agreement between KongZhong China Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated July 1, 2006.
4.8(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated June 30, 2005.
4.9(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated July 29, 2005.
4.10(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated September 30, 2005.
4.11(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated December 31, 2005.
4.12(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated February 28, 2006.

101

Number	Description of Exhibit
4.13(5)	Amended and Restated Business Operation Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd., Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, dated October 16, 2006.
4.14(5)	Amended and Restated Equity Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, dated October 16, 2006.
4.15(5)	Amended and Restated Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, dated October 16, 2006.
4.16(5)	Power of Attorney by Yang Yang, dated March 1, 2005.
4.17	Power of Attorney by Yang Yang, dated October 13, 2008.
4.18(5)	Power of Attorney by Yang Li, dated November 21, 2005.
4.19	Power of Attorney by Yang Li, dated October 13, 2008.
4.20(5)	Power of Attorney by Xuelei Wu, dated November 21, 2005.
4.21	Power of Attorney by Xuelei Wu, dated October 13, 2008.
4.22(5)	Power of Attorney by Yang Li, dated January 28, 2006.
4.23	Power of Attorney by Yang Li, dated October 13, 2008.
4.24(5)	Power of Attorney by Guijun Wang, dated January 28, 2006.
4.25	Power of Attorney by Guijun Wang, dated October 13, 2008.
4.26	Power of Attorney by Jingye Sun, dated September 5, 2008.
4.27	Power of Attorney by Li Ai, dated September 5, 2008.
4.28(5)	Power of Attorney by Linguang Wu, dated October 16, 2006.
4.29	Power of Attorney by Linguang Wu, dated October 13, 2008.
4.30(5)	Power of Attorney by Guijun Wang, dated October 16, 2006.
4.31	Power of Attorney by Guijun Wang, dated October 13, 2008.
4.32	Power of Attorney by Songlin Yang, dated October 13, 2008.
4.33	Power of Attorney by Zhen Huang, dated October 13, 2008.
4.34	Power of Attorney by Jingye Sun, dated October 13, 2008.
4.35	Power of Attorney by Xu Guo, dated April 1, 2009.

102

Number	Description of Exhibit
4.36	Power of Attorney by Yang Yang, dated April 1, 2009.
4.37	Power of Attorney by Li Ai, dated October 13, 2008.
4.38	Undertaking by Yunfan Zhou with Linguang Wu, Songlin Yang, Guijun Wang and Zhen Huang, dated October 13, 2008.
4.39	Undertaking by Yunfan Zhou with Yang Yang, Jingye and Li Ai, dated October 13, 2008.
4.40	Undertaking by Yunfan Zhou with Yang Li and Xuelei Wu, dated October 13, 2008.
4.41	Undertaking by Yunfan Zhou with Yang Li and Guijun Wang, dated October 13, 2008.
4.42(1)	Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd., Yunfan Zhou, Songlin Yang and Zhen Huang, dated March 31, 2004.
4.43(1)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing Boya Wuji Technologies Co., Ltd., dated March 31, 2004.
4.44(1)	Letter Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and KongZhong Corporation, dated May 10, 2004.
4.45	Technical Service Agreement on MonternetÔ WAP Services between China Mobile Telecommunications Group Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated January 1, 2008.
4.46	Technical Service Agreement on Short Message Services between China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd, dated May 1, 2008.
4.47	Technical Service Agreement on MonternetÔ Multimedia Messaging Services between China Mobile Telecommunications Group Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated June 18, 2008.
4.48	Technical Service Agreement on Interactive Voice Responses Services between China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated November 11, 2008.
4.49(6)	Technical Service Agreement between China United Telecommunications Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated September 1, 2007.
4.50(6)	Technical Service Agreement between China Telecommunications Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated June 5, 2007.
4.51(1)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated May 27, 2004.
4.52(1)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated May 27, 2004.
4.53(4)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., for rooms 01, 02, 03, 09, 10 and 11 on the 7th  floor of the Tengda Building, dated February 25, 2005.
4.54(4)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., for rooms 01, 02, 03 and 11 on the 22nd floor of the Tengda Building, dated February 25, 2005.

103

Number	Description of Exhibit
4.55(4)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated July 31, 2005.
4.56	Lease Agreement No. DC-ZW-TD-12 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., for rooms 01, 02, 03, 10 and 11 on the 7th floor of the Tengda Building, dated May 12, 2008.
4.57	Lease Agreement No. DC-ZW-TD-07 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and KongZhong China Co., Ltd., for room 08 on the 32nd floor of the Tengda Building, dated February 28, 2008.
4.58	Supplemental Agreement No. 2 to the Lease Agreement No. DC-ZW-TD-07 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and KongZhong China Co., Ltd., for room 08 on the 32nd floor of the Tengda Building, dated May 12, 2008.
4.59	Lease Agreement No. DC-ZW-TD-06 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing Xinrui Technology Co., Ltd. for room 08 on the 8th floor of the Tengda Building, dated February 28, 2008.
4.60	Supplemental Agreement No. 2 to the Lease Agreement No. DC-ZW-TD-06 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing Xinrui Technology Co., Ltd. for room 08 on the 8th floor of the Tengda Building, dated May 12, 2008.
4.61	Joint Lease Agreement among Beijing Gaoling Estate Development Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd., Beijing Boya Wuji Technologies Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Beijing Xinrui Network Technology Co., Ltd., KongZhong China Co., Ltd., Beijing Chengxitong Information Technology Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated August 28, 2008.
4.62(6)	Form of Employment Agreement.
4.63(6)	Form of Confidentiality and Non-Compete Agreement.
4.64(5)	Capital Contribution Transfer Agreement among Yang Cha, Yunfan Zhou, Linguang Wu, Guijun Wang, Songlin Yang and Zhen Huang, dated October 16, 2006.
4.65(4)	Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Li Yang, Wu Xuelei and Wuhan Chengxitong Information Technology Co., Ltd., dated November 21, 2005.
4.66(4)	Share Purchase Agreement among KongZhong Corporation, Wang Gui Jun, Li Yang, Sharp Edge Group Limited, Anjian Xingye Technology (Beijing) Co., Ltd., Beijing Xinrui Network Technology Co., Ltd., the Xinrui Shareholders, Ho Chi Sing, Sun Jing Ye and Ai Li, dated January 26, 2006.
4.67(4)	Exclusive Technical and Consulting Services Agreement among Anjian Xingye Technology (Beijing) Co., Ltd. and Beijing Xinrui Network Technology Co., Ltd., dated January 26, 2006.
4.68(4)	Share Disposition Agreement among Anjian Xingye Technology (Beijing) Co., Ltd., Wang Guijun and Li Yang, dated January 28, 2006.
4.69(4)	Share Pledge Agreement among Anjian Xingye Technology (Beijing) Co., Ltd., Wang Guijun and Li Yang, dated January 26, 2006.
4.70(4)	Business Operations Agreement among Anjian Xingye Technology (Beijing) Co., Ltd., Beijing Xinrui Network Technology Co., Ltd., Wang Guijun and Li Yang, dated January 26, 2006.
4.71(4)	Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Wuhan Chengxitong Information Technology Co., Ltd., Li Yang and Wu Xuelei, dated November 21, 2005.

104

Number	Description of Exhibit
4.72(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Wuhan Chengxitong Information Technology Co., Ltd., dated November 21, 2005.
4.73(4)	Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Wuhan Chengxitong Information Technology Co., Ltd., Li Yang and Wu Xuelei, dated November 21, 2005.
4.74(5)	Capital Contribution Transfer Agreement among Zhen Huang, Yunfan Zhou and Beijing AirInbox Information Technologies Co., Ltd., dated October 27, 2006.
4.75(5)	Capital Contribution Transfer Agreement among Linguang Wu, Guijun Wang, Hai Qi and Yang Yang, dated June 29, 2006.
4.76	Capital Contribution Transfer Agreement among Hai Qi, Jingye Sun, Li Ai and Yang Yang, dated September 5, 2008.
4.77(5)	Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang and Hai Qi, dated June 29, 2006.
4.78	Amendment to Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang, Jingye Sun and Li Ai, dated September 5, 2008.
4.79(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing Wireless Interactive Network Technologies Co., Ltd., dated February 28, 2005.
4.80(5)	Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang and Hai Qi, dated June 29, 2006.
4.81	Amendment to Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang, Jingye Sun and Li Ai, dated September 5, 2008.
4.82(5)	Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang and Hai Qi, dated June 29, 2006.
4.83	Amendment to Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang, Jingye Sun and Li Ai, dated September 5, 2008.
4.84	Capital Contribution Transfer Agreement among Shaoying Zhang, Yanli You, Xu Guo and Yang Yang, dated March 27, 2009.
4.85	Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Xu Guo, Yang Yang and Shanghai Mailifang Communications Ltd., dated April 1, 2009.
4.86	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Shanghai Mailifang Communications Ltd., dated April 1, 2009.
4.87	Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Shanghai Mailifang Communications Ltd., Xu Guo and Yang Yang, dated April 1, 2009.
4.88	Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Shanghai Mailifang Communications Ltd., Xu Guo and Yang Yang, dated April 1, 2009.

105

Number	Description of Exhibit
4.89(4)	Lease Agreement between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.90(4)	Supplemental Agreement No. 1 to the Premises Lease Agreement No. TD0196 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.91(5)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0196 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated March 22, 2007.
4.92	Supplemental Agreement No. 4 to the Premises Lease Agreement No. TD0196 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated May 12, 2008.
4.93(4)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0155 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.94(4)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0175 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.95(4)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0130 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.96(5)	Supplemental Agreement No. 5 to the Premises Lease Agreement No. TD0130 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated March 22, 2007.
4.97	Supplemental Agreement No. 8 to the Premises Lease Agreement No. TD0130 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated May 12, 2008.
4.98(4)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0131 between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated April 16, 2006.
4.99(5)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0131 between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated March 22, 2007.
4.100	Supplemental Agreement No. 5 to the Premises Lease Agreement No. TD0131 between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated May 12, 2008.
4.101(4)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0154 between Beijing Gaoling Estate Development Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd. and KongZhong (China) Co., Ltd., dated April 14, 2006.
4.102(4)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0154 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.103	Note and Warrant Purchase Agreement among KongZhong Corporation, Leilei Wang and Nokia Growth Partners II, L.P., dated March 18, 2009.
4.104	First Amendment to Note and Warrant Purchase Agreement among KongZhong Corporation, Leilei Wang and Nokia Growth Partners II, L.P., dated April 9, 2009.

106

Number	Description of Exhibit
8.1	List of Significant Subsidiaries and Consolidated Entities.
11.1(3)	Code of Business Conduct and Ethics.
12.1	CEO Certification pursuant to Rule 13a – 14(a).
12.2	CFO Certification pursuant to Rule 13a – 14(a).
13.1	CEO Certification pursuant to Rule 13a – 14(b).
13.2	CFO Certification pursuant to Rule 13a – 14(b).
23.1	Consent of King & Wood.
23.2	Consent of Deloitte Touche Tohmatsu CPA Ltd.
23.3	Consent of American Appraisal China Limited.

(1) Previously filed as an exhibit to the Registration Statement on Form F-1 (File No. 333-116172) of KongZhong Corporation filed with the SEC on June 4, 2004 and incorporated herein by reference thereto.

(2) Previously filed as an exhibit to the Registration Statement on Form F-6 (File No. 333-116228) of KongZhong Corporation filed with the SEC on June 7, 2004 and incorporated herein by reference thereto.

(3) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation as filed with the SEC on June 28, 2005 and incorporated herein by reference thereto.

(4) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation filed with the SEC on June 16, 2006 and incorporated herein by reference thereto.

(5) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation filed with the SEC on June 20, 2007 and incorporated herein by reference thereto.

(6) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation filed with the SEC on June 19, 2008 and incorporated herein by reference thereto.

107

SIGNATURE

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

Date: April 29, 2009

KongZhong Corporation
By:	/s/ Leilei Wang
	Name:     Leilei Wang
	Title:       Chief Executive Officer

108

EXHIBITS

Number	Description of Exhibit
1.1(4)	Amended and Restated Articles of Association, as adopted on September 6, 2005.
1.2(1)	Amended and Restated Memorandum of Association, as adopted on June 11, 2004.
2.1(1)	Specimen of share certificate.
2.2(2)	Form of Deposit Agreement among the registrant, Citibank, N.A., as depositary, and Holders and Beneficial Holders of American Depositary Shares evidenced by American Depositary Receipts thereunder, including the form of American Depositary Receipt.
4.1(1)	Shareholders Agreement.
4.2(1)	Loan Agreement among KongZhong Corporation, as the lender, and Yunfan Zhou, Songlin Yang and Zhen Huang, each as a borrower, dated March 31, 2004.
4.3(5)	Amendment to Loan Agreement among KongZhong Corporation, Songlin Yang, Zhen Huang, Guijun Wang and Yunfan Zhou, dated October 16, 2006.
4.4(1)	Loan Agreement among KongZhong Corporation, as the lender, and Yang Cha and Songlin Yang, as the borrowers, dated March 31, 2004.
4.5(5)	Amendment to Loan Agreement among KongZhong Corporation, Songlin Yang, Linguang Wu and Yang Cha, dated October 16, 2006.
4.6(1)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated March 31, 2004.
4.7(5)	Exclusive Technical and Consulting Services Agreement between KongZhong China Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated July 1, 2006.
4.8(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated June 30, 2005.
4.9(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated July 29, 2005.
4.10(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated September 30, 2005.
4.11(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated December 31, 2005.
4.12(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated February 28, 2006.
4.13(5)	Amended and Restated Business Operation Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd., Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, dated October 16, 2006.
4.14(5)	Amended and Restated Equity Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, dated October 16, 2006.
4.15(5)	Amended and Restated Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Guijun Wang, Songlin Yang, Zhen Huang and Linguang Wu, dated October 16, 2006.

109

Number	Description of Exhibit
4.16(5)	Power of Attorney by Yang Yang, dated March 1, 2005.
4.17	Power of Attorney by Yang Yang, dated October 13, 2008.
4.18(5)	Power of Attorney by Yang Li, dated November 21, 2005.
4.19	Power of Attorney by Yang Li, dated October 13, 2008.
4.20(5)	Power of Attorney by Xuelei Wu, dated November 21, 2005.
4.21	Power of Attorney by Xuelei Wu, dated October 13, 2008.
4.22(5)	Power of Attorney by Yang Li, dated January 28, 2006.
4.23	Power of Attorney by Yang Li, dated October 13, 2008.
4.24(5)	Power of Attorney by Guijun Wang, dated January 28, 2006.
4.25	Power of Attorney by Guijun Wang, dated October 13, 2008.
4.26	Power of Attorney by Jingye Sun, dated September 5, 2008.
4.27	Power of Attorney by Li Ai, dated September 5, 2008.
4.28(5)	Power of Attorney by Linguang Wu, dated October 16, 2006.
4.29	Power of Attorney by Linguang Wu, dated October 13, 2008.
4.30(5)	Power of Attorney by Guijun Wang, dated October 16, 2006.
4.31	Power of Attorney by Guijun Wang, dated October 13, 2008.
4.32	Power of Attorney by Songlin Yang, dated October 13, 2008.
4.33	Power of Attorney by Zhen Huang, dated October 13, 2008.
4.34	Power of Attorney by Jingye Sun, dated October 13, 2008.
4.35	Power of Attorney by Xu Guo, dated April 1, 2009.
4.36	Power of Attorney by Yang Yang, dated April 1, 2009.
4.37	Power of Attorney by Li Ai, dated October 13, 2008.
4.38	Undertaking by Yunfan Zhou with Linguang Wu, Songlin Yang, Guijun Wang and Zhen Huang, dated October 13, 2008.
4.39	Undertaking by Yunfan Zhou with Yang Yang, Jingye and Li Ai, dated October 13, 2008.
4.40	Undertaking by Yunfan Zhou with Yang Li and Xuelei Wu, dated October 13, 2008.
4.41	Undertaking by Yunfan Zhou with Yang Li and Guijun Wang, dated October 13, 2008.
4.42(1)	Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd., Yunfan Zhou, Songlin Yang and Zhen Huang, dated March 31, 2004.
4.43(1)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing Boya Wuji Technologies Co., Ltd., dated March 31, 2004.
4.44(1)	Letter Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and KongZhong Corporation, dated May 10, 2004.
4.45	Technical Service Agreement on MonternetÔ WAP Services between China Mobile Telecommunications Group Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated January 1, 2008.
4.46	Technical Service Agreement on Short Message Services between China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd, dated May 1, 2008.
4.47	Technical Service Agreement on MonternetÔ Multimedia Messaging Services between China Mobile Telecommunications Group Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated June 18, 2008.
4.48	Technical Service Agreement on Interactive Voice Responses Services between China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated November 11, 2008.
4.49(6)	Technical Service Agreement between China United Telecommunications Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated September 1, 2007.
4.50(6)	Technical Service Agreement between China Telecommunications Corporation and Beijing AirInbox Information Technologies Co., Ltd., dated June 5, 2007.
4.51(1)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated May 27, 2004.
4.52(1)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated May 27, 2004.
4.53(4)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., for rooms 01, 02, 03, 09, 10 and 11 on the 7th  floor of the Tengda Building, dated February 25, 2005.
4.54(4)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., for rooms 01, 02, 03 and 11 on the 22nd floor of the Tengda Building, dated February 25, 2005.
4.55(4)	Lease Agreement of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated July 31, 2005.
4.56	Lease Agreement No. DC-ZW-TD-12 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., for rooms 01, 02, 03, 10 and 11 on the 7th floor of the Tengda Building, dated May 12, 2008.
4.57	Lease Agreement No. DC-ZW-TD-07 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and KongZhong China Co., Ltd., for room 08 on the 32nd floor of the Tengda Building, dated February 28, 2008.
4.58	Supplemental Agreement No. 2 to the Lease Agreement No. DC-ZW-TD-07 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and KongZhong China Co., Ltd., for room 08 on the 32nd floor of the Tengda Building, dated May 12, 2008.

110

Number	Description of Exhibit
4.59	Lease Agreement No. DC-ZW-TD-06 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing Xinrui Technology Co., Ltd. for room 08 on the 8th floor of the Tengda Building, dated February 28, 2008.
4.60	Supplemental Agreement No. 2 to the Lease Agreement No. DC-ZW-TD-06 of Tengda Building between Beijing Gaoling Estate Development Co., Ltd. and Beijing Xinrui Technology Co., Ltd. for room 08 on the 8th floor of the Tengda Building, dated May 12, 2008.
4.61	Joint Lease Agreement among Beijing Gaoling Estate Development Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd., Beijing Boya Wuji Technologies Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Beijing Xinrui Network Technology Co., Ltd., KongZhong China Co., Ltd., Beijing Chengxitong Information Technology Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated August 28, 2008.
4.62(6)	Form of Employment Agreement.
4.63(6)	Form of Confidentiality and Non-Compete Agreement.
4.64(5)	Capital Contribution Transfer Agreement among Yang Cha, Yunfan Zhou, Linguang Wu, Guijun Wang, Songlin Yang and Zhen Huang, dated October 16, 2006.
4.65(4)	Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Li Yang, Wu Xuelei and Wuhan Chengxitong Information Technology Co., Ltd., dated November 21, 2005.
4.66(4)	Share Purchase Agreement among KongZhong Corporation, Wang Gui Jun, Li Yang, Sharp Edge Group Limited, Anjian Xingye Technology (Beijing) Co., Ltd., Beijing Xinrui Network Technology Co., Ltd., the Xinrui Shareholders, Ho Chi Sing, Sun Jing Ye and Ai Li, dated January 26, 2006.
4.67(4)	Exclusive Technical and Consulting Services Agreement among Anjian Xingye Technology (Beijing) Co., Ltd. and Beijing Xinrui Network Technology Co., Ltd., dated January 26, 2006.
4.68(4)	Share Disposition Agreement among Anjian Xingye Technology (Beijing) Co., Ltd., Wang Guijun and Li Yang, dated January 28, 2006.
4.69(4)	Share Pledge Agreement among Anjian Xingye Technology (Beijing) Co., Ltd., Wang Guijun and Li Yang, dated January 26, 2006.
4.70(4)	Business Operations Agreement among Anjian Xingye Technology (Beijing) Co., Ltd., Beijing Xinrui Network Technology Co., Ltd., Wang Guijun and Li Yang, dated January 26, 2006.
4.71(4)	Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Wuhan Chengxitong Information Technology Co., Ltd., Li Yang and Wu Xuelei, dated November 21, 2005.
4.72(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Wuhan Chengxitong Information Technology Co., Ltd., dated November 21, 2005.
4.73(4)	Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Wuhan Chengxitong Information Technology Co., Ltd., Li Yang and Wu Xuelei, dated November 21, 2005.
4.74(5)	Capital Contribution Transfer Agreement among Zhen Huang, Yunfan Zhou and Beijing AirInbox Information Technologies Co., Ltd., dated October 27, 2006.
4.75(5)	Capital Contribution Transfer Agreement among Linguang Wu, Guijun Wang, Hai Qi and Yang Yang, dated June 29, 2006.

111

Number	Description of Exhibit
4.76	Capital Contribution Transfer Agreement among Hai Qi, Jingye Sun, Li Ai and Yang Yang, dated September 5, 2008.
4.77(5)	Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang and Hai Qi, dated June 29, 2006.
4.78	Amendment to Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang, Jingye Sun and Li Ai, dated September 5, 2008.
4.79(4)	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Beijing Wireless Interactive Network Technologies Co., Ltd., dated February 28, 2005.
4.80(5)	Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang and Hai Qi, dated June 29, 2006.
4.81	Amendment to Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang, Jingye Sun and Li Ai, dated September 5, 2008.
4.82(5)	Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang and Hai Qi, dated June 29, 2006.
4.83	Amendment to Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Beijing Wireless Interactive Network Technologies Co., Ltd., Yang Yang, Jingye Sun and Li Ai, dated September 5, 2008.
4.84	Capital Contribution Transfer Agreement among Shaoying Zhang, Yanli You, Xu Guo and Yang Yang, dated March 27, 2009.
4.85	Option Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Xu Guo, Yang Yang and Shanghai Mailifang Communications Ltd., dated April 1, 2009.
4.86	Exclusive Technical and Consulting Services Agreement between KongZhong Information Technologies (Beijing) Co., Ltd. and Shanghai Mailifang Communications Ltd., dated April 1, 2009.
4.87	Share Pledge Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Shanghai Mailifang Communications Ltd., Xu Guo and Yang Yang, dated April 1, 2009.
4.88	Business Operations Agreement among KongZhong Information Technologies (Beijing) Co., Ltd., Shanghai Mailifang Communications Ltd., Xu Guo and Yang Yang, dated April 1, 2009.
4.89(4)	Lease Agreement between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.90(4)	Supplemental Agreement No. 1 to the Premises Lease Agreement No. TD0196 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.91(5)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0196 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated March 22, 2007.
4.92	Supplemental Agreement No. 4 to the Premises Lease Agreement No. TD0196 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated May 12, 2008.

112

Number	Description of Exhibit
4.93(4)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0155 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.94(4)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0175 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.95(4)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0130 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.96(5)	Supplemental Agreement No. 5 to the Premises Lease Agreement No. TD0130 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated March 22, 2007.
4.97	Supplemental Agreement No. 8 to the Premises Lease Agreement No. TD0130 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated May 12, 2008.
4.98(4)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0131 between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated April 16, 2006.
4.99(5)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0131 between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated March 22, 2007.
4.100	Supplemental Agreement No. 5 to the Premises Lease Agreement No. TD0131 between Beijing Gaoling Estate Development Co., Ltd. and KongZhong Information Technologies (Beijing) Co., Ltd., dated May 12, 2008.
4.101(4)	Supplemental Agreement No. 2 to the Premises Lease Agreement No. TD0154 between Beijing Gaoling Estate Development Co., Ltd., Beijing AirInbox Information Technologies Co., Ltd. and KongZhong (China) Co., Ltd., dated April 14, 2006.
4.102(4)	Supplemental Agreement No. 3 to the Premises Lease Agreement No. TD0154 between Beijing Gaoling Estate Development Co., Ltd. and Beijing AirInbox Information Technologies Co., Ltd., dated April 16, 2006.
4.103	Note and Warrant Purchase Agreement among KongZhong Corporation, Leilei Wang and Nokia Growth Partners II, L.P., dated March 18, 2009.
4.104	First Amendment to Note and Warrant Purchase Agreement among KongZhong Corporation, Leilei Wang and Nokia Growth Partners II, L.P., dated April 9, 2009.
8.1	List of Significant Subsidiaries and Consolidated Entities.
11.1(3)	Code of Business Conduct and Ethics.
12.1	CEO Certification pursuant to Rule 13a – 14(a).
12.2	CFO Certification pursuant to Rule 13a – 14(a).
13.1	CEO Certification pursuant to Rule 13a – 14(b).
13.2	CFO Certification pursuant to Rule 13a – 14(b).
23.1	Consent of King & Wood.

113

Number	Description of Exhibit
23.2	Consent of Deloitte Touche Tohmatsu CPA Ltd.
23.3	Consent of American Appraisal China Limited.

(1) Previously filed as an exhibit to the Registration Statement on Form F-1 (File No. 333-116172) of KongZhong Corporation filed with the SEC on June 4, 2004 and incorporated herein by reference thereto.

(2) Previously filed as an exhibit to the Registration Statement on Form F-6 (File No. 333-116228) of KongZhong Corporation filed with the SEC on June 7, 2004 and incorporated herein by reference thereto.

(3) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation as filed with the SEC on June 28, 2005 and incorporated herein by reference thereto.

(4) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation filed with the SEC on June 16, 2006 and incorporated herein by reference thereto.

(5) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation filed with the SEC on June 20, 2007 and incorporated herein by reference thereto.

(6) Previously filed as an exhibit to the annual report on Form 20-F (File No. 000-50826) of KongZhong Corporation filed with the SEC on June 19, 2008 and incorporated herein by reference thereto.

114

KONGZHONG CORPORATION

Report of Independent Registered Public Accounting

Firm and Consolidated Financial Statements

For the years ended December 31, 2006, 2007 and 2008

KONGZHONG CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

CONTENTS	PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2007 AND 2008	F-3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008	F-4
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008	F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008	F-6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF

KONGZHONG CORPORATION

We have audited the accompanying consolidated balance sheets of KongZhong Corporation and its subsidiaries and variable interest entities (the "Company") as of December 31, 2007 and 2008 and the related consolidated statements of operations, shareholders' equity and comprehensive income, and cash flows for the years ended December 31, 2006, 2007 and 2008.  These consolidated financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of KongZhong Corporation and its subsidiaries and variable interest entities at December 31, 2007 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

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

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2008, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 24, 2009 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ Deloitte Touche Tohmatsu CPA Ltd.

Beijing, The People's Republic of China

April 24, 2009

F-2

KONGZHONG CORPORATION

CONSOLIDATED BALANCE SHEETS

(In US dollars)

	As of December 31,
	2007		2008
Assets
Current assets
Cash and cash equivalents	$	122,342,672	$	136,054,274
Accounts receivables, net of allowance of $Nil as of December 31, 2007 and 2008		14,992,907		16,196,043
Prepaid expenses and other current assets		4,498,117		3,389,158
Total current assets		141,833,696		155,639,475
Rental deposits		446,816		524,182
Property and equipment, net		3,426,451		3,369,260
Long-term investments		-		2,962,994
Goodwill		34,918,685		15,683,081
Acquired intangible assets, net		1,266,274		673,438
Total assets	$	181,891,922	$	178,852,430
Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	5,596,931	$	10,792,226
Accrued expenses and other current liabilities		5,001,149		6,729,485
Income tax payable		695,054		586,946
Total current liabilities	$	11,293,134	$	18,108,657
Commitments and contingencies
Non-current deferred tax liability		123,022		55,555
Total liabilities	$	11,416,156	$	18,164,212
Ordinary shares ($0.0000005 par value; 1,000,000,000,000 shares authorized, 1,423,156,120 and 1,434,232,520 shares issued and outstanding in 2007 and 2008, respectively)		711		717
Additional paid-in capital		84,729,618		86,250,897
Accumulated other comprehensive income		13,764,239		23,115,698
Statutory reserve		6,764,705		7,392,442
Retained earnings		65,216,493		43,928,464
Total shareholders' equity		170,475,766		160,688,218
Total liabilities and shareholders' equity	$	181,891,922	$	178,852,430

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

F-3

KONGZHONG CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In US dollars)

	For the years ended December 31,
	2006			2007			2008
Revenues	$	106,769,217		$	74,016,944		$	96,689,684
Cost of revenues		(47,665,422	)		(36,495,577	)		(51,612,494	)
Gross profit		59,103,795			37,521,367			45,077,190
Operating expenses
Product development (including share-based compensation expense of $547,735 , $840,075 and $1,006,126 for 2006, 2007 and 2008, respectively)		(12,026,262	)		(12,535,242	)		(15,180,775	)
Selling and marketing (including share-based compensation expense of $425,375  $706,385 and $488,927 for 2006, 2007 and 2008, respectively)		(16,755,155	)		(18,094,164	)		(21,338,924	)
General and administrative (including share-based compensation expense of $665,129 ,$1,003,858 and $785,506  for 2006, 2007 and 2008, respectively)		(9,105,184	)		(7,220,991	)		(11,639,983	)
Goodwill impairment loss		-			-			(21,623,279	)
Total operating expenses		(37,886,601	)		(37,850,397	)		(69,782,961	)
Income (loss) from operations		21,217,194			(329,030	)		(24,705,771	)
Other expenses, net		(49,056	)		-			-
Interest income		3,866,908			3,809,972			4,897,409
Gain on sales of investment		1,240,805			207,631			-
Net income (loss) before income taxes		26,275,851			3,688,573			(19,808,362	)
Income taxes expense		1,584,206			856,829			851,930
Net income (loss)	$	24,691,645		$	2,831,744		$	(20,660,292	)
Net income (loss) per share, basic	$	0.02		$	0.00		$	(0.01	)
Net income (loss) per share, diluted	$	0.02		$	0.00		$	(0.01	)
Weighted average shares used in calculating basic net income (loss) per share		1,399,872,743			1,423,156,120			1,424,581,293
Weighted average shares used in calculating diluted net income (loss) per share		1,418,255,296			1,430,910,421			1,424,581,293

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

F-4

KONGZHONG CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUTY AND COMPREHENSIVE INCOME

(In US Dollars)

										Accumulated
							Additional			other							Total
	Ordinary shares						paid-in			comprehensive		Statutory		Retained			shareholders'			Comprehensive
	Shares			Amount			capital			income		reserve		earnings			equity			income/(loss)
Balance as of January 1, 2006		1,384,523,600		$	692		$	78,174,402		$	1,140,822	$	4,573,506	$	39,884,303		$	123,773,725		$	23,315,096
Issuance of ordinary shares upon exercise of employee options		38,632,520			19			2,214,481			-		-		-			2,214,500
Share-based compensation recognized		-			-			1,638,239			-		-		-			1,638,239
Provision for statutory reserve		-			-			-			-		1,535,145		(1,535,145	)		-
Foreign currency translation adjustments		-			-			-			3,458,873		-		-			3,458,873		$	3,458,873
Net income		-			-			-			-		-		24,691,645			24,691,645			24,691,645
Balance as of December 31, 2006		1,423,156,120		$	711		$	82,027,122		$	4,599,695	$	6,108,651	$	63,040,803		$	155,776,982		$	28,150,518
Issuance of ordinary shares upon exercise of employee options		-			-			152,178			-		-		-			152,178
Share-based compensation recognized		-			-			2,550,318			-		-		-			2,550,318
Provision for statutory reserve		-			-			-					656,054		(656,054	)
Foreign currency translation adjustments		-			-			-			9,164,544		-		-			9,164,544		$	9,164,544
Net income		-			-			-			-		-		2,831,744			2,831,744			2,831,744
Balance as of December 31, 2007		1,423,156,120		$	711		$	84,729,618		$	13,764,239	$	6,764,705	$	65,216,493		$	170,475,766		$	11,996,288
Repurchase of ordinary shares		(8,923,600	)		(4	)		(760,208	)		-		-		-			(760,212	)
Issuance of ordinary shares for share-based compensation		20,000,000			10			928			-		-		-			938
Share-based compensation recognized		-						2,280,559			-		-					2,280,559
Provision for statutory reserve		-			-			-			-		627,737		(627,737	)		-
Foreign currency translation adjustments		-			-			-			9,351,459		-		-			9,351,459		$	9,351,459
Net loss		-			-			-			-		-		(20,660,292	)		(20,660,292	)		(20,660,292	)
Balance as of December 31, 2008		1,434,232,520		$	717		$	86,250,897		$	23,115,698	$	7,392,442	$	43,928,464		$	160,688,218		$	(11,308,833	)

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

F-5

KONGZHONG CORPORATION

CONSOLIDATED CASH FLOW STATEMENTS

(In US dollars)

	For the years ended December 31,
	2006			2007			2008
Operating activities
Net income (loss)	$	24,691,645		$	2,831,744		$	(20,660,292	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		3,030,399			2,770,100			2,867,914
Gain on sales of investment		(1,240,805	)		(207,631	)		-
Loss (gain) on disposal of property and equipment		16,546			10,639			(19,595	)
Provision for impairment of goodwill								21,623,279
Share-based compensation		1,638,239			2,550,318			2,280,559
Changes in operating assets and liabilities
Accounts receivable		2,242,478			(2,514,305	)		(123,994	)
Prepaid expenses and other current assets		(242,266	)		(2,010,090	)		1,338,415
Rental deposits		(49,364	)		42,946			(45,864	)
Accounts payable		2,287,261			(770,063	)		4,676,787
Accrued expenses and other liabilities		(4,648,448	)		486,899			1,440,881
Income tax payable		284,531			124,768			(856,586	)
Net cash provided by operating activities		28,010,216			3,315,325			12,521,504
Investing activities
Purchases of subsidiaries, net of cash acquired		(17,138,978	)		(17,000,000	)		-
Purchase of long-term investments		-			-			(2,964,118	)
Purchase of property and equipment		(2,518,312	)		(1,927,726	)		(1,878,605	)
Proceeds from disposal of property and equipment		-			-			30,822
Proceeds from sales of investment		1,740,805			207,631			-
Net cash used in investing activities		(17,916,485	)		(18,720,095	)		(4,811,901	)
Financing activities
Repurchase of common stock		-			-			(760,212	)
Proceeds from exercise of employee stock options		2,214,500			152,178			938
Increase (decrease) in minority interest		(24,165	)		-			-
Net cash provided by (used in) financing activities		2,190,335			152,178			(759,274	)
Effect of foreign exchange rate changes		1,976,402			6,193,257			6,761,273
Net increase (decrease) in cash and cash equivalents		14,260,468			(9,059,335	)		13,711,602
Cash and cash equivalents, beginning of year		117,141,539			131,402,007			122,342,672
Cash and cash equivalents, end of year	$	131,402,007		$	122,342,672		$	136,054,274
Supplemental disclosures of cash flow information
Income taxes paid	$	1,309,225		$	816,127		$	791,927
Acquisition of subsidiaries:
Cash consideration	$	17,999,389		$	17,000,000			-
Acquisition payable		-			-			-
Total cash consideration	$	17,999,389		$	17,000,000			-
Consideration satisfied by waiving receivables from former shareholders	$	827,643		$	-			-
Non-cash investing activities:  Assets acquired (including cash of $945,855, intangible assets of $2,415,100 and goodwill of $14,280,764 in 2006)	$	20,527,937		$	-		$	-
Liabilities assumed	$	(2,528,548	)	$	-		$	-
Total consideration	$	17,999,389		$	-		$	-

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

F-6

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES

KongZhong Corporation ("KongZhong") was incorporated under the laws of the Cayman Islands on May 6, 2002.  KongZhong and its consolidated entities (the "Company") provide wireless interactive entertainment, media and community services to mobile phone users in the People's Republic of China (the "PRC") and specialize in the development, marketing and distribution of consumer wireless value-added services.

As of December 31, 2008, details of the Company's significant majority-owned subsidiaries and variable interest entities are as follows:

	Incorporation		Shareholder/owner's
	or acquisition	Shareholder/	relationship
Name	date/place	nominee owner	with the Company	Legal ownership	Principal activities
				%
Subsidiaries of the Company:
KongZhong Beijing	July 29, 2002	KongZhong	-	100	Providing consulting
	the PRC				and technology services
KongZhong China	June 10, 2005	KongZhong	-	100	Providing consulting
	the PRC				and technology services
Anjian Xingye (Beijing)	November 28, 2005	KongZhong	-	100	Providing consulting
Co., Ltd.	the PRC				and technology services
("Beijing Anjian Xingye") (Note iv)
Variable interest entities ("VIE"):
Beijing AirInbox Information	April 4, 2002	Linguang Wu	Employee	45	Providing wireless
Technologies Co., Ltd.	the PRC	SonglinYang	Uncle of Nick Yang, President	42	value-added services
("Beijing AirInbox") (Note (i))		Guijun Wang	Employee	10	to mobile phone users
		Zhen Huang	Wife of Nick Yang, President	3
Beijing Wireless Interactive	November 28, 2003	Yang Yang	Employee	40	Providing wireless
Network Technologies Co., Ltd.	the PRC	Jingye Sun	Employee	30	value-added services
("Beijing WINT") (Note (ii))		Li Ai	Former employee	30	to mobile phone users
Beijing Chengxitong	June 23, 2004	Yang Li	Employee	90	Providing wireless
Information	the PRC	Xuelei Wu	Employee	10	value-added services
Technology Co., Ltd.					to mobile phone users
("Beijing Chengxitong") (Note (iii))
Beijing Xinrui Network	December 17, 2003	Guijun Wang	Employee	51	Providing wireless
Technology Co., Ltd.	the PRC	Yang Li	Employee	49	value-added services
("Beijing Xinrui") (Note (iv))
Subsidiaries of VIE:
Beijing Boya Wuji	March 29, 2004	Beijing AirInbox	VIE	100	Providing wireless
Technologies Co., Ltd.	the PRC				value-added services
("Beijing Boya Wuji") (Note (v))
Tianjin Mammoth Technology	June 12, 2002	Beijing AirInbox	VIE	95	Mobile games
Co., Ltd. ("Tianjin Mammoth")	the PRC	Beijing WINT	VIE	5	developing
(Note (vi))
Beijing Shiyuan Leya	July 30, 2008	Beijing Xinrui	VIE	100	Providing
Culture Communication Co., Ltd.	the PRC				media services
("Beijing Shiyuan Leya ")
(Note (vii))

F-7

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

Notes:

(i) PRC regulations prohibit direct foreign ownership of business entities providing value-added telecommunications services in the PRC where certain licenses are required for the provision of such services.  To comply with these regulations the Company conducts majority of its activities through Beijing AirInbox, a variable interest entity established by KongZhong through nominated owners on April 4, 2002.  Beijing AirInbox provides wireless value-added services to PRC's mobile phone users.  Upon establishment Beijing AirInbox was legally owned directly by three PRC citizens nominated by KongZhong, Yunfan Zhou, the Company's then Chief Executive Officer, Songlin Yang, the uncle of Nick Yang, the Company's President, and Leilei Wang, who held 35%, 35% and 30%, respectively, of Beijing AirInbox's total outstanding shares.  In September 2003, Leilei Wang transferred his 30% equity interest in Beijing AirInbox to Yunfan Zhou and Zhen Huang, the wife of Nick Yang, in portions of 15% each.  In April 2004, the registered capital of Beijing AirInbox was increased from $0.3 million (RMB2 million) to $1.2 million (RMB10 million).  The increased registered capital was contributed from Songlin Yang and Yang Cha, a PRC citizen and employee of the Company, for $0.4 million (RMB3.5 million) and $0.5 million (RMB4.5 million), respectively.  In October, 2006, Yang Cha transferred his $0.5 million (RMB4.5 million) to Linguang Wu, an employee of the Company.  In October, 2006, Yunfan Zhou transferred his $0.1 million (RMB1million) to Guijun Wang, an employee of the Company.

In addition, the Company has extended an interest-free loan to the nominee shareholders ($241,546 had been loaned as of December 31, 2002 and 2003) to finance their investments in Beijing AirInbox.  In April 2004, Yang Cha and Songlin Yang drew down the loans in the amount of $0.5 million and $0.4 million, respectively, for investment into Beijing AirInbox as contribution to the capital increase in Beijing AirInbox by Yang Cha and Songlin Yang.  Principal terms of these loan agreements provide that (i) proceeds from the loans are to be used solely for the investment in Beijing AirInbox, (ii) the loans can only be repaid to the Company by transferring the shares of Beijing AirInbox to the Company, (iii) the shares of Beijing AirInbox cannot be transferred without the approval of the Company, (iv) the Company has the right to appoint all directors and senior management personnel of Beijing AirInbox, and (v) all shareholder rights including voting rights and rights to dividends are assigned to KongZhong Beijing.  In addition, the Company has the right to require the transfer of the shares of Beijing AirInbox to the Company or any party designated by the Company, at any time, for the amount of the loan outstanding.  In 2006, Yang Cha transferred his loan to Linguang Wu.  Since the Company consolidates Beijing AirInbox, the loans to the registered shareholders and Linguang Wu are treated as investments in Beijing AirInbox and are eliminated upon consolidation for all periods presented.

(ii) In February 2005, the Company completed the acquisition of all outstanding shares of Beijing WINT through nominated owners (see Note 3(a)), and entered into a series of contractual arrangements, pursuant to which, Beijing WINT became the Company's variable interest entity.  Beijing WINT provides wireless value-added services to PRC's Mobile phone users.  Beijing WINT is legally owned directly by three PRC citizens nominated by KongZhong.  As of December 2005, Yang Yang, Linguang Wu and Guijun Wang held 40%, 30% and 30% equity interest of Beijing WINT, respectively.  In July 2006, Linguang Wu and Guijun Wang transferred their shares to Hai Qi.  As of December 2006, Hai Qi and Yang Yang held 60% and 40% equity interest of Beijing WINT, respectively.  In Septermber 2008, Hai Qi transferred his shares to Jingye Sun and Li Ai.  As of December 2008, Yang Yang, Jingye Sun and Li Ai held 40%, 30% and 30% equity interest of Beijing WINT, respectively.

(iii) In November 2005, the Company completed the acquisition of all outstanding shares of Beijing Chengxitong through nominated shareholders (see Note 3(c)), and entered into a series of contractual arrangements pursuant to which Beijing Chengxitong, became the Company's variable interest entity.  Beijing Chengxitong provides wireless value-added services to the PRC's mobile phone users.  Beijing Chengxitong is legally owned directly by two PRC citizens nominated by KongZhong.  As of December 2006, Yang Li and Xuelei Wu held 90% and 10% equity interest of Beijing Chengxitong, respectively.

(iv) In January 2006, the Company acquired a 100% equity interest in Sharp Edge Company Limited ("Sharp Edge"), a company incorporated in the British Virgin Islands and based in Beijing which provides wireless value-added services through its wholly owned subsidiary Beijing Anjian Xingye and its variable interest entity, Beijing Xinrui.  Following the acquisition, the incorporation of Sharp Edge was deregistered in the British Virgin Islands and the Company directly holds Anjian Xingye as its wholly owned subsidiary ("WOFE").  Beijing Xinrui has entered into a series of contractual arrangements with Beijing Anjian Xingye, pursuant to which, Beijing Xinrui became the Company's variable interest entity.  Beijing Xinrui provides wireless value-added services to the PRC's mobile phone users.  Beijing Xinrui is legally owned directly by two PRC citizens nominated by KongZhong.  As of December 2006, Guijun Wang and Yang Li held 51% and 49% equity interest of Beijing Xinrui, respectively.

F-8

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

Notes: - continued

(v) In March 2004, the Company established another variable interest entity, Beijing Boya Wuji, through nominated owners.  KongZhong Beijing entered into a series of contractual arrangements, pursuant to which Beijing Boya Wuji became the Company's variable interest entity.  Beijing Boya Wuji provides wireless value-added services to PRC's mobile phone users and a license was obtained from the PRC government in April 2004.  Upon establishment Beijing Boya Wuji was legally owned directly by two PRC citizens nominated by KongZhong, Yunfan Zhou and Zhen Huang held 50% and 50%, respectively, of Beijing Boya Wuji.  The investment by these two individuals has been done through their personal funds with no loans provided by the Company.  Accordingly, the investment amount of $120,815 has been included as a minority interest.  In January 2005, 80% of the equity interest of Beijing Boya Wuji held by the nominated owners was transferred to Beijing AirInbox for an aggregate amount of RMB800,000 ($96,650).  In October 2006, the remaining 20% of the equity interest of Beijing Boya Wuji held by the nominated owners was transferred to Beijing AirInbox for an aggregate amount of RMB200,000 ($24,165).  Beijing Boya Wuji became a subsidiary of Beijing AirInbox.

(vi) On May 24, 2005, the Company's VIE, Beijing AirInbox and Beijing WINT acquired 95% and 5%, respectively, of the outstanding equity interest of Tianjin Mammoth (see Note 3(b)).

(vii) On July 30, 2008, the Company's VIE, Beijing Xinrui established its own subsidiary, Beijing Shiyuan Leya, and is the 100% owner of Beijing Shiyuan Leya.

KongZhong Beijing or KongZhong China has entered into various operating agreements with Beijing AirInbox, Beijing WINT, Beijing Chengxitong and Beijing Xinrui (collectively the "VIE companies"), including exclusive technical and consulting services agreements.  Under these agreements, KongZhong Beijing or KongZhong China provides technical and other services to the VIE companies in exchange for all their net income.  As a collateral security for the prompt and complete performance of the obligations of the VIE companies, respective owners of VIE companies have entered into pledge agreements, pursuant to which they agreed to pledge all their rights and interests, including voting rights, in the VIE companies respectively in favor of KongZhong Beijing or KongZhong China.  Finally, KongZhong Beijing or KongZhong China has the option to acquire the equity interests of the VIE companies for a purchase price equal to the respective capital of the VIE companies or such higher price as required under PRC laws at the time of such purchase.

Through the contractual arrangements described above, KongZhong Beijing or KongZhong China is the primary beneficiary of the VIE companies because the KongZhong Beijing or KongZhong China holds all of the variable interests in the VIE companies either directly or through related parties.

In January 2003, the Financial Accounting Standard Board ("FASB") issued Interpretation FIN No. 46, "Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51" which required certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties.  FIN 46 was effective for all new variable interest entities created or acquired after December 15, 2003.  In December 2003, the FASB issued FIN 46 (revised) which deferred the implementation date to the end of the first reporting period after March 15, 2004 unless the Company has a special purpose entity, in which case the provisions must be applied for fiscal years ended December 31, 2003.  However, the Company has elected to retroactively apply FIN 46 and consolidate all of its variable interest entity, including Beijing AirInbox from its inception and all the other VIEs from their respective acquisition dates.

The following financial statement amounts and balances of KongZhong's VIEs were included in the accompanying consolidated financial statements as of and for the years ended December 31:

	Years Ended December 31,
	2007		2008
	$		$
Total assets		77,595,022		85,065,654
Total liabilities		15,818,940		16,154,177

F-9

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

1. ORGANIZATION AND PRINCIPAL ACTIVITIES - continued

	Years Ended December 31,
	2006		2007		2008
	$		$		$
Gross revenue		109,184,587		73,647,938		97,680,826
Net income		15,060,163		227,727		2,877,745

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

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

Basis of consolidation

The consolidated financial statements include the financial statements of the Company, its wholly-owned subsidiaries, and its VIEs.  All inter-company transactions and balances have been eliminated upon consolidation.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased.  Cash also includes other kinds of accounts that have the general characteristics of demand deposits in that the customer may deposit additional funds at any time and also effectively may withdraw funds at any time without prior notice or penalty.

Fair value

The Company adopted SFAS No. 157 "Fair Value Measurements" on January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually).  SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

SFAS 157 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

SFAS 157 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  SFAS 157 establishes three levels of inputs that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

F-10

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses in the financial statements and accompanying notes.  Significant accounting estimates reflected in the Company's financial statements include valuations of goodwill, accruals for revenue and cost of revenue adjustments, valuation allowance for deferred tax assets, and share-based compensation expense.  Actual results could differ from those estimates.

Property and equipment, net

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

Computer and transmission equipment	3 years
Furniture and office equipment	3 years
Motor vehicles	3 years
Leasehold improvements	Over the shorter of the lease term or useful lives
Communication equipment	1 year
Office building	20 years

Acquired intangible assets, net

Acquired intangible assets which mainly represent agreements with operators and completed product technologies as detailed in Note 6, is carried at cost, less accumulated amortization.  The amortization of acquired intangible assets is recognized over the expected useful lives of the assets.

Impairment of long-lived assets

In accordance with SFAS No.144, "Accounting for the Impairment or Disposal of Long-lived Assets," long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.  When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition.  If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets.

In light of the adverse conditions in global capital markets in 2008, the Company compared the sum of the expected undiscounted future cash flows from the use of the Company’s long-lived assets with the carrying amount of such assets and concluded that no impairment was required.  The Company did not record any impairment loss during the years ended December 31, 2006, 2007 and 2008.

Goodwill

The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheet as goodwill.

SFAS No. 142,"Goodwill and Other Intangible Assets" ("SFAS 142"), requires the Company to complete a two-step goodwill impairment test.  The first step compares the fair value of each reporting unit (operating segment or one level below an operating segment) to its carrying amount, including goodwill.  If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required.  If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of the affected reporting unit's goodwill to the carrying value of that goodwill.  The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit.  The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill.  This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities.  An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill.  We performed annual impairment assessments of the carrying value of the goodwill recorded in connection with various acquisitions as required under SFAS 142 in December 2006, 2007 and 2008.

F-11

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Long-term investment

For investments in investees over which the Company does not have significant influence, the Company carries the investments at cost.  The Company reviews the long-term investments for impairment whenever events or circumstances indicate that an other-than-temporary decline has occurred.  An impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made.  The fair value of the investment would then become the new cost basis of the investment.  No impairment charges were recorded during the years ended December 31, 2006, 2007 and 2008.

Revenue recognition and cost of revenues

The Company's revenues are primarily derived from entertainment-oriented wireless value-added services ("WVAS"), wireless internet services ("WIS") and mobile games services.

(i)  Wireless value-added services ("WVAS")

Wireless value-added services revenues are derived from providing personalized interactive entertainment, media and community services primarily to mobile phone customers of China Mobile Communication Corporation and its various subsidiaries ("China Mobile"), China United Telecommunications Corporation ("China Unicom"), China Telecommunications Corporation ("China Telecom"), and China Network Communications Company Corporation ("China Netcom") (collectively, the "Mobile Operator").

The Company contracts with the Mobile Operator for the transmission of wireless value-added services as well as for billing and collection services.  The Mobile Operator provides the Company with a monthly statement that represents the principal evidence that service has been delivered and triggers revenue recognition for a substantial portion of the Company's revenue.  In certain instances, when a statement is not received within a reasonable period of time, the Company makes an estimate of the revenues and cost of revenues for the period covered by the statement based on internally generated information, historical experience, verbal communication with Mobile Operator, and/or other assumptions that are believed to be reasonable under the circumstances.

The Mobile Operator remits to the Company only amounts net of the allowance such Mobile Operator has made for the doubtful debts in respect of the amounts due to the Company from its customers, net of the Mobile Operator's fees for the services provided to the Company, including billing and collection services, and net of the Mobile Operator’s transmission charges.  China Unicom, China Telecom and China Netcom do not provide an itemized analysis of their remittances and the Company is therefore unable to determine what allowance, if any, for doubtful or bad debts should be recorded with respect to services delivered through them.  China Mobile sometimes specifies the allowance it makes for doubtful debts.  However, it did so only from the second quarter of 2007 to the second quarter of 2008.  Accordingly, recognition of revenues is based upon the amounts reported on the Mobile Operator's monthly statements to the Company, which are net of doubtful debts and represent the amounts the Company reasonably believes will be collected.

The Company records the following fees paid to the Mobile Operator as cost of revenues:

· Service fees paid to the Mobile Operator which are charged to us as a percentage, ranging from 15% to 52%, of gross revenues less bad debts.

· Fixed transmission fees that are charged on a basis of each transmission (regardless whether the customers can be billed or pay the Mobile Operator).

In addition, cost of revenues includes amounts paid to content providers and certain payments to handset manufacturers with whom the Company has cooperation agreements.

(ii)  Wireless internet services ("WIS")

Wireless internet services are delivered through the wireless internet portal Kong.net and other sites owned by the Company.  The Company recognizes advertising revenues ratably over the performance period for which the advertisements are displayed, so long as collection of the fees remains probable.

F-12

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue recognition and cost of revenues - continued

(iii)  Mobile Games

The Company recognizes revenues from providing two kinds of mobile games services: downloadable mobile games and online mobile games.  Mobile phone users download the first kind of mobile games in the same manner as the WVAS and the Company recognizes revenues from such mobile games services in the same way as the WVAS revenues are recognized.  Online mobile games are massively multiplayer online role-playing games that are free-to-play model for mobile phone users.  The Company recognizes revenues from online mobile games when mobile phone users purchase in-game merchandise or premium features and the Company delivers such merchandise or features to the mobile phone users.  The Company derived the majority of its revenues from mobile games services from downloadable mobile games for all the periods presented.

Operating leases

Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company are accounted for as operating leases.  Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease period.

Foreign currency translation

The functional and reporting currency of KongZhong is US dollar.  The functional currency of the KongZhong's subsidiaries in the PRC is Renminbi ("RMB").

Assets and liabilities are translated from each subsidiary's functional currency to the reporting currency at the exchange rate on the balance sheet date.  Equity amounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated using the average rate for the year.  Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component of other comprehensive income in the consolidated statements of shareholders' equity and comprehensive income.

Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date.  Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates.  Transaction gains and losses are recognized in the consolidated statements of operations.

Foreign currency risk

The RMB is not a freely convertible currency.  The State Administration for Foreign Exchange, under the authority of the People's Bank of China, controls the conversion of RMB into foreign currencies.  The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market.  The cash and cash equivalents of the Company included aggregate amounts of RMB629,590,379 and RMB713,042,699 at December 31, 2007 and 2008, respectively, which were denominated in RMB.

Product development expenses

Product development expenses consist primarily of the compensation and related costs for employees associated with the development and programming of mobile data content and are expensed as incurred.

F-13

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Income taxes

Deferred income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements, net operating loss carry forwards and credits by applying enacted statutory tax rates applicable to future years.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are classified as current or non-current depending on their individual characteristics.  Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

In June 2006, the Financial Accounting Standards Board ("FASB") issued Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109".  FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 is effective for fiscal years beginning after December 15, 2006, with early adoption permitted.  The Company adopted FIN 48 effective January 1, 2007.  The adoption of FIN 48 did not result in a cumulative adjustment on January 1, 2007 and had no significant impact on the Company's accounting for income taxes for the year ended December 31, 2007 and 2008.  The Company did not incur any interest or penalties related to potential underpaid income tax expenses, and also does not expect to have a significant increase or decrease on the unrecognized tax benefits within 12 months from December 31, 2008.

Comprehensive income

Comprehensive income includes net income and foreign currency translation adjustments.  Comprehensive income is reported in the statements of shareholders' equity.

Fair value of financial instruments

Financial instruments include cash and cash equivalents, accounts receivable and accounts payable.  The carrying values of cash and cash equivalents, accounts receivable and accounts payable approximate their fair values due to their short-term maturities.

Advertising costs

The Company expenses advertising costs as incurred.  Total advertising expenses were $4,209,069, $4,135,705 and $2,777,670 for the years ended December 31, 2006, 2007 and 2008, respectively, and have been included as part of selling and marketing expenses.

Share-based compensation

The Company has in effect stock incentive plans under which incentive stock options and nonvested shares have been granted to employees and members of the Board of Directors.  Effective January 1, 2006 the Company adopted SFAS No. 123 (revised 2004), "Share-based Payment", or SFAS 123R, which requires all share-based payments to employees to be recognized in the financial statements based upon their respective grant date fair values, and does not allow the previously permitted pro forma disclosure-only method as an alternative to financial statement recognition.

The Company adopted SFAS 123R using the modified-prospective method of recognition of compensation expense related to share-based payments.  Under this transition method, stock-based compensation expense recognized beginning January 1, 2006 includes: (a) compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006 based on the fair market value as of the grant date, measured in accordance with SFAS No. 123, "Accounting for Stock-based Compensation", or SFAS 123,and (b) compensation expense for all stock-based compensation awards granted on or subsequent to January 1, 2006, based on grant-date fair vale estimated in accordance with the provisions of SFAS 123(R).  The consolidated statements of income for the years ended December 31, 2006, 2007 and 2008 reflect the impact of adopting SFAS 123R.

SFAS 123R requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model.  The value of the portion of the award that is ultimately expected to vest is principally recognized as expense ratably over the requisite service periods.  The Company has estimated the fair value of stock options as of the date of grant or assumption using the Black-Scholes option pricing model, which was developed for use in estimating the value of traded options that have no vesting restrictions and that are freely transferable.  The Black-Scholes model considers, among other factors, the expected life of the award and the expected volatility of our stock price.  Although the Black-Scholes model meets the requirements of SFAS 123R and SAB 107 "Share-Based Payment,” the fair values generated by the model may not be indicative of the actual fair values of our equity awards.

F-14

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Net income per share

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

Recently issued accounting standards

In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements".  Effective January 1, 2008, the Company adopted the measurement and disclosure other than those requirements related to nonfinancial assets and liabilities in accordance with guidance from FASB Staff Position 157-2, "Effective Date of FASB Statement No. 157," which delayed the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until the beginning of fiscal year 2009.  The Company does not believe that the adoption of SFAS No. 157 for nonfinancial assets and liabilities would have a significant effect on its consolidated financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141R, "Business Combination", to improve reporting creating greater consistency in the accounting and financial reporting of business combinations.  The standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination.  SFAS No. 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  An entity may not apply it before that date.  The Company does not believe that the adoption of SFAS No. 141R would have a significant effect on its consolidated financial position or results of operations.

.

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

In April 2008, the FASB issued FASB Staff Position FAS142-3, "Determination of the Useful Life of Intangible Assets".  This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, "Goodwill and Other Intangible Assets".  This FSP is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  Early adoption is prohibited.  The guidance for determining the useful life of a recognized intangible asset in this FSP shall be applied prospectively to intangible assets acquired after the effective date.  The Company does not believe that the adoption of FASB Staff Position FAS142-3 would have a significant effect on its consolidated financial position or results of operations.

At the November 24, 2008 meeting, the FASB ratified the consensus reached by the Task Force in Issue No. 08-6, "Equity Method Investment Accounting Considerations" ("EITF 08-6").  Because of the significant changes to the guidance on subsidiary acquisitions and subsidiary equity transactions and the increased use of fair value measurements as a result of SFAS No. 141R and SFAS No. 160, questions have arisen regarding the application of that accounting guidance to equity method investments.  EITF 08-6 provides guidance for entities that acquire or hold investments accounted for under the equity method.  EITF 08-6 is effective for transactions occurring in fiscal years and interim periods beginning on or after December 15, 2008.  Early adoption is not permitted.  The Company does not believe that the adoption of EITF 08-6 will have a significant effect on its consolidated financial position or results of operations.

In November 2008 the FASB ratified EITF Issue No. 08-7, Accounting for Defensive Intangible Assets, or EITF 08-7.  EITF 08-7 applies to defensive intangible assets, which are acquired intangible assets that the acquirer does not intend to actively use but intends to hold to prevent its competitors from obtaining access to them.  As these assets are separately identifiable, EITF 08-7 requires an acquiring entity to account for defensive intangible assets as a separate unit of accounting which should be amortized to expense over the period the asset diminished in value.  Defensive intangible assets must be recognized at fair value in accordance with SFAS 141R and SFAS 157.  EITF 08-7 is effective for financial statements issued for fiscal years beginning after December 15, 2008.  The Company does not believe that the adoption of EITF 08-7 would have a significant effect on its consolidated financial position or results of operations.

F-15

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Recently issued accounting standards - continued

On April 9, 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2, or FSP No. FAS 115-2 and FAS 124-2 "Recognition and Presentation of Other-Than-Temporary Impairments." This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements.  This FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities.  The FSP will be effective on April 1, 2009.  This FSP does not require disclosures for earlier periods presented for comparative purposes at initial adoption.  In periods after initial adoption, this FSP requires comparative disclosures only for periods ending after initial adoption.  The Company does not believe that the adoption of FSP No. FAS 115-2 and FAS 124-2 would have a significant effect on its consolidated financial position or results of operations.

On April 9, 2009, the FASB issued FASB Staff Position No. FAS 157-4, or FSP No. FAS 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly." This FSP provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased.  This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly.  This FSP emphasizes that even if there has been a significant decrease in the volume and level of activity for the asset or liability and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same.  Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.  This FSP will be effective on April 1, 2009 and will be applied prospectively.  This FSP does not require disclosures for earlier periods presented for comparative purposes at initial adoption.  In periods after initial adoption, this FSP requires comparative disclosures only for periods ending after initial adoption.  The Company does not believe that the adoption of FSP No. FAS 157-4 would have a significant effect on its consolidated financial position or results of operations.

3. ACQUISITIONS

Sharp Edge

In January 2006, the Company acquired a 100% equity interest in Sharp Edge, a company incorporated in the British Virgin Islands and based in Beijing which provides wireless value-added services through its wholly owned subsidiary, Beijing Anjian Xingye, and its VIE, Beijing Xinrui. The purchase price was $35,827,032, consisting of $34,999,389 in cash and $827,643 satisfied by waiving receivables from former shareholders.  The Company paid cash consideration of approximately $7 million, $11 million and $17 million during the first quarter and third quarter of 2006 and the first quarter of 2007, respectively.  The acquisition was recorded using the purchase method of accounting and, accordingly, the acquired assets and liabilities were recorded at their fair market value at the date of acquisition.  The results of operations from the acquisition date have been included in the Company's consolidated financial statements.  Following the acquisition, the incorporation of Sharp Edge was deregistered in the British Virgin Islands and the Company directly holds Anjian Xingye as its WOFE.  Beijing Xinrui has entered into a series of contractual arrangements with Beijing Anjian Xingye, pursuant to which, Beijing Xinrui became the Company's variable interest entity.  The purchase price was allocated as follows:

Tangible assets acquired (including cash of $945,855)	$	3,832,073
Acquired intangible assets:
Partnership agreement		1,982,100
Non-compete agreement		303,700
Content agreements		5,900
Self-developed contents		37,700
Operating platforms		76,700
Licenses		9,000
Liabilities assumed		(2,390,513	)
Non current deferred tax liability		(138,035	)
Goodwill		31,280,764
Total	$	34,999,389

The purchase price allocation and intangible asset valuations for the acquisition described above were based on a valuation analysis prepared by American Appraisal China Limited, a third party valuation firm.  The valuation analysis utilizes and considers generally accepted valuation methodologies such as the income, market, cost and actual transaction of Company shares approach.  The Company has incorporated certain assumptions which include projected cash flows and replacement costs.

F-16

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

3. ACQUISITIONS - continued

Pro forma

The following summarized unaudited pro forma results of operations for the year ended December 31, 2006 assuming that all significant acquisitions during the year ended December 31, 2006 occurred as of January 1, 2006.  These pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the significant acquisitions occurred as of January 1, 2006, nor is it indicative of future operating results.

	For the years
	ended December 31,
	2006
	(unaudited)
Revenues	$	107,531,729
Net income	$	25,130,012
Income per share - basic	$	0.02
Income per share - diluted	$	0.02

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

	As of December 31,
	2007		2008
Advance to suppliers	$	1,012,139	$	670,418
Staff advances		858,300		282,909
Rental and other deposits		670,658		663,975
Interest receivables		677,603		1,589,513
Prepayments		1,229,767		122,546
Other current assets		49,650		59,797
	$	4,498,117	$	3,389,158

5. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following:

	As of December 31,
	2007			2008
Computer and transmission equipment	$	6,988,939		$	9,156,632
Furniture and office equipment		1,105,264			1,186,656
Motor vehicles		606,996			574,867
Leasehold improvements		1,430,280			1,712,615
Communication equipment		310,374			356,644
Office building		588,648			629,064
		11,030,501			13,616,478
Less: accumulated depreciation		(7,604,050	)		(10,247,218	)
	$	3,426,451		$	3,369,260

Depreciation expenses for the years ended December 31, 2006, 2007 and 2008 are $2,347,737, $1,891,293 and $2,173,698 respectively.

F-17

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

6. ACQUIRED INTANGIBLE ASSETS, NET

Acquired intangible assets, net consist of the following:

	2006							2007							2008
			Accumulated							Accumulated							Accumulated
	Gross		amortization &			Net		Gross		amortization &			Net		Gross		amortization &			Net
	carrying		exchange			carrying		carrying		exchange			carrying		carrying		exchange			carrying		Amortization
	amount		difference			amount		amount		difference			amount		amount		difference			amount		Period
Agreements with Operators	$	1,986,600	$	(407,322	)	$	1,579,278	$	2,192,126	$	(1,052,931	)	$	1,139,195	$	2,342,633	$	(1,709,620	)	$	633,013	4 years
Operating platforms		76,700		(12,067	)		64,633		84,604		(32,431	)		52,173		90,413		(52,741	)		37,672	5 years
Licenses of service providers		25,342		(9,478	)		15,864		28,215		(20,342	)		7,873		30,152		(28,382	)		1,770	3.2 years
Contracts with content providers		8,124		(7,620	)		504		8,953		(8,953	)		-		9,568		(9,568	)		-	1 year
Non-compete agreement		303,700		(133,780	)		169,920		335,131		(321,167	)		13,964		358,141		(358,141	)		-	2 years
Self-developed contents		37,700		(16,640	)		21,060		41,563		(39,831	)		1,732		44,416		(44,416	)		-	2 years
Completed product technologies		289,978		(144,841	)		145,137		328,560		(282,927	)		45,633		351,118		(351,118	)		-	3 years
Contracts with service providers		4,349		(4,349	)		-		4,928		(4,928	)		-		5,267		(5,267	)		-	1 year
Subscriber list		1,002		(1,002	)		-		1,135		(1,135	)		-		1,213		(1,213	)		-	1 year
Trademarks		13,450		(12,221	)		1,229		21,540		(15,836	)		5,704		33,991		(33.008	)		983	1 year
Total	$	2,746,945	$	(749,320	)	$	1,997,625	$	3,046,755	$	(1,780,481	)	$	1,266,274	$	3,266,912	$	(2,593,474	)	$	673,438

The Company recorded amortization expenses of $682,662, $878,807, and $694,216 for the years ended December 31, 2006, 2007 and 2008, respectively.  Assuming no subsequent impairment of the acquired intangible assets recorded as of December 31, 2008, amortization expenses for the years ending December 31, 2009, 2010, 2011 and 2012 are $605,155, $66,776, $1,507 and $0.

7. LONG-TERM INVESTMENTS

In March 2005, the Company acquired a 10% equity interest in eFriendsNet Entertainment Corp.  ("EFN") for $500,000 for long-term investment purposes.  EFN is primarily engaged in online dating services.  The Company did not exert significant influence over the operating and financial activities of EFN, and accordingly, this was recorded as a long-term investment at cost.  On January 19, 2006, the Company sold the investment in EFN and received cash consideration of $1,740,805, resulting in a gain of $1,240,805 recognized for 2006.  In February 2007, the Company received additional payments of $207,631, which had been contingent upon certain conditions.

In January 2008, the Company signed an agreement with HiU! Media, a company providing residential community direct marketing advertising network and residential community marketing solutions in China, to purchase 9.87% of the total equity interest in HiU! Media for $1,500,000.  The investment was completed in January 2008 and accounted for with the cost method.  Through its investment in HiU! Media, the Company expects to strengthen the Kong.net brand by launching advertisement campaigns on HiU! Media's advertising network.

In July 2008, the Company signed an agreement with Xin Chuang Hang Yuan Technology Co. Ltd. ("XCHY"), a company providing discount e-coupons on mobile phones and Internet in China, to purchase 19.9% of the total equity interest in XCHY for $1,464,118.  The investment was completed in August 2008.  As the Company has no significant influence on XCHY, and accordingly, this was recorded as a long-term investment at cost.  Through its investment in XCHY, the Company expects to provide discount e-coupon services to Kong.net users.

No impairment of the long-term investments was recorded for the years ended December 31, 2006, 2007 and 2008.

F-18

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

8. GOODWILL

The change in the carrying amounts of goodwill by reportable segment is as follows:

	WVAS			Mobile Games
	Segment			Segment		Total
Balance as of January 1, 2007	$	15,639,478		$	196,378	$	15,835,856
Goodwill acquired during the year		17,000,000			-		17,000,000
Exchange difference		2,069,277			13,552		2,082,829
Balance as of December 31, 2007		34,708,755			209,930		34,918,685
Impairment loss during the year		(21,623,279	)		-		(21,623,279	)
Exchange difference		2,373,262			14,413		2,387,675
Balance as of December 31, 2008	$	15,458,738		$	224,343	$	15,683,081

SFAS No. 142 requires that the goodwill impairment assessment be performed at the reporting unit level.  During the year ended December 31, 2008, the Company reorganized its business into three reporting units, consistent with its operating segments, as a result of increasing revenues from mobile games services.  Two of the reporting units, i.e., WVAS and mobile games, have a significant amount of goodwill.  As a result of the financial turmoil and the decreasing market capitalization of the Company, the Company performed a goodwill impairment test in the third quarter of 2008 and determined that its WVAS segment was impaired, thus necessitating a charge of $21,623,279.  The Company estimated the fair values of the reporting units primarily using the income approach valuation methodology that includes the discounted cash flow method, taking into consideration the market approach and certain market multiples as a validation of the values derived using the discounted cash flow methodology.  The discounted cash flows for each reporting unit were based on discrete five year financial forecasts developed by management for planning purposes.  Cash flows beyond the four year and discrete forecast were estimated using a terminal value calculation, which incorporated historical and forecasted financial trends for each reporting unit and considered long-term earnings growth rates for publicly traded peer companies.  Specifically, the income approach valuations included reporting unit cash flow discount rate at approximately 25% and 26%, and terminal value growth rate at 3% and 3% for WVAS and mobile game respectively.  Publicly available information regarding the market capitalization of the Company was also considered in assessing the reasonableness of the cumulative fair values of our reporting units estimated using the discounted cash flow methodology.  The Company re-evaluated the goodwill impairment at its annual goodwill impairment test in December 2008 and determined that there was no additional goodwill impairment as of December 31, 2008.  During the years ended December 31, 2006 and 2007, there was no impairment or impairment indicator present and no goodwill impairment loss was recorded.

9. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	At December 31,
	2007		2008
Accrued welfare benefits	$	1,373,673	$	1,684,772
Accrued payroll		1,753,888		1,551,845
Accrued professional service fees		698,571		1,175,973
Other tax payables		1,070,336		2,069,530
Others		104,681		247,365
	$	5,001,149	$	6,729,485

F-19

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

10. INCOME TAXES

KongZhong is a tax exempted company incorporated in the Cayman Islands.  The subsidiaries and VIEs incorporated in the PRC were governed by the Income Tax Law of the PRC concerning domestic enterprises and the Income Tax Law of the PRC Concerning Foreign-invested Enterprises and Foreign Enterprises as well as various local income tax laws (the "Income Tax Laws") prior to January 1, 2008.  Pursuant to the Income Tax Laws, the PRC enterprises were subject to income tax at a statutory rate of 33% (comprising state income tax of 30% and local income tax of 3%) on PRC taxable income.  However, KongZhong Beijing, KongZhong China, Beijing Anjian Xingye, Beijing AirInbox, Beijing Boya Wuji, Beijing WINT, Beijng Xinrui, Beijing Chengxitong and Tianjin Mammoth enjoyed the benefit from preferential tax treatment as a high technology enterprise and were subject to an income tax rate of 15% with tax exemption and 50% tax relief for certain years.  On March 16, 2007, the National People's Congress adopted the Enterprise Income Tax Law (the "New Income Tax Law"), which became effective on January 1, 2008 and replaced the existing separate income tax laws for domestic enterprises and foreign-invested enterprises,  by adopting unified income tax rate of 25% for most enterprises.  A summary of the tax concessions available to the PRC entities for the year ended December 31, 2008 is as follows:

	Chinese	Concession from	Year of
	Statutory	Chinese Statutory	commencement
PRC entities	income tax rate	income tax	of tax holiday
	(%)
KongZhong Beijing	15	50% tax relief in 2008	2003
KongZhong China	25	None	N/A
Beijing Anjian Xingye	25	None	N/A
Wukong Shentong Search	25	None	N/A
Beijing AirInbox	15	None	N/A
Beijing Boya Wuji	25	None	N/A
Beijing WINT	25	None	N/A
Beijing Chengxitong	25	None	N/A
Beijing Xinrui	15	50% tax relief in 2008	2004
Tianjin Mammoth	15	None	N/A
Beijing Shiyuan Leya	25	None	N/A

In accordance with the implementation rules of the New Income Tax Law, the Company's various PRC entities that previously qualified for "high and new technology enterprise" ("HNTE status ") and were granted the preferential tax treatments may not continue to qualify as "high and new technology enterprise strongly supported by the State" under the new rules.  However, in 2008 the Company's various PRC entities, including KongZhong Beijing, Beijing AirInbox, Beijing Xinrui and Tianjin Mammoth have been newly announced HNTE status by the PRC tax authority.

The HNTE status would allow qualifying China based enterprises to use a 15% tax rate for three years.  At the conclusion of the three year period, the qualifying enterprises have the option to renew for an additional three years through a simplified application process if the company's business operations continue to qualify for HNTE status.  After the first six years, enterprises would have to go through a new application process in order to renew their HNTE status.

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

	At December 31,
	2007			2008
Deferred tax assets
Depreciation and amortization	$	179,076		$	384,169
Net operating loss carry forwards		177,502			755,413
Deferred tax assets		356,578			1,139,582
Valuation allowance		(356,578	)		(1,139,582	)
Deferred tax assets, net	$	-		$	-
Deferred tax liabilities
Depreciation and amortization	$	123,022		$	55,555

F-20

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

10. INCOME TAXES - continued

The Company operates through multiple subsidiaries and variable interest entities and the valuation allowance is considered on each individual subsidiary and variable interest entity basis.  A full valuation allowance has been established because the Company believes that either it is more likely than not that its deferred tax assets will not be realized as it does not expect to generate sufficient taxable income in future, or the amount involved is not significant.  The tax losses carried forward as of December 31, 2007 and 2008 amount to $535,226 and $5,381,903 and will expire by 2012 and 2013 respectively.

A reconciliation between current income tax expense and the Company's effective tax rate is as follows:

	For the years ended December 31,
	2007		2008
PRC enterprise income tax		33%		(25%)
Effect of tax holiday granted to a PRC subsidiary		(38.5%)		(7.7%)
Tax effect of expenses that are not deductible in determining taxable profit		23.3%		24.5%
Change in valuation allowance		5.4%		3.9%
Effective tax rate for the year		23.2%		(4.3%)

Note: The domestic income tax rate in the jurisdiction where the operation of the Company is substantially based is used.

If the tax holidays granted to KongZhong, Beijing Airinbox, Tianjin Mammoth and Beijing Xirui were not available, income tax provision and earnings per share amounts would be as follows:

	For the years ended December 31,
	2007		2008
Provision for income taxes	$	4,429,863	$	2,379,522
Net income per share-basis	$	0.00	$	(0.02	)
Net income per share-diluted	$	0.00	$	(0.02	)

The Company adopted FIN 48 effective January 1, 2007.  The adoption of FIN 48 did not result in a cumulative adjustment on January 1, 2007 and had no significant impact on the Company's accounting for income taxes for the years ended December 31, 2007 and 2008.  The Company did not incur any interest or penalties related to potential underpaid income tax expenses.

Under the New Income Tax law, enterprises are classified as either resident or non-resident.  A resident enterprise refers to one that is incorporated under the PRC law or under the law of a jurisdiction outside the PRC with its “de facto management organization” located within the PRC.  Non-resident enterprise refers to one that is incorporated under the law of a jurisdiction outside the PRC with its “de facto management organization” located also outside of the PRC, but which has either set up institutions or establishments in the PRC or has income originating from the PRC without setting up any institution or establishment in the PRC.  Under the New EIT Implementation Regulation, “de facto management organization” is defined as the organization of an enterprise through which substantial and comprehensive management and control over the business, operations, personnel, accounting and properties of the enterprise are exercised.  Under the New Income Tax Law and the New EIT Implementation Regulation, a resident enterprise’s global net income will be subject to a 25% EIT rate.  Uncertainties exist with respect to how the New EIT Law applies to the Company's overall operations, and more specifically, with regard to tax residency status.  Additional guidance is expected to be released by the Chinese government in the near future that may clarify how to apply this standard to taxpayers.  Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Company does not believe that its legal entities organized outside of China should be treated as residents for New Income tax Law purposes.  Even if one or more of its legal entities organized outside of China were characterized as China tax residents, none of them had profit; therefore, no significant impact would be expected on the net current tax payable balance and the net deferred tax balance.

If KongZhong were to be non-resident for PRC tax purpose, dividends paid to it out of profits earned after January 1, 2008 would be subject to a withholding tax.  In the case of dividends paid by PRC subsidiaries the withholding tax would be 10% and in the case of a subsidiary 25% or more directly owned by residents in the Hong Kong SAR, the withholding tax would be 5%.

F-21

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

10. INCOME TAXES - continued

Aggregate undistributed earnings of the Company's subsidiaries, VIEs and its VIEs' subsidiaries located in the PRC that are available for distribution to the Company of approximately $53,939,815 at December 31, 2008 are considered to be indefinitely reinvested under APB opinion No. 23, "Accounting for Income Taxes-Special Areas" and accordingly, no provision has been made for the Chinese dividend withholding taxes that would be payable upon the distribution of those amounts to the Company.  The Chinese tax authorities have also clarified that distributions made out of pre January 1, 2008 retained earnings will not be subject to the withholding tax.

Under applicable accounting principles, a deferred tax liability should be recorded for taxable temporary differences attributable to the excess of financial reporting over tax basis, including those differences attributable to a more than 50% interest in a domestic subsidiary.  However, recognition is not required in situations where the tax law provides a means by which the reported amount of that investment can be recovered tax-free and the enterprise expects that it will ultimately use that means.  The Company has not recorded any such deferred tax liability attributable to the undistributed earnings of its financial interest in VIE affiliates because the Company believes such excess earnings can be distributed in a manner that would not be subject to tax.

11. SHAREHOLDER'S EQUITY

Stock options

The Company's 2002 employee equity incentive plan ("2002 Plan") allows the Company to offer a variety of incentive awards to employees, consultants or external service advisors of the Company.  Options to purchase 105,000,000 ordinary shares are authorized under the 2002 Plan.  In 2005, the shareholders authorized additional 32,000,000 options under the 2002 plan.  Under the terms of the 2002 Plan, options are generally granted at prices equal to the fair market value of the Company's shares listed on the Nasdaq National Market.  Forfeiture or other termination of option may be the subject of the grant of further options.  The majority options will vest over four years where 25% of the options will vest at the end of the first year, 6.25% will vest quarterly in the second year through the fourth years.  The stock options expire 10 years from the date of grant.

In October 2008, the Company cancelled certain options granted under the 2002 Plan, whose exercise prices were under water, and re-granted new options to the affected employees.  The newly re-granted options will vest in 16 equal quarterly installments beginning one calendar quarter after the grant date.  The incremental compensation cost of $726,271 arising from the cancellation and re-grant of options was measured as the excess of the fair value of the re-granted awards over the fair value of the cancelled awards at the cancellation date.  The total compensation cost measured at the date of cancellation and re-grant is the remaining unrecognized share based compensation cost of $1,725,138 plus the incremental cost resulting from the cancellation and replacement, which is amortized over the required service period under the replacement award.

As of December 31, 2008, options to purchase 59,534,640 shares of ordinary shares were outstanding, and options to purchase 29,603,880 ordinary shares were available for future grant.

For stock options granted prior to the initial public offering, the Company performed a valuation analysis to reassess the determination of the market value of the Company's ordinary shares.  The valuation analysis utilized generally accepted valuation methodologies such as the income and market approach and discounted cash flow approach to value the Company's business.  As a result, prior to January 1, 2006, stock compensation expense was recorded for the excess of the fair value of the ordinary shares over the exercise price of the employee stock options on the grant date.  For stock options granted following the initial public offering, options are granted at the fair market value of the ordinary share at the date of grant determined using the quoted market price of the Company's stock.  Accordingly, there were no compensation charges generated from these option grants under APB 25 before January 1, 2006.  With the adoption of SFAS 123R on January 1, 2006, the Company recognizes compensation costs for share - based awards to employees based on their grant date fair value for all awards granted to employees prior to the adoption of SFAS 123R that remain unvested on January 1, 2006 and for all share-based payments granted after January 1, 2006.

F-22

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

11. STOCK OPTIONS AND NONVESTED SHARES - continued

Nonvested Shares

The Company's 2006 Equity Incentive Plan ("2006 Plan") allows the Company to offer a variety of incentive awards to employees, consultants or advisors of the Company.  40,000,000 nonvested ordinary shares are authorized under the 2006 Plan.  In December 2008, the shareholders authorized additional 140,000,000 nonvested ordinary shares under the 2006 Plan.  Forfeiture or other termination of nonvested shares may be the subject of the grant of further nonvested shares.

For the nonvested shares granted in 2008, the fair market value of the grant date was used to determine the cost of the nonvested shares.  As of December 31, 2008, 122,237,500 shares were outstanding and 45,790,000 shares were available for future grant.  The majority of nonvested shares will vest over four years where 25% of the nonvested shares will vest at the end of the first year, and 6.25% will vest quarterly from the second year through the fourth year.

The Company recognizes the compensation costs net of a forfeiture rate and recognizes the compensation costs for those options and nonvested sharesexpected to vest on a straight-line basis over the requisite service period of the award, which is generally the vesting period.  The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates.  Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of share-based compensation expense to be recognized in future periods.

Share repurchase

On October 27, 2008, the Company's Board of Directors, authorized to purchase the American Depositary Shares (“ADSs”) of the Company on the open market (the "Purchase Plan").  The number of ADSs to be purchased under the Purchase Plan shall not exceed 4,500,000 ADSs.  The aggregate value of ADSs to be purchased under the Purchase Plan shall not exceed $10,000,000.  During the year ended December 31, 2008, the Company repurchased 8,923,600 shares of its ordinary shares for a total consideration of $760,212.  The shares repurchased by the Company were cancelled in February 2009.

A summary of the stock option activity is as follows:

	Outstanding options
				Weighted		Weighted average
	Number of			average		grant-date
	Options			exercise price		fair value
Options outstanding at January 1, 2006		89,049,750		$	0.133	$	0.144
Granted		32,400,000		$	0.222	$	0.221
Forfeited		(15,643,470	)	$	0.218	$	0.237
Exercised		(30,062,480	)	$	0.074	$	0.078
Options outstanding at December 31, 2006		75,743,800		$	0.177	$	0.184
Granted		23,800,000		$	0.117	$	0.117
Forfeited		(19,522,980	)	$	0.207	$	0.211
Exercised		(3,256,640	)	$	0.047	$	0.053
Options outstanding at December 31, 2007		76,764,180		$	0.156	$	0.162
Granted		50,950,280		$	0.071	$	0.071
Forfeited		(68,161,060	)	$	0.179	$	0.095
Exercised		(18,760	)	$	0.050	$	0.185
Options outstanding at December 31, 2008		59,534,640		$	0.057	$	0.057

The fair value of each option granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions for each applicable period.

Option grants	2006			2007			2008
Average risk-free rate of return		4.95	%		3.44	%		1.56	%
Weighted average expected option life	2.68 years			2.72 years			2.39 years
Volatility rate		63	%		83	%		63	%
Dividend yield		-			-			-

F-23

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

11. STOCK OPTIONS AND NONVESTED SHARES - continued

(1) Volatility

The volatility of the underlying ordinary shares during the life of the options was estimated based on the historical stock price volatility of the Company and listed comparable companies over a period comparable to the expected term of the options.

(2) Risk-free interest rate

Risk-free interest rate was estimated based on the yield to maturity of treasury bonds of the United States with a maturity period close to the expected term of the options.

(3) Expected term

The expected term was estimated based on historical and other economic data trended into the future.

(4) Dividend yield

The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options.

(5) Exercise price

The exercise price of the options was determined by the Company's Board of Directors.

(6) Fair value of underlying ordinary shares

The closing market price of the ordinary shares of the Company as of the grant date was used as the fair value of the ordinary shares on that date.

The weighted average per share fair value of options granted in each year was as follows:

	For the years ended December 31,
	2006		2007		2008
Stock options	$	0.165	$	0.159	$	0.027

The total intrinsic value of options exercised during the year ended December 31, 2006, 2007 and 2008 was $5,120,749, $343,645 and $633.15 respectively.

The following table summarizes information with respect to stock options outstanding at December 31, 2008:

			Options outstanding							Options exercisable
					Weighted		Weighted					Weighted		Weighted
					average		average	Aggregate				average		average	Aggregate
			Number		exercise		remaining	intrinsic		Number		exercise		remaining	intrinsic
			outstanding		price		contractual life	Value		exercisable		price		contractual life	value
Range of average exercise price
	$	0.0025		9,716,800	$	0.0025			789,490		9,716,800	$	0.0025			789,490
	$	0.0100		2,260,080	$	0.0100			166,681		2,260,080	$	0.0100			166,681
	$	0.0500		502,480	$	0.0500			16,959		502,480	$	0.0500			16,959
	$	0.0703		45,855,280	$	0.0703			619,046		-	$	0.0703			-
	$	0.0875		1,200,000	$	0.0875			-		-	$	0.0875			-
Total				59,534,640	$	0.0571	8.60 years	$	1,592,176		12,479,360	$	0.0058	3.63 years	$	973,130

F-24

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

11. STOCK OPTIONS AND NONVESTED SHARES - continued

A summary of the nonvested shares activity is as follows:

	Number of			Weight average
	Nonvested			grant-date
	shares outstanding			fair value
Nonvested shares outstanding at January 1, 2007		-
Granted		37,280,000		$	0.161
Forfeited		(4,520,000	)	$	0.178
Vested		(360,000	)	$	0.190
Nonvested shares outstanding at January 1, 2008		32,400,000		$	0.158
Granted		104,600,000		$	0.087
Forfeited		(3,150,000	)	$	0.167
Vested		(11,612,500	)	$	0.165
Nonvested shares outstanding at December 31, 2008		122,237,500		$	0.097

The total intrinsic value of shares vested in the year of 2007 and 2008 was $65,250 and $972,547 respectively.

The following table summarizes information with respect to nonvested shares outstanding at December 31, 2008:

	Nonvested share outstanding
			Aggregate
	Number		intrinsic
	outstanding		value
Grant date
February 14, 2007		8,502,500		712,084
June 26, 2007		1,825,000		152,844
November 12, 2007		7,350,000		615,563
September 16, 2008		440,000		36,850
October 20,2008		1,720,000		144,050
December 19, 2008		102,400,000		8,576,000
Total		122,237,500		10,237,391

The Company recorded share-based compensation expenses of $1,638,239, $2,550,318 and $2,280,559 for the years ended December 31, 2006, 2007 and 2008, respectively.  The amount of unvested stock-based compensation currently estimated to be expensed from 2009 through 2012 related to unvested share-based payment awards at December 31, 2008 is $12,034,361.  This amount will be recognized as presented in the following table.

Year
2009	3,543,135
2010	3,479,295
2011	2,763,109
2012	2,248,822
Total	12,034,361

That cost is expected to be recognized over a weighted average period of 3.59 years.  To the extent the actual forfeiture rate is different from the Company's original estimate, share-based compensation related to these awards may require to be adjusted.

F-25

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

12. SEGMENT AND GEOGRAPHIC INFORMATION

Segment reporting

Based on the criteria established by Statement of Financial Accounting Standards No. 131, "Disclosure about Segments of an Enterprise and Related Information", the Company currently operates in three principal operating segments: wireless value-added services ("WVAS"), mobile games and wireless internet services ("WIS").  The wireless value-added services are delivered through the 2.5G mobile networks, which comprise Wireless Application Protocol ("WAP") services and Multimedia Messaging Services ("MMS"), and through 2G technology platforms, which comprise Short Messaging Services ("SMS"), Interactive Voice Response services ("IVR"), and Color Ring Back Tones ("CRBT").  Mobile games services are delivered through online mobile games and downloadable mobile games.  Wireless internet services are delivered through the wireless internet portal Kong.net and other sites owned by the Company.  Business segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Company's chief operating decision maker in deciding how to allocate resources and in assessing performance.  The Company does not allocate any assets to its operating segments as management does not believe that allocating these assets is useful in evaluating these segments' performance.  Hence, the Company has not made disclosure of total assets by reportable segment.

During the year ended December 31, 2008, the Company’s revenue from the business of mobile games has increased significantly.  As a result, the Company now allocates resources and assesses performance based on the three operating segments and report three operating segments as compared to two in the prior years.  The revised segment reporting is reflected throughout the consolidated financial statements for all periods presented.  Historical figures are presented in a manner that is consistent with the revised segment reporting.

	For the years ended December 31,
	2006			2007			2008
Revenues
WVAS	$	103,974,236			70,178,828			86,911,720
Mobile games		2,505,971			2,835,868			7,743,291
WIS		289,010			1,002,248			2,034,673
		106,769,217			74,016,944			96,689,684
Cost of revenues
WVAS		(45,863,416	)		(34,440,328	)		(46,985,460	)
Mobile games		(1,265,988	)		(1,375,886	)		(3,479,763	)
WIS		(536,018	)		(679,363	)		(1,147,271	)
		(47,665,422	)		(36,495,577	)		(51,612,494	)
Gross profit (loss)
WVAS		58,110,820			35,738,500			39,926,260
Mobile games		1,239,983			1,459,982			4,263,528
WIS		(247,008	)		322,885			887,402
		59,103,795			37,521,367			45,077,190
Operating expenses
Product development		(12,026,262	)		(12,535,242	)		(15,180,775	)
Sales and marketing		(16,755,155	)		(18,094,164	)		(21,338,924	)
General and administrative		(9,105,184	)		(7,220,991	)		(11,639,983	)
Goodwill impairment loss		-			-			(21,623,279	)
Total operating expenses		(37,886,601	)		(37,850,397	)		(69,782,961	)
Income (loss) from operations		21,217,194			(329,030	)		(24,705,771	)

F-26

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

12.  SEGMENT AND GEOGRAPHIC INFORMATION - continued

Product lines

The Company derives revenues principally from providing value-added services, such as entertainment, communication services, personalized media, and various other related products to mobile phone users.  These services are delivered through 2.5G technology platforms including wireless access protocol ("WAP"), multimedia messaging services ("MMS") and Java TM and 2G technology platforms, including short messaging services ("SMS"), interactive voice response ("IVR") and color ring back tone ("CRBT").  Revenues for the years ended December 31, 2006, 2007 and 2008 are as follows:

	For the years ended December 31,
	2006		2007		2008
WVAS
2.5 Generation
- WAP	$	26,154,220	$	10,554,166	$	8,994,099
- MMS		23,134,712		13,253,041		16,664,417
		49,288,932		23,807,207		25,658,516
2 Generation
- SMS		43,308,829		31,339,945		42,228,789
- IVR		6,443,488		10,047,862		10,312,722
- CRBT and others		4,932,987		4,983,814		8,711,692
		54,685,304		46,371,621		61,253,203
Mobile games		2,505,971		2,835,868		7,743,291
WIS		289,010		1,002,248		2,034,674
	$	106,769,217	$	74,016,944	$	96,689,684

13. NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share:

	For the years ended December 31,
	2006		2007		2008
Net income (loss) (numerator), basic and diluted	$	24,691,645	$	2,831,744	$	(20,660,292	)
Shares (denominator):
Weighted average ordinary shares outstanding used in computing basic net  income (loss) per share		1,399,872,743		1,423,156,120		1,424,581,293
Effect of dilutive securities:
Plus incremental weighted average ordinary shares from assumed conversions of stock options and nonvested shares using the treasury stock method		18,382,553		7,754,301		-
Total weighted average shares used in computing diluted net income (loss) per share		1,418,255,296		1,430,910,421		1,424,581,293
Net income (loss) per share, basic	$	0.02	$	0.00	$	(0.01	)
Net income (loss) per share, diluted	$	0.02	$	0.00	$	(0.01	)

As of December 31, 2006, 2007 and 2008, the Company had 60,464,840, 82,346,060, and 137,452,493 ordinary share equivalents outstanding, respectively, which could potentially dilute income per share in the future, but which were excluded in the computation of diluted income per share in each period, as they have an anti-dilutive effect.

Common stock equivalents are calculated using the treasury stock method.  Under the treasury stock method, the proceeds from the assumed conversion of options and nonvested shares, which include the benefit of the compensation costs attributable to future services and not yet recognized, are used to repurchase outstanding ordinary shares using a yearly average market price.

F-27

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

14. CONCENTRATIONS

i. Dependence on Mobile Operator

The revenue of the Company is primarily derived from cooperative arrangements with the Mobile Operator in the PRC.  The major operators cooperated with the Company are China Mobile, China Unicom, China Telecom and China Netcom.  The Mobile Operator is entitled to a portion of the revenues earned primarily from the transmission of wireless short message and WAP as well as for the billing and collection of services.  If the strategic relationship with the Mobile Operator in the PRC is terminated or scaled-back, or if the Mobile Operator alters the revenue sharing arrangements, the Company's wireless value-added service business would be adversely affected.

Revenues collected through China Mobile for the years ended December 31, 2006, 2007 and 2008 are approximately $81,147,000, $55,434,000 and $72,491,974 representing 76%, 75% and 75% of gross revenues, respectively.

Revenues collected through China Unicom for the years ended December 31, 2006, 2007 and 2008 are approximately $11,724,000, $6,481,000 and $12,260,778 representing 11%, 9% and 13% of gross revenues, respectively.

Revenues collected through China Telecom for the years ended December 31, 2006, 2007 and 2008 are approximately $10,539,000, $7,793,000 and $8,572,156 representing 10%, 11% and 9% of gross revenues, respectively.

Amounts due from China Mobile as of December 31, 2006, 2007 and 2008 amounted to approximately $7,387,000, $10,067,000 and $11,097,096 representing approximately 64%, 67% and 69% of accounts receivable, respectively.

Amounts due from China Unicom as of December 31, 2006, 2007 and 2008 amounted to approximately $2,373,000, $2,511,000 and $1,975,099 representing approximately 21%, 17% and 12% of accounts receivable, respectively.

Amounts due from China Telecom as of December 31, 2006, 2007 and 2008 amounted to approximately $847,000, $1,401,000 and $1,485,733representing approximately 7%, 9% and 9% of accounts receivable, respectively.

ii. Credit risk

The Company depends on the billing system of the Mobile Operator to charge the mobile phone users through mobile phone bills and collect payments from users.  The Company generally does not require collateral for its accounts receivable.  The Company has not experienced any significant credit losses for any periods presented.

15. MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION

Full time employees of the Company in the PRC participate in a government-mandated multi-employer defined contribution plan pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund and other welfare benefits are provided to employees.  Chinese labor regulations require the Company accrue these benefits based on certain percentages of the employees' salaries.  The total provision for such employee benefit was $646,515 and $404,074 for the years ended December 31, 2007 and 2008, respectively.

Pursuant to the laws applicable to the PRC's Foreign Investment Enterprises and local enterprises, the Company's subsidiaries in the PRC must make appropriations from after-tax profit to non-distributable reserve funds as determined by the Board of Directors of the Company.

For foreign enterprises, these reserve funds include (i) a general reserve fund, (ii) an enterprise expansion fund, and (iii) a staff bonus and welfare fund.  Subject to certain cumulative limits, the general reserve fund requires annual appropriations of 10% of after-tax profit (as determined under PRC GAAP at each year-end); the other fund appropriations are at the Company's discretion.  These reserve funds can only be used for specific purposes of enterprise expansion and staff welfare and bonus and are not distributable as cash dividends.

F-28

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

15.  MAINLAND CHINA CONTRIBUTION PLAN AND PROFIT APPROPRIATION - continued

For local enterprises, these reserve funds include (i) a statutory surplus reserve fund, (ii) a statutory public welfare fund and (iii) a general surplus reserve fund.  Subject to certain cumulative limits, the statutory surplus reserve fund and the statutory public welfare fund require annual appropriations of 10% and 5%, respectively, of after-tax profit (as determined under PRC GAAP at each year end).  The statutory surplus reserve fund can be converted into paid-in capital or distributed as dividends to shareholders under certain conditions.  When the total amount of statutory surplus reserve fund up to 50% of paid-in capital of the company, the company can stop accruing this reserve fund.  The statutory public welfare fund can only be utilized on capital items for the collective benefits of the company's employees such as the construction of dormitories, canteen, and other staff welfare facilities.  The general surplus reserve fund can be used to distribute dividend to shareholders.  Statutory public welfare fund should not be appropriated any longer since January 1, 2006 according to the Company Law of the People's Republic of China (revised in 2005) and the balance of that fund should be transferred to the general surplus reserve fund.  Therefore, there are only 2 reserve funds since 2006, (i) a statutory surplus reserve fund and (ii) a general surplus reserve fund.

As of December 31, 2007 and 2008, the total statutory reserve amounted to $6,764,705and $7,392,442, respectively.

16. COMMITMENT AND CONTINGENCY

i. Operating lease as lessee

The Company leases certain office premises under non-cancelable leases which expire in 2009  Rental expenses under operating leases for the years ended December 31, 2006, 2007 and 2008 were  $1,795,573,$1,399,781 and $1,773,753, respectively.

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

Year ending
2009	$	1,050,041

ii. Purchase obligations

The Company entered into a series of agreements with content providers to develop wireless value-added services and Wireless Internet services.  A future of minimum purchase obligations payments under non-cancelable purchase agreements were approximately as follows:

Year ending
2009	$	3,358,802
2010	$	247,087
	$	3,605,889

iii. Business tax

The subsidiaries and VIEs incorporated in the PRC are subject to business tax at rates of 3% to 5% on PRC taxable revenues, as defined by the related tax rules and regulations.  The business tax has been accounted for as operating expenses in the consolidated financial statements.  For the years prior to 2007, when determining the PRC taxable revenues, the subsidiaries and VIEs adopted a "net" basis, i.e. deducting certain items of cost of revenues, including service fees and transmission charges paid to the Mobile Operator, from revenues.  However, as the deductible items for business tax purposes are not clearly defined, the Company would be subject to additional tax if the net basis used by the Company was determined inappropriate, which could result in additional expenses in the period of settlement and have an adverse impact on the Company's financial position and results of operations.  Additional business tax payable amounting to $670,084 could arise had the gross revenue been used for business tax calculations for the years prior to 2007.

Since January 1, 2007, the Company has used gross revenues as taxable revenues in the calculations of business tax, which resulted in a growing business tax accrual that may not be required for payment.  The over-accrued business tax amounts will be reversed when the Company believes they are no longer subject to payment upon the expiration of the 10-year statute of limitations for collecting tax.  Such business tax accruals are $306,266 and $875,145 for the years ended December 31, 2007 and 2008.

F-29

KONGZHONG CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

(In US dollars)

17. SUBSEQUENT EVENTS

Investment from Nokia Growth Partners II, L.P. ("NGP") - On March 18, 2009, the Company issued to NGP a convertible senior note due in 2014 with an aggregate principal amount of $6,775,400. The convertible senior note could be converted into the Company's ordinary  shares. The current conversion price is $0.08915 per ordinary share, subject to possible adjustments. NGP also received a warrant to purchase up to 80 million of the Company’s ordinary shares at $0.125 per ordinary share, exercisable within five years.

Acquisition of Sigma Interactive Inc. ("Sigma") - On January 8, 2009, the Company entered into an agreement with Sigma to acquire 100% of its equity interest for a total consideration of RMB7 million (approximately $1.02 million).  Sigma is engaged in the business of developing technology solutions for mobile Internet, including the development of its on-device portal platform.  Through this acquisition, the Company is expected to obtain Sigma's development team and knowledge of mobile device platforms.  The acquisition was completed in January 2009.

Acquisition of Shanghai Mailifang Communications Ltd. ("Mailifang") - On March 27, 2009, the Company entered into an agreement with Mailifang to acquire 100% of its equity interest for a total consideration of RMB14 million (approximately $2.07 million).  Mailifang is engaged in the business of developing mobile games.  The acquisition was completed in April 2009.

F-30

EX-4.19

Exhibit 4.19

Power of Attorney

Principal:	Yang Li
ID No.:	110104197708032533
Address:	No. 210, Building 397, Guang’anmenwai Avenue, Xuanwu District, Beijing
Agent:	Leilei Wang
ID No.:	110102197304020437
Address:	No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Yang Li, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing Chengxitong Information Technology Co., Ltd. (“Chengxitong”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Chengxitong.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Chengxitong with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Yang Li       (Signature)

Yang Li

Date: 2008-10-13

EX-4.21

Exhibit 4.21

Power of Attorney

Principal:	Xuelei Wu
ID No.:	110102197501140024
Address:	No.23, Ningbo Street, Xicheng District, Beijing
Agent:	Leilei Wang
ID No.:	110102197304020437
Address:	No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Xuelei Wu, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing Chengxitong Information Technology Co., Ltd. (“Chengxitong”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Chengxitong.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Chengxitong with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Xuelei Wu         (Signature)

Xuelei Wu

Date: 2008-10-13

EX-4.23

Exhibit 4.23

Power of Attorney

Principal:  Yang Li

ID No.:  110104197708032533

Address: No. 210, Building 397, Guang’anmenwai Avenue, Xuanwu District, Beijing

Agent:  Leilei Wang

ID No.:  110102197304020437

Address: No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Yang Li, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing Xinrui Network Technologies Co., Ltd. (“Beijing Xinrui”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing Xinrui.

Unless consented by the board of directors of Anjian Xingye Technologies（Beijing）Co., Ltd. (Anjian Xingye), the aforesaid authorization is irrevocable. The Principal also agrees that Anjian Xingye is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Beijing Xinrui with due diligence and care, and will act in accordance with directions of the board of directors of Anjian Xingye.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of Anjian xingye.

/s/ Yang Li	(Signature)
Yang Li

Date: 2008-10-13

EX-4.25

Exhibit 4.25

Power of Attorney

Principal:  Guijun Wang

ID No.:  110108197604075411

Address:  No. 17, Andeli North Street Jia, East District, Beijing

Agent:  Leilei Wang

ID No.:  110102197304020437

Address: No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Guijun Wang, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing Xinrui Network Technologies Co., Ltd. (“Beijing Xinrui”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing Xinrui.

Unless consented by the board of directors of Anjian Xingye Technologies（Beijing）Co., Ltd. (Anjian Xingye), the aforesaid authorization is irrevocable. The Principal also agrees that Anjian Xingye is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Beijing Xinrui with due diligence and care, and will act in accordance with directions of the board of directors of Anjian Xingye.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of Anjian xingye.

/s/ Guijun Wang	(Signature)
Guijun Wang

Date: 2008-10-13

EX-4.26

Exhibit 4.26

Power of Attorney

Principal:  Jingye Sun

IDNo.:  110102197202232316

Address:  No.7 Block A, building8, Fuwai Avenue, Xicheng District, Beijing.

Agent:  Zhou Yunfan

IDNo.:  110102197411102374

Address:  13A, Building 9, South Garden, Guancheng, Madian Haidian District, Beijing

The Principal, Jingye Sun, a citizen of the People’s Republic of China, hereby authorizes Mr. Yunfan Zhou to exercise all voting powers as a shareholder of Beijing Wireless Interactive Network Technology Co., Ltd. (“Wireless Interactive”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Wireless Interactive.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Wireless Interactive with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Jingye Sun	(Signature)
Jingye Sun
Date: 2008-9-5

1

EX-4.27

Exhibit 4.27

Power of Attorney

Principal:	Li Ai
ID No.:	110108197304238936
Address:	No. 403, Unit 2, Building 7, Sanyi Xili, Xuanwu District, Beijing.
Agent:	Zhou Yunfan
ID No.:	110102197411102374
Address:	13A, Building 9, South Garden, Guancheng, Madian Haidian District, Beijing

The Principal, Li Ai, a citizen of the People’s Republic of China, hereby authorizes Mr. Yunfan Zhou to exercise all voting powers as a shareholder of Beijing Wireless Interactive Network Technology Co., Ltd. (“Wireless Interactive”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Wireless Interactive.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Wireless Interactive with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power of Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Li Ai                  (Signature)

Li Ai

Date: 2008-9-5

1

EX-4.29

Exhibit 4.29

Power of Attorney

Principal:	Linguang Wu
ID No.:	340104197202233015
Address:	No. 159-204, Feixi Road No. 3, Shushan District, Hefei
Agent:	Leilei Wang
ID No.:	110102197304020437
Address:	No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Linguang Wu, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing AirInbox Information Technologies Co. Ltd. (“Beijing AirInbox”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing AirInbox.

Unless consented by the board of directors of KongZhong Information Technologies （Beijing）Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Beijing AirInbox with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Linguang Wu               (Signature)

Linguang Wu

Date: 2008-10-13

EX-4.31

Exhibit 4.31

Power of Attorney

Principal:  Guijun Wang

ID No.:  110108197604075411

Address:  No. 17, Andeli North Street Jia, East District, Beijing

Agent:  Leilei Wang

ID No.:  110102197304020437

Address: No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Guijun Wang, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing AirInbox Information Technologies Co. Ltd. (“Beijing AirInbox”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing AirInbox.

Unless consented by the board of directors of KongZhong Information Technologies （Beijing）Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Beijing AirInbox with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Guijun Wang	(Signature)
Guijun Wang

Date: 2008-10-13

EX-4.32

Exhibit 4.32

Power of Attorney

Principal:	Songlin Yang
ID No.:
Address:
Agent:	Leilei Wang
ID No.:	110102197304020437
Address:	No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Songlin Yang, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing AirInbox Information Technologies Co. Ltd. (“Beijing AirInbox”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing AirInbox.

Unless consented by the board of directors of KongZhong Information Technologies （Beijing）Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Beijing AirInbox with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Songlin Yang	(Signature)
Songlin Yang

Date: 2008-10-13

EX-4.33

Exhibit 4.33

Power of Attorney

Principal:  Zhen Huang

ID No.:  610104197802191627

Address:  NO.36, Jianhuaxi Lane, Lianhu District, Xi’an, Shanxi Province

Agent:  Leilei Wang

ID No.:  110102197304020437

Address: No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Zhen Huang, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Beijing AirInbox Information Technologies Co. Ltd. (“Beijing AirInbox”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing AirInbox.

Unless consented by the board of directors of KongZhong Information Technologies （Beijing）Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Beijing AirInbox with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Zhen Huang	(Signature)
Zhen Huang

Date: 2008-10-13

EX-4.34

Exhibit 4.34

Power of Attorney

Principal:  Jingye Sun

ID No.: 110102197202232316

Address:  No.7 Block A, Building8, Fuwai Avenue, Xicheng District, Beijing.

Agent:  Leilei Wang

ID No.:  110102197304020437

Address:  No.1001, Building 1, Xiaoyang Yibin Hutong, Dongcheng District, Beijing

The Principal, Jingye Sun, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Wireless Interactive Network Technology Co. Ltd. (“Wireless Interactive”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Wireless Interactive.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Wireless Interactive with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Jingye Sun	(Signature)
Jingye Sun

Date: 2008-10-13

EX-4.35

Exhibit 4.35

Power of Attorney

Principal:	Xu Guo
ID No.:	110101197010212111
Address:	No. 502, Unit 1, Building 9, Shenggubeili, Chaoyang District, Beijing
Agent:	Leilei Wang
ID No.:	110102197304020437
Address:	No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Xu Guo, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Shanghai Mailifang Communications Ltd. (“Mailifang”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Mailifang.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Mailifang with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Xu Guo                     (Signature)

Xu Guo

Date: 2009-4-1

EX-4.36

Exhibit 4.36

Power of Attorney

Principal:	Yang Yang
ID No.:	110104731027252
Address:	407, No. 397 Guang An Men Wai Avenue, Xuanwu District, Beijing
Agent:	Leilei Wang
ID No.:	110102197304020437
Address:	No.1001, Building 1, Xiao Yang Yi Bin Hutong, Dongcheng District, Beijing

The Principal, Yang Yang, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Shanghai Mailifang Communications Ltd. (“Mailifang”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Mailifang.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Mailifang with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Yang Yang                    (Signature)

Yang Yang

Date: 2009-4-1

EX-4.37

Exhibit 4.37

Power of Attorney

Principal: Li Ai

ID No.: 110108197304238936

Address: No. 403, Unit 2, Building 7, Sanyi Xili, Xuanwu District, Beijing.

Agent: Leilei Wang

ID No.: 110102197304020437

Address:    No.1001, Building 1, Xiaoyang Yibin Hutong, Dongcheng District, Beijing.

The Principal, Li Ai, a citizen of the People’s Republic of China, hereby authorizes Mr. Wang Leilei to exercise all voting powers as a shareholder of Wireless Interactive Network Technology Co. Ltd. (“Wireless Interactive”) during the term of this Power of Attorney, including not limited to acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Wireless Interactive.

Unless consented by the board of directors of KongZhong Information Technologies (Beijing) Co., Ltd. (KongZhong Beijing), the aforesaid authorization is irrevocable. The Principal also agrees that KongZhong Beijing is entitled to appoint a new agent to replace the original agent, and will execute relevant documents and take all necessary actions to complete the new appointment.

The Agent, with the authorization of the Principal, shall exercise shareholders’ voting powers of Wireless Interactive with due diligence and care, and will act in accordance with directions of the board of directors of KongZhong Beijing.

This Power Attorney will come into effect on the day of execution and will expire upon dissolution of KongZhong Beijing.

/s/ Li Ai	(Signature)
Li Ai

Date: 2008-10-13

EX-4.38

Exhibit 4.38

Letter of Undertaking

Date：2008-10-13

To: KongZhong Information Technologies (Beijing) Co., Ltd (“KongZhong Beijing”)

Dear Sir/Madam:

Whereas:

1. Pursuant to the Power of Attorney dated on May 10, 2004 and October 16, 2006 respectively and signed by shareholders of Beijing AirInbox Information Technologies Co. Ltd. (“Beijing AirInbox”), I was authorized to exercise all voting powers of the shareholder of Beijing AirInbox.

2. Shareholders of Beijing AirInbox have revoked aforesaid Power of Attorney according to the board resolution of KongZhong Beijing which revocation became effective on October 13, 2008. To avoid confusion, documents listed below became ineffective on October 13, 2008:

a)         the Power of Attorney signed by Songlin Yang on May 10, 2004;

b)         the Power of Attorney signed by Linguang Wu on October 16, 2006;

c)         the Power of Attorney signed by Guijun Wang on October 16, 2006;

d)         the Power of Attorney signed by Zhen Huang on May 10, 2004.

I hereby undertake that I shall not exercise any authority of aforesaid ineffective documents henceforth, including but not limited to exercising voting powers as the shareholder of Beijing AirInbox, and/or acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing AirInbox.

Yours Faithfully,

/s/ Yunfan Zhou                  (Signature)

Yunfan Zhou

Consented by Shareholders of Beijing AirInbox:

Songlin Yang:    /s/ Songlin Yang                                  

Linguang Wu:    /s/ Linguang Wu                                  

Guijun Wang:    /s/ Guijun Wang                                   

Zhen Huang:    /s/ Zhen Huang                                      

EX-4.39

Exhibit 4.39

Letter of Undertaking

Date：2008-10-13

To: KongZhong Information Technologies (Beijing) Co., Ltd (“KongZhong Beijing”)

Dear Sir/Madam:

Whereas:

1. Pursuant to the Power of Attorney dated on March 1, 2005 and September 5, 2008 respectively and signed by shareholders of Wireless Interactive Network Technology Co. Ltd. (“Wireless Interactive”), I was authorized to exercise all voting powers of the shareholder of Wireless Interactive.

2. Shareholders of Wireless Interactive have revoked the aforesaid Power of Attorney according to the board resolution of KongZhong Beijing which revocation became effective on October 13, 2008. To avoid confusion, documents listed below became ineffective on October 13, 2008:

a)         the Power of Attorney signed by Yang Yang on March 1, 2005;

b)         the Power of Attorney signed by Jingye Sun on September 5, 2008;

c)         the Power of Attorney signed by Li Ai on September 5, 2008.

I hereby undertake that I shall not exercise any authority of aforesaid ineffective documents henceforth, including but not limited to exercising voting powers as the shareholder of Wireless Interactive, and/or acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Wireless Interactive.

Yours Faithfully,

/s/ Yunfan Zhou    (Signature)

Yunfan Zhou

Consented by Shareholders of Wireless Interactive:

Yang Yang:       /s/ Yang Yang                   

Jingye Sun:       /s/ Jingye Sun                    

Li Ai:                  /s/ Li Ai                            

EX-4.40

Exhibit 4.40

Letter of Undertaking

Date：2008-10-13

To: KongZhong Information Technologies (Beijing) Co., Ltd (“KongZhong Beijing”)

Dear Sir/Madam:

Whereas:

1. Pursuant to the Power of Attorney dated on Nobember 21, 2005 and signed by shareholders of Beijing Chengxitong Information Technology Co., Ltd. (“Chengxitong”), I was authorized to exercise all voting powers of the shareholder of Chengxitong.

2. Shareholders of Chengxitong have revoked aforesaid Power of Attorney according to the board resolution of KongZhong Beijing which revocation became effective on October 13, 2008. To avoid confusion, documents listed below became ineffective on October 13, 2008:

a)   the Power of Attorney signed by Xuelei Wu on November 21, 2005;

b)   the Power of Attorney signed by Yang Li on November 21, 2005.

I hereby undertake that I shall not exercise any authority of aforesaid ineffective documents henceforth, including but not limited to exercising voting powers as the shareholder of Chengxitong, and/or acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Chengxitong.

Yours Faithfully,

/s/ Yunfan Zhou           (Signature)

Yunfan Zhou

Consented by Shareholders of Chengxitong:

Xuelei Wu:    /s/ Xuelei Wu                  

Yang Li:        /s/ Yang Li                      

EX-4.41

Exhibit 4.41

Letter of Undertaking

Date：2008-10-13

To:  Anjian Xingye Technologies（Beijing）Co., Ltd. (“Anjian Xingye”)

Dear Sir/Madam:

Whereas:

1. Pursuant to the Power of Attorney dated on January 28, 2006 and signed by shareholders of Beijing Xinrui Network Technologies Co., Ltd. (“Beijing Xinrui”), I was authorized to exercise all voting powers of the shareholder of Beijing Xinrui.

2. Shareholders of Beijing Xinrui have revoked aforesaid Power of Attorney according to the board resolution of Anjian Xingye which revocation became effective on October 13, 2008. To avoid confusion, documents listed below became ineffective on October 13, 2008:

a)         the Power of Attorney signed by Guijun Wang on January 28, 2006;

b)         the Power of Attorney signed by Jingye Sun on January 28, 2006.

I hereby undertake that I shall not exercise any authority of aforesaid ineffective documents henceforth, including but not limited to exercising voting powers as the shareholder of Beijing Xinrui, and/or acting as the authorized representative to nominate and elect senior management officers such as directors, general manager at shareholders’ meetings of Beijing Xinrui.

Yours Faithfully,

/s/ Yunfan Zhou            (Signature)

Yunfan Zhou

Consented by Shareholders of Beijing Xinrui:

Yang Li:   /s/ Yang Li                                

Guijun Wang:   /s/ Guijun Wang               

EX-4.45

Exhibit 4.45

Contract Registration No.:

2 0 0 8 1 1 0 0 3 2 0 1 2 6 1 6

Technical Service Agreement

(Including Technical Training and Technology Intermediary Services)

Registered (seal)

Project Name: Agreement 08DX039 on China Mobile’s WAP Service

Principal: China Mobile Telecommunications Group  Corporation

(Party A)

Agent: Beijing AirInbox Information Technologies Co., Ltd. (seal)

(Party B)

Place of Execution: Haidian District, Beijing

Date of Execution: January 1, 2008

Validity Term: January 1, 2008 to December 31, 2008

1

YYXSHT [2008] 709-10

Cooperation Agreement between China Mobile Telecommunications Group Corporation and Providers of Monternet WAP Services

Party A: China Mobile Telecommunications Group  Corporation

Party B: Beijing AirInbox Information Technologies Co., Ltd

With a view to seeking mutual benefit and win-win results, Both parties, through full and amicable consultations, have decided to establish cooperative relationshipon on equal footing. This Agreement is formulated to define the rights and obligations of both parties during cooperation, which is equally binding upon both parties hereto.

I. Principles of Cooperation

Both parties will carry out faithful cooperation in Mobile On-line business (via WAP) of mobile data services based on the benefit sharing, mutual beneficial and win-win principles  Both parties shall abide by the agreement and coordinate the counterpart.

II. Coverage of Project

As a network operator, Party A shall provide the network platform and communication service, and shall provide Party B with the WAP access specification for Monternet Mobile On-line business and the technical specification on interface. As a service provider, Party B shall, in accordance with the specifications provided by Party A, develop and provide content and application services. Only as approved by Party A can the application and contents provided by Party B be linked to WAP home site of Party A’s Monternet. URL: Http://wap.monternet.com.

III. Responsibilities of Both Parties

(I) Responsibilities of Party A

1. Party A shall, by making use of the media under its control, publicize and promote WAP home site of Monternet to attract users to visit the website.

2. Party A shall provide Party B with the technical specifications of interface and technical support for WAP access, so as to ensure successful access of Party B to Monternet WAP home site.

3. Party A shall, as required by Party B, provide necessary training to Party B.

4. With the firewall of Party A’s WAP system and Party B’s interface as the boundary, Party A shall maintain all equipment at its side and ensure normal operation thereof.

5. Party A shall, at the WAP home site of Monternet, make available the application services provided by Party B which was tested and approved by Party A.

6. Party A shall conduct routine maintenance for WAP home site of Monternet. Party A shall resolve any failure caused by technical problem on its part to ensure normal operation of application services.

7. Party A shall provide network interface services to Party B for free, and assist Party B to link the application services to WAP home site of Monternet.

2

8. Party A shall work out the indicators for Mobil On-line business (via WAP), inform Party B of the same in complete and unambiguous manner, and allow Party B enough time to realize such indicators.

9. Party A shall be responsible for the registration, login, authentication and authority of users, and feedback related data to Party B.

10. Party A shall calculate visit numbers of WAP home site of Monternet, and provide the statistics to Party B as required by the latter.

11. With respect to the services provided by Party B at WAP home site of Monternet, Party A shall calculate the charges based on the rate provided by Party B, and charge Party A’s customers who use the services provided by Party B based on the calculation, and shall settle with Party B based on relevant clauses in Part 6 hereunder.

12. Party A shall be responsible for consultation and complaints from customers, and handle complaints. Party A shall, in case of network, gateway and operation platform failures caused by Party A, take responding actions immediately; in case of failures caused by Party B, Party A shall inform Party B of the situation and urge Party B to solve the problems.

(II) Responsibilities of Party B

1. Party B shall, by making use of the media (including WEB Site, WAP Site, print media, TV etc) under its control, assist China Mobile to introduce WAP home site of Monternet (wap.monternet.com) and application services at the home site, to attract users to visit such website to use the services. Party B may promote the Monternet Mobile On-line business by the company name or business name of Party A only upon written confirmation of Party A; without written consent of Party A, Party B shall not promote business not included in the Monternet Mobile On-line business in the name of “China Mobile” or “Monternet” by media.

2. Party B shall, according to the coverage of project, provide necessary equipment, including WAP application server, application software, information source and special line for application data and ensure normal operation of such equipment as required by Party A.

3. Party B shall coordinate Party A for interface testing and ensure successful access of Party B to Monternet WAP home site according to the WAP access specification for Monternet Mobile On-line business (via WAP) and the technical specification on interface as provided by Party A.

4. With the firewall of Party A’s WAP system and Party B’s interface as the boundary, Party B shall maintain all equipment at its side and ensure normal operation of such equipment.

5. Party B must satisfy the following network performance indicators which will be tested and recorded by Party A.

(1) The proportion of success links shall be no less than 98% in busy hours;

(2) Network delay (round trip delay of WTBS PING SP server) shall be no more than 100 milliseconds;

(3) SP response delay (response delay from WTBS delivering a business request to WTBS receiving the business) shall be no more than 500 milliseconds;

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6. Party B shall, in case of failures concerning application services cased by Party B, resolve such failures immediately and take practical measures to ensure that the same or similar failures do not recur in the future. In case of economic losses to Party A or Party A’s customers incurred by Party B, Party B shall be liable for compensation therefor.

7. Party B shall be responsible for negotiations and reaching commercial agreements with the direct providers for application services. Party B shall ensure all information and services provided do not violate relevant policies and regulations of the State, and would not infringe the interests of consumers as well as the intellectual property right of any third party. Party B shall be responsible for approval and online-related work as regards to the information and contents required for updating, and bear legal liabilities arising therefrom. Party B shall assume the relevant responsibilities for litigations incurred.

8. Party B shall ensure users to use all services provided by Party A freely at Party A’s WAP home site of Monternet. Party B shall not require the users who visit Party A’s WAP home site of Monternet for registration and certification and shall not require the users to register firstly in any website other than Party A’s WAP home site of Monternet without Party A’s consent.

9. Party B shall ensure the contents as provided are legal and do not infringe the legitimate rights of the third party and shall update the contents timely.

10. Party B shall not unilaterally provide any service other than that approved by Party A through the WAP home site of Monternet without the written consent of Party A.

11. With respect to the application services provided by Party B for Party A in whatsoever transmission and carrying ways, Party B shall not provide such services for other communication operators or websites. Failing which, Party A may terminate the application services provided by Party B at Party A’s WAP home site of Monternet and terminate the settlement with Party B.

12. Party B shall not provide the services with charge on its own WAP websites or other websites. Failing which, Party A may terminate the application services provided by Party B at Party A’s WAP home site of Monternet and terminate the settlement with Party B.

13. Party B shall, in principle, terminate the service in the event that Party B had provided such service on its own WAP websites or WAP websites of Party A’s companies at provincial level before cooperation with Party A. It is allowed to add a link to Monternet in the original service location. Otherwise, Party A may terminate the application services provided by Party B at Party A’s WAP home site of Monternet and terminate the settlement with Party B.

14. Party B shall provide a link to the homepage of Party A’s WAP home site of Monternet (http://wap.monternet.com) on its own WAP websites and recommend application services of WAP home site of Monternet to users.

15. Party B may either provide nation-wide services at Party A’s WAP home site or provide services at Party A’s local WAP websites. However, Party B may apply  only one of them for providing same or similar contents. In other words, the services provided for local WAP websites shall not be provided for the WAP home site and the services provided for the WAP home site shall not be provided for the local WAP websites. In addition, the services provided for different provinces shall be different. It is not allowed to provide nation-wide services in the disguise of accessing to multi local WAP websites of Party A. Otherwise, the nation-wide services of Party B may be terminated.

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16. Without written consent of Party A, the application services provided by Party B at Party A’s WAP home site shall be marked with a uniform trademark of Monternet other than the brand or trademark of Party B.

17. All services provided by Party B at Party A’s WAP home site shall not go to Party B or third party’s URL; Links shall be available for all services to return the homepage of Monternet （http://wap.monternet.com）．

18. Party B shall provide to Party A all necessary materials for the billing clearly and unambiguously and shall bear all economic and legal liabilities.

19. Party B must possessthe Business License of the People's Republic of China on Cross-region Value-added Telecommunication Business as approved and issued by Ministry of Information Industry. Party B must meet all requirements for operating value-added telecommunication business as specified in the business license of the People’s Republic of China on cross-region value-added telecommunication business. In addition, the business scope provided by Party B shall comply with the term and geographical area specified in the business license of value-added telecommunication business.

IV. Rights of Both Parties

(I) Rights of Party A

1. Party A shall have the right to inform Party B of policy adjustments made by the competent administrative authority and shall make corresponding adjustments according to the policy requirements of competent administrative authority.

2. Party A shall have the right to, by its own or entrusting certain institutions, inspect the content of the information and applications services provided by Party B and their timeliness.

3. Party A shall have the right to refuse to publish or delete the information that goes against national laws, regulations and policies or is deemed improper by Party A unavailable to customers; Party A shall also have the right to request Party B to compensate for the subsequent negative influences to Party A’s economy and goodwill.

4. Party A shall have the right to request Party B to amend, correct or delete the contents that shall be amended, corrected or deleted according to Party A.

5. Party A shall have the right to establish indices for evaluating services provided by Party B, and to evaluate the services provided based thereon. The Party A shall have the right to request Party B to adjust or amend the application services which are found to be unqualified in three consecutive months; Party B may be disqualified for providing application services in the event that the adjustment is not made in a manner as required or not up to the requirements of Party A after adjustment.

6. Party A shall have the sole authority to decide the order and priority of application services as provided by Party B at Party A’s WAP home site.

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7. Party A shall have the right to conduct direction and supervision over the charging standard of Party B’s businesses.

8. Party A shall be entitled to reasonable allocation of charges. (Please refer to Part 6 hereof for the allocation of charges).

(II) Rights of Party B

1. Party B shall have the right to decide to either provide nation-wide services at Party A’s WAP home site or provide services on Party A’s local WAP websites. Party B shall file an application to Party A for nation-wide services and to local branches of Party A for local services. However, with respect to the services provided by Party B on the local websites of Party A, Party A will not conduct settlement to Party B, but the local company of Party A will conduct the settlement to Party B based on an independent agreement concluded by both parties.

2. Party B is entitled to determine, under the instruction of Party A, whether the services are chargeable and the charging rates

3. Party B is entitled to obtain statistical data of users’ access to the information and application service contents as provided by Party B through platform.

4. Party A shall not transfer, publish or resell Party B’s information products in any form to any third Party hereto without the prior written consent or authorization of Party B.

5. Party B shall be entitled to partial reasonable allocation of business charges. (Please refer to Part 6 hereof for the allocation of charges).

6. Party B shall have the right to request Party A to provided detailed statistical data for reconciliation  in case of considerable discrepancy between statistical data of both parties.

V. Confidentiality Provision

1. Assume that both parties shall be obligated to maintain confidentiality. Neither party may, in any way, disclose commercial secrets of each party to any third party. The confidential information as described in this Agreement refers to the data, price, quantity, technical solutions in relation to the Agreement and the details of the Agreement and other materials and information in relation to the business of each party, which are obtained or known by one party (including the parent company, subsidiary, joint stock company and affiliated company) from the other party.

2. Any material and information that is disclosed hereunder from one party to the other party shall be regarded as confidential information.  The mentioned confidential information which is obtained or known by one party from the other party may not be disclosed to the third party and may not be used for any purpose other than those stated in the Agreement.

3. The persons (including but not limited to employees, representatives, agencies and consultants of respective party) who are engaged in the cooperation or obtain or know the mentioned confidential information shall also undertake the confidentiality obligations.

4. The confidentiality obligation shall survive within one year after termination of this Agreement.

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VI. Intellectual Property Right

1. Party A authorizes Party B to use its trademark and company name for the purpose agreed hereupon. Party B shall ensure proper and reasonable use of Party A’s trademark and company name, shall not change, without authorization, or misrepresent the image of Party A and any part of it, and shall not use Party A’s trademark and company name for any purpose other than as expressly agreed under this Agreement.

2. Party A holds the copyright of all promotional materials and the creations, designs, graphics, figures and words contained therein which are provided for Party B by Party A in line of this Contract. Party B shall not use such materials and contents for any purpose other than as agreed hereunder or allow any third party to use, without the prior written consent of Party A.

3. Party B ensures the contents contained in WAP as provided to Party A do not infringe the intellectual property right of any third party. Any claim or dispute in relation to the contents of WAP or arising from the Party A’s application of contents of WAP shall be handled by Party B. Party B shall be held liable for compensation in case of losses to Party A.

VII. Charge Allocation and Settlement

Registered (seal)

1. Party A and Party B provide Mobile On-line business (via WAP) for Party A’s customers jointly. Each Party shall have the right to conduct settlement over the business charges. The settlement shall be based on the statistical data given by the billing system of Party A.

2. The settlement shall only apply to the nation-wide services as provided by Party B at Party A’s WAP home site. The local services provided by Party B on local websites of Party A are excluded from the scope of this Agreement.

3. If Party A’s customers need to use Party A’s network resources when using Mobil On-line business (via WAP), Party A shall own the subsequent communication fees.

4. The term of settlement shall commence as of the beginning of this project and end at the expiration of this Agreement.

5. Party A shall, by the network-wide billing system, charge the customers who use the services at WAP home site of Monternet on behalf of Party B. 15% of the information fees shall be paid to Party A as remuneration and 85% shall be paid to Party B by Party A.

6. Party A shall inform Party B of the receivable revenue (the remuneration of Party A has been deducted) of last month before the 20th day of each month. Party B shall issue a formal and legitimate invoice based on the revenue provided by Party A and deliver it to Party A.

7. After receiving the invoice issued by Party B and the invoice is proved to be correct, Party A, according to the bank account information provided by Party B, shall transfer the receivable revenue of Party B of last month into the account of Party B within 10 working days.

8. Each Party shall be responsible for its own tax payment arising from this Agreement.

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9. The settlement between Party A and Party B is completed by the billing system of Party A; Party B may access to platform for reconciliation application in the event that Party B holds any objection against the billing results. Party A shall assist Party B to find the causes but will not change the settlement amount of the month.

10. Party B shall provide accurate bank account information for Party A.

Name of the account: Beijing AirInbox Information Technologies Co., Ltd

Bank of deposit: ICBC Capital Indoor Stadium Sub-branch

Account No.: 0200053719200031688

VIII. Force Majeure

1. If any Party is prevented from performing any of its obligations due to an event of Force Majeure (including war, serious fire, flood, typhoon and earthquake etc), the time for performance of the obligations under this Contract shall be extended by a period equal to the period of delay caused by such Event of Force Majeure.

2. The Force Majeure refers to the objective situations which could not be predicted when the parties entered into this Contract and of which the occurrence and consequences could not be avoided or overcame. The party affected by the event of Force Majeure shall inform the other party of its occurrence by cable, fax or telex as soon as possible, and thereafter send a certificate as issued by the relevant authorities to the other party by EMS or registered letter for review and confirmation within two weeks after its occurrence.

3. Should the delay caused by any event of Force Majeure continue for more than one hundred and twenty (120) consecutive days, the parties may terminate this Contract.

IX. Liability for Breach  of Contract

1. In the event that this Agreement cannot be carried out due to either Party’s breach of this Agreement, the observant Party shall have the right to terminate this Agreement and request compensation from the breaching Party for losses caused by such breach.

2. In the event of either Party’s breach of agreement which causes harmful social influences or economic losses to the observant Party, the observant Party shall have the right to investigate the other Party’s liabilities, request for relevant economic compensation until the termination hereof.

X. Settlement of Disputes

1. Any dispute arising from this Agreement or in connection with this Agreement shall be resolved by both Parties through consultations on equal basis.

2. If negotiation fails, either Party may refer the dispute to Beijing Arbitration Commission for arbitration, which shall be conducted in Beijing in accordance with the Commission’s arbitration rules in effect at the time. The arbitration award shall be final and binding upon both Parties.

XI. Term of Agreement

1. This Agreement shall come into force on January 1, 2008 and expire on December 31, 2008.

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2. During the period of validity hereof, the Agreement shall automatically terminate if both parties agree to terminate this Agreement.

3. In the event that the Agreement fails to be carried out continuously due to Force Majeure, the Agreement shall automatically terminate after two parties complete all outstanding settlements.

4. If one party fails to continue performance of obligations hereunder due to occurrence of an event and the event is foreseeable, the party shall inform the other party of the event within five working days after the party should have predicted the event, and shall coordinate with the other party to complete all issues not covered in the Agreement. In the event that one party shall sustain loss due to failure of the other party for informing the party of the event timely, the other party shall be liable for compensation therefor.

XII. Miscellaneous

1. The appendix to this Agreement, Monternet SP Cooperation and Management Measures, Mobile On-line Section, has the same legal effect as this Agreement.

2. The matters not covered in the Agreement shall be solved by both parties through amicable negotiation.

3. This Agreement is made in duplicate, one copy for Party A and one copy for Party B respectively. Each copy has the same legal effect.

Party A:	China Mobile Telecommunications Group Corporation	Party B: Beijing AirInbox Information Technologies Co., Ltd (Special Contract Seal of Beijing
(Special Contract Seal of China Mobile Telecommunications Group  Corporation)		AirInbox Information Technologies Co., Ltd)
Authorized Representative: (signature)		Authorized Representative: (signature)
Date: June 18, 2008		Date:

No. 06, Haidian Local Tax Bureau, Beijing

Special seal for stamp tax, payment received

Tax amount seal    11,015.34

WSPZZ: No. 1768484

January 13, 2009

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Place for Affixing of Tax Stamps

(Seal of Beijing AirInbox Information Technologies Co., Ltd)

(Seal of Beijing AirInbox Information Technologies Co., Ltd)

Column for Examination and Registration by Registration Authority:         Person-in-charge：(seal)           (Special Seal of Beijing AirInbox Information Technologies Co., Ltd Contract)   Technology Contract Registration Authority (Special-Purpose Seal)   August 7, 2008

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EX-4.46

Exhibit 4.46

Contract Registration No.:

2 0 0 8 1 1 0 0 3 2 0 0 9 7 4 9

TECHNICAL SERVICE AGREEMENT

(Including Technical Training and Technology Intermediary Services)

(Registered seal)

Project Name: Agreement 08DX028 on Monternet Short Message Services

Principal: China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd.

(Party A)

Agent: Beijing AirInbox Information Technologies Co., Ltd. (seal)

(Party B)

Place of Execution: Haidian District, Beijing

Date of Execution: May 01, 2008

Validity Term: May 01, 2008 to April 30, 2009

Cooperation Agreement on Monternet Short Message Business of China Mobile

Telecommunications Group Corporation (Beijing) Co., Ltd.

Party A: China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd.	Party B: Beijing AirInbox Information Technologies Co., Ltd.
Address: 7, Dongzhimen Nandajie, Dongcheng District, Beijing, China	33/F, 168 Xiwai Dajie, Haidian District, Beijing, China
Post code: 100007	Post code: 100044
Tel: 86-10-65546699	Tel: 010-88576000
Fax: 86-10-65541330	Fax: 010-88575900
Bank of deposit: ICBC Beijing Branch, Chang’an Sub-branch	Bank of deposit: ICBC Capital Indoor Stadium Sub-branch
Account No.: 054018-32	Account No.: 0200053719200031688

As a mobile communication operator, China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd. (“Party A”), a network operator approved by the Ministry of Information Industry under the State Council, provides paid communication channels, billing platform and service of charge collection to various providers of short message contents and application services.

As a provider of short message contents and application services, Beijing AirInbox Information Technologies Co., Ltd. (“Party B"), a company engaged in communication value-added service approved by the telecommunication authorities (No. of value-added telecommunication business license: B2-20040152) provides short message value-added services directly to the users of Party A.

Both Parties have, on the principles of mutual benefits, complementing each other for mutual promotion and jointly seeking development, and through full and amicable consultations, reached an agreement as follows on the matters regarding engaging in business of Monternet short message services:

I. Methods and Contents of Cooperation

1. As a provider of short message network and billing platform, Party A shall provide paid communication and billing channels to Party B. During the period of cooperation, the enterprise code of Party B in the provinces where Party A is located is 901085, and the service code is 10663355.

2. Party B shall, through the short message platform of Party A, provide value-added and application services to the users of Party A’s Monternet. Party B shall, according to the customized requirements of Party users, provide information services based on the quality and quantity as required in timely manner. Party A shall, through its own billing and support systems, provide paid services of billing and charge collection for Party B.

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3. Party B shall, through Party A’s short message channel, provide Monternet short message services only for mobile phone users of China Mobile in Beijing.

II. Rights and Obligations of the Parties

(I) Obligations of Party A

1. Party A shall, as required by Party B, provide billing and charge collection services of business subject to cooperation.

2. Party A shall, in case of commissioning, maintenance and upgrading of systems and other predictable and possible operations that might result in service interruption, notify Party B of such operations, including the causes, time and period of the interruption, in the form of notification, email or others through “SIMS system” seven days before such operation.

3. Party A shall provide Party B with relevant specifications on interface and the relevant technical protocol standards, and coordinate with Party B in connecting Party B’s server with the interface of Party A's short message gateway. Party A shall ensure smooth network transmission and perform relevant rights and obligations based on the network access agreement signed with users.

4. Party A shall be responsible for dealing with the users’ consultation, appeal and complaints on problems of the communication network of Party A. System affixing the Responsibility of the First Recipient shall be adopted. Any problem to be assisted by Party B for solution shall be properly transferred to Party B. Party A shall follow up the handling situation and carry out users return visit.

5. Party A shall, if possible, provide the information fees actually collected to Party B in timely manner, including user’s number and relevant fees.

6. Party A shall be obliged to notify Party B information that formulated and official released by Party A and has direct impact on the business development of Party B, except that relevant to secrets of the state and Party A.

7. If Party A is unable to provide services due to its improper operation or other reasons of its own, it shall inform Party B three months in advance and make explanation to the users and deal with affairs arising therefrom.

(II) Rights of Party A

1. Party A shall not assume risks of overdue information fee as a result of reasons of the users, such as cancellation of the phone number, pre-cancellation of the phone number, out of service, refusal to pay. Users who do not receive information service will not be collected with the information fee.

2. Party A shall has the right to formulate Monternet management measures, assessment provisions, standards of customer service and relevant documents to demand Party B for compliance and implementation. Party A will carry out assessment on Party B according to the above rules and regulations and take corresponding measures based on the result of the assessment.

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3. Party A shall have the right to review Party B’s Business License for Telecommunication and Information Services, Value-Added Telecommunication Business License, the Credibility Letter, information resource and bank accounts and other materials relevant to regular business operation as required to provide the information service under this Agreement.

4. Party A shall have the right to review service newly added and changed by Party B and to reject such service in non-compliance with national rules on information security. If Party B makes services without authorization of Party A, Party A shall have the right to investigate corresponding liabilities of Party B in accordance with Monternet Cooperation and Management Measures.

5. In respect of abnormally overloaded short message that effect security of network of Party A, Party A reserves the right to restrict its transmission or adjust the short message flow according to capacity of short message system. Party A shall have the right to request Party B to handle spam or illegal attacks from Party B within a time limit, otherwise, Party A shall have the right to take corresponding measures to prevent the aggravation of the situation. In case of an emergency, Party A shall have the right to interrupt the communication interface without noticing Party B in order to protect the legal rights of the users. If Party B releases illegal information through the short message platform of Party A, Party A shall have the right to immediately interrupt the communication interface with Party B and reserves the right for investigation of the Party B’s liability.

6. Party A shall have the right to return the information fee to the user when accepting the users’ complaint caused by Party B and deduct such payment in settling accounts of Party B. If the money in the settling accounts is not adequate to set off such payment, Party B shall pay the gap to Party A.

7. If Party B can not reach the business level same as other equivalent partners of Party A, Party A shall have the right to terminate the billing and collection agency service and/or this Agreement with Party B.

8. Party A shall have the right to terminate or suspend the cooperative relation or the billing and collection agency service with Party B according to request of authorities at a higher level.

(III) Obligations of Party B

1. Party B shall possess Corporate Business License for enterprises engaged in lawful operation and be qualified for content/application service business operation.  It shall provide Party A with the true business license for value-added information services issued by the Ministry of Information Industry or the local telecommunication authorities, as well as the Credibility Letter, complete after-sale service system, approval for commodity price, bank account and other information.

2. Party B shall ensure the good service quality and the security of information, especially in the critical period, and the smooth communication channel in 7×24 hours. Party B shall be obligated to claim the exemption when opening a service to the user.

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3. If Party B wants to add or change the business, it shall file an application to Party A and such addition or change shall be made upon approval of Party A.

4. Party B shall, in case of commissioning, maintenance and upgrading of systems and other predictable and possible operations that might result in service interruption, notify Party B of such operations, including the causes, time and period of the interruption, thought SIMS system or in writing form seven days before such operation, and shall make relevant declaration to the users. Party B shall not use such communication channel as provided by Party A to provide any payment collection service.

5. Party B shall ensure the accuracy of its information in SIMS system, including without limitation, company name, address, tax account No., telecom value added service permit No. , contact and so on. And such information shall be immediately updated upon the change of Party B’s information. Party B shall take full responsibilities for loss caused because Party B fails to update its information in time.

6. Party B shall log in SIM system everyday to check notices, announcement and other information issued by Party A and respond in time. Party B shall take full responsibilities for loss caused because Party B fails to check information in SIMS system.

7. In the case of any unpaid overdue payment to Party A, Party B shall pay Party A in timely manner within the settlement period. Where Party B fails to pay the overdue payment for consecutively three months, Party A has the right to terminate the cooperation and recover the payment.

8. Party B shall comply with Monternet cooperation and management measures, assessment provisions, standards of customer service and relevant documents formulated by Party A in order to regulate the order of the Monternet market, and shall assume relevant responsible for the violation of relevant provisions.

9. Party B shall provide special customer service phone to accept complaints from users, and shall be responsible for dealing with the consultation, appeal and complaints of customers arising from problems other than those of the communication network of Party A, as well as consultation, cost inquiry and complaints of users arising from problems in other communication network. The Responsibility of the First Recipient shall be adopted. Any problem to be assisted by Party A for solution shall be properly transferred to Party A. Party B shall follow up the handling situation and make users return visit.

10. In case of commissioning, Party B shall not effect the proper operation of existing networks of Party A. Party B shall send messages to the short message platform of Party A in a speed within the port traffic limit set by Party A. In absent of approval of Party A, Party B shall not carry out high-traffic test, otherwise Party B shall take full responsibilities for all consequences arising therefrom.

11. Party B must strictly manage the network port and ID authority to ensure the security of the network and information. Party B shall assume full responsibility for any consequence arising from improper management of Party B.

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12. If Party B is unable to provide services due to its operation or other reasons of its own, it shall inform Party A three months in advance and make explanation to the users and deal with affairs arising therefrom.

13. Party B shall ensure that it has the lawful claim to any product and relevant matters provided to Party A during cooperation or the authorization that network operators are allowed to use in accordance with this Agreement, and that the cooperative products and relevant matters will not infringe upon lawful rights of any third party (including without limitation, copy rights and rights of reputation and portrait) which can be transmitted through information network by operators upon authorization without any copyright dispute and violation of laws and regulations.

14. If any third party files administrative complaint, bring an action or initiate arbitration because Party B has no disposal right on any cooperative product or relevant contents or any authorization made by Party B is not right, Party A shall have the right, according to the severity of the case, to jointly or optionally take following measures: (1) terminate allocation of charges under this Agreement within the limit of claim for compensation by the third party; (2) request Party B to undertake relevant charges, in which case, Party B shall apply at its own expense to the organization for dispute settlement to participate in the settlement as a third party; (3)this Agreement will be terminated in whole or in part. If the above measures can not protect Party A from losses, at the request of Party A, Party B shall be obligated to compensate all losses of Party A (including without limitation economic losses incurred during the period of the business interruption and attorney fees, legal cost or arbitration fee paid by Party A to settle the dispute) fully and timely.

15. If Party B is not qualified for internet service operation, it shall not provide users with access to any service (including without limitation service subscription and service programming) through internet in whatsoever form. In addition, Party B shall not promote the cooperative services on the websites with the Business License for Telecommunication and Information Services. Party B shall assume all responsibilities for any violation of the above provisions during cooperation.

(IV) Rights of Party B

1. Party B shall have the right to demand Party A to provide relevant specifications on interface and the relevant technical protocol standards, and to coordinate with Party B to provide service to the users.

2. Party B shall have the right to, in line with the business development, request Party A to adjust limit of the network interface traffic within the system restriction of Party A.

3. Party B shall have the right to regularly add or change the business and work out the information fee for each service, in accordance with this Agreement and Monternet cooperation and management measures.

4. Party B shall have the right to know information that formulated and official released by Party A and has direct impact on the business development of Party B, except that relevant to secrets of the state and Party A.

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5. Party B shall have the right to demand Party A to cooperation with it in handling the user’s complaints.

6. Party B shall have the right to demand Party A to provide billing and charge collection services of business subject to cooperation.

Registered (seal)

III. Charge Allocation

1. Communication fees

The communication fees incurred from the occupation of mobile network resource by the users shall be owned by Party A.

2. Unbalanced Downlink Communication Charges:

Party A deducts the Unbalanced Downlink Communication Charges at the price of RMB0.05-0.08/piece as a result of unbalanced downlink communication of Party B: unbalanced uplink and downlink short message flow = (Party B’s downlink short message flow－flow of short messages sent upward to Party B). The rates are as follows:

Unbalanced Downlink Short Message Flow X (10,000 pieces/month)	Rate (RMB/piece)	Calculation X=(MT-MO) piece/month
X≤10	0.08	X*0.08 (at least RMB 2,000)
10＜X≤30	0.07	(X-100,000)* 0.07+100,000*0.08
30＜X≤100	0.06	(X-300,000)*0.06+200,000*0.07+100,000*0.08
X＞100	0.05	(X-1,000,000)*0.05+700,000*0.06+200,000*0.07+100,000*0.08

3. Allocation of information fees:

The information fees paid by the users for the usage of application service or information service provided by Party B shall be owned by Party B. Party A shall provide Party B with information service fee billing and collection service. All the information service fees incurred by users in the Beijing area, as recorded in the monthly accounts, shall be the information service fees receivable of the Beijing area, 15% of which will be paid by Party B to Party A as the billing and collection service fee and 85% of which will be deemed as income of information fee of Party B. Party A shall deduct the unbalanced communication fees payable by Party B from the 85% of the information fee. If there is still balance after such deduction, Party A shall pay the balance to Party B and request the invoice of service sector thereof; if there is no balance, Party B shall pay the amount owing before the 25th day of each month and provide the invoice thereof upon the receipt of the payment.

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4. The billing period for short message business of Monternet shall commence on 00:00 of the first day of each month and end at 24:00 of the last day of the same month

5. The billing and settlement shall be based on the statistical data provided by the billing system of Party A. The billing and settlement of business charged by piece shall be based on successful receipt of the user and that charged per month shall be based on actual subscription and successful use of the business in the current month.

6. The information fees settled by the two Parties shall not include:

(1) Fees of users (pre-canceling) canceling the phone number;

(2) Fees of users out of service;

(3) Silent user fees;

(4) The fees subject to extreme high average charge of a single item of information;

(5) Refund (twice as the original charge).

7. Party A shall provide Party B with the bill of the previous month before the 15th day of each month through SIMS system. Each Party shall check the amount of information fees incurred from the first day to the last day of last month. Party B shall feed back the result of the reconciliation within ten days, otherwise, the reconciliation shall be deemed correct.

8. If there is balance in the settling account of Party B, notwithstanding any dissidence against the bill of the previous month, Party B shall issue the invoice to Party A before the 18th day (the date when the invoice is delivered to the place designated by Party A) each month, and Party A shall pay Party B the settled information fee in the invoice amount conforming to the reconciliation statement, by the end of the same month after receiving the lawful invoice issued by Party B. That is to say, no matter whether the Parties are able to complete reconciliation or not in due course, settlement shall be made based on the amount indicated on the reconciliation statement, and any deficiency or excess thereof determined in reconciliation shall be paid or refunded in the next period or later.

9. If there is no balance in the settling account of Party B, notwithstanding any dissidence against the bill of the previous month, Party B shall pay Party A the amount overdue before the 25th  day of each month. Party A shall issue the invoice of the overdue payment upon the receipt. That is to say, no matter whether the Parties are able to complete reconciliation or not in due course, settlement shall be made based on the amount indicated on the reconciliation statement, and any deficiency or excess thereof determined in reconciliation shall be paid or refunded in the next period or later.

10. Upon receipt of the reconciliation statement at the 15th day of each month, Party B may request for reconciliation if the difference of the information fees and the subscription of GoTone user exceeds 5% or if the difference of the information fees and the subscription of Easyown and M-zone user exceeds success rate of billing of current month, after deducting the fees of users canceling the phone number, pre-canceling the phone number, out of service and silent user and fees subject to extreme high average charge of a single item of information, otherwise, the data provided by Party A shall prevail. In case of any dissidence, the two parties shall understand the reasons and solve it in timely manner according to the real condition.

7

IV. Customer Services

1. Party B must ensure that all Monternet short message services received by user must be the information proactively demanded or subscribed by the user and the content of the information shall be appropriate and lawful. Party A is entitled to monitor and manage the short messages provided by Party B. Please see Appendix I for the management measures.

2. Party B shall ensure that before using the Monternet services, the clients are sufficiently informed of the basic information of such business, including price, cancellation way, frequency of transmission, use method, main content and the like.

3. Party B shall provide users with approaches for customer service, including 7*24-hour customer service telephone number and mobile phone number, where the extension telephone shall not be used and the mobile phone shall avoid power-off and call forwarding. Party B shall inform Party A of the customer service numbers. These numbers can only be changed upon the agreement of Party A. The customer service numbers shall be contained in the website and announcement.

4. Party B shall be responsible for handling the users’ consultation, cost inquiry, appeal and complaints for application/content services, as well as appeal and complaints for failures of communication networks. Party B shall assist Party A in handling the users’ consultation, cost inquiry, appeal and complaints for application services provided by Party B, which are accepted by the customer service department of Party A. Party B shall provide trained personnel for customer service to handle the users’ consultation and complaints and give an answer within the prescribed time limit.

5. The users' demand for refund as a result of Party B’s failure shall be realized within a prescribed time limit. There are two manners available for refund. a). Party B handles the refund by itself until the user is satisfactory; b). Party A pays the refund and deducts such refund in settling accounts of Party B or Party B repays Party A directly.

6. During cooperation, in the event of large amount of users’ complaints, reflecting bad service quality of Party B or causing harmful social influences, Party A has the right to suspend the cooperation; in the case is serious enough, Party A is entitled to request Party B to supplement the customer service cost accordingly. The customer service cost shall be calculated by Party A according the actual condition in certain manner of which Party B shall be informed.

8

V. Confidentiality Provision

1. For the purpose of this Agreement, “Proprietary Information” refers to the information which one party obtains from the other party (“Disclosing Party”) in the process of cooperation that is developed, created and found by the Disclosing Party, or is known, or assigned to the disclosing party and is commercially valuable to the disclosing party. Proprietary Information includes but not limited to relevant business secret, computer program, designs and technologies, ideas, knowhow, process, data, business and product development plan, client information related to the business of the Disclosing Party and the like, or other confidential information received by  the Disclosing Party from other third party. Both parties understand that the Disclosing Party owns and will own the Proprietary Information which is essential to the Disclosing Party. The cooperation between the parties results in non-disclosure and trust relating to Disclosing Party between the parties.

2. Without the prior consent in writing from the Disclosing Party, the other party shall keep confidential any Proprietary Information, and shall not use or disclose any of such Proprietary Information to any individual or entity, except the disclosure required by the implementation of obligations hereunder.

3. The Parties shall keep confidential this cooperation and the content hereof. Without prior written consent of the other Party, no Party shall disclose to any third party this cooperation and the content of this Agreement between the Parties.

4. These non-disclosure provisions shall not terminate due to the termination hereof; instead they are valid permanently.

VI. Exemption

Either Party who is unable to perform or fully perform this Agreement due to accidental events or force majeure shall bear no liability for breach of contract for the other Party. The Party(ies) encountering the aforesaid force majeure shall forthwith notify the other Party in writing of conditions of such event and produce within ten working days the valid supporting documents on particulars of event. When the impact of force majeure no longer exists, both Parties will decide through consultations whether to continue to perform this Agreement by one party or both parties.

VII. Liabilities for Breach of Contract

1. Any failure of one party to perform any clause under this Agreement or the Appendix will be deemed as breach of contract.

2. Either party shall, after receiving the notification send through SIMS system or in writing from the other party specifying breach of contract, if such breach is confirmed to be true, conduct rectification to the breach within ten working days and send the notification of such rectification to the other party; if such breach is proved not exist, it shall provide a written dissidence or explanation in writing within ten working days to the other party. Under such circumstances, both parties may conduct negotiation for this issue, if negotiation fails, then this matter shall be solved by following the provisions of dispute resolution.

3. In the event of either Party’s breach of Contract which causes harmful social influences or economic losses to the observant Party, the observant Party shall have the right to request the breaching party to remove the harmful influences and bear compensate the economic losses caused; and the observant party shall have the right to investigate the other Party’s civil liabilities.

9

VIII. Settlement of Disputes

Any dispute arising from this Agreement or in connection with this Agreement shall be resolved by both Parties through amicable consultations. Failing which, either Party may refer the dispute to the Beijing Arbitration Commission for arbitration which shall be conducted in Beijing in accordance with the Commission’s arbitration rules in effect at the time. The arbitral award is final and binding upon both parties.

IX. Validity, Change, Extension and Termination of Agreement

1. This Agreement shall come into force on May 1, 2008 and expired on April 30, 2009. Either Party shall, within thirty days prior to the expiration of term hereof, have the right to unilaterally inform the other Party in writing of termination of this Agreement. Otherwise, the term hereof shall automatically be extended for six months. The times for extension are unlimited, with six months for each. If any party objects the extension, it shall, within thirty days prior to the expiration of term or current extended term hereof, inform the other Party in writing and this Agreement shall terminate. Both Parties shall deal with other affairs rising from this Agreement upon the expiration hereof. This Agreement shall be valid until both Parties have fully performed all obligations under this Agreement and all payments and compensations between the two Parties have been settled.

2. If Party B, in accordance with the Monternet cooperation and management measures, removed from the service, this Agreement shall termination at the date of such removal.

3. This Agreement is made in quadruplicate, three copies for Party A and one copy for Party B. Each copy has the same legal effect.

4. The Appendixes hereto are integral parts of this Agreement, which have the same legal effect as this Agreement.

5. During the validity term hereof, both Parties shall modify or terminate this Agreement through consultations Any Party shall inform the other Party of the modification or termination of this Agreement through SIMS system in writing 30 days in advance. Any Party unilaterally terminating this Agreement shall be responsible for any loss which the other Party sustains as a result of such termination, except for the other Party’s early breach of this Agreement.

6. Any direct or indirect violation of any provision of this Agreement, or non-performance or delayed or incomplete performance of obligations under this Agreement, shall constitute breach of this Agreement. The observant Party has the right to request the breaching Party to correct such breach, take sufficient and effective measures in timely manner to eliminate the consequences thereof and compensate the losses incurred therefrom. If the breaching Party fails to correct such breach within ten days after receiving the notice thereof from the observant Party, the observant Party has the right to unilaterally inform the breaching Party through SIMS system (which is regarded as being successfully delivered at receiving the issued notice by SIMS) or in writing of the termination of this Agreement and investigate the other Party’s liabilities for the breach.

10

Representative of Party A: (signature)	Representative of Party B: (signature)
Seal of Party A	Seal of Party B
Date of Signing: April 30, 2008	(Special Contract Seal of Beijing AirInbox Information Technologies Co., Ltd.)

Appendix I: Monternet SP Cooperation and Management Measures, Short Message Section

The former agreements entered into by the two Parties shall automatically terminate at the date of effectiveness of this Agreement.(Seal)

No. 06, Haidian Local Tax Bureau,

Beijing

Special seal for stamp tax, payment

received

Tax payment seal    20,952.28

WSPZZ: No. 1768484

January 13, 2009

11

Place for Affixing of Tax Stamps

(Seal of Beijing AirInbox Information Technologies Co., Ltd.)

Column for Examination and Registration by Registration Authority:
	(Special Seal of Beijing AirInbox Information Technologies Co., Ltd.,Contract)
Person-in-Charge:  (seal)	Technology Contract Registration Authority (Special-Purpose Seal) June 18, 2008

EX-4.47

Exhibit 4.47

Contract Registration No.:

2 0 0 8 1 1 0 0 3 2 0 1 8 2 2 5

Technical Service Agreement

(Including Technical Training and Technology Intermediary Services)

Registered (seal)

Project Name: Agreement 08DX048 on Monternet Multimedia Messaging Services

Principal: China Mobile Telecommunications Group Corporation

(Party A)

Agent: Beijing AirInbox Information Technologies Co., Ltd. (seal)

(Party B)

Place of Execution: Haidian District, Beijing

Date of Execution: June 18, 2008

Validity Term: June 18, 2008 to December 31, 2008

YYXSHT [2008] 705-2

Cooperation Agreement on Monternet Multimedia Messaging Services

(Special Contract Seal of Beijing AirInbox Information Technologies Co., Ltd.)

Party A: China Mobile Telecommunications Group Corporation

Party B: Beijing AirInbox Information Technologies Co., Ltd.

Both Parties have, on the principles of equality and mutual benefit, and through full and amicable consultations, reached an agreement as follows on the matter regarding that Party B consigns Party A to provide Services of Monternet Multimedia Messaging and charge collection for Party B. This Agreement is formulated to define the rights and obligations of both parties during service provision, which is equally binding upon both parties hereto.

I. Principles for Providing Services

Both parties will carry out faithful cooperation in MMS of mobile data services based on benefit sharing, mutual benefits and win-win principles. Both parties shall abide by the agreement and coordinate the counterpart.

II. Services

The primary characteristic of Multimedia Messaging Service (“MMS”) provided by China Mobile is that it supports multimedia functions and enables transmission of comprehensive contents and message, including text, image, voice, data and messages in other multimedia formats.

As a network operator, Party A shall provide the platform of MMS network and cmmunication services, and shall provide Party B with Monternet MMS specification and the technical specification on interface. As a service provider, Party B shall, in accordance with the specifications provided by Party A, develop and provide content and application services. Only as approved by Party A after testing, Party B can access to the MMS network platform as MMS service provider.

III. Responsibilities of Both Parties

(I) Obligations of Party A

1. Party A shall promote and publicize Monternet MMS by making use of media (e.g., TV advertisement. Post etc.), so as to attract more users to use this service.

2. Party A shall provide the technical specifications of interface for MMS access, so as to ensure successful access of Party B to Party A’s MMS network platform.

3. Party A shall, as required by Party B, provide necessary training to Party B.

4. With the firewall of Party A’s MMSC system and Party B’s interface as the boundary, Party A shall maintain all equipment at its side and ensure normal operation of such equipment.

5. Party A shall provide day-to-day maintenance for MMS network platform. Party A shall, in case of any failure caused by Party A, resolve such failures to ensure normal operation of application services.

6. Party A shall provide network interface services to Party B for free, and assist Party B to access the application services to MMS network platform.

7. Party A shall establish the indicators for MMS business, inform Party B of such index on complete and unambiguous manner and provide enough time for Party B to realize such index.

8. With respect to the services provided by Party B in MMS network platform, Party A shall calculate the charges based on the rate that is provided by Party B and recognized by Party A, and charge Party A’s customers who use the services provided by Party B, and shall conduct settlement to Party B based on relevant clauses in Part 6 hereunder.

9. Party A shall be responsible for consultation and complaints from customers, and handle consultation and complaints resulted from network, operation platform billing and other reasons of Party A. Party A shall, in case of consultation and complaints caused by Party B, inform Party B of the situation and urge Party B to solve the problems.

(II) Obligations of Party B

1. Party B shall perform all the requirements and obligations specified in Monternet SP Cooperation and Management Measures, SSM Section.

2. Party B shall, by making use of the media (including WEB Site, WAP Site, print media, TV etc) under its control, promote MMS. Party B shall, in the case of using the name and business trademark of Party A to promote Monternet MMS business, obtain the prior agreement of Party A. Without written consent of Party A, Party B shall not promote businesses not included herein in the name of “China Mobile” or “Monternet” by media.

3. Party B shall, according to the contents of project, provide necessary equipment, including MMS application server, application software, information source and special line for application data and ensure normal operation of such equipment as required by Party A.

4. Party B shall coordinate Party A for interface testing and ensure that the MMS provided by Party B is in line with the specification for MMS network platform and the technical specification on interface as provided by Party A.

5. With the firewall of Party A’s MMSC system and Party B’s interface as the boundary, Party B shall conduct maintenance to all equipment at its own side and ensure normal operation of such equipment.

6. Party B shall, in case of failures concerning application services cased by Party B, resolve such failure immediately and take practical measures to ensure that the same or similar failures do not recur in the future. In case of economic losses to Party A or Party A’s MMS customers incurred by Party B, Party B shall be liable for compensation therefor.

7. Party B shall be responsible for negotiations and commercial agreements with the direct providers for the contents of application services (e.g., the property right owner of image and music). Party B shall ensure all information and services as provided would not violate relevant policies and regulations of the State, and would not infringe the interests of consumers as well as the intellectual property right and relevant benefits of the third party. Party B shall assume the relevant responsibilities for litigations incurred.

8. Without the written consent of Party A, Party B shall not unilaterally provide the services not recognized by Party A.

9. With respect to the application services provided by Party B for Party A, in whatsoever transmission and carrying ways, Party B shall not provide such services for other communication operators; otherwise, Party A shall have the right to terminate the application services provided by Party B in Party A’s MMS network platform and terminate the settlement with Party B.

10. Party B shall provide all necessary materials for the billing clearly and unambiguously to Party A and shall bear all economic and legal liabilities.

11. Party B shall be obliged to provide Party A with all statistic data concerning the use of Party B’s MMS application services by Party A’s customers.

IV. Rights of Both Parties

(I) Rights of Party A

1. Party A shall have the right to, by its own or entrusting certain institutions, inspect the content of the information and applications services provided by Party B.

2. Party A shall have the right to refuse to make the information that goes against national laws, regulations and policies or is deemed improper by Party A unavailable to customers; Party A shall also have the right to request Party B to compensate for the subsequent negative influences to Party A’s economy and goodwill.

3. Party A shall have the right to request Party B to amend, correct or delete the contents that shall be amended, corrected or deleted as deemed by Party A.

4. Party A shall have the right to establish indices for evaluating services provided by Party B, and to evaluate the services provided based thereon. Please refer to Chapter 9 of Monternet SP Cooperation and Management Measures, SSM Section, Appendix hereof, for detailed measures of evaluation.

5. Party A shall have the right to conduct direction and supervision over the charging standard of Party B’s businesses.

6. Party A shall be entitled to reasonable allocation of charges based hereon. (Please refer to Part 7 hereof for the allocation of charges).

(II) Rights of Party B

1. Party B is entitled to determine, under the instruction of Party A, the charging rates of services provided.

2. Party B is entitled to obtain statistical data of users’ access to the information and application service contents through network platform.

3. Party A shall not transfer, publish or resell Party B’s information products in any form to any third Party hereto without the prior written consent or authorization from Party B.

4. Party B shall be entitled to partial reasonable allocation of business charges based hereon. Please refer to Part 7 hereof for the allocation of charges.

5. Party B is entitled to reconciliation for major differences between statistical data of both Parties. Please refer to Chapter 6 of Monternet SP Cooperation and Management Measures, SSM Section, Appendix hereof,.

V. Intellectual Property Right

1. Party A authorizes Party B to use its trademark and company name for the purpose agreed hereupon. Party B shall ensure proper and reasonable use of Party A’s trademark and company name,  shall not change, without authorization, or misrepresent the image of Party A and any part of it, and shall not use Party A’s trademark and company name for any purpose other than as expressly agreed under this Contract.

2. Party A holds the copyright of all promotional materials provided for Party B by Party A in line of this Contract and the creations, designs, graphics, figures and words contained therein. Party B shall not use such materials and contents for any purpose other than as agreed hereunder or allow any third party to use, without the prior written consent from Party A.

VI. Confidentiality Provision

1. For the purpose of this Agreement, “Proprietary Information” refers to the information which one party obtains from the other party (“Disclosing Party”) when Party A provides Services for Party B that is developed, created and found by the Disclosing Party, or is known, or assigned to the disclosing party and is commercially valuable to the disclosing party. Proprietary Information includes but not limited to information related to relevant business secret, computer program, designs and technologies, ideas, knowhow, process, data, business and product development plan, client information related to the business of the Disclosing Party and the like, or other confidential information received by the Disclosing Party from other third party. Both parties understand that the Disclosing Party owns and will own the Proprietary Information which is essential to the Disclosing Party. The cooperation between the parties results in non-disclosure and trust relating to Disclosing Party between the parties;

2. Without the prior consent in writing from the Disclosing Party, the other party shall keep confidential any Proprietary Information, and shall not use or disclose any of such Proprietary Information to any individual or entity, except the disclosure required by the implementation of obligations hereunder.

3. Both parties are obliged to keep this cooperation and the detailed content of this Agreement confidential. Without the prior consent from the other party, one party shall not disclose the detailed contents of this Agreement to any third party.

VII. Charge Allocation and Settlement

1. Party B provides MMS for Party A’s customers through Party A’s MMS platform and communication platform. Both parties are entitled to reasonable allocation of charges based on the provisions hereunder.

2. Party B shall, if Party A’s customers need to use Party A’s network resource when using services provided by Party B, pay the subsequent unbalanced communication fees to Party A.

3. With respect to the information fees receivable due to the use of services provided by Party B by customers, Party A shall be entitled to 15% of such information fees as compensation for calculation and collection of information fees. After Party B provides valid invoice to the provincial subsidiary of Party A of the access location, such provincial subsidiary shall conduct settlement with Party B.

4. Basis of settlement: the information fee list concerning Monternet MMS provided by China Mobile.

5. Party B will, based on the settlement list provided by the provincial subsidiary of Party A of the access location, make settlement with the provincial subsidiary. Party B does not need to execute agreements otherwise with such provincial subsidiary.

6. Settlement period: Party A makes settlement with Party B in every calendar month.

7. Please refer to Chapter 6 of Monternet SP Cooperation and Management Measures, SSM Section, Appendix hereof, for calculation principles and settlement procedures.

8. Each Party shall, in line with the taxation provisions, be responsible for its own tax payment resulting from performance hereof.

9. Party B shall provide accurate bank account information for Party A.

Name of the account: Beijing AirInbox Information Technologies Co., Ltd.

Bank of deposit: ICBC Capital Indoor Stadium Sub-branch

Account No.: 0200053719200031688

VIII. Liabilities for Breach of Contract

1. In the event that this Agreement cannot be carried out due to either Party’s breach of this Agreement, the observant Party shall have the right to terminate this Agreement and request compensation from the breaching Party for losses caused by such breach.

2. In the event of either Party’s breach of Contract which causes harmful social influences or economic losses to the observant Party, the observant Party shall have the right to investigate the breaching Party’s liabilities, request for relevant economic compensation until the termination hereof. .

IX. Term of Agreement

1. This Agreement shall come into force on the date of signing and expire on December 31, 2008.

2. If both Parties agree to continue the cooperation under the Agreement, the Agreement shall automatically be extended for one year upon expiration. If any party decides not to extend this Agreement, it shall notify the other Party such decision one month before the expiration of this Agreement in writing.

3. During the period of validity of the Agreement, the Agreement shall automatically terminate if both parties agree to terminate this Agreement.

4. Where there is force majeure event making further performance of this Agreement impossible, this Agreement will automatically terminate after both Parties complete all settlements.

5. Where any Party cannot perform this Agreement for any predictable event, this Party shall inform the other Party of such event within 5 working days after predicting the event, and cooperate with the other Party in completion of all unsettled matters. In the event that one party shall sustain loss due to failure of the other party for informing the party of the event timely, the other party shall be liable for compensation therefor.

X. Miscellaneous

1. 1. The appendix to this Agreement, Monternet SP Cooperation and Management Measures, SSM Section, shall bear the same legal effect as this Agreement.

2. The matters not covered in the Agreement shall be solved by both parties through amicable negotiation.

3. Any dispute arising from this Agreement or in connection with the contents or performance of this Agreement shall be resolved by both parties through amicable negotiation; if such negotiation fails, either Party may file a lawsuit to a competent Chinese court.

4. If any national policy changes, both Parties shall revise relevant clauses of this Agreement according to the changed policy.

5. This Agreement is made in duplicate, one copy for Party A and one copy for Party B respectively. Each copy has the same legal effect.

Party A: China Mobile Telecommunications Group Corporation   Authorized Representative: (signature)   Date: June 18, 2008 Party B: Beijing AirInbox Information Technologies Co., Ltd.   (Special Contract Seal of  Beijing AirInbox Information Technologies Co., Ltd..)   Authorized Representative: (signature)   Date:

Place for Affixing of Tax Stamps

Tax stamp of the People’s Republic of China (stamp)

(Seal of Beijing AirInbox Information Technologies Co., Ltd.)

Column for Examination and Registration by Registration Authority:	(Special Seal of Beijing AirInbox Information Technologies Co., Ltd. Contract)
Person-in-charge (seal)	Technology Contract Registration Authority (Special-Purpose Seal) November 7, 2008

EX-4.48

Exhibit 4.48

Contract Registration No.:

2 0 0 9 1 1 0 0 3 2 0 0 1 1 8 8

TECHNICAL SERVICE AGREEMENT

(Including Technical Training and Technology Intermediary Services)

Registered (seal)

Project Name: Agreement 08DX104 on Interactive Voice Response Service

Principal: China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd.

(Party A)

Agent: Beijing AirInbox Information Technologies Co., Ltd.

(Party B)

Place of Execution: Haidian District, Beijing

Date of Execution: November 1, 2008

Validity Term: November 1, 2008 to November 1, 2009

CMBJ-2008-00006320-SW-00000645-QIVR-006

Cooperation Agreement on Interactive Voice Responses Services

	Contract No.:    Agreement No.:
Party A:China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd.	Party B: Beijing AirInbox Information Technologies Co., Ltd
Address: 7, Dongzhimen Nandajie, Dongcheng District, Beijing, China	Address: 33/F, Tengda Building, 168 Xiwai Dajie, Haidian District, Beijing, China
Post code: 100007	Post code: 100044
Tel: 86-10-65546699	Tel: 010-88576000
Fax: 86-10-65541330	Fax: 010-88575900
Bank of deposit: ICBC Beijing Branch, Chang’an Sub-branch	Bank of deposit: ICBC Capital Indoor Stadium Sub-branch
Account No.: 054018-32	Account No.: 0200053719200031688

 As a mobile communication operator, China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd(“Party A”) provides paid communication channels and billing platform to various providers of application services.

Beijing AirInbox Information Technologies Co., Ltd. (“Party B”), a company engaged in communication value-added service approved by the telecommunication authorities, offers value added voice service to CMCC Users through    Party A. Both Parties have, on the principles of mutual benefits, complementing each other for mutual promotion and jointly seeking development, and through full and amicable consultations, reached an agreement as follows on the matters regarding engaging in business of interactive voice response:

I. Basic Description of Cooperation Business

1. Basic Conditions of Cooperation

1) Party B shall be qualified for information service business operation, and provide interactive voice response and a complete after-sales service system in accordance with the Value-Added Telecommunication Business License of the People’s Republic of China and relevant laws and regulations such as Measures on Management of Telecommunication Business License. Such information provided by Party B and the information sources shall comply with the provisions of national laws and violate no one’s legal interests.

2) Party B shall provide Party A with a written and elaborate statement of businesses.

CMBJ-2008-00006320-SW-00000645 Page 1

3) At the initial stage of business operation, Party B shall provide various information services and application services to customers of CMCC. Party B shall provide the Interactive Voice Response (IVR) service to CMCC Users (“Users”) through the SMS channel and voice channel of Party A.

II. Rights and Obligations of Party A

1. Party A, as the communication channel operator of value added voice service, shall exercise its rights and obligations in accordance with Monternet SP Cooperation and Management Measures.

2. Party A shall allow Party B to connect its network to provide Users with value added voice service. Party A may adjust voice traffic from time to time in line with the network capacity and, if such adjustment will affect business of Party B, give a timely prior notice to Party B.

3. Party A shall provide Party B with an IVR access number of 1259056 and relevant network interface, and ensure stability of the use of said number. The service period of the number shall coincide with the term of this Agreement. If Party A withdraws the number before expiration thereof, a one month written notice shall be given to Party B, and Party A shall cease use of the number three months after receiving written acknowledgement of Party B. If the number is withdrawn or adjusted according to government’s requirement, it will be ceased or adjusted on the date notified by Party A.

4. Party A shall be responsible for the construction and operation of a complete GSM mobile communication system and ensure stable and smooth information transmission. If Party B notifies Party A of any unsmooth communication detected, Party A shall promptly solve such problem to prevent any adverse effect on the business of Party B.

5. Party A shall open to Party B relevant technical protocol and interface standards of its network. Party A shall provide Party B with technical documents necessary for performance of the Parties and promptly solve any problem of Party B in communication.

6. Party A shall be responsible for providing software and hardware systems necessary for its network and assume the corresponding operating cost.

7. Party A shall be responsible for improving its own billing system when necessary at its own cost.

8. Party A shall provide billing and collection agency service to Party B. Party A shall be responsible for inspecting business status of Party B, ensuring accuracy of billing information and transmitting bills of Users to Party B promptly.  Party A shall provide Users with clear IVR fee receipts and provide the information fee bills of Users at the request of Users.

9. Party A shall, upon expiration of each fee payment period, provide Party B with relevant data of the Users defaulting payment of information service fee, so as to enable Party B to take actions against such Users accordingly.

CMBJ-2008-00006320-SW-00000645 Page 2

10. Party A shall manage the business forms, contents and promotion methods provided by Party B, and formulate relevant methods and rules on the management.

11. Party A is entitled to punish Party B for its violation of provisions on business forms, contents and promotional methods. See Monternet SP Cooperation and Management Measures of Party A for relevant provisions.

III. Rights and Obligations of Party B

1. Party B shall be responsible for developing and maintaining its own software and hardware, including but not limited to all hardware, system debugging and testing, opening, system maintenance, day-to-day business management, market development involved in this project and their costs.

2. Party B shall provide CMCC users with contents and application services within the scope agreed upon. Party B shall ensure the legality, timeliness and reliability of information source. It also guarantee that it hold legal qualification and authorization to provide businesses under the Contract, and the information contents provided do not violate relevant policies, laws and regulations of the State, as well as legal interests of other person(s). All the consequences caused by the methods or contents of information provided by Party B shall be solely assumed by Party B.

3. Party B shall provide business forms complying with relevant voice service rules provided of Party A.

4. Party B shall only use the number provided by Party A to conduct the business agreed herein Party B shall not adjust such number or provide businesses other than the ones agreed under the Agreement without written consent from Party A.

5. Party B shall provide business contents complying with Content Management Regulations of Party A.

6. Party B shall abide by Advertisement Law, Law of the PRC on the Protection of the Rights and Interests of Consumers and relevant laws and regulations in their publicity activity, and shall not violate the management measures and rules of Party A.

7. Party B shall assume relevant responsibilities in accordance with the regulations of Party A for any violation in its form, contents and promotion of business.

8. Party B shall take necessary measures to effectively control the Users defaulting payment of information service fee. Party B shall not send any information to any user defaulting payment of information fee, or allow any users defaulting payment of information fee to order any information for other users. If Party B sends information to such defaulting users or allows them to use IVR service thereof while knowing such default, Party A is entitled to claim compensations from Party B for its economic loss incurred from such default of payment by users and terminate this Agreement.

9. Party B shall submit itself to adjustments to voice traffic made by Party A in emergencies to ensure normal and stable voice service. Any dispute with users arising therefrom shall be settled between the Parties through amicable negotiation.

CMBJ-2008-00006320-SW-00000645 Page 3

10. Party B shall not send to any user any information not approved by Party A, such advertisement, through the communication channel provided by Party A. Party B shall not use such communication channel provided by Party A to provide any payment collection service or any business not approved by Party A.

11. Party B shall assume transmission cost for interconnecting its equipments with Party A network and other costs.

12. During the term of this Agreement, Party B shall be obligated to provide Party A with reports, at its request, on such data as user development status, user classification, user habits and business outlook projection. Party A shall be obligated to keep confidential such data in accordance with Article 10 hereof.

13. Any business publicity activity and promotional measures of Party B shall be reported to Party A in advance for approval before implementation.

14. Party B shall compensate Party A in full losses incurred thereto by Party B’s fault.

15. Party B shall ensure the accuracy of its information in SIMS system, including without limitation, company name, address, tax account No., telecom value added service permit No. , contact and so on. And such information shall be immediately updated upon the change of Party B’s information. Party B shall take full responsibilities for loss caused because Party B fails to update its information in time.

16. Party B shall log in SIM system everyday to check notices, announcement and other information issued by Party A and respond in time. Party B shall take full responsibilities for loss caused because Party B fails to check information in SIMS system.

IV. Rights and Responsibilities of the Parties

1. Party B shall be responsible and liable for any user dispute in connection with the content of information or service. Party A shall be responsible and liable for any user dispute in connection with the network of Party A. Any user dispute arising from unsmooth transmission between the Parties shall be dealt with by the Party held liable when the causes are identified by the Parties. Any user dispute arising from unsmooth transmission due to any third party causes shall be solved between the Parties through negotiation.

2. The contents and applications provided by Party B shall not exceed the scope set forth in the Monternet SP Cooperation and Management Measures, or otherwise Party A may terminate this Agreement and Party B shall be liable for breach hereof.  Party A may supervise business operation of Party B, and the latter shall provide assistance to Party A to avoid any adverse effect of Party B business operation on normal operation of Party A. If Party B breaches this Agreement in its business operation, which causes any adverse effect on normal operation of Party A, Party A may terminate this Agreement and Party B shall be liable for compensations.

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3. Party B shall not increase or decrease part of the business in connection with the cooperation, or change the price of part of the business without the written consent from Party A, and shall give Party A a one-month formal written notice of its intent, if any. If Party A agrees to such change by Party B in the price of part of the business, Party A shall give Party B a written notice to implement price change. If Party A agrees on addition of part of the business by Party B, Party B shall test such additional business and provide Party A with regular test reports, and shall not launch such business on the market and offer to users before approval of Party A.

V. Earnings of the Parties

1. Party A shall charge its mobile users for using the IVR service hereunder at the following rates:

(1) Rates for users using the service in the local province as calling party

Peak Hours: RMB 0.3/min.

Off-Peak Hours: RMB 0.15/min.

Off-peak hours mean 23:00 ~ 7:00, except in Xinjiang Uygur Autonomous Region and Tibet Autonomous Region where the period shall be delayed for 2 hours due to time difference.

(2) When users use this service in a roaming province as the calling party, the rate shall be RMB 0.5/min.

(3) When the users use this service as the called party, the rate of the phone fee currently in force shall apply.

(4) Users during outbound or inbound international roaming have no access to IVR service.

(5) One-minute communication fee will be charged for any use of said service less than one minute.

2. The information service fee incurred during the mobile user uses any service hereunder shall be determined by Party B according to relevant regulations of Party A and Party B shall report detailed charging rates to price authorities.

3. Party A shall provide Party B with information service fee billing and collection service.  All the information service fees incurred from the use of IVR service by users across the country, as recorded in the monthly accounts, shall be the information service fees receivable. Party A shall pay 70% of such information service fees receivable to Party B, with the remaining 30% payable by Party B to Party A as the billing and collection service fee.

VI. Settlement Method

1. Settlement Point: To be set under the requirements of Party A.

2. Settlement Method

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Party B equipments are interconnected via optical fibers with the mobile data network of Party A and the billing information provided by Party A shall be final.

(1) The billing period shall commence on 00:00 of the first day of each month and end at 24:00 of the last day of the same month. For monthly settlement method, the settlement period shall be from the 15th day to the end of each month. The fees incurred from the first day to the last day of a month shall be settled in the immediate next month. After expiration of each normal billing period, Party A shall calculate the information fee of the corresponding month receivable by Party B, based on which the settlement shall be made between the Parties.

(2) The billing system of Party A settles the total amount of the IVR information fee receivable of the present month, and Party A shall pay Party B 70% of such total amount of the information fee and request the service sector invoice therefrom.

(3) The Parties shall strictly follow requirements on the method and period of settlement during settlement and payment. If Party A fails to pay the settlement amount within the specified timeframe, it shall pay the Party B a penalty equal to 1‰ of the amount payable for each day of delay, except for the overdue caused by delayed delivery of invoice.

3. Notwithstanding any dissidence against the bill of the previous month, Party B shall issue the invoice to Party A before the 18th day (the date when the invoice is delivered to the place designated by Party A) each month, and Party A shall pay Party B the settled information fee in the invoice amount conforming to the reconciliation statement, by the end of the same month after receiving the lawful invoice issued by Party B. That is to say, no matter whether the Parties are able to complete reconciliation or not in due course, settlement shall be made based on the amount indicated on the reconciliation statement, and any deficiency or excess thereof determined in reconciliation shall be paid or refunded in the next period or later.

VII. Customer Services

To ensure normal use of IVR service by customers, the Parties shall maintain a long-term, stable, convenient and effective customer service system.

1. Party B shall ensure that all customers fully understand the price, content and the way of providing service before using the IVR service, and shall not provide service until receiving customer’s confirmation.

2. Any IVR SMS and voice service received by user must be the information proactively demanded or subscribed by the user, or information bought by another user for such user. If a user demands service for another user, the receiving user shall not assume the corresponding expense.

3. Party B shall ensure the appropriateness and legality of the information content when providing IVR service to users, and Party A is entitled to monitor and manage the IVR content provided by Party B.

4. Party B shall not increase user's consumption by extending user’s waiting time or inducting user to participate with false promotion such as false minimum bonus.

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5. Party A will take action against Party B’s breach in accordance with the relevant provisions of Monternet SP Cooperation and Management Measures and this Agreement.

6. The customer service center 10086 of Party A and its main business outlets shall be responsible for dealing with customer consultation and complaints about the IVR service, and forward any question or problem on information content and service to the customer service center of Party B. Party B shall assign full time persons to deal with customer complaints and ensure that any such customer complaint will be solved within three days upon reception thereof.

7. Party A shall only be responsible for dealing with the consultation and complaints of customers arising from problems in the communication network.

8. Party B shall be liable for assisting Party A to settle user complaint caused by Party B's fault and providing corresponding system data and proof, and shall compensate user by strictly following the relevant requirements of Party A’s management measures.

9. Party B shall open a 24-hour service hotline and disclose the number to customers through its website or external promotional materials.

VIII. Confidentiality Provision

1. “Proprietary Information” refers to the information which one party obtains from the other party (“Disclosing Party”) in the process of cooperation that is developed, created and found by the Disclosing Party, or is known, or assigned to the disclosing party and is commercially valuable to the disclosing party. The Proprietary Information includes but not limited to business secrete, intellectual property, technical secret, as well as the technical parameters, standards and documents provided by Party A for Party B in the light of this Agreement.

2. The Parties shall keep confidential their own and the other Party’s Proprietary Information such as intellectual property and business secret. Any Party shall keep confidential any Proprietary Information of the other Party and not disclose to third parties any Proprietary Information involving technical or business secret of the other Party without written consent of the other Party.

3. The Parties shall keep confidential this cooperation and the content hereof. Without prior written consent of the other Party, no Party shall disclose to any third party this cooperation and the content of this Agreement between the Parties.

4. These non-disclosure provisions shall not terminate due to the termination hereof; instead they are valid permanently.

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IX. Liability for Breach of Contract

Any Party failing to perform any provision hereunder shall be deemed in breach of this Agreement. Any Party receiving a detailed written notice of such breach from the other Party shall, if such breach is confirmed to be true, correct such breach within twenty days and notify the other Party in writing. If the alleged breach is proved not exist, the notified Party shall provide a written dissidence or explanation to the other Party within twenty days. In such case, the Parties may settle such issue through negotiation and, if such negotiation fails, shall be solved in accordance with the dispute resolution provision hereunder. The breaching Party shall bear any and all the economic losses incurred to the observant Party due to its breach hereof.

X. Exemption

Where the Parties or a Party cannot perform obligations hereunder in part or in whole due to any force majeure event, none of the Parties shall be held liable for breach hereof, provided that the affected Parties or Party shall provide a notice to the other Party within fifteen days after occurrence thereof together with relevant supporting documents. The affected Party or Parties shall continue to perform this Agreement after the effect of such force majeure event ceases.

XI. Settlement of Disputes

Any dispute arising from or in connection with performance of this Agreement may be settled through amicable negotiation between the Parties. If such negotiation fails, either Party may refer such dispute to Beijing Arbitration Commission for arbitration in accordance with the arbitration rules thereof. The arbitration award shall be final and binding upon both Parties.

XII. Term of Agreement

This Agreement shall come into force on November 1, 2008 and expire on November 1, 2009. Either Party shall, within thirty days prior to the expiration of term hereof, inform the other Party in writing of termination of this Agreement. Otherwise, the term hereof shall automatically be extended for six months. The times for extension are unlimited, with six months for each. A Party having any dissidence shall notify the other Party thirty days before expiration of this Agreement or the present extension hereof through SIMS system or in writing, and so the Agreement will expire on the expiration date of this Agreement or the present extension. Both Parties shall deal with other affairs rising from this Agreement upon the expiration hereof. This Agreement shall be valid until both Parties have fully performed all obligations under this Agreement and all payments and compensations between the two Parties have been settled.

XIII. Validity, Change, Termination and Extension of the Agreement

1. This Agreement shall be in quadruplicate (each containing 11 pages), and become effective upon signature and sealing by duly authorized representatives of the Parties. Party A shall hold three copies and Party B shall hold one copy, each being equally valid.

2. The appendix to this Agreement shall constitute an integral part hereof and bear the same legal effect as this Agreement.

3. During the term of this Agreement, the Parties may change relevant provisions hereof or terminate this Agreement through amicable negotiation. Any Party intended to change or terminate this Agreement shall give a 30-day written notice to the other Party. Any Party terminating this Agreement at its sole discretion shall compensate the other Party for any and all the losses incurred thereto.

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4. During the cooperation hereunder, Party B shall not send to users any irrelevant information, such as ads, through the communication channel provided by Party A. Once detected, any such activity shall result in compensation by Party B for the financial losses incurred to Party A and entitle Party A to terminate this Agreement.

5. If Party B breaches the provisions of this Agreement and hence causes prosecution of any third party, user complaint or government punishment, Party B shall assume full responsibility and Party A is entitled to terminate this Agreement.

6. Any Party directly or indirectly breaching any provision hereof or failing to perform its obligations hereunder, or failing to make timely and full performance of such obligations, shall be deemed to breach this Agreement. The observant Party shall be entitled to give the breaching Party a written notice requesting the breaching Party to correct such breach and take sufficient, effective and timely actions to eliminate any effect thereof and compensate the observant Party for any loss incurred from such breach. If the breaching Party fails to correct such breach within ten days upon receiving the said notice, the observant Party may terminate this Agreement at its sole discretion by sending notice through SIMS system (which is deemed as successfully delivered after sending) or by giving a written notice and hold the breaching Party liable for breach hereof.

China Mobile Telecommunications Group Corporation (Beijing) Co., Ltd.

(Corporate Seal)

Authorized Representative: (signature)

Beijing AirInbox Information Technologies Co., Ltd.

(Corporate Seal)

Authorized Representative: (signature)

No. 06, Haidian Local Tax Bureau, Beijing

Special seal for stamp tax, payment received

Tax amount seal     1,296.15

WSPZZ: No. 1768484

January 13, 2009

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Appendix: Anti-Corruption Agreement

This Agreement is made for the purpose of maintaining fair competition in commercial activities and achieving good faith, resistance to corruption, high efficiency and win-win pattern in both parties’ business association.

1. Both Parties shall abide national laws and regulations in the cooperation, and do business in accordance with Law of the People's Republic of China for Countering Unfair Competition, Law of the People's Republic of China on Tenders and Bids, Interim Provisions on Prohibition of Commercial Bribery and other relevant laws and regulations.

2. Follow the principle of fairness, impartiality and openness in the verification of bid invitation qualification, bidding, bid opening and bid evaluation and forbid operations under the table. Supervisory department or authorized officer of Party A shall monitor bid projects in accordance with relevant regulations, carefully investigate, fairly deal with and timely respond the complaints and reports concerning tender and bid of Party B.

3. Related personnel of both parties and their relatives shall not accept cash, valuable objects, and securities, etc. from any counter party, request or accept any financial aids for house construction and fitment, wedding and funeral, abroad travel and so on from any counter party, shall not make their relatives to engage in the activities related to the cooperation of both Parties, accept kickbacks, participate any entertainment, banquet or trip affecting fair performance of their duties, and shall not apply for reimbursement for personal expenses.

4. Related personnel of both parties shall not negotiate or reach agreements on material supply, number and quality in private for personal profit.

5. Party B shall not subcontract any accepted project (including engineering, maintenance, supervision, design and system integration) by violating regulations or without explicit consent from Party A.

6. Do nothing violating commercial ethics, disturbing normal competition order and compromising both Parties’ image; no bidding collusion or disclosure of other party’s secrets; reject no fair competition from other, and no false or deliberately overrated budget, tender and pricing in business.

7. If any Party takes any action violating above clause or other commercial ethics or market rules, the cooperation between two parties on such project with violation or similar project will cease upon verification.

8. Both Parties are obliged to report any bribery, irregularity or gross misconduct of the other Party to the supervisory departments of the other Party or competent authority.

9. The appendix to this Agreement shall constitute an integral part hereof, and be sealed with paging seal together with the main contract.

Ways to contact Supervisory Department of Party A for report:	Ways to contact Party B for report:
Tel: 65546699-82576	Tel: 13910079094
Email: jubao@bj.chinamobile.com	Email: zhangyanchun@kongzhong.com

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Place for Affixing of Tax Stamps

(Seal of Beijing AirInbox Information Technologies Co.,)Ltd.

Column for Examination and Registration by Registration Authority:               Person-in-charge：(seal)           (Special Seal of Beijing AirInbox Information Technologies Co., Ltd Contract)   Technology Contract Registration Authority (Special-Purpose Seal)   January 15, 2009

EX-4.56

Exhibit 4.56

Reference No. DC – ZW – TD – 012

Lease Agreement No. DC-ZW-TD-12 of Tengda Building

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: Beijing AirInbox Information Technologies Co., Ltd.

Lessor is the title owner of the Tengda Plaza; and the Lessor desires to lease to Lessee and the Lessee desires to lease from Lessor. The Contract is hereby entered into by and between the Lessor and Lessee after negotiations in accordance with the Contract Law of the People’s Republic of China to stipulate the rights and obligations of each of the Lessor and Lessee.

Article 1 Rental, Property Management Charge and Deposit

Subsection 1 Lessor agrees to lease rooms 01/02/03/10/11 on the 7th floor of Tengda Plaza, of which the total leased area of the premises (hereinafter the “Premises”) is 836 square meters as confirmed by the parties (the layout of which is set forth in Appendix I hereto, however which is provided merely for the purpose of determining the location of the Premises), which shall be leased to Lessee for the purpose of office use.

Subsection 2 The lease term of the Premises shall be one year and three months, commencing from May 28, 2008 through August 27, 2009.

Subsection 3 The rental of the Premises shall be RMB 3.30 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 107,844.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.

Subsection 4 If the Contract term is longer than two years, the Lessor reserves the right to adjust the rental and property management charge of the Premises after such two-year period.

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Subsection 5 As of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 323,532.00 (RMB Three Hundred and Twenty-Three Thousand Five Hundred and Thirty-Two) in aggregate.

Subsection 6 If the Lessor fails to deliver the Premises to Lessee for use two months after the commencement date of the lease due to a default or negligence not attributable to Lessor, the Lessee may terminate the Contract by serving a written notice to Lessor, under which circumstances the Lessor shall refund (without interest) to Lessee all the Deposit, rental and property management charges received by Lessor.

Subsection 7 If the Lessee fails to comply with any of the terms and conditions of the Contract (including delay of payment for rental, property management charges or compensation of losses or any other failure in performing the contractual obligations) and the Lessee’s failure of compliance with the obligations provided in the Contract or any of its supplemental agreements has caused losses to the Lessor, the Lessor has the right to deduct the Deposit to offset such losses suffered by Lessor and any amount payable by Lessee. After the Lessor deducts the Deposit to offset the payment due by Lessee as per the terms of the Contract, and therefore the Deposit retained is less than the amount provided in Subsection 5 of this Article, Lessee shall make up the difference within 5 working days after the receipt of the written notice from Lessor. If Lessee fails to do so, the Lessor has the right to take measures, including suspension of telephone services or power supply, up to termination of the Contract, and claim from the Lessee the relevant economic losses which are not compensated for by the Deposit.

Subsection 8 Lessor shall fully refund the Lessee the Deposit (without interest) within 30 days after the Contract is expired, the Premises are handed over back and all the relevant payments in terms of the Premises are settled, provided that the Lessee has fully complied with all the terms and conditions of the Contract.

Subsection 9 Without the consent of the Lessor, the Lessee shall not assign the claim of Deposit to any third party or create a mortgage on the same.

Article 2  Termination of the Contract by the Lessee during the Contract Term

The Lessee has the right to terminate the Contract during the Contract term, provided that a written notice has been served to the Lessor and the entire Deposit shall be paid to the Lessor.

Article 3 Interior Facility and Reconstruction of the Premises

Subsection 1  The Lessor shall provide the following facilities within the Premises:

1. central air-conditioning, and ceiling (including intake, automatic smoke sensor, spiracle, and illumination); and

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2. 220V power supply, communication cables, and sockets for satellite TV.

Subsection 2 If the Lessee desires to decorate or reconstruct the Premises, it shall provide the Lessor with the shop drawings, plans and the information about the contractor(s) and person(s) hired therefor in advance, and the contractor(s) shall pay the Lessor the decoration work management fee at RMB 6.55/construction square meter; and no construction shall be carried out until the written consent has been obtained from the Lessor and the contractor(s) has paid up the construction deposit and the relevant management fee. Construction deposit will be refunded to the contractor(s) after the construction is completed and the Lessor has inspected and confirmed that the construction has been carried out in accordance with the construction plans and budget approved by the Lessor, and there is no damage to the facilities or devices within the building, etc. Any tax levied on the interior decoration or facility added by the Lessee shall be borne by the Lessee, regardless of the name and category on the invoice for such tax.

Subsection 3 The Lessee may lease direct telephone lines (use the name of the Lessor to open an account in the telecommunications company) from the Lessor, of which the costs will be paid by the Lessor upfront however, the Lessee shall pay telephone deposit of RMB 5000/line (RMB Five Thousand per line) and line maintenance fee RMB 300/year/line (RMB Three Hundred per year per line) to the Lessor. After the payment of such telephone deposit and line maintenance fee, the Lessee may immediately start the process of choosing telephone numbers, and the Lessor shall be responsible for the installation. The monthly telephone bill of the Lessee shall be paid within 7 days after the receipt of the notice from the Lessor. Deposit will be refunded to the Lessee without interest after the expiry of the Contract. If the Lessee has its own telephone lines (transferred from elsewhere) or applies for an account in the name of the Lessee to the telecommunication company, the Lessee shall pay to the Lessor a lump sum payment of line occupation fee of RMB 200/ line (RMB Two Hundred per line) and account transfer fee of RMB 5/ line (RMB Five per line) and the annual line maintenance fee of RMB 100/line (RMB One Hundred per line); and the Lessor shall provide assistance in the installation of the telephone lines.

Article 4 Renewal of the Lease

After the expiry of the lease, the Lessee has the priority right to renew the Contract under the same terms and condition, of which the terms and conditions shall be subject to a mutual agreement (as of the renewal, the price adjustment shall be determined by taking into account the increase/decrease of the Beijing municipal realty industrial indices and the overall rental rate of this building), provided that the Lessee shall issue a written notice to the Lessor three months prior to the expiry of the Contract. If the Lessee doesn’t issue any notice during the above period, the Lessor may deem that the Lessee chooses not to renew the lease after the expiry of the Contract, and therefore the Lessee shall be evacuated from the Premises on the termination date provided herein.

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Article 5 Return of the Premises

Subsection 1 The Lessee shall return the Premises on the date notified by the Lessor after the expiry of the Contract. If the Premises are not returned on schedule due to a reason attributable to the Lessee and the Premises have been leased by a new lessee, the Lessor shall have the right to request the Lessee to evacuate from the Premises within 3 days and withhold the Deposit, either partially or entirely, paid by the Lessee to compensate for the economic losses suffered by the Lessor as a result of such delay in evacuating from the Premises by the Lessee. If the Deposit is not sufficient to compensate for the losses suffered by the Lessor therefrom, the Lessor shall have the right to claim such deficiency from the Lessee. In case the Premises have not yet been leased by a new lessee, the Lessor shall regard the Lessee has renewed the lease, under which circumstances the Lessee shall complete the formalities for renewal. If the Lessee fails to complete such formalities for renewal, the Lessor has the right to request the Lessee to be evacuated from the Premises immediately and withhold the Deposit, either partially or entirely, paid by the Lessee to compensate for the economic losses suffered by the Lessor as a result of such delay in evacuating from the Premises by the Lessee.

Subsection 2 When the Lessee returns the Premises upon the expiry of the Contract, the Premises leased shall be of a good condition (except for natural wear and tear). If the Lessor discovers any damage to the Premises or facilities due to a reason attributable to the Lessee, the Lessor has the right to withhold the Deposit to offset the relevant reasonable losses. If the Deposit is not sufficient to compensate for such losses suffered by the Lessor, the Lessee shall make up the deficiency to the Lessor within 3 days after the receipt of the written notice issued by the Lessor.

Subsection 3 In terms of any annexure to the Premises by the Lessee (with the permit of the Lessor), it is not necessary that the Lessor will request the Lessee to restore the Premises to the original status after the expiry of the lease. If the Lessee doesn’t restore the Premises to the original status, the Lessor is not obligated to compensate the Lessee in terms of the costs of such annexure.

Article 6 Obligations of the Lessee

The Lessee agrees to comply with the following terms and conditions:

Subsection 1 The Lessee shall strictly comply with the rules and regulations established by the Lessor or any of its agents, of which the details are set forth in Appendix II Client Manual. If the Lessor makes any reasonable amendment to (add, delete or revise) the rules and regulations, the Lessee shall continue strictly complying with and implementing the same after the receipt of the written notice from the Lessor and shall not refuse to do so without any due reason. If there is any conflict between the terms of the Client Manual and the terms of this Contract or any of its appendices, the terms of the agreement and appendices that are signed by the Lessor and Lessee shall prevail.

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Subsection 2 The Lessee shall not carry out or allow any person to deliberately carry out any activity that invalidates or may invalidate the policy of the Premises or the building or may result in the increase of the premium. Otherwise, if the Lessor has to purchase a separate insurance policy as a result of Lessee’s sole default in violating this article, the Lessee shall bear the relevant incremental premium and other relevant costs, which shall be paid by the Lessee in a timely manner within the time period provided by the Lessor after the occurrence of a relevant event.

Subsection 3 The Lessee shall not:

1. use the Premises to carry out any illegal activity;

2. transfer the rights of the lessee under the Contract to a third party or create a mortgage on the same;

3. sublease the Premises to a third party or allow a third party to use the Premises, either partially or entirely;

4. jointly use the Premises with a third party (excluding an affiliate of the Lessee, whereby an affiliate refers to the parent company, subsidiary or branch of the Lessee or a company which has the common shareholder(s) and same legal representative as those of the Lessee), or use the Premises in any name other than the name of the Lessee, without the written consent from the Lessor; or

5. transfer the title or proprietary right of or mortgage to a third party any interior decoration, facilities or articles owned by the Lessor within the Premises.

Subsection 4 The Lessee shall be responsible for the security within the Premises during the lease term and shall be responsible for any loss or damage of any property within the Premises. If there is a fire, the Lessee shall be liable for compensations to the extent where the Lessee is held liable, as the case may be.

Article 7 Obligations of the Lessor

The Lessor agrees to comply with the following terms and conditions:

Subsection 1 The Lessor shall ensure the good condition of the public facilities of the building (including illumination, air-conditioning, automatic smoke sensors and spiracles, restrooms and elevators, etc.), and shall assign personnel for maintenance immediately after the receipt of notice from the Lessee in case of any malfunction.

Subsection 2 The Lessor shall implement a strict 24 hours security policy so as to ensure the safety of the building.

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Subsection 3 If the Lessee is unable to reasonably use the Premises due to a quality issue of the same, the Lessor shall be liable for the relevant losses suffered by the Lessee (except for the losses caused by an event under Article 9 of the Contract or the quality problem as a result of the decoration carried out by the Lessee).

Article 8 Compensation and Liability of Breach

Subsection 1 The Lessee shall be held liable for any losses suffered by the Lessor due to any willful misconduct or negligence of the Lessee, or any of the agents or contractors of the Lessee when carrying out their obligations as an agent or contractor. Vice versa, the Lessor shall be held liable for any losses suffered by the Lessee due to any willful misconduct or negligence of the Lessor, or any of the agents or contractors of the Lessor when carrying out their obligations as an agent or contractor.

Subsection 2 If the Lessee fails to comply with any term of the Contract or any of the appendices or supplemental agreements hereto and doesn’t correct the same within 7 days after the Lessee is notified by the Lessor in writing, the Contract shall be terminated automatically 14 days after a written notice of the Lessor. After the automatic termination of the Contract, the Lessee shall evacuate from and return the Premises to the Lessor 5 days after the written notification of the Lessor, and the Lessor shall have the right to request the Lessee to pay liquidated damages equivalent to three months rental and three months property management charges, of which the losses and costs incurred therefrom shall be borne by the Lessee. If the Deposit paid by the Lessee is equal to the amount of the above liquidated damages, the Lessor may withhold the Deposit to offset the same; however, if the Deposit is less than the amount of the liquidated damages, after the Lessor offsets the liquidated damages with the Deposit, the Lessee shall make up the deficiency to the Lessor. The above remedy under this subsection shall not be exclusive, and the Lessor shall have the right to take any other measures in respect of a breach of the Lessee.

Article 9 Exemption of Liability

The Lessor shall not be held liable for any of the following:

1. one time suspension of use of any public facilities as a result of necessary maintenance for the building or any reason not attributable to the Lessor;

2. any loss of the Lessee as a result of a natural disaster, such as earthquake, fire or flood, or any other force majeure event; or

3. any loss of the Lessee due to a reason attributable to any other lessee or a third party (however, the Lessor shall have the obligation to provide assistance to the Lessee in claiming losses from the liable party).

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Article 10 Waiver

Any waiver by the Lessor of a right under any terms or conditions hereunder shall not be effective unless made in writing and signed by the Lessor. Any payment of rental or other charges by the Lessee less than the amount provided herein, or any consent from the Lessor on less payment of the Lessee shall not impair the right of the Lessor to claim from the Lessee for any payment due or the right of the Lessor to take any other actions according to the Contract or law.

Article 11 Notice

Any notice issued under the Contract shall be made in writing. Any invoices, receipts or other notices from the Lessor to the Lessee shall be addressed to the Lessee and deemed as served if delivered to the leased rooms, or addressed to the address of the Lessee in Beijing by registered mail or courier. Any notice from the Lessee to the Lessor shall be addressed to the following address of the Lessor and deemed as served upon signing on receipt: Beijing Gaoling Estate Development Co., Ltd., 168 XiZhiMen Wai Avenue, Haidian District, Beijing, PRC.

Article 12 Dispute

This Contract is governed by and construed in accordance with the laws of the People’s Republic of China. If a dispute cannot be resolved by the Lessor and the Lessee through consultations, either party may bring a lawsuit to a people’s court.

Article 13 Business License and Language

Prior to the signing of the Contract, the Lessee shall produce the business license issued by the government of the People’s Republic of China and the power of attorney on the authorized signatory of the Lessee. The photocopy of the business license and the original of the power of attorney shall be attached to the Contract as an appendix. The appendices hereto shall take effect at the same time when the Contract becomes effective, and shall constitute an integral part of the Contract and have equal legal effect as the Contract.

The Contract and the appendices hereto shall be made in either Chinese language version or English language version, which shall have equal legal effect. The Contract shall be made in two original copies, of which each of the Lessor and the Lessee shall keep one.

Article 14 Supplemental Agreement

The parties may enter into supplemental agreement in terms of any matter not covered hereunder, after separate negotiations, which shall be attached to the Contract, become an integral part of the Contract and have the same legal effect as the Contract.

The Contract shall take effect on the date of signing and sealing and the full payment of Deposit.

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Appendix I: Layout of the Premises

Appendix II: Client Manual

Appendix III: Supplemental Agreement(s)

8

[Signature Page and No Content]

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: Beijing AirInbox Information Technologies Co., Ltd.
Address: 168 XiZhiMen Wai Avenue, Haidian District, Beijing	Address:
Post Code: 100044	Post Code:
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Telephone: 8838.3388	Telephone:
Bank:	Bank:
Account No.:	Account No.:
Dated: May 12, 2008	Dated: May 12, 2008

9

EX-4.57

Exhibit 4.57

Reference No. DC – ZW – TD – 07

Lease Agreement No. DC-ZW-TD-07 of Tengda Building

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: KongZhong China

Lessor is the title owner of the Tengda Plaza; and the Lessor desires to lease to Lessee and the Lessee desires to lease from Lessor. The Contract is hereby entered into by and between the Lessor and Lessee after negotiations in accordance with the Contract Law of the People’s Republic of China to stipulate the rights and obligations of each of the Lessor and Lessee.

Article 1  Rental, Property Management Charge and Deposit

Subsection 1 Lessor agrees to lease room 08 on the 32nd floor of Tengda Plaza, of which the total leased area of the premises (hereinafter the “Premises”) is 139 square meters as confirmed by the parties (the layout of which is set forth in Appendix I hereto, however which is provided merely for the purpose of determining the location of the Premises), which shall be leased to Lessee for the purpose of office use.

Subsection 2 The lease term of the Premises shall be six months, commencing from February 28, 2008 through August 27, 2008.

Subsection 3 The rental of the Premises shall be RMB 3.20 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 17,514.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.

Subsection 4 If the Contract term is longer than two years, the Lessor reserves the right to adjust the rental and property management charge of the Premises after such two-year period.

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Subsection 5 As of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 52,542.00 (RMB Fifty-Two Thousand Five Hundred and Forty-Two) in aggregate.

Subsection 6 If the Lessor fails to deliver the Premises to Lessee for use two months after the commencement date of the lease due to a default or negligence not attributable to Lessor, the Lessee may terminate the Contract by serving a written notice to Lessor, under which circumstances the Lessor shall refund (without interest) to Lessee all the Deposit, rental and property management charges received by Lessor.

Subsection 7 If the Lessee fails to comply with any of the terms and conditions of the Contract (including delay of payment for rental, property management charges or compensation of losses or any other failure in performing the contractual obligations) and the Lessee’s failure of compliance with the obligations provided in the Contract or any of its supplemental agreements has caused losses to the Lessor, the Lessor has the right to deduct the Deposit to offset such losses suffered by Lessor and any amount payable by Lessee. After the Lessor deducts the Deposit to offset the payment due by Lessee as per the terms of the Contract, and therefore the Deposit retained is less than the amount provided in Subsection 5 of this Article, Lessee shall make up the difference within 3 days after the receipt of the written notice from Lessor. If Lessee fails to do so, the Lessor has the right to take measures, including suspension of telephone services or power supply, up to termination of the Contract, and claim from the Lessee the relevant economic losses which are not compensated for by the Deposit.

Subsection 8 Lessor shall fully refund the Lessee the Deposit (without interest) within 30 days after the Contract is expired, the Premises are handed over back and all the relevant payments in terms of the Premises are settled, provided that the Lessee has fully complied with all the terms and conditions of the Contract.

Subsection 9 Without the consent of the Lessor, the Lessee shall not assign the claim of Deposit to any third party or create a mortgage on the same.

Article 2 Termination of the Contract by the Lessee during the Contract Term

If the Lessee terminates the Contract during the Contract term, it shall serve a written notice to the Lessor, and it shall not have any right to claim the refund of the Deposit.

Article 3 Interior Facility and Reconstruction of the Premises

Subsection 1  The Lessor shall provide the following facilities within the Premises:

1. central air-conditioning, and ceiling (including intake, automatic smoke sensor, spiracle, and illumination); and

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2. 220V power supply, communication cables, and sockets for satellite TV.

Subsection 2 If the Lessee desires to decorate or reconstruct the Premises, it shall provide the Lessor with the shop drawings, plans and the information about the contractor(s) and person(s) hired therefor in advance, and the contractor(s) shall pay the Lessor the decoration work management fee of RMB 30,000.00 (RMB Thirty Thousand); and no construction shall be carried out until the written consent has been obtained from the Lessor and the contractor(s) has paid up the construction deposit and the relevant management fee. Construction deposit will be refunded to the contractor(s) after the construction is completed and the Lessor has inspected and confirmed that the construction has been carried out in accordance with the construction plans and budget approved by the Lessor, and there is no damage to the facilities or devices within the building, etc. Any tax levied on the construction costs hereunder or the interior decoration or facility added by the Lessee shall be borne by the Lessee, regardless of the name and category on the invoice for such tax.

Subsection 3 If the Lessee leases direct telephone lines (use the name of the Lessor to open an account in the telecommunications company) from the Lessor, of which the costs will be paid by the Lessor upfront however, the Lessee shall pay telephone deposit of RMB 5000/line (RMB Five Thousand per line) and line maintenance fee RMB 300/year/line (RMB Three Hundred per year per line) to the Lessor. After the payment of such telephone deposit and line maintenance fee, the Lessee may immediately start the process of choosing telephone numbers, and the Lessor shall be responsible for the installation. The monthly telephone bill of the Lessee shall be paid within 7 days after the receipt of the notice from the Lessor. Deposit will be refunded to the Lessee without interest after the expiry of the Contract. If the Lessee has its own telephone lines (transferred from elsewhere) or applies for an account in the name of the Lessee to the telecommunication company, the Lessee shall pay to the Lessor a lump sum payment of line occupation fee of RMB 200/ line (RMB Two Hundred per line) and account transfer fee of RMB 5/ line (RMB Five per line) and the annual line maintenance fee of RMB 100/line (RMB One Hundred per line); and the Lessor shall provide assistance in the installation of the telephone lines.

Article 4 Renewal of the Lease

After the expiry of the lease, the Lessee has the priority right to renew the Contract under the same terms and condition, of which the terms and conditions shall be subject to a mutual agreement (as of the renewal, the price adjustment shall be determined by taking into account the increase/decrease of the Beijing municipal realty industrial indices and the overall rental rate of this building), provided that the Lessee shall issue a written notice to the Lessor three months prior to the expiry of the Contract. If the Lessee doesn’t issue any notice during the above period, the Lessor may deem that the Lessee chooses not to renew the lease after the expiry of the Contract, and therefore the Lessee shall be evacuated from the Premises on the termination date provided herein.

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Article 5 Return of the Premises

Subsection 1 The Lessee shall return the Premises on the date notified by the Lessor after the expiry of the Contract. If the Premises are not returned on schedule due to a reason attributable to the Lessee and the Premises have been leased by a new lessee, the Lessor shall have the right to request the Lessee to evacuate from the Premises within 3 days and withhold the Deposit paid by the Lessee, either partially or entirely. If the Deposit is not sufficient to compensate for the losses suffered by the Lessor therefrom, the Lessor shall have the right to claim such deficiency from the Lessee. In case the Premises have not yet been leased by a new lessee, the Lessor shall regard the Lessee has renewed the lease, under which circumstances the Lessee shall complete the formalities for renewal. If the Lessee fails to complete such formalities for renewal, the Lessor has the right to request the Lessee to be evacuated from the Premises immediately and withhold the Deposit paid by the Lessee, either partially or entirely.

Subsection 2 When the Lessee returns the Premises upon the expiry of the Contract, the Premises leased shall be of a good condition (except for natural wear and tear). If the Lessor discovers any damage to the Premises or facilities due to a reason attributable to the Lessee, the Lessor has the right to withhold the Deposit to offset the relevant losses. If the Deposit is not sufficient to compensate for such losses suffered by the Lessor, the Lessee shall make up the deficiency to the Lessor within 3 days after the receipt of the written notice issued by the Lessor.

Subsection 3 In terms of any annexure to the Premises by the Lessee (with the permit of the Lessor), it is not necessary that the Lessor will request the Lessee to restore the Premises to the original status after the expiry of the lease. If the Lessee doesn’t restore the Premises to the original status, the Lessor is not obligated to compensate the Lessee in terms of the costs of such annexure.

Article 6 Obligations of the Lessee

The Lessee agrees to comply with the following terms and conditions:

Subsection 1 The Lessee shall strictly comply with the rules and regulations established by the Lessor or any of its agents.

Subsection 2 The Lessee shall not carry out or allow any person to deliberately carry out any activity that invalidates or may invalidate the policy of the Premises or the building or may result in the increase of the premium. Otherwise, if the Lessor has to purchase a separate insurance policy as a result of Lessee’s violation of this article, the Lessee shall bear the relevant incremental premium and other relevant costs, which shall be paid by the Lessee in a timely manner within the time period provided by the Lessor after the occurrence of a relevant event.

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Subsection 3 The Lessee shall not:

1. use the Premises to carry out any illegal activity;

2. transfer the rights of the lessee under the Contract to a third party or create a mortgage on the same;

3. sublease the Premises to a third party or allow a third party to use the Premises, either partially or entirely;

4. jointly use the Premises with a third party (excluding an affiliate of the Lessee, whereby an affiliate refers to the parent company, subsidiary or branch of the Lessee or a company which has the common shareholder(s) and same legal representative as those of the Lessee), or use the Premises in any name other than the name of the Lessee, without the written consent from the Lessor; or

5. transfer the title or proprietary right of or mortgage to a third party any interior decoration, facilities or articles owned by the Lessor within the Premises.

Subsection 4 The Lessee shall be responsible for the security within the Premises during the lease term and shall be responsible for any loss or damage of any property within the Premises. If there is a fire, the Lessee shall be liable for compensations to the extent where the Lessee is held liable, as the case may be.

Article 7 Obligations of the Lessor

The Lessor agrees to comply with the following terms and conditions:

Subsection 1 The Lessor shall ensure the good condition of the public facilities of the building (including illumination, air-conditioning, automatic smoke sensors and spiracles, restrooms and elevators, etc.), and shall assign personnel for maintenance immediately after the receipt of notice from the Lessee in case of any malfunction.

Subsection 2 The Lessor shall implement a strict 24 hours security policy.

Subsection 3 If the Lessee is unable to reasonably use the Premises due to a quality issue of the same, the Lessor shall be liable for the relevant losses suffered by the Lessee (except for the losses caused by an event under Article 9 of the Contract or the quality problem as a result of the decoration carried out by the Lessee).

Article 8 Compensation and Liability of Breach

Subsection 1 The Lessee shall be held liable for any losses suffered by the Lessor due to any willful misconduct or negligence of the Lessee, or any of the agents or contractors of the Lessee when carrying out their obligations as an agent or contractor. Vice versa, the Lessor shall be held liable for any losses suffered by the Lessee due to any willful misconduct or negligence of the Lessor, or any of the agents or contractors of the Lessor when carrying out their obligations as an agent or contractor.

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Subsection 2 If the Lessee fails to comply with any term of the Contract or any of the appendices or supplemental agreements hereto and doesn’t correct the same within 7 days after the Lessee is notified by the Lessor in writing, the Contract shall be terminated automatically 14 days after a written notice of the Lessor. After the automatic termination of the Contract, the Lessee shall evacuate from and return the Premises to the Lessor 5 days after the written notification of the Lessor, and the Lessor shall have the right to request the Lessee to pay liquidated damages equivalent to 3 months rental and 3 months property management charges, of which the losses and costs incurred therefrom shall be borne by the Lessee. If the Deposit paid by the Lessee is equal to the amount of the above liquidated damages, the Lessor may withhold the Deposit to offset the same; however, if the Deposit is less than the amount of the liquidated damages, after the Lessor offsets the liquidated damages with the Deposit, the Lessee shall make up the deficiency to the Lessor. The above remedy under this subsection shall not be exclusive, and the Lessor shall have the right to take any other measures in respect of a breach of the Lessee.

Article 9 Exemption of Liability

The Lessor shall not be held liable for any of the following:

1. one time suspension of use of any public facilities as a result of necessary maintenance for the building or any reason not attributable to the Lessor;

2. any loss of the Lessee as a result of a natural disaster, such as earthquake, fire or flood, or any other force majeure event; or

3. any loss of the Lessee due to a reason attributable to any other lessee or a third party (however, the Lessor shall have the obligation to provide assistance to the Lessee in claiming losses from the liable party).

Article 10 Waiver

Any waiver by the Lessor of a right under any terms or conditions hereunder shall not be effective unless made in writing and signed by the Lessor. Any payment of rental or other charges by the Lessee less than the amount provided herein, or any consent from the Lessor on less payment of the Lessee shall not impair the right of the Lessor to claim from the Lessee for any payment due or the right of the Lessor to take any other actions according to the Contract or law.

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Article 11 Notice

Any notice issued under the Contract shall be made in writing. Any invoices, receipts or other notices from the Lessor to the Lessee shall be addressed to the Lessee and deemed as served if delivered to the leased rooms, or addressed to the address of the Lessee in Beijing by registered mail or courier. Any notice from the Lessee to the Lessor shall be addressed to the following address of the Lessor and deemed as served upon signing on receipt: Beijing Gaoling Estate Development Co., Ltd., 168 XiZhiMen Wai Avenue, Haidian District, Beijing, PRC.

Article 12  Dispute

This Contract is governed by and construed in accordance with the laws of the People’s Republic of China. If a dispute cannot be resolved by the Lessor and the Lessee through consultations, either party may bring a lawsuit to a people’s court.

Article 13 Business License and Language

Prior to the signing of the Contract, the Lessee shall produce the business license issued by the government of the People’s Republic of China and the power of attorney on the authorized signatory of the Lessee. The photocopy of the business license and the original of the power of attorney shall be attached to the Contract as an appendix. The appendices hereto shall take effect at the same time when the Contract becomes effective, and shall constitute an integral part of the Contract and have equal legal effect as the Contract.

The Contract and the appendices hereto shall be made in either Chinese language version or English language version, which shall have equal legal effect. The Contract shall be made in two original copies, of which each of the Lessor and the Lessee shall keep one.

Article 14  Supplemental Agreement

The parties may enter into supplemental agreement in terms of any matter not covered hereunder, after separate negotiations, which shall be attached to the Contract, become an integral part of the Contract and have the same legal effect as the Contract.

The Contract shall take effect on the date of signing and sealing and the full payment of Deposit.

Appendix I: Layout of the Premises

Appendix II: Client Manual

Appendix III: Supplemental Agreement(s)

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Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: KongZhong China
Address: 168 XiZhiMen Wai Avenue, Haidian District, Beijing	Address:
Post Code: 100044	Post Code:
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Telephone: 8838.3388	Telephone:
Bank:	Bank:
Account No.:	Account No.:
Dated: February 28, 2008	Dated: February 28, 2008

8

EX-4.58

Exhibit 4.58

Supplemental Agreement No.2 to the Lease Agreement No. DC-ZW-TD-07 of Tengda Building

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: KongZhong China

The Realty Lease Contract No. DC-ZW-TD-07 signed by and between the Lessor and Lessee (hereinafter the “Contract”) shall be expired on August 27, 2008; however the Lessee desires to continue leasing the room 08 on the 32nd floor of Tengda Plaza after the expiry of the said Contract. Hence, it is hereby agreed by the Lessor and Lessee as follows after friendly negotiations.

1. Effective from August 28, 2008, the subsection 2 of Article 1 under the Realty Lease Contract No. DC-ZW-TD-07 shall be amended and read as “the lease term of the Premises shall be one year, commencing from August 28, 2008 through August 27, 2009.”

2. Effective from August 28, 2008, the subsection 3 of Article 1 under the Realty Lease Contract No. DC-ZW-TD-07 shall be amended and read as “the rental of the Premises shall be RMB 3.30 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 17,931.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.”

3. Effective from August 28, 2008, the subsection 5 of Article 1 under the Realty Lease Contract No. DC-ZW-TD-07 shall be amended and read as “as of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 53,793.00 (RMB Fifty-Three Thousand Seven Hundred and Ninety-Three) in aggregate.”

4. Grace period shall be 70 days in aggregate, which commences from August 28, 2008 through November 5, 2008.

1

During the grace period, the Lessee is obligated to pay the property management charges at RMB 1.00 per day per square meter and other payable expenses. If the Contract is early terminated due to a reason attributable to the Lessee, the Lessee shall not be entitled to the grace period. Any grace period day after the termination date of the Contract that the Lessee has not enjoyed shall become void, and the Lessor is not obligated to compensate the Lessee for such void grace period days. If the Lessee terminates the Contract before the expiry of the Contract term or the Contract is early terminated due to a reason attributable to Lessee, the Lessee shall make full payment to the Lessor of the rental of the grace period enjoyed according to the rental rate provided in the Contract.

5. This Supplemental Agreement is a supplement and amendment to the Realty Lease Contract No. DC-ZW-TD-07 and its relevant supplemental agreements, all of which shall have equal legal effect. If there is any conflict between the terms of this Supplemental Agreement and the terms of the Realty Lease Contract No. DC-ZW-TD-07 or any of its relevant supplemental agreements, the terms of this Supplemental Agreement shall prevail; all terms that are consistent with the terms of the Realty Lease Contract No. DC-ZW-TD-07 and its relevant supplemental agreements shall continue in full force.

6. This Agreement is written in two original copies, of which each of the Lessor and Lessee shall keep one. The Agreement shall take effect on the date when the parties sign and seal the Agreement.

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: KongZhong China
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Dated: May 12, 2008	Dated: May 12, 2008

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EX-4.59

Exhibit 4.59

Reference No. DC – ZW – TD – 06

Lease Agreement No. DC-ZW-TD-06 of Tengda Building

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: Beijing Xinrui Network Technologies Co., Ltd.

Lessor is the title owner of the Tengda Plaza; and the Lessor desires to lease to Lessee and the Lessee desires to lease from Lessor. The Contract is hereby entered into by and between the Lessor and Lessee after negotiations in accordance with the Contract Law of the People’s Republic of China to stipulate the rights and obligations of each of the Lessor and Lessee.

Article 1 Rental, Property Management Charge and Deposit

Subsection 1 Lessor agrees to lease room 08 on the 8th floor of Tengda Plaza, of which the total leased area of the premises (hereinafter the “Premises”) is 139 square meters as confirmed by the parties (the layout of which is set forth in Appendix I hereto, however which is provided merely for the purpose of determining the location of the Premises), which shall be leased to Lessee for the purpose of office use.

Subsection 2 The lease term of the Premises shall be six months, commencing from February 28, 2008 through August 27, 2008.

Subsection 3 The rental of the Premises shall be RMB 3.20 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 17,514.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.

Subsection 4 If the Contract term is longer than two years, the Lessor reserves the right to adjust the rental and property management charge of the Premises after such two-year period.

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Subsection 5 As of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 52,542.00 (RMB Fifty-Two Thousand Five Hundred and Forty-Two) in aggregate.

Subsection 6 If the Lessor fails to deliver the Premises to Lessee for use two months after the commencement date of the lease due to a default or negligence not attributable to Lessor, the Lessee may terminate the Contract by serving a written notice to Lessor, under which circumstances the Lessor shall refund (without interest) to Lessee all the Deposit, rental and property management charges received by Lessor.

Subsection 7 If the Lessee fails to comply with any of the terms and conditions of the Contract (including delay of payment for rental, property management charges or compensation of losses or any other failure in performing the contractual obligations) and the Lessee’s failure of compliance with the obligations provided in the Contract or any of its supplemental agreements has caused losses to the Lessor, the Lessor has the right to deduct the Deposit to offset such losses suffered by Lessor and any amount payable by Lessee. After the Lessor deducts the Deposit to offset the payment due by Lessee as per the terms of the Contract, and therefore the Deposit retained is less than the amount provided in Subsection 5 of this Article, Lessee shall make up the difference within 5 working days after the receipt of the written notice from Lessor. If Lessee fails to do so, the Lessor has the right to take measures, including suspension of telephone services or power supply, up to termination of the Contract, and claim from the Lessee the relevant economic losses which are not compensated for by the Deposit.

Subsection 8 Lessor shall fully refund the Lessee the Deposit (without interest) within 30 days after the Contract is expired, the Premises are handed over back and all the relevant payments in terms of the Premises are settled, provided that the Lessee has fully complied with all the terms and conditions of the Contract.

Subsection 9 Without the consent of the Lessor, the Lessee shall not assign the claim of Deposit to any third party or create a mortgage on the same.

Article 2 Termination of the Contract by the Lessee during the Contract Term

If the Lessee terminates the Contract during the Contract term, it shall serve a written notice to the Lessor, and it shall not have any right to claim the refund of the Deposit.

Article 3 Interior Facility and Reconstruction of the Premises

Subsection 1 The Lessor shall provide the following facilities within the Premises:

1. central air-conditioning, and ceiling (including intake, automatic smoke sensor, spiracle, and illumination); and

2. 220V power supply, communication cables, and sockets for satellite TV.

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Subsection 2 If the Lessee desires to decorate or reconstruct the Premises, it shall provide the Lessor with the shop drawings, plans and the information about the contractor(s) and person(s) hired therefor in advance, and the contractor(s) shall pay the Lessor the decoration work management fee at RMB 6.55 per construction square meter; and no construction shall be carried out until the written consent has been obtained from the Lessor and the contractor(s) has paid up the construction deposit and the relevant management fee. Construction deposit will be refunded to the contractor(s) after the construction is completed and the Lessor has inspected and confirmed that the construction has been carried out in accordance with the construction plans and budget approved by the Lessor, and there is no damage to the facilities or devices within the building, etc. Any tax levied on the interior decoration or facility added by the Lessee shall be borne by the Lessee, regardless of the name and category on the invoice for such tax.

Subsection 3 If the Lessee leases direct telephone lines (use the name of the Lessor to open an account in the telecommunications company) from the Lessor, of which the costs will be paid by the Lessor upfront however, the Lessee shall pay telephone deposit of RMB 5000/line (RMB Five Thousand per line) and line maintenance fee RMB 300/year/line (RMB Three Hundred per year per line) to the Lessor. After the payment of such telephone deposit and line maintenance fee, the Lessee may immediately start the process of choosing telephone numbers, and the Lessor shall be responsible for the installation. The monthly telephone bill of the Lessee shall be paid within 7 days after the receipt of the notice from the Lessor. Deposit will be refunded to the Lessee without interest after the expiry of the Contract. If the Lessee has its own telephone lines (transferred from elsewhere) or applies for an account in the name of the Lessee to the telecommunication company, the Lessee shall pay to the Lessor a lump sum payment of line occupation fee of RMB 200/ line (RMB Two Hundred per line) and account transfer fee of RMB 5/ line (RMB Five per line) and the annual line maintenance fee of RMB 100/line (RMB One Hundred per line); and the Lessor shall provide assistance in the installation of the telephone lines.

Article 4 Renewal of the Lease

After the expiry of the lease, the Lessee has the priority right to renew the Contract under the same terms and condition, of which the terms and conditions shall be subject to a mutual agreement (as of the renewal, the price adjustment shall be determined by taking into account the increase/decrease of the Beijing municipal realty industrial indices and the overall rental rate of this building), provided that the Lessee shall issue a written notice to the Lessor three months prior to the expiry of the Contract. If the Lessee doesn’t issue any notice during the above period, the Lessor may deem that the Lessee chooses not to renew the lease after the expiry of the Contract, and therefore the Lessee shall be evacuated from the Premises on the termination date provided herein.

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Article 5 Return of the Premises

Subsection 1 The Lessee shall return the Premises on the date notified by the Lessor after the expiry of the Contract. If the Premises are not returned on schedule due to a reason attributable to the Lessee and the Premises have been leased by a new lessee, the Lessor shall have the right to request the Lessee to evacuate from the Premises within 3 days and withhold the Deposit paid by the Lessee, either partially or entirely, as the compensation of the economic losses suffered by the Lessor as a result of such delay in evacuating from the Premises by the Lessee. If the Deposit is not sufficient to compensate for the losses suffered by the Lessor therefrom, the Lessor shall have the right to claim such deficiency from the Lessee. In case the Premises have not yet been leased by a new lessee, the Lessor shall regard the Lessee has renewed the lease, under which circumstances the Lessee shall complete the formalities for renewal. If the Lessee fails to complete such formalities for renewal, the Lessor has the right to request the Lessee to be evacuated from the Premises immediately and withhold the Deposit paid by the Lessee, either partially or entirely, as the compensation of the economic losses suffered by the Lessor as a result of such delay in evacuating from the Premises by the Lessee.

Subsection 2 When the Lessee returns the Premises upon the expiry of the Contract, the Premises leased shall be of a good condition (except for natural wear and tear). If the Lessor discovers any damage to the Premises or facilities due to a reason attributable to the Lessee, the Lessor has the right to withhold the Deposit to offset the relevant reasonable losses. If the Deposit is not sufficient to compensate for such losses suffered by the Lessor, the Lessee shall make up the deficiency to the Lessor within 3 days after the receipt of the written notice issued by the Lessor.

Subsection 3 In terms of any annexure to the Premises by the Lessee (with the permit of the Lessor), it is not necessary that the Lessor will request the Lessee to restore the Premises to the original status after the expiry of the lease. If the Lessee doesn’t restore the Premises to the original status, the Lessor is not obligated to compensate the Lessee in terms of the costs of such annexure.

Article 6 Obligations of the Lessee

The Lessee agrees to comply with the following terms and conditions:

Subsection 1 The Lessee shall strictly comply with the rules and regulations established by the Lessor or any of its agents, of which the details are set forth in Appendix II Client Manual. If the Lessor makes any reasonable amendment to (add, delete or revise) the rules and regulations, the Lessee shall continue strictly complying with and implementing the same after the receipt of the written notice from the Lessor and shall not refuse to do so without any due reason. If there is any conflict between the terms of the Client Manual and the terms of this Contract or any of its appendices, the terms of the agreement and appendices that are signed by the Lessor and Lessee shall prevail.

4

Subsection 2 The Lessee shall not carry out or allow any person to deliberately carry out any activity that invalidates or may invalidate the policy of the Premises or the building or may result in the increase of the premium. Otherwise, if the Lessor has to purchase a separate insurance policy as a result of Lessee’s sole default in violating this article, the Lessee shall bear the relevant incremental premium and other relevant costs, which shall be paid by the Lessee in a timely manner within the time period provided by the Lessor after the occurrence of a relevant event.

Subsection 3 The Lessee shall not:

1. use the Premises to carry out any illegal activity;

2. transfer the rights of the lessee under the Contract to a third party or create a mortgage on the same;

3. sublease the Premises to a third party or allow a third party to use the Premises, either partially or entirely;

4. jointly use the Premises with a third party (excluding an affiliate of the Lessee, whereby an affiliate refers to the parent company, subsidiary or branch of the Lessee or a company which has the common shareholder(s) and same legal representative as those of the Lessee), or use the Premises in any name other than the name of the Lessee, without the written consent from the Lessor; or

5. transfer the title or proprietary right of or mortgage to a third party any interior decoration, facilities or articles owned by the Lessor within the Premises.

Subsection 4 The Lessee shall be responsible for the security within the Premises during the lease term and shall be responsible for any loss or damage of any property within the Premises. If there is a fire, the Lessee shall be liable for compensations to the extent where the Lessee is held liable, as the case may be.

Article 7 Obligations of the Lessor

The Lessor agrees to comply with the following terms and conditions:

Subsection 1 The Lessor shall ensure the good condition of the public facilities of the building (including illumination, air-conditioning, automatic smoke sensors and spiracles, restrooms and elevators, etc.), and shall assign personnel for maintenance immediately after the receipt of notice from the Lessee in case of any malfunction.

Subsection 2 The Lessor shall implement a strict 24 hours security policy so as to ensure the safety of the building.

Subsection 3 If the Lessee is unable to reasonably use the Premises due to a quality issue of the same, the Lessor shall be liable for the relevant losses suffered by the Lessee (except for the losses caused by an event under Article 9 of the Contract or the quality problem as a result of the decoration carried out by the Lessee).

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Article 8 Compensation and Liability of Breach

Subsection 1 The Lessee shall be held liable for any losses suffered by the Lessor due to any willful misconduct or negligence of the Lessee, or any of the agents or contractors of the Lessee when carrying out their obligations as an agent or contractor. Vice versa, the Lessor shall be held liable for any losses suffered by the Lessee due to any willful misconduct or negligence of the Lessor, or any of the agents or contractors of the Lessor when carrying out their obligations as an agent or contractor.

Subsection 2 If the Lessee fails to comply with any term of the Contract or any of the appendices or supplemental agreements hereto and doesn’t correct the same within 7 days after the Lessee is notified by the Lessor in writing, the Contract shall be terminated automatically 14 days after a written notice of the Lessor. After the automatic termination of the Contract, the Lessee shall evacuate from and return the Premises to the Lessor 5 days after the written notification of the Lessor, and the Lessor shall have the right to request the Lessee to pay liquidated damages equivalent to 3 months rental and 3 months property management charges, of which the losses and costs incurred therefrom shall be borne by the Lessee. If the Deposit paid by the Lessee is equal to the amount of the above liquidated damages, the Lessor may withhold the Deposit to offset the same; however, if the Deposit is less than the amount of the liquidated damages, after the Lessor offsets the liquidated damages with the Deposit, the Lessee shall make up the deficiency to the Lessor. The above remedy under this subsection shall not be exclusive, and the Lessor shall have the right to take any other measures in respect of a breach of the Lessee.

Article 9 Exemption of Liability

The Lessor shall not be held liable for any of the following:

1. one time suspension of use of any public facilities as a result of necessary maintenance for the building or any reason not attributable to the Lessor;

2. any loss of the Lessee as a result of a natural disaster, such as earthquake, fire or flood, or any other force majeure event; or

3. any loss of the Lessee due to a reason attributable to any other lessee or a third party (however, the Lessor shall have the obligation to provide assistance to the Lessee in claiming losses from the liable party).

Article 10 Waiver

Any waiver by the Lessor of a right under any terms or conditions hereunder shall not be effective unless made in writing and signed by the Lessor. Any payment of rental or other charges by the Lessee less than the amount provided herein, or any consent from the Lessor on less payment of the Lessee shall not impair the right of the Lessor to claim from the Lessee for any payment due or the right of the Lessor to take any other actions according to the Contract or law.

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Article 11 Notice

Any notice issued under the Contract shall be made in writing. Any invoices, receipts or other notices from the Lessor to the Lessee shall be addressed to the Lessee and deemed as served if delivered to the leased rooms, or addressed to the address of the Lessee in Beijing by registered mail or courier. Any notice from the Lessee to the Lessor shall be addressed to the following address of the Lessor and deemed as served upon signing on receipt: Beijing Gaoling Estate Development Co., Ltd., 168 XiZhiMen Wai Avenue, Haidian District, Beijing, PRC.

Article 12 Dispute

This Contract is governed by and construed in accordance with the laws of the People’s Republic of China. If a dispute cannot be resolved by the Lessor and the Lessee through consultations, either party may bring a lawsuit to a people’s court.

Article 13 Business License and Language

Prior to the signing of the Contract, the Lessee shall produce the business license issued by the government of the People’s Republic of China and the power of attorney on the authorized signatory of the Lessee. The photocopy of the business license and the original of the power of attorney shall be attached to the Contract as an appendix. The appendices hereto shall take effect at the same time when the Contract becomes effective, and shall constitute an integral part of the Contract and have equal legal effect as the Contract.

The Contract and the appendices hereto shall be made in either Chinese language version or English language version, which shall have equal legal effect. The Contract shall be made in two original copies, of which each of the Lessor and the Lessee shall keep one.

Article 14 Supplemental Agreement

The parties may enter into supplemental agreement in terms of any matter not covered hereunder, after separate negotiations, which shall be attached to the Contract, become an integral part of the Contract and have the same legal effect as the Contract.

The Contract shall take effect on the date of signing and sealing and the full payment of Deposit.

Appendix I: Layout of the Premises

Appendix II: Client Manual

Appendix III: Supplemental Agreement(s)

7

[Signature Page and No Content]

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: Beijing Xinrui Network Technologies Co., Ltd.
Address: 168 XiZhiMen Wai Avenue, Haidian District, Beijing	Address:
Post Code: 100044	Post Code:
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Telephone: 8838.3388	Telephone:
Bank:	Bank:
Account No.:	Account No.:
Dated: February 28, 2008	Dated: February 28, 2008

8

EX-4.60

Exhibit 4.60

Supplemental Agreement No.2 to the Lease Contract No. DC-ZW-TD-06 of Tengda Building

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: Beijing Xinrui Network Technologies Co., Ltd.

The Realty Lease Contract No. DC-ZW-TD-06 signed by and between the Lessor and Lessee (hereinafter the “Contract”) shall be expired on August 27, 2008; however the Lessee desires to continue leasing the room 08 on the 8th floor of Tengda Plaza after the expiry of the said Contract. Hence, it is hereby agreed by the Lessor and Lessee as follows after friendly negotiations.

1. Effective from August 28, 2008, the subsection 2 of Article 1 under the Realty Lease Contract No. DC-ZW-TD-06 shall be amended and read as “the lease term of the Premises shall be one year, commencing from August 28, 2008 through August 27, 2009.”

2. Effective from August 28, 2008, the subsection 3 of Article 1 under the Realty Lease Contract No. DC-ZW-TD-06 shall be amended and read as “the rental of the Premises shall be RMB 3.30 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 17,931.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.”

3. Effective from August 28, 2008, the subsection 5 of Article 1 under the Realty Lease Contract No. DC-ZW-TD-06 shall be amended and read as “as of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 53,793.00 (RMB Fifty-Three Thousand Seven Hundred and Ninety-Three) in aggregate.”

4. Grace period shall be 70 days in aggregate, which commences from August 28, 2008 through November 5, 2008.

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During the grace period, the Lessee is obligated to pay the property management charges at RMB 1.00 per day per square meter and other payable expenses. If the Contract is early terminated due to a reason attributable to the Lessee, the Lessee shall not be entitled to the grace period. Any grace period day after the termination date of the Contract that the Lessee has not enjoyed shall become void, and the Lessor is not obligated to compensate the Lessee for such void grace period days. If the Lessee terminates the Contract before the expiry of the Contract term or the Contract is early terminated due to a reason attributable to Lessee, the Lessee shall make full payment to the Lessor of the rental of the grace period enjoyed according to the rental rate provided in the Contract.

5. This Supplemental Agreement is a supplement and amendment to the Realty Lease Contract No. DC-ZW-TD-06 and its relevant supplemental agreements, all of which shall have equal legal effect. If there is any conflict between the terms of this Supplemental Agreement and the terms of the Realty Lease Contract No. DC-ZW-TD-06 or any of its relevant supplemental agreements, the terms of this Supplemental Agreement shall prevail; all terms that are consistent with the terms of the Realty Lease Contract No. DC-ZW-TD-06 and its relevant supplemental agreements shall continue in full force.

6. This Agreement is written in two original copies, of which each of the Lessor and Lessee shall keep one. The Agreement shall take effect on the date when the parties sign and seal the Agreement.

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: Beijing Xinrui Network Technologies Co., Ltd.
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Dated: May 12, 2008	Dated: May 12, 2008

2

EX-4.61

Joint and Several Liability Agreement

Exhibit 4.61

Joint Lease Agreement

Party A: Beijing Gaoling Estate Development Co., Ltd. (hereinafter “Party A”)

Party B: Beijing AirInbox Information Technologies, Co., Ltd. (hereinafter “Party B”)

Party C: Beijing Boya Wuji Technologies Co., Ltd. (hereinafter “Party C”)

Party D: Beijing Wireless Interactive Network Technologies Co., Ltd. (hereinafter “Party D”)

Party E: Beijing Xinrui Network Technologies Co., Ltd.(hereinafter “Party E”)

Party F: KongZhong China (hereinafter “Party F”)

Party G: Beijing Chengxitong Information Technologies Co., Ltd. (hereinafter “Party G”)

Party H: KongZhong Information Technologies (Beijing) Co., Ltd. (hereinafter “Party H”)

In accordance with the relevant provisions of the General Principles of the Civil Law of the People’s Republic of China and the Contract Law of the People’s Republic of China, it is agreed as follows as a supplement to the Realty Lease Contracts with reference numbers of DC-ZW-TD-012, DC-ZW-TD-030, TD0196, DC-ZW-TD-04, DC-ZW-TD-05, DC-ZW-TD-06, DC-ZW-TD-07, DC-ZW-TD-20 and TD0131 which are signed between Party A and each of Party B, Party C, Party D, Party E, Party F, Party G, and Party H.

1. Party B, Party C, Party D, Party E, Party F, Party G, and Party H shall jointly lease from Party A rooms 01/02/03/10/11 on the 7th floor, the entire 8th floor, the 32nd floor, the 33rd floor and the 35th floor of the Tengda Plaza owned by Party A for the purpose of office use. Party A has signed Realty Lease Contracts with each of Party B, Party C, Party D, Party E, Party F, Party G, and Party H, i.e. Realty Lease Contracts No. DC-ZW-TD-012/DC-ZW-TD-030/TD0196 (under which Party B is the Lessee), Realty Lease Contract No. DC-ZW-TD-04 (under which Party C is the Lessee), Realty Lease Contract No. DC-ZW-TD-05 (under which Party D is the Lessee), Realty Lease Contract No. DC-ZW-TD-06 (under which Party E is the Lessee), Realty Lease Contract No. DC-ZW-TD-07 (under which Party F is the Lessee), Realty Lease Contract No. DC-ZW-TD-20 (under which Party G is the Lessee) and Realty Lease Contract No. TD0131 (under which Party H is the Lessee).

2. As Party B, Party C, Party D, Party E, Party F, Party G, and Party H jointly lease the office premises from Party A, Party B, Party C, Party D, Party E, Party F, Party G, and Party H shall all assume relevant obligations to Party A. After the negotiation among Party A, Party B, Party C, Party D, Party E, Party F, Party G, and Party H, it is jointly agreed as follows:

1

Joint and Several Liability Agreement

(1) if any of Party B, Party C, Party D, Party E, Party F, Party G and Party H breaches the relevant provisions under the applicable Realty Lease Contract, and such breaching party fails to correct the breach within 14 working days after the receipt of the written notification from Party A regarding such breach, Party B, Party C, Party D, Party E, Party F, Party G, and Party H shall be held liable to Party A jointly and severally and Party A has the right to claim against any or all of the parties. Party B, Party C, Party D, Party E, Party F, Party G, and Party H shall unconditionally comply with the relevant Realty Lease Contract signed between Party A and the breaching party and compensate Party A for the relevant losses;

(2) if any of Party B, Party C, Party D, Party E, Party F, Party G and Party H fails to make the relevant payment (including, without limitation, the rental and property management charges) in a timely manner according to the terms of the relevant Realty Lease Contract, or any of Party B, Party C, Party D, Party E, Party F, Party G and Party H unilaterally terminates the relevant Realty Lease Contract, any other party shall make payment to Party A regarding the rental, property management charges, and other payable expenses according to the amount and payment term of the same as provided in the Realty Lease Contract signed between Party A and the breaching party, until the lease term of any of Party B, Party C, Party D, Party E, Party F, Party G and Party H is expired. If any of Party B, Party C, Party D, Party E, Party F, Party G and Party H fails to make a payment on schedule and none of the other parties has paid the payment due in a timely manner, it shall be deemed that Party B, Party C, Party D, Party E, Party F, Party G and Party H have breached the contract, and Party A therefore has the right to terminate the Realty Lease Contracts signed with Party B, Party C, Party D, Party E, Party F, Party G and Party H and withhold the Deposits paid by Party B, Party C, Party D, Party E, Party F, Party G and Party H as liquidated damages. If such Deposits are not sufficient to compensate for Party A’s losses, Party A has the right to claim the deficiency from any and all of Party B, Party C, Party D, Party E, Party F, Party G and Party H; and

(3) during the lease term, none of Party B, Party C, Party D, Party E, Party F, Party G and Party H shall be allowed to add a lessee to jointly lease the Premises.

3. The agreement signed between Party A on the one part and Party B, Party C, Party D, Party E and Party F on the other part as of May 12, 2008 shall be automatically terminated upon the effective date of this Agreement.

4. This Agreement is a supplement to each of Realty Lease Contracts No. DC-ZW-TD-012/DC-ZW-TD-030/TD0196 (under which Party B is the Lessee), Realty Lease Contract No. DC-ZW-TD-04 (under which Party C is the Lessee), Realty Lease Contract No. DC-ZW-TD-05 (under which Party D is the Lessee), Realty Lease Contract No. DC-ZW-TD-06 (under which Party E is the Lessee), Realty Lease Contract No. DC-ZW-TD-07 (under which Party F is the Lessee), Realty Lease Contract No. DC-ZW-TD-20 (under which Party G is the Lessee) and Realty Lease Contract No. TD0131 (under which Party H is the Lessee), and shall have equal legal effect as the above nine Realty Lease Contracts. If there is any conflict between the terms of this Agreement and the terms of any of the above Realty Lease Contracts, the terms of the Agreement shall prevail.

2

Joint and Several Liability Agreement

5. This Agreement is made in sixteen original copies, of which each of Party A, Party B, Party C, Party D, Party E, Party F, Party G and Party H shall keep two and all of which shall have equal legal effect. The Agreement shall take effect on the date when all the parties have signed or sealed the same.

Party A: Beijing Gaoling Estate Development Co., Ltd.

Legal Representative or Authorized Representative: (signature)

Dated: August 28, 2008

Party B: Beijing AirInbox Information Technologies, Co., Ltd.

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

Party C: Beijing Boya Wuji Technologies Co., Ltd.

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

Party D: Beijing Wireless Interactive Network Technologies Co., Ltd.

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

3

Joint and Several Liability Agreement

- No Content, Signature Page -

Party E: Beijing Xinrui Network Technologies Co., Ltd.

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

Party F: KongZhong China

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

Party G: Beijing Chengxitong Information Technologies Co., Ltd.

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

Party H: KongZhong Information Technologies (Beijing) Co., Ltd.

Legal Representative or Authorized Representative: (seal)

Dated: August 28, 2008

4

EX-4.76

Exhibit 4.76

Capital Contribution Transfer Agreement

According to the shareholders’ meeting resolution, Hai Qi ("Transferor"), Jingye Sun and Li Ai ("Transferees") and Yang Yang (Original Shareholder) hereby enter into the following agreement:

1           Hai Qi agrees to transfer his 30% equity interests in Beijing Wireless Interactive Network Technology Co. Ltd., to Jingye Sun.

2           Jingye Sun agrees to accept from Hai Qi the 30% equity interests in Beijing Wireless Interactive Network Technology Co. Ltd.,

3           Hai Qi agrees to transfer his 30% equity interests in Beijing Wireless Interactive Network Technology Co. Ltd., to Li Ai.

4           Li Ai agrees to accept from Hai Qi the 30% equity interests in Beijing Wireless Interactive Network Technology Co. Ltd.,

5           The parties will start to go through the registration formalities for the change of shareholders of Beijing Wireless Interactive Network Technology Co. Ltd. starting from the execution date of this Agreement, the completion of the registration will be deemed as the consummation of the transfer. From the consummation date of the transfer, Transferor will not longer enjoy shareholders’ rights nor bear shareholders’ liabilities in connection with their original capital contributions, while each Transferee will enjoy shareholders’ rights and bear shareholders’ liabilities within its capital contribution.

6           Yang Yang agrees to the aforesaid transfer.

This Agreement will come into effect upon execution by the parties.

Transferor:

(Signature)/s/ Hai Qi

Transferees:

(Signature)/s/ Jingye Sun /s/ Li Ai

Original Shareholder:

(Signature)/s/ Yang Yang

Date: 2008-9-5

EX-4.78

Exhibit 4.78

AMENDMENT TO SHARE PLEDGE AGREEMENT

This AMENDING AGREEMENT (this Agreement) is entered into by and among the following parties (the parties) on September 5, 2008:

Party A: Kongzhong Information Technologies (Beijing) Co., Ltd.

Address:  35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing

Legal Representative:  Guijun Wang

Party B:  Beijing Wireless Interactive Network Technology Limited (WINT)

Address:  8F-805, Tengda plaza, No.168 Xiwai Street, Haidian District, Beijing

Legal Representative:  Yang Yang

Party C:  Yang Yang

Address:  407, No. 397 Guang An Men Wai Avenue, Xuanwu District, Beijing

Party D:  Jingye Sun

Address:  No.7 Block A, building8, Fuwai Avenue, Xicheng District, Beijing.

Party E:  Li Ai

Address:  No. 403, Unit 2, Building 7, Sanyi Xili, Xuanwu District, Beijing.

WHEREAS:

1. Party A, Party B, Party C and Hai Qi signed a Share Pledge Agreement on June 29, 2006.

2. Jingye Sun, Li Ai, Hai Qi and Yang Yang have entered into a Capital Contribution Transfer Agreement dated on September 5, 2008. Pursuant to Which: a) Hai Qi agrees to transfer to Jingye Sun, and Jingye Sun agrees to acquire from Hai Qi, 30% of Hai Qi’s equity interests in the registered capital of WINT; b) Hai Qi agrees to transfer to Li Ai, and Li Ai agrees to acquire from Hai Qi, 30% of Hai Qi’s equity interests in the registered capital of WINT (the Transfer).

3. The Parties jointly agree to the Transfer.

Now Therefore, the Parties hereby agree as follows:

1

1. Amendments to the Share Pledge Agreement

The Parties jointly agree to the substitution of Jingye Sun and Li Ai as two parties to the Share Pledge Agreement in place of Hai Qi, As a result thereof, Jingye Sun and Li Ai shall assume Hai Qi’s rights and obligations under the Share Pledge Agreement respectively.

2. Effective Date

This Agreement becomes effective on September 5, 2008.

3. Miscellaneous

(a) Except as expressly amended by this Agreement, all terms and conditions of the Share Pledge Agreement shall remain in full force and effect.

(b) From the effective date of this Agreement, the Share Pledge Agreement as amended by this Agreement shall be read as a single integrated document incorporating such amendments.

(c) This Agreement is governed by, and interpreted in accordance with, the laws of the New York State.

AS WITNESS this Agreement has been signed by the duly authorised representatives of the parties the day and year first written above.

PARTY A:   KONGZHONG INFORMATION TECHNOLOGIES (BEIJING) CO., LTD.

Authorized Representative: (seal)

PARTY B: WINT

Authorized Representative: (seal)

PARTY C:  YANG YANG

Signature: /s/ Yang Yang

PARTY D:  JINGYE SUN

Signature: /s/ Jingye Sun

PARTY E:  LI AI

Signature: /s/ Li Ai

2

EX-4.81

Exhibit 4.81

AMENDMENT TO BUSINESS OPERATIONS AGREEMENT

This AMENDING AGREEMENT (this Agreement) is entered into by and among the following parties (the parties) on September 5, 2008:

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Guijun Wang
Party B:	Beijing Wireless Interactive Network Technology Limited (WINT)
Address:	8F-805, Tengda plaza, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Yang Yang
Party C:	Yang Yang
Address:	407, No. 397 Guang An Men Wai Avenue, Xuanwu District, Beijing
Party D:	Jingye Sun
Address:	No.7 Block A, building8, Fuwai Avenue, Xicheng District, Beijing.
Party E:	Li Ai
Address:	No. 403, Unit 2, Building 7, Sanyi Xili, Xuanwu District, Beijing.

WHEREAS:

1. Party A, Party B, Party C and Hai Qi signed a Business Operations Agreement on June 29, 2006.

2. Jingye Sun, Li Ai, Hai Qi and Yang Yang have entered into a Capital Contribution Transfer Agreement dated on September 5, 2008. Pursuant to Which, a) Hai Qi agrees to transfer to Jingye Sun, and Jingye Sun agrees to acquire from Hai Qi, 30% of Hai Qi’s equity interests in the registered capital of WINT; b) Hai Qi agrees to transfer to Li Ai, and Li Ai agrees to acquire from Hai Qi, 30% of Hai Qi’s equity interests in the registered capital of WINT (the Transfer).

3. The Parties jointly agree to the Transfer.

1

Now Therefore, the Parties hereby agree as follows:

1. Amendments to the Business Operations Agreement

The Parties jointly agree to the substitution of Jingye Sun and Li Ai as two parties to the Business Operations Agreement in place of Hai Qi. As a result thereof, Jingye Sun and Li Ai shall assume Hai Qi’s rights and obligations under the Business Operations Agreement respectively.

2. Effective Date

This Agreement becomes effective on September 5, 2008.

3. Miscellaneous

(a) Except as expressly amended by this Agreement, all terms and conditions of the Business Operations Agreement shall remain in full force and effect.

(b) From the effective date of this Agreement, the Business Operations Agreement as amended by this Agreement shall be read as a single integrated document incorporating such amendments.

(c) This Agreement is governed by, and interpreted in accordance with, the laws of the New York State.

AS WITNESS this Agreement has been signed by the duly authorised representatives of the parties the day and year first written above.

PARTY A:   KONGZHONG INFORMATION TECHNOLOGIES (BEIJING) CO., LTD.

Authorized Representative: (seal)

PARTY B: WINT

Authorized Representative: (seal)

PARTY C:   YANG YANG

Signature: /s/ Yang Yang

PARTY D:   JINGYE SUN

Signature: /s/ Jingye Sun

PARTY E:   LI AI

Signature: /s/ Li Ai

2

EX-4.83

Exhibit 4.83

AMENDMENT TO OPTION AGREEMENT

This AMENDING AGREEMENT (this Agreement) is entered into by and among the following parties (the parties) on September 5, 2008:

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Guijun Wang
Party B:	Beijing Wireless Interactive Network Technology Limited (WINT)
Address:	8F-805, Tengda plaza, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Yang Yang
Party C:	Yang Yang
Address:	407, No. 397 Guang An Men Wai Avenue, Xuanwu District, Beijing
Party D:	Jingye Sun
Address:	No.7 Block A, building8, Fuwai Avenue, Xicheng District, Beijing.
Party E:	Li Ai
Address:	No. 403, Unit 2, Building 7, Sanyi Xili, Xuanwu District, Beijing.

WHEREAS:

1. Party A, Party B, Party C and Hai Qi signed an Option Agreement on June 29, 2006.

2. Jingye Sun, Li Ai, Hai Qi and Yang Yang have entered into a Capital Contribution Transfer Agreement dated on September 5, 2008. Pursuant to Which, a) Hai Qi agrees to transfer to Jingye Sun, and Jingye Sun agrees to acquire from Hai Qi, 30% of Hai Qi’s equity interests in the registered capital of WINT; b) Hai Qi agrees to transfer to Li Ai, and Li Ai agrees to acquire from Hai Qi, 30% of Hai Qi’s equity interests in the registered capital of WINT (the Transfer).

3. The Parties jointly agree to the Transfer.

Now Therefore, the Parties hereby agree as follows:

1

1. Amendments to the Option Agreement

The Parties jointly agree to the substitution of Jingye Sun and Li Ai as two parties to the Option Agreement in place of Hai Qi, As a result thereof, Jingye Sun and Li Ai shall assume Hai Qi’s rights and obligations under the Option Agreement respectively.

2. Effective Date

This Agreement becomes effective on September 5, 2008.

3. Miscellaneous

(a) Except as expressly amended by this Agreement, all terms and conditions of the Option Agreement shall remain in full force and effect.

(b) From the effective date of this Agreement, the Option Agreement as amended by this Agreement shall be read as a single integrated document incorporating such amendments.

(c) This Agreement is governed by, and interpreted in accordance with, the laws of the New York State.

AS WITNESS this Agreement has been signed by the duly authorised representatives of the parties the day and year first written above.

PARTY A: KONGZHONG INFORMATION TECHNOLOGIES (BEIJING) CO., LTD.

Authorized Representative: (seal)

PARTY B: WINT

Authorized Representative: (seal)

PARTY C:  YANG YANG

Signature: /s/ Yang Yang

PARTY D:  JINGYE SUN

Signature: /s/ Jingye Sun

PARTY E:  LI AI

Signature: /s/ Li Ai

2

EX-4.84

Exhibit 4.84

Capital Contribution Transfer Agreement

According to the shareholders’ meeting resolution of Shanghai Mailifang Communications Ltd.(“Mailifang”), Shaoying Zhang and Yanli You ("Transferor"), Xu Guo and Yang Yang ("Transferee") hereby enter into the following agreement:

1      Shaoying Zhang agrees to transfer her 55% equity interests in Mailifang to Xu Guo.

2      Xu Guo agrees to accept from Shaoying Zhang the 55% equity interests in Mailifang.

3      Yanli You agrees to transfer her 35% equity interests in Mailifang to Xu Guo.

4      Xu Guo agrees to accept from Yanli You the 35% equity interests in Mailifang.

5      Yanli You agrees to transfer her 10% equity interests in Mailifang to Yang Yang.

6      Yang Yang agrees to accept from Yanli You the 10% equity interests in Mailifang.

7      Upon the closing of this capital contribution transfer agreement, Xu Guo holds 90% and Yang Yang holds 10% of the total equity interest of Mailifang.

8      The parties will start to go through the registration formalities for the change of shareholders of Mailifang starting from the execution date of this Agreement, the completion of the registration will be deemed as the consummation of the transfer. From the consummation date of the transfer, Transferor will not longer enjoy shareholders’ rights nor bear shareholders’ liabilities in connection with their original capital contributions, while Transferee will enjoy shareholders’ rights and bear shareholders’ liabilities within its capital contribution.

This Agreement will come into effect upon execution by the parties.

Transferor:

(Signature) /s/ Shaoying Zhang /s/ Yanli You

Transferee:

(Signature) /s/ Xu Guo /s/ Yang Yang

Date: 2009-3-27

EX-4.85

Exhibit 4.85

Option Agreement

THIS OPTION AGREEMENT(this “Agreement”) is entered into by and among the following parties (the “Parties”) in Beijing, People’s Republic of China (“PRC”) on April 1, 2009.

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Guijun Wang
Party B:	Xu Guo
Party C:	Yang Yang
Party D:	Shanghai Mailifang Communications Ltd.
Address:	Room 112, No. 258, Guichang Road, Pudong New District, Shanghai.

WHEREAS

1. Party A is a wholly foreign-owned enterprise registered in the PRC.

2. Party D is a limited liability company registered in the PRC and licensed by relevant government authorities to hold a Telecommunications Value-added Service Operation Permit, which qualifies it to engage in telecommunications value-added service.

3. Party B and Party C (the “Authorizing Parties” or the “Shareholders of Party D”) are the shareholders of Party D and own 90% and 10% equity interest in Party D respectively. Party B and Party C have signed Capital Contribution Transfer Agreements with the original shareholders of Party D who transferred their respective equity interest in Party D on 27 March 2009. The amount for the transfer of equity interest was paid by Party A.

4. THE PARTIES THEREFORE AGREE AS FOLLOWS:

1. GRANT OF THE OPTION

1.1 Grant

The authorizing Parties hereby grant to Party A an option to purchase all their respective equity interests in Party D at the lower price between the lowest price permitted by PRC laws or the audited net asset value of Party D once or several times by Party A or its designated third party.

1.2 Term

This Agreement shall take effect as of the date of execution by the parties hereto and shall remain in full force and effect until all of the equity interests held by the Shareholders of Party D in Party D have been purchased by Party A with the permission of PRC laws.

2. EXERCISE OF THE OPTION AND ITS CLOSING

2.1 Timing of Exercise  

2.1.1 The Authorizing Parties agree unanimously that with the permission of PRC laws and regulations, Party A may exercise part or full option anytime during the term of this Agreement.

2.1.2 The Authorizing Parties agree unanimously that there is no limitation on the times for Party A to exercise its option, unless Party A has purchased all of the equity interests in Party D.

2.1.3 The Authorizing Parties agree unanimously that Party A may designate in its sole discretion any third party to exercise the options on its behalf, in which case Party A shall provide a prior written notice to the Authorizing Parties.

2.2 Presentation of the amount for the options

The Authorizing Parties agree unanimously that Party A will present all the amount by exercising the options by Party A or its designated third party to Party D free of charge.

2.3 Transfer

The Authorizing Parties agree unanimously that the options of Party A under this Agreement may be transferred to a third party, which shall be deemed as a party to this Agreement and is entitled to exercise the options under terms of this Agreement, to enjoy the rights assume the obligations of Party A under this Agreement.

2.4 Notice Requirement

To exercise an Option, Party A shall send an written notice to the Authorizing Parties of such Option is to be exercised 10 days prior to each closing date (as defined below), specifying the following:

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2.4.1 The date of the effective closing of such purchase (a  “Closing Date”), that is, the date when formally filing an application for registration of equity interests change with the commercial and industrial administrative authorities;

2.4.2 The name of the person in which the Equity Interests shall be registered;

2.4.3 The amount of Equity Interests to be purchased from such Authorizing Parties;

2.4.4 Means of payment; and

2.4.5 A power of attorney (applicable if a third party has been designated to exercise the Option)

The Authorizing Parties agree unanimously that Party A is entitled to exercise the Options and elect to register the Equity Interests in the name of a third party as it may designates from time to time. The Authorizing Parties agree that as long as Party A or its designated third Party forward the request to exercise the options, the Authorizing Parties shall execute the equity interests transfer agreement and other relevant documents in accordance with the notice and this Agreement within 10 work days upon receipt such notice.

2.5 Closing

On each Closing Date, Party A shall pay to the relevant Authorizing Parties the applicable purchase price for the Equity Interests to be purchased on such Closing Date as provided in Article 1 above. Party A and the Authorizing Parties shall provide necessary assistance to Party D with respect to the processing the registration for change of equity interests with the commercial and industrial administrative authorities.

3. REPRESENTATIONS AND WARRANTIES

3.1 The Authorizing Parties hereby present and warrant as follows:

3.1.1 They have the full power and authority to enter into and perform this Agreement;

3.1.2 The fulfilling of the obligations hereunder does not violate any applicable laws, regulations and contracts, or require any government authorization or approval;

3.1.3 There is no lawsuit, arbitration or other legal or administrative procedures pending which, based on its knowledge, will possibly have material and adverse affects on the performance of this Agreement;

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3.1.4 The Authorizing Parties will not set pledge, debt or other third party rights on the equity interests in Party D and will not dispose the same to any third party by transferring, presenting, pledging or any other means.

3.1.5 There is no any pledge, debt or other third party right on the equity interests in Party D held by the Authorizing Parties.

3.1.6 The options granted to Party A are exclusive, and the Authorizing Parties shall not grant options or similar right to other parties in any ways.

3.2 Undertaking

Considering that Party A or its designated third party will present all the amounts gained from exercising the options to Party D, Party D hereby undertakes to Party A that it will bear all costs arising from executing each Assignment, process all formalities needed for Party A or its designated third party to be the shareholders of Party D, the Ancillary Documents and any other relevant documents required therefore, and will complete all such formalities as are necessary to make Party A or its designated party a full and proper shareholder of Party D. Such formalities include, but are not limited to, assisting Party A with the obtaining of necessary approvals of the equity transfer from relevant government authorities (if any), the submission of the Assignment to the relevant administrative department of industry and commerce for the purpose of amending the Articles of Association, changing the list of shareholders and undertaking any other changes.

4. TAXES

All taxes arising from the performance of this Agreement will be paid by Party D.

5. BREACH OF AGREEMENT

5.1 Unless otherwise provided by this Agreement, a party is deemed as in breach of this Agreement if it fails to fully perform or suspends performing its obligations under this Agreement, and does not correct its wrongdoings within 30 days upon receipt of the notice by the other party, or its representations and warranties are unreal.

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5.2 If one party violates this Agreement of its representations and warranties in this Agreement, the abiding party may notify the default party in writing requesting it to correct its wrongdoings within 10 days of receiving the notice, take corresponding measures to effectively and timely avoid the damages and to resume performing this Agreement. If there are damages, the default party shall compensate the abiding party, causing the abiding party to obtain all receivable rights and interests from the performance of the Agreement.

5.3 If either party breaches this Agreement, which causes the other party to bear any expenses, liabilities or suffer any losses (including not limited to the profit losses of the company), the default party shall compensate the abiding party with respect to such expenses, liabilities or losses (including but not limited to the interests lost or paid due to the breach and attorney fees). The amount of the compensation shall equal the losses due to the breach. The compensation includes the receivable interests by the abiding party from performance of this Agreement, but shall not exceed reasonable expectations of the Parties.

5.4 In case all Parties breach this Agreement, the amounts of compensation shall be determined in accordance with the severity of their respective breaches.

6. GOVERNING LAW AND DISPUTE SETTLEMENT

6.1 Governing Laws

This Agreement shall be governed by the laws of the PRC, including but not limited to the execution, performance, effect and interpretation of this Agreement.

6.2 Friendly Consultation

The Parties shall settle the dispute regarding the interpretation or performance of this Agreement through friendly consultation or mediation by a third party. Any dispute that failing such consultation or mediation shall be submitted to the arbitration authority for arbitration within 30 days after the commencement of such discussions.

6.3 Arbitration

Any dispute in connection with this Agreement shall be submitted to China International Trade Arbitration Committee for arbitration in accordance with its arbitration rules. The arbitration award shall be final and binding on all Parties to this Agreement.

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7 CONFIDENTIALITY

7.1 Confidential Information

The contents of this Agreement and the Annexes hereof shall be kept confidential. No Party shall disclose any such information to any third party (except for the part agreed upon by the Parties with a prior written agreement).  Each Party’s obligations under this clause shall survive after the termination of this Agreement.

7.2 Exceptions

If a disclosure is explicitly required by law, any courts, arbitration tribunals, or administrative authorities, such a disclosure by any Party shall not be deemed a violation of Article 7.1 above.

8. MISCELLANEOUS

8.1 Entire agreement

This Agreement constitutes the entire agreement and understanding among the Parties in respect of the subject matter hereof and supersedes all prior discussions, negotiations and agreements among them.

8.2 This Agreement shall only be amended by a written instrument signed by all the Parties.

8.3 Notices

8.3.1  Any notices or other correspondences among the Parties in connection with the Performance of this Agreement shall be  in writing and be delivered in person, by registered mail, prepaid mail, recognized express mail or facsimile to the following correspondence addresses:

Party A: Kongzhong Information Technologies (Beijing) Co., Ltd.

Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang

Party B: Xu Guo and Party C: Yang Yang

Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang

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Party D: Shanghai Mailifang Communications Ltd.

Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang

8.3.2 Notices and correspondences shall be deemed to have been effectively delivered:

8.3.2.1 At the exact time displayed in the corresponding transmission record, if delivered by facsimile, unless such facsimile is sent after 5:00 pm or on a non-business day in the place where it is received, in which case the date of receipt shall be deemed to be the following business day;

8.3.2.2 On the date that the receiving Party signs for the document, if delivered in person (including express mail);

8.3.2.3 On the fifteenth (15th) day after the date shown on the registered mail receipt, if sent by registered mail;

8.4 Binding Force

This Agreement shall be binding on the Parties.

8.5 Language and Counterparts

This Agreement shall be executed in 5 originals in Chinese, with each party holding one copy.

8.6 Days and Business Day

A reference to a day herein is to a calendar day. A reference to a business day herein is to any day from Monday through Friday in a week.

8.7 Headings

The headings contained herein are inserted for reference purposes only and shall not affect the meaning or interpretation of any part of this Agreement.

8.8 Unspecified Matters  

Any matter not specified in this Agreement shall be handled through discussions among the Parties and resolved in accordance with PRC laws.

Party A: Kongzhong Information Technologies (Beijing) Co., Ltd.

Authorized Representative: (seal)

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Party B: Xu Guo

Signature: /s/ Xu Guo

Party C: Yang Yang

Signature: /s/ Yang Yang

Party D: Shanghai Mailifang Communications Ltd.

Authorized Representative: (seal).

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EX-4.86

Exhibit 4.86

EXCLUSIVE TECHNICAL AND CONSULTING SERVICES AGREEMENT

This Exclusive Technical Consulting and Services Agreement (the "Agreement") is entered into in Beijing as of April 1, 2009 between the following two parties.

PARTY A: KONGZHONG INFORMATION TECHNOLOGIES (BEIJING) CO., LTD.

PARTY B: SHANGHAI MAILIFANG COMMUNICATIONS LTD.

WHEREAS,

1. Party A ,a wholly foreign−owned enterprise registered in People's Republic of China (the "PRC", excluding Hong Kong Special Administration District, Macao Special Administration District and Taiwan area, for the purpose of this "Agreement" ) under the laws of PRC.

2. Party B, a wholly domestic invested company registered in PRC, is licensed by relevant government authorities to engage in the business of the Internet information provision service and value−added telecommunication service;

3. Party A agrees to be the provider of technical and consulting services to Party B, and Party B hereby agrees to accept such technical and consulting services.

WHEREAS, Party A and Party B, through friendly negotiation and based on the equality and mutual benefit, enter into the Agreement as follows:

1. TECHNICAL CONSULTING AND SERVICES; OWNERSHIP AND EXCLUSIVE INTERESTS

1.1 During the term of this Agreement, Party A agrees to provide the relevant technical consulting and services to Party B (the content is specified in Appendix 1) in accordance with the Agreement.

1.2 Party B hereby agrees to accept such technical and consulting services. Party B further agrees that, during the term of this Agreement, it shall not utilize any third party to provide such technical and consulting services for such above−mentioned business without the prior written consent of Party A.

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1.3 Party A shall be the sole and exclusive owner of all rights, title, interests and intellectual property rights arising from the performance of this Agreement, including, (but not limited to, any copyrights, patent, know−how, commercial secrets and otherwise), whether developed by Party A or Party B based on Party A's intellectual property.

1.4 Party B covenant that Party A have the priority on cooperation with Party B in the same condition in case Party B is going to cooperate with other enterprises in respect of any business.

2. CALCULATION AND PAYMENT OF THE FEE FOR TECHNICAL AND CONSULTING SERVICES (THE "FEE")

Party A and Party B agree that the fee under this agreement shall becalculated monthly, based on a certain percentage of the revenues of Mailifang for such month. Aforesaid percentage will be determined and paid according to Appendix 2 which shall be further negotiated.

3. REPRESENTATIONS AND WARRANTIES

3.1 Party A hereby represents and warrants as follows:

3.1.1 Party A is a company duly registered and validly existing under the laws of the PRC;

3.1.2 Party A has full right, power, authority and capacity and all consents and approvals of any other third party and government necessary to execute and perform this Agreement, which shall not be against any enforceable and effective laws or contracts;

3.1.3 The Agreement will constitute a legal, valid and binding agreement of Party A enforceable against it in accordance with its terms upon its execution.

3.2 Party B hereby represents and warrants as follows:

3.2.1 Party B is a company duly registered and validly existing under the laws of the PRC and is licensed to engage in the business of Internet information provision services and value−added telecommunication services.

3.2.2 Party B has full right, power, authority and capacity and all consents and approvals of any other third party and government necessary to execute and perform this Agreement, which shall not be against any enforceable and effective laws or contracts.

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3.2.3 Once the Agreement has been duly executed by both parties, it will constitute a legal, valid and binding agreement of Party B enforceable against it in accordance with its terms upon its execution.

4. CONFIDENTIALITY

4.1 Party B agrees to use all reasonable means to protect and maintain the confidentiality of Party A's confidential data and information acknowledged or received by Party B by accepting the exclusive consulting and services from Party A (collectively the "Confidential Information"). Party B shall not disclose or transfer any Confidential Information to any third party without Party A's prior written consent. Upon termination or expiration of this Agreement, Party B shall, at Party A's option, return all and any documents, information or software contained any of such Confidential Information to Party A or destroy it, delete all of such Confidential Information from any memory devices, and cease to use them. Party B shall take necessary measures to keep the Confidential Information to the employees, agents or professional consultants of Party B who are necessary to get to know such Information and procure them to observe the confidential obligations hereunder.

4.2 The limitation stipulated in Section 4.1 shall not apply to:

4.2.1 The materials available to the public at the time of disclosure;

4.2.2 The materials that become available to the public after the disclosure without fault of Party B;

4.2.3 The materials Party B prove to have got the control neither directly nor indirectly from any other party before the disclosure;

4.2.4 The information that each Party is required by law to disclose to relevant government authorities, stock exchange institute, or that is necessary to disclose the above confidential information directly to the legal counselor and financial consultant in order to keep its usual business.

4.3 Both Parties agree that this article shall survive the modification, elimination or termination of this Agreement.

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5. INDEMNITY

Party B shall indemnify and hold harmless Party A from and against any loss, damage, obligation and cost arising out of any litigation, claim or other legal procedure against Party A resulting from the contents of the technical consulting and services demanded by Party B.

6. EFFECTIVE DATE AND TERM

6.1 This Agreement shall be executed and come into effect as of the date first set forth above. The term of this Agreement is ten (10) years, unless earlier terminated as set forth in this Agreement or in accordance with the terms set forth in the agreement entered into by both parties separately.

6.2 This Agreement may be automatically extended for another ten years except Party A gives its written consent of the termination of this Agreement three months before the expiration of this Agreement.

7. TERMINATION

7.1 This Agreement shall expire on the date due unless this Agreement is extended as set forth in the relevant terms hereunder.

7.2 During the term of this Agreement, Party B can not terminate this Agreement before the schedule time. Notwithstanding the above−mentioned, Party A may terminate this Agreement at any time with a written notice to Party B 30 days before such termination. If Party A terminate the Agreement in advance duo to Party B's reason, Party B shall take the liability to compensate all the losses caused thereby to Party A and shall pay the relevant fees for the services provided.

7.3 Article 4 and 5 shall survive after the termination or expiration of this Agreement.

8. SETTLEMENT OF DISPUTES

8.1 The parties shall strive to settle any dispute arising from the interpretation or performance in connection with this Agreement through friendly consultation. In case no settlement can be reached through consultation, each party can submit such matter to China International Economic and Trade Arbitration Commission (the "CIETAC"). The arbitration shall follow the current rules of CIETAC, and the arbitration proceedings shall be conducted in Chinese and shall take place in Beijing. Thearbitration award shall be final and binding upon Both Parties. This article shall not be influenced by the termination or elimination of this Agreement.

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8.2 Each Party shall continue to perform its obligations in good faith according to the provisions of this Agreement except for the matters in dispute.

9. FORCE MAJEURE

9.1 Force Majeure, which includes but is not limited to, acts of governments, acts of nature, fire, explosion, typhoon, flood, earthquake, tide, lightning, war, means any event that is beyond the party's reasonable control and cannot be prevented with reasonable care. However, any shortage of credit, capital or finance shall not be regarded as an event of Force Majeure. The affected party who is claiming to be not liable to its failure of fulfilling this Agreement by Force Majeure shall inform the other party, without delay, of the approaches of the performance of this Agreement by the affected party.

9.2 In the event that the affected party is delayed in or prevented from performing its obligations under this Agreement by Force Majeure, only within the scope of such delay or prevention, the affected party will not be responsible for any damage by reason of such a failure or delay of performance. The affected party shall take appropriate means to minimize or remove the effects of Force Majeure and attempt to resume performance of the obligations delayed or prevented by the event of Force Majeure. After the event of Force Majeure is removed, both parties agree to resume performance of this Agreement with their best efforts.

10. NOTICES

Notices or other communications required to be given by any party pursuant to this Agreement shall be written in English and Chinese and shall be deemed to be duly given when it is delivered personally or sent by registered or mail or postage prepaid mail or by a recognized courier service or by facsimile transmission to the address of the relevant party or parties set forth below.

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Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing
Fax:	+86 01 88575872
Tele:	+86 01 88576000
Addressee:	Leilei Wang
Party B:	Shanghai Mailifang Communications Ltd.
Address:	Room 112, No. 258, Guichang Road, Pudong New District, Shanghai

11. ASSIGNMENT

Party B shall not assign its rights or obligations under this Agreement to any third party without the prior written consent of Party A. Party A shall transfer its rights or obligations under this Agreement to any third party without the consent of Party B, but shall inform Party B of the above assignment.

12. SEVERABILITY

Any provision of this Agreement that is invalid or unenforceable because of any inconsistency with relevant law shall be ineffective or unenforceable within such jurisdiction where the relevant law governs, without affecting in any way the remaining provisions hereof.

13. AMENDMENT AND SUPPLEMENT

Any amendment and supplement of this Agreement shall come into force only after a written agreement is signed by both parties. The amendment and supplement duly executed by both parties shall be part of this Agreement and shall have the same legal effect as this Agreement.

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14. GOVERNING LAW

The execution, validity, performance and interpretation of this Agreement shall be governed by and construed in accordance with the laws of PRC.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed on their behalf by a duly authorized representative as of the Effective Date first written above.

PARTY A: Kongzhong Information Technologies (Beijing) Co., Ltd.

Authorized Representative: (seal)

PARTY B: SHANGHAI MAILIFANG COMMUNICATIONS LTD.

Authorized Representative: (seal)

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APPENDIX 1: THE LIST OF TECHNICAL AND CONSULTING SERVICES

Party A shall provide technical and consulting services as follows:

1. maintenances of the machine room and website;

2. provision and maintenances of the office network;

3. integrated security services for the website;

4. design and implementation of the integrated structure of the network of the website, including the installation of the server system and 24 hours' daily maintenances each week.

5. development and test of new products;

6. marketing plan of new products;

7. conception, creation, design, update and maintenance of the web pages;

8. maintenance of the clients service platform;

9. training of the employees;

10. study and analysis on market;

11. public relationship service

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EX-4.87

Exhibit 4.87

Share Pledge Agreement

This Share Pledge Agreement (this “Agreement”) is entered into on April 1, 2009 in Beijing by and among the following parties:

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Guijun Wang
Party B:	Shanghai Mailifang Communications Ltd.
Address:	Room 112, No. 258, Guichang Road, Pudong New District, Shanghai.
Party C:	Xu Guo
Party D:	Yang Yang

WHEREAS,

1. Party A is a wholly foreign owned company registered in the PRC.

2. Party B is a limited company registered in China and licensed by relevant government authorities to hold a Telecommunications Value-added Service Operation Permit, which qualifies it to engage in telecommunications value-added service.

3. Party C and Party D (the “Pledgor”) are the shareholders of Party B and own 90% and 10% equity interest in Party B respectively. Party C and Party D have signed Capital Contribution Transfer Agreements with the original shareholders of Party B who transferred their respective equity interest in Party B. The amount for the transfer of equity interest was paid by Party A.

4. All parties to this Agreement have signed Business Operation Agreement and Option Agreement respectively on April 1, 2009.

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5. Party A and Party B have signed Exclusive Technical Consultation and Service Agreement on March 27, 2009.

6. In order to guarantee that Party A collects normally technical service fees under the Exclusive Technical Consulting and Services Agreement, and to ensure the performance of Business Operation Agreement and Option Agreement, the Pledgors are willing to severally and jointly pledge all their equity interest in Party B to the Pledgee as a security for the performance of the obligations under the aforesaid agreement, with Party A as the Pledgee.

Therefore, through friendly negotiations and in the principles of equality and mutual benefit, the parties hereby enter agreement as follows.

1.  Definitions

Unless otherwise provided in this Agreement, the following terms shall have the following meanings:

1.1 Pledge means the full content of Article 2 hereunder.

1.2 Equity Interest means 100% equity interests in Party B legally and jointly held by the Pledgors and all the present and future rights and benefits based on such equity interest.

1.3 Reorganization Agreements mean Exclusive Technical Consultation and Service Agreement signed by the parties on April 1, 2009, Business Operation Agreement and Option Agreement signed by the parties respectively on April 1, 2009.

1.4 Event of Default means any event in accordance with Article 7 hereunder.

1.5 Notice of Default means the notice of default issued by the Pledgee in accordance with this Agreement.

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2.  Pledge

2.1 The Pledgors agree to pledge all the equity interest in Party B to Party A as the security for Party A’s rights and interest under the reorganization agreements.

2.2 The Pledge under this Agreement refers to the rights owned by the Pledgee to collect the fees (including legal fees), expenses and losses that Party B shall pay under the Technical Consulting and Service Agreement, and civil liabilities that Party B or Pledgors shall bear in case theReorganization Agreement wholly or partially becomes nullify due to any reason.

2.3 The Pledge under this Agreement refers to the prior right owned by the Pledgee to the money gained from the conversion, auction, or sell of the equity interests pledged by the Pledgor to the Pledgee.

2.4 The pledge under this Agreement will be discharged only when Party B and Pledgors have performed all the obligations and liabilities under the Reorganization Agreement and Party A confirms in writing. If Party B or Pledgors have not fully performed all or part of its obligations or liabilities under the Reorganization Agreement at the expiration of such agreements, Party A will maintain the pledge hereunder up to the date when all such obligations and liabilities are fully performed.

3.  Effect

3.1 This Agreement shall take effect as of the date when the equity shares pledged are recorded in the Register of Shareholder of Party B.

3.2 Party A is entitled to dispose the pledge hereunder if Party B fails to pay the fees in accordance with the Technical Consulting and Service Agreement or fail to perform the Business Operation Agreement and the Option Agreement.

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4.  Physical Possession Of Documents

5.1 During the term of Pledge under this Agreement, the Pledgor shall deliver the physical possession of the Certificate of Distribution (original) of Party B and provide the testify of the proper record of such pledge on the shareholders’ register of Party B to Party A within one week as of the date of conclusion of this Agreement.

5.2 The Pledgor shall be entitled to collect the incomes (such as, including but not limited to, any dividends and profits) from the equity interests, which shall become the assurance for the debt of Beijing AirInbox Information Technologies Limited, within the term of this Agreement, unless consented otherwise in writing by Party A.

5.  Warranties And Representation Of The Pledgor

The Pledgors hereby make the following representation and warranties to the Pledgee and confirm that Party A executes this Agreement in reliance of such representation and warranties:

5.1 The Pledgors lawfully own the equity interests hereunder and are entitled to create pledge on such the equity interests;

5.2 Party A shall not be interfered by any other parties once the Party A exercises the rights of the Pledge in accordance with this Agreement.

5.3 Party A is entitled to dispose the pledge in accordance with relevant laws and this Agreement.

5.4 The execution and performance of this Agreement of the Pledgor has gained all necessary authorization and shall not violate any applicable laws and regulations. The representative who signs this Agreement shall be lawfully and effectively authorized.

5.5 Except for the pledge under this Agreement, there is no other burden of rights on the equity interests pledged by the Pledgors (including but not limited to pledge).

5.6 There is no pending or incoming civil, administrative or criminal litigation or administrative punishment or arbitration relating to the equity interests hereunder at the date of execution of this Agreement.

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5.7 There are no outstanding taxes, fees or undecided legal procedures related with the equity interests hereunder at the date of execution of this Agreement.

5.8 Each provision hereunder is the expression of each Party’s true meaning and shall be binding upon all the Parties.

6.  Covenant Of The Pledgor

6.1  During the term of this Agreement, the Pledgor covenants to Party A that the Pledgor will:

6.1.1 not transfer or assign the equity interests, create or permit to create any pledges which may have an adverse effect on the rights or benefits of the Pledgee without prior written consent from the Pledgee except transfer to the Pledgee or the person designated by the Pledgee as required by the Pledgee;

6.1.2 comply with and implement laws and regulations with respect to the pledge of rights, present to Party A the notices, orders or suggestions with respect to the Pledge issued or made by the competent authority within five days upon receiving such notices, orders or suggestions and take actions in accordance with the reasonable instruction of Party A;

6.1.3 timely notify Party A of any events or any received notices which may affect the Pledgor’s equity interest or any part of its right, and any events or any received notices which may change the Pledgor’s any covenant and obligation under this Agreement or which may affect the Pledgor’s performance of its obligations under this Agreement, take actions in accordance with the instructions of Party A;

6.2 The Pledgors agree that Party A’s right of exercising the Pledge pursuant to this Agreement shall not be suspended or hampered by the Pledgors or any successors or transferees of the Pledgors or any other persons.

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6.3 The Pledgors warrant to Party A that in order to protect or perfect the security over the payment of the technical consulting and service fees under the Technical Consulting and Service Agreement, the Pledgors shall execute in good faith and cause other parties who have interests in the pledge to execute all the title certificates, contracts, and /or perform and cause other parties who have interests to take action as required by the Pledgee and make access to exercise the rights and authorization vested in the Pledgee under this Agreement, and execute all the documents with respect to the changes of certificate of equity interests with the Pledgee or another party designated by the Pledgee, and provides the Pledgee with all the documents regarded as necessary to the Pledgee within the reasonable time.

6.4 The Pledgors warrants to Party A that the Pledgors will comply with and perform all the guarantees, covenants, agreements, representations and conditions for the benefits of the Pledgee. The Pledgor shall compensate for all the losses suffered by Party A for the reasons that the Pledgor does not perform or fully perform their guarantees, covenants, agreements, representations and conditions.

7.  Event Of Default

7.1  The following events shall be regarded as an event of default:

7.1.1 Party B or its successors or transferees fail to make full payment of service fees under the Service Agreement on time, or the Pledgors or its successors or transferees fail to perform the Business Operation Agreement and the Option Agreement.;

7.1.2 The Pledgors make any material misleading or fraudulent representations or warranties under Article 5 and 6 herein, and/or the Pledgor is in violation of any representations or warranties under Article 5 and 6 herein;

7.1.3 The Pledgors gravely violate any provisions of this Agreement;

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7.1.4 The Pledgors waive the pledged equity interests or transfers the pledged equity interests without prior written consent from the Pledgee except otherwise agreed under Article 6.1.1 herein;

7.1.5 The Pledgor’s any external loan, security, compensation, covenants or any other compensation liabilities (1) are required to be repaid or performed prior to the scheduled date; or (2) are due but can not be repaid or performed as scheduled and thereby cause the Pledgee to deem that the Pledgor’s capacity to perform the obligations herein is affected;

7.1.6 The Pledgors are incapable of repaying the general debt or other debt, which subsequently affects the interests of Party A;

7.1.7 This Agreement is illegal for the reason of the promulgation of any related laws or the Pledgor's incapability of continuing to perform the obligations herein;

7.1.8 Any approval, permits, licenses or authorization from the competent authority of the government needed to perform this Agreement or validate this Agreement are withdrawn, suspended, invalidated or materially amended;

7.1.9 The property of the Pledgor is adversely changed and causes Party A to deem that the capability of the Pledgor to perform the obligations herein is affected;

7.1.10 Other circumstances whereby the Pledgee is incapable of exercising the right to dispose the Pledge in accordance with relevant laws.

7.2 The Pledgor shall immediately give a written notice to Party A if the Pledgor is aware of or find that any event under Article 7.1 herein or any events that may result in the foregoing events have happened or are going on.

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7.3 Unless the event of default under Article 7.1 herein has been solved to Party A's satisfaction, Party A, at any time when the event of default happens or thereafter, may give a written notice of default to the Pledgor and require the Pledgor to immediately make full payment of the outstanding fees under the Service Agreement, and other payables or timely perform the Business Operation Agreement or the Option Agreement, or dispose the Pledge in accordance with Article 8 herein.

8.  Exercise Of The Right Of The Pledge

8.1 The Pledgor shall not transfer the pledge without prior written approval from Party A prior to the full repayment of the fees under the Service Agreement and the full performance of the Business Operation Agreement or the Option Agreement.

8.2 Party A shall give a notice of default to the Pledgors when it exercises the right of pledge.

8.3 Subject to Article 7.3, the Pledgee may exercise the right to dispose the Pledge at any time when Party A gives a notice of default in accordance with Article 7.3 or thereafter.

8.4 Party A is entitled to have priority in receiving payment by the evaluation or proceeds from the auction or sale of whole or part of the share pledged herein in accordance with legal procedure until the outstanding fees under the Servicing Agreement and all other payables there under are repaid, and the full performance of the Business Operation Agreement or the Option Agreement.

8.5 The Pledgors shall not hinder the Pledgee from disposing the Pledge in accordance with this Agreement and shall give necessary assistance so that the Pledgee could realize his Pledge.

9.  Transfer

9.1 The Pledgors shall not transfer the rights and obligations to any third party herein without prior consent from the Pledgee.

9.2 This Agreement shall be binding upon the Pledgors and their successors and be effective to Party A and his successors and assignees.

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9.3 Party A may transfer his all or any rights and obligations under the Reorganization Agreement to any third party at any time. In this case, the assignee shall enjoy and undertake the same rights and obligations herein of Party A as if the assignee is a party hereto. When Party A transfers the rights and obligations under the Reorganization Agreement, at the request of Party A, the Pledgors shall execute relevant agreements and/or documents with respect to such transfer.

9.4 After the Pledgee’s change resulting from the transfer, the new parties to the pledge shall reexecute a pledge agreement.

10.  Fees And Other Charges

The Pledgor shall be responsible for all the fees and actual expenditures in relation to this Agreement including but not limited to legal fees, cost of production, stamp tax and any other taxes and charges.

11.  Force Majeure

11.1 If this Agreement is delayed in or prevented from performing in the Event of Force Majeure (“Event of Force Majeure”), only within the limitation of such delay or prevention, the affected party is absolved from any liability under this Agreement. Force Majeure, which includes acts of governments, acts of nature, fire, explosion, geographic change, flood, earthquake, tide, lightning, war, means any unforeseen events beyond the prevented party’s reasonable control and cannot be prevented with reasonable care. However, any shortage of credit, capital or finance shall not be regarded as an eventbeyond a Party’s reasonable control.  The Party affected by Force Majeure who claims for exemption from performing any obligations under this Agreement or under any Article herein shall notify the other party of such exemption promptly and advice him of the steps to be taken for completion of the performance.

11.2 The Pledge affected by Force Majeure shall not assume any liability under this Agreement. However, subject to the Party affected by Force Majeure having taken its reasonable and practicable efforts to perform this Agreement, the Party claiming for exemption of the liabilities may only be exempted from performing such liability as within limitation of the part performance delayed or prevented by Force Majeure. Once causes for such exemption of liabilities are rectified and remedied, both parties agree to resume performance of this Agreement with their best efforts.

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12.  Applicable Law and Dispute Resolution

12.1 The execution, validity, performance and interpretation of this Agreement shall be governed by and construed in accordance with the PRC law.

12.2 The parties shall strive to settle any dispute arising from the interpretation or performance through friendly consultation. In case no settlement can be reached through consultation, each party can submit such matter to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration. The arbitration shall follow the current rules of CIETAC, and the arbitration proceedings shall be conducted in Chinese and shall take place in Beijing. The arbitration award shall be final and binding upon the parties.

12.3 Each Party shall continue performance of this Agreement in good faith according to the stipulations herein except the matters in dispute.

13.  Notice

Any notice or correspondence, which is given by the Party as stipulated hereunder, shall be in Chinese and English writing and shall be delivered in person or by registered or prepaid mail or recognized express service, or be transmitted by telex or facsimile to the following addresses:

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang

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Party B:	Shanghai Mailifang Communications Ltd.
Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang
Party C: Xu Guo and Party D:Yang Yang
Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang

14.  Appendices

The appendices to this Agreement are entire and integral part of this Agreement.

15.  Waiver

The Pledgee’s non-exercise or delay in exercise of any rights, remedies, power or privileges hereunder shall not be deemed as the waiver of such rights, remedies, power or privileges. Any single or partial exercise of the rights, remedies, power and privileges shall not exclude the Pledgee from exercising any other rights, remedies, power and privileges. The rights, remedies, power and privileges hereunder are accumulative and shall not exclude the application of any other rights, remedies, power and privileges stipulated by laws.

16.  Miscellaneous

16.1 Any amendments, modifications or supplements to this Agreement shall be in writing and come into effect upon being executed and sealed by the parties hereto.

16.2 In case any terms and stipulations in this Agreement is regarded as illegal or can not be performed in accordance with the applicable law, such terms and stipulations shall be deemed to lose effect and enforcement within the scope governed by the applicable law, and the rest stipulations will remain effective.

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16.3 This Agreement and all the agreements and/or documents referenced or specifically included herein constitute the entire agreement among the Parties in respect of the subject matter hereof and supersede all prior oral or written agreements, contract, understanding and correspondence among them, including the equity pledge agreement among the Party A, Paryt B, Party C, Guijun Wang and Linguang Wu dated April 1, 2009.

16.1 This Agreement shall be kept in 5 copies.

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Party A: Kongzhong Information Technologies (Beijing) Co., Ltd.

Authorized Representative: (seal)

Party B: Shanghai Mailifang Communications Ltd.

Authorized Representative: (seal)

Party C: Xu Guo

Signature: /s/ Xu Guo

Party D: Yang Yang

Signature: /s/ Yang Yang

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EX-4.88

Exhibit 4.88

Business Operations Agreement

This Business Operations Agreement (this “Agreement”) is entered into on the day of April 1, 2009, in Beijing by and among the following parties:

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35F, Tengda Plaze, No.168 Xiwai Street, Haidian District, Beijing
Legal Representative:	Guijun Wang
Party B:	Shanghai Mailifang Communications Ltd.
Address:	Room 112, No. 258, Guichang Road, Pudong New District, Shanghai.
Party C:	Xu Guo
Party D:	Yang Yang

WHEREAS:

1. Party A is a wholly foreign-owned enterprise registered in the PRC;

2. Party B, a wholly domestic-owned company registered in the PRC, is approved by relevant government authorities to engage in the value-added telecommunications service;

3. A business relationship has been established between Party A and Party B by entering into Exclusive Technical Consulting and Services Agreement, under which Party B shall pay all incomes from main business operations to Party A, and subsequently the daily operation of Party B will have a material impact on its payment capacity to Party A;

4. Party C and party D are all shareholders of Party B (the “Shareholders of Party B”), which own 90% and 10% equity in Party B respectively.

Party A, Party B, Party C and Party D, through friendly negotiation in the principle of equality and common interest, hereby jointly agree the following:

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1. Non-action Obligation

In order to ensure Party B’s performance of the agreements between Party A and Party B and all its obligations to Party A, Party B together with its shareholders Party C and Party D hereby jointly confirm and agree that Party B will not conduct any transaction which may materially affect its assets, obligations, rights or the company’s operation unless a prior written consent from Party A or another Party appointed by Party A, including but not limited to the following contents, has been obtained:

1.1 To conduct any business which is beyond normal business operations;

1.2 To borrow money or incur any debt from any third party;

1.3 To change or dismiss any directors or to dismiss and replace any senior management officers;

1.4 To sell to or acquire from any third party any assets or rights exceeding RMB 200,000 Yuan, including but not limited to any intellectual property rights;

1.5 To provide guarantee for any third party with its assets or intellectual property rights or to provide any other guarantee or to place its assets under any other obligations;

1.6 To amend the Articles of Association of the company or to change its scope of business;

1.7 To change the normal business process or modify any material by laws;

1.8 To assign rights and obligations under this Agreement to any third party.

2. Management of Operation and Arrangements of HR

2.1 Party B together with its shareholders Party C and Party D hereby jointly agree to accept and strictly enforce the proposals in respect of the employment and dismissal of its employees, the daily business management and financial management, etc., provided by Party A from time to time.

2.2 Party B together with the Shareholders of Party B hereby jointly agree that the Shareholders of Party B shall only appoint candidates designated by Party A as the directors of Party B in accordance with the procedures regulated by laws and regulations and the Article of Association of the company, and cause the chosen directors to elect Party A’s president candidate as President of the company, and Party B shall engage Party A’s nominees as Party B’s General Manager, Chief Financial Officer, and other senior officers.

2.3 If any of the above officers quits or is dismissed by Party A, he or she will lose the qualification to undertake any positions in Party B and therefore the Shareholders of Party B shall appoint other nominees of Party A to assume such positions.

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2.4 For the purpose of 2.3, the Shareholders of Party B shall take all necessary inside and outside procedures to accomplish the above dismissal and engagement.

2.5 The Shareholders of Party B hereby agree, simultaneously with the execution of this Agreement, to sign Powers of Attorneys, according to which the Shareholders of Party B will authorize personnel designated by Party A to exercise their shareholders’ rights and their full voting rights as shareholders at Party B’s shareholders’ meetings. The Shareholders of Party B further agree to replace the authorized persons appointed in the above mentioned Power of Attorney at any time at the request of Party A.

3. Other Agreements

3.1 In the event that any of the agreements between Party A and Party B terminates or expires, Party A is entitled to terminate all agreements between Party A and Party B including but not limited to the Exclusive Technical and Consulting Services Agreement.

3.2 Whereas the business relationship between Party A and Party B has been establishes through the Exclusive Technical Consulting and Services Agreement and other agreements and the daily business operations of Party B shall bear a material impact on its capacity to pay the payables to Party A, the Shareholders of Party B jointly agree that they will immediately and unconditionally pay or transfer to Party A any bonus, dividends or any other incomes or benefits (regardless of the forms) obtained from Party B as shareholders of Party B at the time such payables occur.

4. Entire Agreement and Modifications

4.1 This Agreement together with all the other agreements and/or documents mentioned or explicitly included in this Agreement will be part of the whole agreement concluded in respect of the matters in this Agreement and shall replace all other prior oral and written agreements, contracts, understandings and communications among all the parties involving this matters.

4.2 Any amendment and supplement to this Agreement shall take effect only after it is executed by all Parties. The amendment and supplement duly executed shall be part of this Agreement and shall have the same legal effect as this Agreement.

5. Governing Law

The execution, effect, performance and the resolution of disputes of this Agreement shall be governed by and construed in accordance with the PRC laws.

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6. Dispute Resolution

6.1 The parties shall strive to settle any dispute arising from the interpretation or performance through negotiation in good faith. In case no settlement can be reached through consultation, each party can submit such matter to China International Economic and Trade Arbitration Commission (“CIETAC”) for arbitration in accordance with the current rules of CIETAC. The arbitration proceedings shall take place in Beijing and shall be conducted in Chinese. The arbitration award shall be final and binding upon all parties.

6.2 Each Party shall continue to perform its obligations in good faith according to the provisions of this Agreement except for the matters in dispute.

7. Notice

7.1 Notices for the purpose of exercising the rights and performing the obligations hereunder shall be in writing and be delivered by personal delivery, registered or mail or postage prepaid mail, recognized courier service or by facsimile transmission to the address of the relevant party or parties set forth below.

Party A:	Kongzhong Information Technologies (Beijing) Co., Ltd.
Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang
Party B:	Shanghai Mailifang Communications Ltd.
Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang
Party C: Xu Guo and Party D:Yang Yang
Address:	35 F, Tengda Plaza, No.168 Xiwai Street, Haidian District, Beijing, PRC
Fax:	(86)10−88575872
Tele:	(86)10−88576000
Addressee:	Leilei Wang

8. Effect, Term and Other About This Agreement

8.1 Any written consent, suggestion, appointment or other decisions which have material effects on Party B’s daily business operations involved in this Agreement shall adopted by the board of directors of Party A.

8.2 This Agreement will take effect upon execution by duly authorized representatives of all parties and the term of this Agreement will last until Party A is dissolved according to the PRC laws.

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8.3 Party B and the Shareholders of Party B shall not terminate this Agreement within the term of this Agreement while Party A is entitled to terminate this Agreement any time by issuing a written notice to Party B and the Shareholders of Party B 30 days prior to the termination.

8.4 In case any term or provision in this Agreement is regarded as illegal or can not be performed in accordance with the applicable law, it shall be deemed to be deleted from this Agreement and be null and void, and this Agreement shall be treated as without it from the very beginning. However, the rest of the provisions will remain effective. The parties shall replace the deleted provisions with lawful, effective and mutually acceptable ones through negotiations.

8.5 Any non-exercise of any rights, powers or privileges hereunder shall not be deemed as a waiver thereof. Any single or partial exercise of such rights, powers or privileges shall not exclude one party from exercising any other rights, powers or privileges.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be duly executed on their behalf by duly authorized representatives as of the Effective Date first written above.

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Party A: Kongzhong Information Technologies (Beijing) Co., Ltd.

Authorized Representative: (seal)

Party B: Shanghai Mailifang Communications Ltd.

Authorized Representative: (seal)

Party C: Xu Guo

Signature: /s/ Xu Guo

Party D: Yang Yang

Signature: /s/ Yang Yang

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EX-4.92

Exhibit 4.92

Supplemental Agreement No.4 to the Premises Lease Agreement No. TD0196

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: Beijing AirInbox Information Technologies Co., Ltd.

The Realty Lease Contract No. TD0196 signed by and between the Lessor and Lessee (hereinafter the “Contract”) shall be expired on August 27, 2008; however the Lessee desires to continue leasing the rooms 01/02/03/06/07/09/11 on the 8th floor of Tengda Plaza after the expiry of the said Contract. Hence, it is hereby agreed by the Lessor and Lessee as follows after friendly negotiations.

1. Effective from August 28, 2008, the subsection 2 of Article 1 under the Realty Lease Contract No. TD0196 shall be amended and read as “the lease term of the Premises shall be one year, commencing from August 28, 2008 through August 27, 2009.”

2. Effective from August 28, 2008, the subsection 3 of Article 1 under the Realty Lease Contract No. TD0196 shall be amended and read as “the rental of the Premises shall be RMB 3.30 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB143,190.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.”

3. Effective from August 28, 2008, the subsection 5 of Article 1 under the Realty Lease Contract No. TD0196 shall be amended and read as “as of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 429,570.00 (RMB Four Hundred and Twenty-Nine Thousand Five Hundred and Seventy) in aggregate.”

4. Grace period shall be 70 days in aggregate, which commences from August 28, 2008 through November 5, 2008.

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During the grace period, the Lessee is obligated to pay the property management charges at RMB 1.00 per day per square meter and other payable expenses. If the Contract is early terminated due to a reason attributable to the Lessee, the Lessee shall not be entitled to the grace period. Any grace period day after the termination date of the Contract that the Lessee has not enjoyed shall become void, and the Lessor is not obligated to compensate the Lessee for such void grace period days. If the Lessee terminates the Contract before the expiry of the Contract term or the Contract is early terminated due to a reason attributable to Lessee, the Lessee shall make full payment to the Lessor of the rental of the grace period enjoyed according to the rental rate provided in the Contract.

5. This Supplemental Agreement is a supplement and amendment to the Realty Lease Contract No. TD0196 and its relevant supplemental agreements, all of which shall have equal legal effect. If there is any conflict between the terms of this Supplemental Agreement and the terms of the Realty Lease Contract No. TD0196 or any of its relevant supplemental agreements, the terms of this Supplemental Agreement shall prevail; all terms that are consistent with the terms of the Realty Lease Contract No. TD0196 and its relevant supplemental agreements shall continue in full force.

6. This Agreement is written in two original copies, of which each of the Lessor and Lessee shall keep one. The Agreement shall take effect on the date when the parties sign and seal the Agreement.

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: Beijing AirInbox Information Technologies Co., Ltd.
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Dated: May 12, 2008	Dated: May 12, 2008

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EX-4.97

Exhibit 4.97

Supplemental Agreement No.8 to the Premises Lease Agreement No. TD0130

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: Beijing AirInbox Information Technologies Co., Ltd.

The Realty Lease Contract No. TD0130 signed by and between the Lessor and Lessee (hereinafter the “Contract”) shall be expired on August 27, 2008; however the Lessee desires to continue leasing the rooms 01/02/03/05/06/07/09/10/11 of the 32nd floor and the entire 33rd floor of Tengda Plaza after the expiry of the said Contract. Hence, it is hereby agreed by the Lessor and Lessee as follows after friendly negotiations.

1. Effective from August 28, 2008, the subsection 2 of Article 1 under the Realty Lease Contract No. TD0130 shall be amended and read as “the lease term of the Premises shall be one year, commencing from August 28, 2008 through August 27, 2009.”

2. Effective from August 28, 2008, the subsection 3 of Article 1 under the Realty Lease Contract No. TD0130 shall be amended and read as “the rental of the Premises shall be RMB 3.30 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 381,453.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.”

3. Effective from August 28, 2008, the subsection 5 of Article 1 under the Realty Lease Contract No. TD0130 shall be amended and read as “as of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 1,144,359.00 (RMB One Million One Hundred and Forty-Four Thousand Three Hundred and Fifty-Nine) in aggregate.”

4. Grace period shall be 70 days in aggregate, which commences from August 28, 2008 through November 5, 2008.

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During the grace period, the Lessee is obligated to pay the property management charges at RMB 1.00 per day per square meter and other payable expenses. If the Contract is early terminated due to a reason attributable to the Lessee, the Lessee shall not be entitled to the grace period. Any grace period day after the termination date of the Contract that the Lessee has not enjoyed shall become void, and the Lessor is not obligated to compensate the Lessee for such void grace period days. If the Lessee terminates the Contract before the expiry of the Contract term or the Contract is early terminated due to a reason attributable to Lessee, the Lessee shall make full payment to the Lessor of the rental of the grace period enjoyed according to the rental rate provided in the Contract.

5. This Supplemental Agreement is a supplement and amendment to the Realty Lease Contract No. TD0130 and its relevant supplemental agreements, all of which shall have equal legal effect. If there is any conflict between the terms of this Supplemental Agreement and the terms of the Realty Lease Contract No. TD0130 or any of its relevant supplemental agreements, the terms of this Supplemental Agreement shall prevail; all terms that are consistent with the terms of the Realty Lease Contract No. TD0130 and its relevant supplemental agreements shall continue in full force.

6. This Agreement is written in two original copies, of which each of the Lessor and Lessee shall keep one. The Agreement shall take effect on the date when the parties sign and seal the Agreement.

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: Beijing AirInbox Information Technologies Co., Ltd.
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Dated: May 12, 2008	Dated: May 12, 2008

2

EX-4.100

Exhibit 4.100

Supplemental Agreement No. 5 to the Premises Lease Agreement No. TD0131

Lessor: Beijing Gaoling Estate Development Co., Ltd.

Lessee: KongZhong Information Technologies (Beijing) Co., Ltd.

The Realty Lease Contract No. TD0131 signed by and between the Lessor and Lessee shall be expired on August 27, 2008; however the Lessee desires to continue leasing the entire 35th floor of Tengda Plaza after the expiry of the said contract. Hence, it is hereby agreed by the Lessor and Lessee as follows after friendly negotiations.

1. Effective from August 28, 2008, the subsection 2 of Article 1 under the Realty Lease Contract No. TD0131 shall be amended and read as “the lease term of the Premises shall be one year, commencing from August 28, 2008 through August 27, 2009.”

2. Effective from August 28, 2008, the subsection 3 of Article 1 under the Realty Lease Contract No. TD0131 shall be amended and read as “the rental of the Premises shall be RMB 3.30 per day per square meter and the property management charge shall be RMB 1.00 per day per square meter, of which the aggregated monthly rental (including property management charges) of the subject matter of the Contract shall be RMB 194,016.00. Under this Contract each month will be computed on a 30-day basis. The rental and property management charges shall be paid on a monthly basis by means of advanced payment, whereby the Lessee shall pay the Lessor the rental and property management charges for the next payment period within 10 days before the commencement of the next payment period (payment period shall be the 28th day of the applicable month through the 27th day of the following month) and such payment shall be deemed as paid with receipt of the Lessor. If the Lessee fails to make any payment above according to the terms of the Contract, the Lessee shall pay Lessor a late payment fee computed at 0.02% of all amount due for each default day.”

3. Effective from August 28, 2008, the subsection 5 of Article 1 under the Realty Lease Contract No. TD0131 shall be amended and read as “as of the signing of this Contract, the Lessee shall pay Lessor a deposit as guarantee of its faithful performance of the terms of the Contract (hereinafter the “Deposit”), which shall be equal to three months rentals and property management charges, i.e. RMB 582,048.00 (RMB Five Hundred and Eighty-Two Thousand and Forty-Eight) in aggregate.”

4. Grace period shall be 70 days in aggregate, which commences from August 28, 2008 through November 5, 2008.

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During the grace period, the Lessee is obligated to pay the property management charges at RMB 1.00 per day per square meter and other payable expenses. If the Contract is early terminated due to a reason attributable to the Lessee, the Lessee shall not be entitled to the grace period. Any grace period day after the termination date of the Contract that the Lessee has not enjoyed shall become void, and the Lessor is not obligated to compensate the Lessee for such void grace period days. If the Lessee terminates the Contract before the expiry of the Contract term or the Contract is early terminated due to a reason attributable to Lessee, the Lessee shall make full payment to the Lessor of the rental of the grace period enjoyed according to the rental rate provided in the Contract.

5. This Supplemental Agreement is a supplement and amendment to the Realty Lease Contract No. TD0131 and its relevant supplemental agreements, all of which shall have equal legal effect. If there is any conflict between the terms of this Supplemental Agreement and the terms of the Realty Lease Contract No. TD0131 or any of its relevant supplemental agreements, the terms of this Supplemental Agreement shall prevail; all terms that are consistent with the terms of the Realty Lease Contract No. TD0131 and its relevant supplemental agreements shall continue in full force.

6. This Agreement is written in two original copies, of which each of the Lessor and Lessee shall keep one. The Agreement shall take effect on the date when the parties sign and seal the Agreement.

Lessor: Beijing Gaoling Estate Development Co., Ltd.	Lessee: KongZhong Information Technologies (Beijing) Co., Ltd.
Legal Representative or Authorized Representative: (signature)	Legal Representative or Authorized Representative: (seal)
Dated: May 12, 2008	Dated: May 12, 2008

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EX-4.103

EXECUTION VERSION

Exhibit 4.103

Note and Warrant Purchase Agreement

Dated March 18, 2009

among

KongZhong Corporation,

Leilei Wang

and

Nokia Growth Partners II, L.P.

TABLE OF CONTENTS

		Page
Recitals		1
	Article I
	Purchase; Closing
1.1	Purchase	1
1.2	Closing	1
1.3	Interpretation	2
	Article II
	Representations and Warranties
2.1	Disclosure	3
2.2	Representations and Warranties of the Company	4
2.3	Representations and Warranties of the Investor	7
	Article III
	Covenants
3.1	Certain Actions by the Company	9
3.2	SEC Reports; NASDAQ Listing	10
3.3	Sales of Ordinary Shares by the Sponsor	10
	Article IV
	Additional Agreements
4.1	Commercially Reasonable Efforts	10
4.2	Conversion of Ordinary Shares	10
4.3	Expenses	10
4.4	Board Observer Rights	10
4.5	Transfers	11
4.6	Form D and Blue Sky	12
4.7	CFC	12
4.8	Public Announcements	12
	Article V
	Miscellaneous
5.1	Termination	12
5.2	Amendment	13
5.3	Waiver of Conditions	13
5.4	Counterparts and Facsimile	13

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5.5	Governing Law; Submission to Jurisdiction, Etc.	13
5.6	Notices	14
5.7	Entire Agreement, Etc.	15
5.8	Definitions of “Subsidiary”, “affiliate” and “person”	15
5.9	Assignment	15
5.10	Severability	15
5.11	No Third Party Beneficiaries	15
5.12	Further Assurances	15

- ii - -

LIST OF ANNEXES

ANNEX A:	FORM OF NOTE
ANNEX B:	FORM OF WARRANT
ANNEX C:	FORM OF REGISTRATION RIGHTS AGREEMENT
ANNEX D:	FORM OF LEGAL OPINION OF COMPANY’S CAYMAN ISLANDS COUNSEL

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INDEX OF DEFINED TERMS

Term	Location of Definition
ADSs	2.1(a)
affiliate	5.8(b)
Agreement	Preamble
Bankruptcy Exceptions	2.2(e)(i)
Beneficial Ownership; Beneficial Owner; Beneficially Own	2.3(c)
Board	3.1(d)
Business Day	1.3
Capitalization Date	2.2(b)
CFC	2.2(p)
Closing	1.2(a)
Closing Date	1.2(a)
Code	2.2(p)
Commission	2.1(b)
Company	Preamble
Company’s Knowledge	2.2(j)
Confidential Information	4.4(c)
Designated Courts	5.5(c)
Exchange Act	2.1(b)
GAAP	2.1(a)
Governmental Entities	1.2(c)
Hedging Transaction	4.5(c)
HKIAC	5.5(b)
Investor	Preamble
Investor Material Adverse Effect	2.3(b)(ii)
Material Adverse Effect	2.1(a)
Note	Recital A
Note Shares	2.2(c)
Observer	4.4(a)
Observer Representatives	4.4(c)
Ordinary Shares	Recital A
Permitted Transferee	4.5(b)
person	5.8(c)
Previously Disclosed	2.1(b)
Purchase	1.1
Purchased Securities	Recital A
Registration Rights Agreement	1.2(e)(iv)
Related Party Transaction	3.1(c)
SEC Reports	2.1(b)
Securities Act	Recital C
Sponsor	Preamble
Subsidiary	5.8(a)
Transaction Documents	2.1(c)
Transfer	4.5(a)
Warrant	Recital A
Warrant Shares	2.2(d)

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Note and Warrant Purchase Agreement, dated March 18, 2009 (this “Agreement”), among KongZhong Corporation, an exempted limited liability company incorporated under the laws of the Cayman Islands (the “Company”), Leilei Wang, Chief Executive Officer of the Company (the “Sponsor”), and Nokia Growth Partners II, L.P., a Delaware limited partnership (the “Investor”).

Recitals:

WHEREAS:

A.          The Company desires to issue and sell to the Investor (i) US$6,775,400 aggregate principal amount of the Company’s Convertible Senior Note in the form set forth in Annex A hereto (the “Note”) and (ii) a warrant to purchase up to 80,000,000 ordinary shares of the Company, par value US$0.0000005 per share (“Ordinary Shares”) (such warrant, the “Warrant” and, together with the Note, the “Purchased Securities”);

B.           the Investor desires to purchase from the Company the Purchased Securities; and

C.           the Purchased Securities will be offered and sold to the Investor without being registered under the United States Securities Act of 1933, as amended (the “Securities Act”), in reliance upon exemptions from the registration requirements thereunder;

NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Article I

Purchase; Closing

1.1         Purchase.  On the terms and subject to the conditions set forth in this Agreement, the Company agrees to sell to the Investor, and the Investor agrees to purchase from the Company, at the Closing (as hereinafter defined), the Purchased Securities for an aggregate purchase price of US$6,775,400 (the “Purchase”).

1.2         Closing.

(a)          On the terms and subject to the conditions set forth in this Agreement, the closing of the Purchase (the “Closing”) will take place at the offices of Sullivan & Cromwell LLP, Suite 501, Tower 1, China World Trade Center, One Jian Guo Men Wai Avenue, Beijing 100004, People’s Republic of China, at 9:30 a.m., Beijing time, on March 18, 2009 or as soon as practicable thereafter, or at such other place, time and date as shall be agreed between the Company and the Investor.  The time and date on which the Closing occurs is referred to in this Agreement as the “Closing Date”.

(b)         Subject to the fulfillment or waiver of the conditions to the Closing in this Section 1.2, at the Closing, the Company will deliver the Note and the Warrant, in each case as evidenced by one or more certificates dated the Closing Date and bearing appropriate legends as hereinafter provided for, in exchange for payment in full of the aggregate purchase price therefor by wire transfer of immediately available funds to a bank account that has been designated by the Company at least three Business Days prior to the Closing Date.

(c)          The respective obligations of each of the Investor and the Company to consummate the Purchase are subject to the fulfillment (or waiver by the Investor and the Company, as applicable) prior to the Closing of the condition that (i) any approvals or authorizations of all United States of America, People’s Republic of China and other national, state, provincial, local and other governmental or regulatory authorities (collectively, “Governmental Entities”), the absence of which would reasonably be expected to make the Purchase unlawful, shall have been obtained or made in form and substance reasonably satisfactory to each party and shall be in full force and effect and (ii) no provision of any applicable United States or other law and no judgment, injunction, order or decree of any Governmental Entity shall prohibit the purchase and sale of the Purchased Securities.

(d)         The obligation of the Company to consummate the Closing is also subject to the fulfillment (or waiver by the Company) at or prior to the Closing of each of the following conditions:

(i)           (A) the representations and warranties of the Investor set forth in this Agreement shall be true and correct as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct as of such date), except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, does not have and would not be reasonably likely to have an Investor Material Adverse Effect and (B) the Investor shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing; and

(ii)          the Investor shall have duly executed and delivered to the Company a certificate, certifying that the Investor is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act.

(e)          The obligation of the Investor to consummate the Closing is also subject to the fulfillment (or waiver by the Investor) at or prior to the Closing of each of the following conditions:

(i)           (A) the representations and warranties of the Company set forth in this Agreement shall be true and correct as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct as of such date), except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, does not have and would not be reasonably likely to have a Material Adverse Effect and (B) the Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing;

(ii)          the Company shall have duly executed and delivered the Note in substantially the form attached hereto as Annex A to the Investor or its designee(s);

(iii)         the Company shall have duly executed and delivered the Warrant in substantially the form attached hereto as Annex B to the Investor or its designee(s);

(iv)        the Company shall have duly executed and delivered to the Investor or its designee(s) a Registration Rights Agreement (the “Registration Rights Agreement”) in substantially the form attached hereto as Annex C; and

(v)         the Company shall have delivered to the Investor an opinion, dated as of the Closing Date, of Cayman Islands counsel for the Company as to matters under Cayman Islands law in substantially the form attached hereto as Annex D.

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1.3         Interpretation.  When a reference is made in this Agreement to “Recitals”, “Articles”, “Sections” or “Annexes”, such reference shall be to a Recital, Article or Section of, or Annex to, this Agreement unless otherwise indicated.  The terms defined in the singular have a comparable meaning when used in the plural, and vice versa.  References to “herein”, “hereof”, “hereunder” and the like refer to this Agreement as a whole and not to any particular section or provision, unless the context requires otherwise. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement.  Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation”.  No rule of construction against the draftsperson shall be applied in connection with the interpretation or enforcement of this Agreement, as this Agreement is the product of negotiation between sophisticated parties advised by counsel.  All references to “US$” mean the lawful currency of the United States of America.  Except as expressly stated in this Agreement, all references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of any statute, include any rules and regulations promulgated under such statute) and to any section of any statute, rule or regulation include any successor to the section.  References to a “Business Day” shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the City of New York, New York, United States of America, or Beijing, People’s Republic of China generally are authorized or required by law or other governmental actions to close.

Article II

Representations and Warranties

2.1         Disclosure.

(a)          “Material Adverse Effect” means a material adverse effect on (i) the business, results of operation or financial condition of the Company and its consolidated Subsidiaries taken as a whole; provided, however, that Material Adverse Effect shall not be deemed to include the effects of (A) any facts, circumstances, events, changes or occurrences generally affecting businesses, industries and markets in which the Company or any of its Subsidiaries operates (including, without limitation, changes generally in prevailing interest rates, credit availability and liquidity, currency exchange rates and price levels or trading volumes in the United States of America or other markets), companies engaged in such businesses, industries or markets or the economy, including effects on such businesses, industries, markets or economy resulting from any regulatory or political conditions or developments, or any outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, (B) changes or proposed changes to generally accepted accounting principles in the United States of America (“GAAP”) and/or changes or proposed changes in International Financial Reporting Standards and/or other relevant accounting standards, (C) changes or proposed changes in securities or other laws of general applicability or related policies or interpretations of Governmental Entities, (D) changes in the market price or trading volume of the American Depositary Shares of the Company (the “ADSs”) or any other equity, equity-related or debt securities of the Company, (E) the disclosure or consummation of the transactions contemplated by the Transaction Documents or (F) any litigation arising from allegations of a breach of fiduciary duty or other violation of applicable laws relating to the Transaction Documents or the transactions contemplated thereby; or (ii) the ability of the Company timely to consummate the Purchase and the other transactions contemplated by the Transaction Documents.

(b)          “Previously Disclosed” means information set forth or incorporated in the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2007 or its other reports and forms filed with the United States Securities and Exchange Commission (the “Commission”) (such reports and forms, the “SEC Reports”) under Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) after December 31, 2007 but prior to the date hereof.

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(c)          Each party acknowledges that it is not relying upon any representation or warranty not set forth in the Transaction Documents.  The Investor acknowledges that it has had an opportunity to conduct such review and analysis of the business, assets, condition, operations and prospects of the Company and its Subsidiaries, including an opportunity to ask such questions of management (for which it has received such answers) and to review such information maintained by the Company, in each case as the Investor considers sufficient for the purpose of making the Purchase.  The Investor further acknowledges that it has had such an opportunity to consult with its own counsel, financial and tax advisors and other professional advisors as it believes is sufficient for purposes of the Purchase.  For purposes of this Agreement, the term “Transaction Documents” refers collectively to this Agreement, the Note, the Warrant and the Registration Rights Agreement, in each case, as amended, modified or supplemented from time to time in accordance with their respective terms.

2.2         Representations and Warranties of the Company.  Except as Previously Disclosed, the Company represents and warrants to the Investor that as of the date hereof:

(a)          Organization, Authority and Subsidiaries.  The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Cayman Islands, with corporate power and authority to own its properties and conduct its business in all material respects as currently conducted, and, except as has not had or would not be reasonably likely to have a Material Adverse Effect, has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties, or conducts any business so as to require such qualification.  Each Subsidiary of the Company has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization, except that Wukong Shentong Search Co., Ltd. and Anjian Xingye Technology (Beijing) Company Limited are in the process of being dissolved and liquidated.

(b)         Capitalization.  The authorized share capital of the Company consists of 1,000,000,000,000 Ordinary Shares, of which, as of December 31, 2008 (the “Capitalization Date”), 1,443,156,120 Ordinary Shares were issued and outstanding (it being understood that the number of 1,443,156,120 includes (i) 13,286,920 Ordinary Shares which the Company had agreed to repurchase pursuant to its share repurchase program and were in the process of being cancelled and of which such cancellation had not yet been reflected in the Register of Members of the Company as of December 31, 2008, and (ii) 13,321,960 Ordinary Shares held by Citi (Nominees) Limited as of December 31, 2008 for future exercise of stock options and vesting of restricted share units under the Company’s equity incentive plans).  The issued and outstanding Ordinary Shares have been duly authorized and are validly issued as fully paid and non-assessable (meaning that no further sums are payable to the Company on such shares), and are not subject to any preemptive rights under Cayman Islands law or the Memorandum and Articles of Association of the Company.

(c)          The Note and the Note Shares.  The Note has been duly authorized and, when executed and delivered as contemplated hereby, will constitute a valid and legally binding obligation of the Company in accordance with their terms, and the Ordinary Shares issuable upon conversion of the Note (the “Note Shares”) have been duly authorized and when issued upon conversion of the Note in accordance with the terms of the Note will be validly issued, fully paid and non-assessable.

(d)         The Warrant and the Warrant Shares.  The Warrant has been duly authorized and, when executed and delivered as contemplated hereby, will constitute a valid and legally binding obligation of the Company in accordance with its terms, and the Ordinary Shares issuable upon exercise of the Warrant (the “Warrant Shares”) have been duly authorized and when issued upon exercise of the Warrant against payment therefor in accordance with the terms of the Warrant will be validly issued, fully paid and non-assessable.

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(e)          Authorization, Enforceability.

(i)           The Company has the corporate power and authority to execute and deliver this Agreement and the other Transaction Documents and to carry out its obligations hereunder and thereunder.  The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company, and no further approval or authorization is required on the part of the Company in connection herewith and therewith.  This Agreement and the other Transaction Documents are or will be valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity (“Bankruptcy Exceptions”).

(ii)          The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby and compliance by the Company with any of the provisions hereof and thereof, will not (i) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any Subsidiary under any of the terms, conditions or provisions of (A) its memorandum of association or articles of association, as amended and restated, or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement, contract or other instrument or obligation to which the Company or any Subsidiary is a party or by which it or any Subsidiary may be bound, or to which the Company or any Subsidiary or any of the properties or assets of the Company or any Subsidiary may be subject, or (ii) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any law, statute, rule or regulation or any judgment, ruling, order, writ, injunction, business license, decree or other regulatory restriction applicable to the Company or any Subsidiary or any of their respective properties or assets except for those occurrences that, individually or in the aggregate, have not had and would not be reasonably likely to have a Material Adverse Effect.

(iii)        Other than the filing of any report on Form 6-K or Form D or annual report on Form 20-F required to be filed with the Commission and such as have been made or obtained, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Entity is required to be made or obtained by the Company in connection with the consummation by the Company of the Purchase except for any such notices, filings, exemptions reviews, authorizations, consents and approvals the failure of which to be made or obtained would not be reasonably likely to have a Material Adverse Effect.

(f)           Company Financial Statements.

(i)           The consolidated financial statements of the Company and its consolidated Subsidiaries included or incorporated by reference in the SEC Reports filed prior to the Closing, present fairly in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates indicated therein and the consolidated results of their operations for the periods specified therein; and such financial statements were prepared in conformity with GAAP applied on a consistent basis (except as may be noted therein).

(ii)          Deloitte Touche Tohmatsu CPA Ltd. is an independent registered public accounting firm of the Company as required by the Exchange Act and the rules and regulations of the Commission and the Public Company Accounting Oversight Board.

(g)          No Material Adverse Effect.  Since the most recent SEC Report, no fact, circumstance, event, change, occurrence, condition or development has occurred that, individually or in the aggregate, has had or would be reasonably likely to have a Material Adverse Effect.

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(h)         Reports.

(i)           Since December 31, 2007, the Company has complied in all material respects with the filing requirements of Sections 13(a) and 15(d) of the Exchange Act.

(ii)          The SEC Reports filed by the Company prior to the Closing, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder, and none of such documents, when they became effective or were filed with the Commission, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

(iii)         The Company is in compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and rules and regulations of the Commission with respect thereto as in effect at the time of filing.

(i)           No General Solicitation.  Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of any general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D under the Securities Act in connection with the offer and sale of the Purchased Securities.

(j)           No Material Misstatements; No Violation.  To the Company's Knowledge, no representation or warranty by the Company or its Subsidiaries in Section 2.2 of this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary to make any statement in any such representation or warranty not misleading.  “Company’s Knowledge” means the actual knowledge, after due inquiry, of the Sponsor and Jay Chang, Chief Financial Officer of the Company, as of the date hereof.  Except as set forth in the SEC Reports, each of the Company and its Subsidiaries has complied in all material respects with each, and is not in violation in any material respect of any, applicable law, rule or regulation to which the Company or any such Subsidiary or its respective business, operations, assets or properties is or has been subject and no event has occurred and no circumstance exists that constitutes a violation of, conflict with or failure on the part of the Company or any of its Subsidiaries to comply with, any law, rule or regulation, except for any such violations, conflicts or failures to comply that individually or in the aggregate, have not had and would not be reasonably likely to result in a Material Adverse Effect.

(k)          Office of Foreign Assets Control.  Neither the Company nor, to the Company’s Knowledge, any director, officer, agent, employee or affiliate of the Company is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department.

(l)           Foreign Corrupt Practices.  Neither the Company, nor, to the Company’s Knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company, in the course of actions for, or on behalf of, the Company (i) is using any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) is making any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) is making any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

(m)         Form F-3. The Company is eligible to use Form F-3 to register securities under the Securities Act.

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(n)         NASDAQ. The Company has satisfied the qualitative listing requirements for foreign private issuers pursuant to Rule 4350(a) of the NASDAQ Marketplace Rules.  The Company has not received any notice from the NASDAQ Global Select Market on which the Company’s ADSs have been listed to the effect that the Company is not in compliance with its listing or maintenance requirements.

(o)         Investment Company.  The Company is not, and is not an affiliate of, an “investment company” or controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(p)         CFC Representation.  The Company was not a “Controlled Foreign Corporation” (“CFC”) as defined in the United States Internal Revenue Code of 1986, as amended (the “Code”), for the tax year ended December 31, 2008.

2.3         Representations and Warranties of the Investor.  The Investor hereby represents and warrants to the Company that as of the date hereof:

(a)          Organization.  The Investor has been duly organized and is validly existing as a limited partnership under the laws of Delaware.

(b)          Authorization, Enforceability.

(i)           The Investor has the power and authority, corporate or otherwise, to execute and deliver this Agreement and the Registration Rights Agreement and to carry out its obligations hereunder and thereunder.  The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Investor, and no further approval or authorization is required on the part of the Investor or any other party for such authorization to be effective.  This Agreement and the Registration Rights Agreement are or will be valid and binding obligations of the Investor enforceable against the Investor in accordance with their respective terms, except as the same may be limited by Bankruptcy Exceptions.

(ii)          The execution, delivery and performance by the Investor of this Agreement and the Registration Rights Agreement and the consummation of the transactions contemplated hereby and thereby and compliance by the Investor with any of the provisions hereof and thereof, will not (i) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of, any lien, security interest, charge or encumbrance upon any of the properties or assets of such Investor under any of the terms, conditions or provisions of (A) its organizational documents or (B) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which it may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (ii) subject to compliance with the statutes and regulations referred to in the next paragraph, violate any statute, rule or regulation or any judgment, ruling, order, writ, injunction or decree applicable to the Investor or any of its properties or assets except for those occurrences that, individually or in the aggregate, have not had and would not be reasonably likely to have an Investor Material Adverse Effect.  “Investor Material Adverse Effect” means a material adverse effect on the ability of the Investor to consummate the Purchase and the other transactions contemplated by the Transaction Documents.

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(iii)         Other than such as have been made or obtained, no notice to, filing with, exemption or review by, or authorization, consent or approval of, any Governmental Entity is required to be made or obtained by the Investor in connection with the consummation by the Investor of the Purchase except for any such notices, filings, exemptions, reviews, authorizations, consents and approvals the failure of which to make or obtain would not be reasonably likely to have an Investor Material Adverse Effect.

(c)          Ownership.  The Investor is not the Beneficial Owner of (i) any Ordinary Share or (ii) any securities or other instruments representing the right to acquire any Ordinary Share.  The Investor does not have a formal or informal agreement, arrangement or understanding with any person (other than the Company) to acquire, dispose of or vote any securities of the Company.  “Beneficial Ownership” shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange Act, including the provision that any member of a “group” shall be deemed to have Beneficial Ownership of all securities Beneficially Owned by other members of the group, and except that the exclusion in Rule 13d-3(d)(1)(i) for rights to acquire securities that are not exercisable “within 60 days” shall not apply.  “Beneficial Owner” and “Beneficially Own” shall have conforming definitions.

(d)          Purchase for Investment.  The Investor acknowledges that the Purchased Securities, the Note Shares and the Warrant Shares have not been registered under the Securities Act or under any state securities laws.  The Investor (i) is acquiring the Purchased Securities pursuant to an exemption from registration under the Securities Act solely for investment purposes for its own account with no present intention to distribute them to any person in violation of the Securities Act or any applicable state securities laws, (ii) will not sell or otherwise dispose of any of the Purchased Securities, the Note Shares or the Warrant Shares, except in compliance with the registration requirements or exemption provisions of the Securities Act and any applicable state securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of the Purchase and of making an informed investment decision, and has conducted a review of the business and affairs of the Company that it considers sufficient and reasonable for purposes of making the Purchase, (iv) is able to bear the economic risk of the Purchase and at the present time is able to afford a complete loss of such investment and (v) is an “accredited investor” (as that term is defined by Rule 501 of Regulation D under the Securities Act), whose sole limited partner is a controlled affiliate of Nokia Corporation.

(e)          Legend.  The Investor agrees that all certificates or other instruments representing the Purchased Securities, the Note Shares and the Warrant Shares will bear a legend substantially to the following effect:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.  THIS INSTRUMENT IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A NOTE AND WARRANT PURCHASE AGREEMENT, DATED MARCH 18, 2009, AMONG THE ISSUER OF THESE SECURITIES, THE SPONSOR AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER.  THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT.  ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.”

In the event that (i) any Purchased Securities, Note Shares or Warrant Shares become registered under the Securities Act or (ii) the Note Shares or the Warrant Shares are eligible to be transferred without restriction in accordance with Rule 144 under the Securities Act, the Company shall issue new certificates or other instruments representing such Purchased Securities, Note Shares or Warrant Shares, which shall not contain such portion of the above legend that is no longer applicable; providedthat the Investor surrenders to the Company the previously issued certificates or other instruments.

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 (f)         U.S. Federal Tax Treatment. The Investor is a limited partnership which has not made an election under United States Treasury Regulation 301.7701-3 to be treated as an association taxable as a corporation for United States Federal tax purposes.

To the extent the Investor transfers its rights to the Permitted Transferee at or prior to the Closing, the representations and warranties in Sections 2.3(a), (b), (d) and (e) shall be deemed to also be made by the Investor in respect of the Permitted Transferee and the representation and warranty in Section 2.3(c) shall be deemed to be made in respect of the Investor and the Permitted Transferee collectively.

Article III

Covenants

3.1         Certain Actions by the Company.  From the date of the Closing, as long as the Investor (i) holds the Note or the Warrant and (ii) maintains ownership of an aggregate amount of not less than 78,000,000 Ordinary Shares comprised of the Note Shares and/or the Warrant Shares or such Ordinary Shares into which the Note then held by the Investor is convertible and for which the Warrant held by the Investor is exercisable, the Company shall not, without prior written consent of the Investor:

(a)         change the terms of the Note or the Warrant;

(b)         (i) authorize or issue any security senior to or pari passu with the Note (including any security convertible into, exercisable for or exchangeable for any such security) or any security senior to the Ordinary Shares (including any security convertible into, exercisable for or exchangeable for any such security); (ii) enter into any agreement for indebtedness, including guarantees and like contingent obligations or (iii) authorize or issue any Ordinary Shares (including any security convertible into, exercisable for or exchangeable for Ordinary Shares) for an amount less than US$0.125 per Ordinary Share (orUS$5 per ADS), such that the amounts of securities or obligations described in (i), (ii) and (iii) above would exceed US$10,000,000, either individually or in the aggregate;

(c)         engage in any Related Party Transaction.  For purposes herein, a “Related Party Transaction” means a transaction between the Company or any of its Subsidiaries and (i) any shareholder of the Company that (A) owns of record, as reflected in the Register of Members of the Company, or (B) owns beneficially, as reflected in disclosure on Schedules 13D or 13G filed with the Commission in accordance with Section 13(d) of the Exchange Act, 5% or more of the voting shares of the Company, (ii) any executive officer of the Company, (iii) any director of the Company or (iv) any affiliate of either the Company or any such shareholder, executive officer or director, in each case other than any transaction in the ordinary course of business of the Company; or

(d)         make any recommendation to the Company’s shareholders or take other actions through its Board of Directors (the “Board”) that would materially and adversely affect the rights of the Investor under the terms of the Purchased Securities (or the Ordinary Shares issuable upon the conversion or exercise thereof), subject to applicable laws, including laws governing the fiduciary duties of the Board, and the articles of association and the memorandum of association of the Company.  For the avoidance of doubt, administrative actions, including the preparation and distribution of proxy materials, will not be deemed a breach of this covenant.

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3.2         SEC Reports; NASDAQ Listing.  For so long as the Investor continues to hold the Purchased Securities, the Company shall file with the Commission in a timely manner all reports and other documents required to be filed by the Company pursuant to the Exchange Act.  For so long as the Investor continues to hold the Purchased Securities, the Company shall use its reasonable best efforts to maintain the listing of its ADSs on the NASDAQ Global Market.

3.3         Sales of Ordinary Shares by the Sponsor.  Until the earlier of (i) October 1, 2011 and (ii) such time as the Investor ceases to hold any Purchased Securities, the Sponsor shall not sell any Ordinary Shares that are held by the Sponsor as of the date of this Agreement without the prior written consent of the Investor.

Article IV

Additional Agreements

4.1         Commercially Reasonable Efforts.  Subject to the terms and conditions of this Agreement, each of the parties will use its commercially reasonable efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Purchase as promptly as practicable and otherwise to enable consummation of the transactions contemplated hereby and shall use commercially reasonable efforts to cooperate with the other party to that end.

4.2         Conversion of Ordinary Shares.  The Company shall use its reasonable best efforts to assist in a timely manner the Investor in any conversions of such Investor’s Note Shares and Warrant Shares into ADSs.

4.3         Expenses.  Within 30 Business Days following the Closing, the Company will pay or reimburse all reasonable fees, charges and out-of-pocket expenses of (i) legal counsel engaged by the Investor in connection with the negotiation, preparation, execution and delivery of the Transaction Documents and (ii) the security review firm engaged by the Investor, up to a maximum aggregate amount of US$50,000, to the extent evidenced by written invoices of sufficient detail and clarity.

4.4         Board Observer Rights.  (a)    From the date of the Closing and until such time as the Investor ceases to maintain ownership of an aggregate amount of not less than 31,200,000 Ordinary Shares comprising the Note Shares, Warrant Shares and such Ordinary Shares into which the Note then held by the Investor are convertible and for which the Warrant held by the Investor is exercisable (in each case, as adjusted for share splits, share dividends, combinations and recapitalizations), the Investor shall be entitled to appoint one representative to attend meetings of the Board as a non-voting observer (the “Observer”).  The Company will give the Observer written notice of each meeting of the Boardat the same time and in the same manner as notice is given to the members of the Board and shall provide the Observer with copies of all minutes, consents and other materials that it provides to the members of the Board at the same time and in the same manner as such materials are given to the members of the Board. Notwithstanding any other right granted under Section 4.4, the Company reserves the right to exclude the Observer from access to any material or meeting or portion thereof if the Company believes on the advice of counsel that such exclusion is reasonably necessary to preserve the attorney-client privilege.

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(a)          The Observer shall agree to comply with the insider trading policies of the Company and all applicable insider trading laws and to maintain the confidentiality of all confidential information furnished to the Observer by the Company or otherwise obtained by the Observer in respect of any business transacted by the Board, whether oral, written or electronic, together with any reports, analyses, compilations, memoranda, notes and any other written or electronic materials prepared by the Observer or by the Observer’s Representatives (as defined below) that contain, reflect or are based upon such information (collectively, “Confidential Information”).  Confidential Information may be disclosed to any general partners, counsel, financial advisors, consultants and other representatives of the Observer (“Observer Representatives”), provided that the Observer shall be liable for any disclosure by any Observer Representative that is not permitted by this Section 4.4.  The term “Confidential Information” does not include information that (i) is or becomes publicly available other than as a result of a disclosure by the Observer or by any of the Observer Representatives in violation of this Section 4.4, (ii) is already in the Observer’s or any Observer Representative’s possession, provided that such information is not known by the Observer or any such Observer Representative, as the case may be, to be subject to any legal or contractual obligation of confidentiality owed to the Company, (iii) is or becomes available to the Observer or any Observer Representatives on a non-confidential basis from a source other than the Company, provided that such source is not known by the Observer or any such Observer Representatives, as the case may be, to be subject to any legal or contractual obligation to the Company to keep such information confidential, or (iv) is independently developed by the Observer or on the Observer’s behalf without violating any of the Observer’s obligations under this Section 4.4.

4.5         Transfers.

(a)          The Investor shall not, without the prior written consent of the Company, directly or indirectly transfer, sell, contract to sell, assign, pledge, convey, lend, hypothecate, grant any option to purchase, purchase any option to sell, make any short sale or otherwise encumber or dispose of (including entering into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequence of ownership interests) any of the Purchased Securities.  Each transaction referenced in this clause is herein called a “Transfer”.  Exercise of the Warrant for Warrant Shares in accordance with the terms of the Warrant and conversions of the Note for Note Shares in accordance with the terms of the Note shall not be deemed Transfers.

(b)         Notwithstanding the foregoing, Section 4.5(a) shall not prevent the Investor from transferring any or all of the Purchased Securities, at any time, to Nokia Corporation (the “Permitted Transferee”), but only if the Permitted Transferee agrees in writing for the benefit of the Company to be bound by the terms of this Agreement as applicable to the Investor (including these transfer restrictions); provided further that no such Transfer shall relieve the Investor of its obligations under the Transaction Documents.  The Investor shall provide written notice to the Company of any Transfer of Purchased Securities to the Permitted Transferee within 30 calendar days after such Transfer.

(c)          For the avoidance of doubt, without the prior written consent of the Company, neither the Investor nor the Permitted Transferee may at any time engage in any Hedging Transaction with respect to any of the Purchased Securities, the Note Shares or the Warrant Shares.  “Hedging Transaction” means any short sale (whether or not against the box) or any purchase, sale or grant of any right (including any put or call option, swap or other derivative transaction whether settled in cash or securities) to obtain a “short” or “put equivalent position” with respect to the Ordinary Shares.

(d)         The Purchased Securities are, and the Note Shares and the Warrant Shares will be when issued, restricted securities under the Securities Act and may not be offered or sold except pursuant to an effective registration statement or an available exemption from registration under the Securities Act.  Accordingly, the Investor shall not, directly or through others, offer or sell any Purchased Securities, Note Shares or Warrant Shares except pursuant to a registration statement or an exemption from registration under the Securities Act, if available.  Prior to any Transfer of the Purchased Securities, Note Shares or Warrant Shares, the Investor shall notify the Company of such Transfer (it being understood that the notification of any sale of Note Shares and/or Warrant Shares pursuant to an effective registration statement shall be made in accordance with Section 2(b) of the Registration Rights Agreement).  With respect to any such Transfer (other than pursuant to an effective registration statement), the Company may require the Investor to provide, prior to such Transfer, such evidence that the Transfer will comply with the Securities Act (including written representations and an opinion of counsel) as the Company may reasonably request.  The Company may impose stop-transfer instructions with respect to any securities that are to be transferred in contravention of this Agreement.

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(e)          The Investor may at any time, subject to applicable laws, request in writing that the Company exchange any outstanding Purchased Securities for convertible senior notes and warrants of one of the Company’s wholly owned entities in the People’s Republic of China (i) of equivalent value as and (ii) with terms substantially similar to, in each of (i) and (ii) those of the Purchased Securities then outstanding.  Subject to applicable laws, upon receiving a request from the Investor, the Company shall effect such exchange as soon as practicable.

4.6         Form D and Blue Sky .  The Company shall file a report on Form D with respect to the Purchased Securities if required to do so pursuant to Regulation D under the Securities Act and shall notify the Investor promptly after such filing.  The Company shall take such action as the Company shall reasonably determine to be necessary in order to obtain an exemption for or to qualify the Purchased Securities for sale to the Investor pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States.

4.7         CFC.  The Company shall make due inquiry with its tax advisors on an annual basis regarding the Company’s status as a CFC and regarding whether any portion of the Company’s income is “subpart F income” (as defined in Section 952 of the Code).  No later than 60 calendar days following the end of a taxable year in which the Company becomes a CFC, the Company shall inform the Investor of its status as a CFC.

4.8         Public Announcements.   No press release or other public announcement in respect of this Agreement or the transactions contemplated hereby that includes the name of the Investor shall be issued or made by the Company or its affiliates without the consent of the Investor (which consent shall not be unreasonably withheld, conditioned or delayed), except for any such press release or other public announcement as the Company may determine in good faith is required to be issued or made by it or any of its affiliates by applicable law, in which case the Company, shall use its commercially reasonable efforts to allow the Investor reasonable time under the circumstances to comment on such press release or other public announcement in advance of such issuance or making.

Article V

Miscellaneous

5.1         Termination.  This Agreement may be terminated at any time prior to the Closing:

(a)         by either the Investor or the Company if the Closing shall not have occurred by the thirtiethcalendar day following the date of this Agreement;  provided,however, that in the event the Closing has not occurred by such thirtieth calendar day, the parties will consult in good faith to determine whether to extend the term of this Agreement, it being understood that the parties shall be required to consult only until the fifth day after such thirtieth calendar day and not be under any obligation to extend the term of this Agreement; provided, further, that the right to terminate this Agreement under this Section 5.1(a) shall not be available to any party whose breach of any representation or warranty or failure to perform any obligation under this Agreement shall have caused or resulted in the failure of the Closing to occur on or prior to such thirtiethcalendar day;

(b)         by either the Investor or the Company in the event that any Governmental Entity shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; or

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(c)         by the mutual written consent of the Investor and the Company.

In the event of termination of this Agreement as provided in this Section 5.1, this Agreement shall forthwith become void and there shall be no liability on the part of either party hereto, except that nothing herein shall relieve either party from liability for any breach of this Agreement.

5.2         Amendment.  No amendment of any provision of this Agreement will be effective unless made in writing and signed by a duly authorized officer or representative of each party hereto.

5.3         Waiver of Conditions.  The conditions to each party’s obligation to consummate the Purchase are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable laws.  No waiver will be effective unless it is in a writing signed by a duly authorized officer or representative of the waiving party that makes express reference to the provision or provisions subject to such waiver.

5.4         Counterparts and Facsimile.  For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this Agreement may be delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been delivered.

5.5         Governing Law; Submission to Jurisdiction, Etc.

(a)         This Agreement will be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of laws principles thereof.

(b)         Each of the parties hereto agrees all disputes arising among the parties in connection with the Transaction Documents, or the breach, termination, interpretation or validity thereof, shall be finally settled by the Hong Kong International Arbitration Centre (the “HKIAC”) pursuant to UNCITRAL Rules with the Company, on the one hand, being entitled to designate one arbitrator, and with the Investor, on the other hand, being entitled to designate one arbitrator, while the third arbitrator will be selected by agreement between the two designated arbitrators or, failing such agreement, within 10 calendar days of initial consultation between the two arbitrators, by the HKIAC pursuant to its arbitration rules.  If any party fails to designate its arbitrator within 20 calendar days after the designation of the first of the three arbitrators, the HKIAC shall have the authority to designate any person whose interests are neutral to the parties as the second of the three arbitrators.  The arbitration shall be conducted in English.  To the extent consistent with UNCITRAL rules, each of the parties hereto shall cooperate with the others in provision of information during any discovery process relating to arbitrations in connection with the Transaction Documents.  The parties hereto further agree that, to the extent consistent with UNCITRAL rules, the parties shall be entitled to seek temporary and permanent injunctive relief from the arbitrators without the necessity of proving actual damages and without posting a bond or other security.

(c)         Notwithstanding the provisions of Section 5.5(b) above, each party hereto agrees, and the Investor shall procure the Observer to agree, that it shall bring any action or proceeding in respect of any claim arising out of or related to the provisions under Section 4.4(c) of this Agreement, and the corresponding confidentiality agreements or provisions in any subsequent agreements among the parties relating to the Observer’s rights, exclusively in the United States District Court for the Southern District of New York or any New York State court sitting in New York City (the “Designated Courts”), and solely in connection with such claim (i) irrevocably submits to the non-exclusive jurisdiction of the Designated Courts, (ii) waives any objection to laying venue in any such action or proceeding in the Designated Courts and (iii) waives any objection that any of the Designated Courts is an inconvenient forum or does not have jurisdiction over any party hereto.

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(d)         Each of the parties hereto agrees that notice may be served upon such party at the address and in the manner set forth for such party in Section 5.6.

(e)         To the extent permitted by applicable laws, each of the parties hereto hereby unconditionally waives trial by jury in any legal action or proceeding relating to the Transaction Documents or the transactions contemplated hereby or thereby.

5.6         Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the second Business Day following the date of dispatch if delivered by a recognized next-day courier service.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

(A)        If to the Investor:
	Nokia Growth Partners II, L.P.
	c/o N.G. Partners II, L.L.C., its general partner
	545 Middlefield Road, Suite 210
	Menlo Park, CA 94025
	United States of America
	Attention:  John Gardner
	Facsimile: (+1-650) 462-7252
with a copy to:
	Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP
	1200 Seaport Boulevard
	Redwood City, CA  94063
	United States of America
	Attention:  Brian C. Patterson
	Facsimile: (+1-650) 321-2800
(B)        If to the Company:
	KongZhong Corporation
	35th Floor, Tengda Plaza
	No. 168 Xizhimenwai Street
	Beijing 100044
	People’s Republic of China
	Attention:  Chief Financial Officer
	Facsimile:  (+86-10) 8857-5891
with a copy to:
	Sullivan & Cromwell LLP
	Suite 501, Tower 1
	China World Trade Center
	One Jian Guo Men Wai Avenue
	Beijing 100004
	People’s Republic of China
	Attention: Robert Chu
	Facsimile:  (+86-10) 5923-5950

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5.7         Entire Agreement, Etc.  This Agreement (including the Annexes hereto) and the other Transaction Documents constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

5.8         Definitions of “Subsidiary”, “affiliate” and “person”.  (a)        Unless otherwise stated, when a reference is made in this Agreement to a Subsidiary of a person, the term “Subsidiary” means those entities of which such person owns or controls more than 50% of the outstanding equity securities either directly or through an unbroken chain of entities as to each of which more than 50% of the outstanding equity securities is owned directly or indirectly by its parent, including as of the date hereof KongZhong Information Technologies (Beijing) Co., Ltd. and KongZhong China Co., Ltd.

(b)         The term “affiliate” means, with respect to any person, any person directly or indirectly controlling, controlled by or under common control with, such other person.  For purposes of this definition, “control” when used with respect to any person, means the possession, directly or indirectly, of the power to cause the direction of management and/or policies of such person, whether through the ownership of voting securities by contract or otherwise.

(c)         The term “person” means any individual, corporation, trust, association, company, partnership, joint venture, limited liability company, joint stock company, Governmental Entities or other entity.

5.9         Assignment.  Neither this Agreement nor any right, remedy, obligation nor liability arising hereunder or by reason hereof shall be assignable by any party hereto without the prior written consent of the other parties, and any attempt to assign any right, remedy, obligation or liability hereunder without such consent shall be void, except (i) an assignment, in the case of a merger or consolidation where such party is not the surviving entity, or a sale of substantially all of its assets, to the entity which is the survivor of such merger or consolidation or the purchaser in such sale or (ii) an assignment by Investor in accordance with Section 4.5(b) hereof.

5.10       Severability.  If any provision of this Agreement or a Transaction Document, or the application thereof to any person or circumstance, is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

5.11       No Third Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the Company, the Sponsor and the Investor (and the Permitted Transferee or other transferee to which an assignment is made in accordance with this Agreement), any benefits, rights, or remedies.

5.12       Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

*           *           *

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In Witness Whereof, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.

KONGZHONG CORPORATION
By:	/s/  Leilei Wang
	Name:	Leilei Wang
	Title:	CEO of the Company
LEILEI WANG
By:	/s/ Leilei Wang
	Name:	Leilei Wang
	Title:	CEO of the Company
NOKIA GROWTH PARTNERS II, L.P.
By:	N.G. Partners II, L.L.C.
	/s/ John Gardner
	Name:	John Gardner
	Title:	Managing Member

ANNEX A: FORM OF NOTE

(Face of Note)

THE NOTE REPRESENTED BY THIS INSTRUMENT (THIS “NOTE”) AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.  THIS NOTE IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A NOTE AND WARRANT PURCHASE AGREEMENT, DATED MARCH 18, 2009, AMONG THE ISSUER OF THESE SECURITIES, THE SPONSOR AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER.  THIS NOTE MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT.  ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

KONGZHONG CORPORATION

Adjustable Rate Convertible Senior Note Due 2014

US$6,775,400

KongZhong Corporation, an exempted limited liability company incorporated under the laws of the Cayman Islands (the “Company”), for value received, hereby promises to pay to Nokia Growth Partners II, L.P., or its Permitted Transferee (the “Holder”), the principal sum of SIX MILLION SEVEN HUNDRED SEVENTY FIVE THOUSAND FOUR HUNDRED United States Dollars (US$6,775,400) upon presentation and surrender of this Note on March 18, 2014, and to pay interest at the times and rates specified on the reverse of this Note until the principal hereof is paid or made available for payment.  Payment of the principal and interest of this Note shall be made to the Holder of this Note specified in the register of securities by wire transfer of immediately available funds to an account designated by the Holder in such lawful money of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Company the right to redeem this Note on certain terms and giving the Holder of this Note the right to convert this Note into Ordinary Shares and the right to require the Company to accelerate payment on this Note upon certain events, in each case on the terms and subject to the limitations referred to on the reverse hereof.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

****************

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

Dated: March __, 2009

KONGZHONG CORPORATION
By:
	Authorized Signatory
Attest:
	Authorized Signatory

(Reverse of Note)

This Note evidences a duly authorized issue of securities of the Company, designated as its Adjustable Rate Convertible Senior Note Due 2014, in an aggregate principal amount of US$6,775,400 (the “Principal Amount”), issued under and pursuant to a Note and Warrant Purchase Agreement, dated as of March 18, 2009 (the “Purchase Agreement”), among the Company, Leilei Wang, as the Sponsor, and Nokia Growth Partners II, L.P., as the Investor, to which Purchase Agreement and all amendments thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Company and the Holder of this Note.

The indebtedness evidenced by this Note is unsecured and unsubordinated indebtedness of the Company and ranks equally with the Company’s other unsecured and unsubordinated indebtedness.

1. Form and Denomination.  This Note shall only be represented by one certificate with a denomination equal to the Principal Amount.

2. Payment of Interest.  Until the Principal Amount is paid, or deemed to be paid, in full (whether at maturity, or by redemption, acceleration, conversion or cancellation), any outstanding portion of the Principal Amount of this Note that has not been repaid, redeemed, accelerated, converted or cancelled shall bear interest at a rate per annum as set forth below.

(a)           Initial Interest Rate.  For the period commencing and including March 18, 2009 and ending and including December 31, 2009, the applicable interest rate shall be 8% per annum, compounded annually on the outstanding portion of the Principal Amount and any accrued and unpaid interest that is overdue.

(b)           Adjusted Interest Rate.  For the fiscal year commencing January 1, 2010 and each fiscal year thereafter, so long as the Company is not in material breach of any of the covenants set forth in Article III of the Purchase Agreement, the applicable interest rate shall be as set forth below (the “Adjusted Interest Rate”) in accordance with the Earning/Debt Ratio achieved by the Company in respect of the immediately preceding fiscal year:

(i) The Adjusted Interest Rate for a given fiscal year shall be 6% per annum, compounded annually on the outstanding portion of the Principal Amount and any accrued and unpaid interest that is overdue, if the Company achieves an Earning/Debt Ratio equal to or greater than 2.1 in respect of the preceding fiscal year;

(ii) The Adjusted Interest Rate for a given fiscal year shall be 7% per annum, compounded annually on the outstanding portion of the Principal Amount and any accrued and unpaid interest that is overdue, if the Company achieves an Earning/Debt Ratio equal to or greater than 1.5 but less than 2.1 in respect of the preceding fiscal year; and

(iii) The Adjusted Interest Rate for a given fiscal year shall be 8% per annum, compounded annually on the outstanding portion of the Principal Amount and any accrued and unpaid interest that is overdue, if the Company achieves an Earning/Debt Ratio of less than 1.5 in respect of the preceding fiscal year;

“Earning/Debt Ratio” in respect of any given fiscal year means the quotient of (w) Adjusted Net Income for such fiscal year, divided by (x) the outstanding portion of the Principal Amount as of December 31 of such fiscal year.

“Adjusted Net Income” in respect of any given fiscal year means the sum of (y) the net income of the Company, as reflected in the audited consolidated statement of operations of the Company for such fiscal yearand (z) any interest, expenses and charges associated with this Note and anyexpenses and charges associated with the Warrant incurred or accrued during such fiscal year.  Prior to June 30 of each year until the Principal Amount is paid or deemed to be paid (whether at maturity, by redemption, acceleration, conversion or cancellation), the Company will provide the Holder with information regarding (i) the amount of any such interest, expenses and charges associated with this Note, (ii) the amount of any such expenses and charges associated with the Warrant and (iii) the resulting Adjusted Net Income for the applicable fiscal year.

(c)           Manner of Payment.  Accrued and unpaid interest shall be paid on the following basis (each date on which an interest payment is to be made being referred to herein as an “Interest Payment Date”):

(i) any unpaid interest accrued on any outstanding portion of the Principal Amount during the period March 18, 2009 through June 30, 2009 shall be paid on July 15, 2009;

(ii) any unpaid interest accrued on any outstanding portion of the Principal Amount during the period July 1 through December 31 of any given fiscal year commencing January 1, 2009 and each fiscal year thereafter shall be paid on January 15 of the following fiscal year;

(iii) any unpaid interest accrued on any outstanding portion of the Principal Amount during the period January 1 through June 30 of any given fiscal year commencing January 1, 2010 and each fiscal year thereafter shall be paid on July 15 of such fiscal year; and

(iv) notwithstanding clauses (i), (ii) and (iii) above in this Section 2(c), any unpaid interest accrued on any outstanding portion of the Principal Amount that is to be repaid (whether at maturity, or by redemption, acceleration, conversion or cancellation) as of a given date shall be paid on such date.

(d)           Day Count Convention.Interest on this Note will be calculated on the basis of a 360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the actual number of days elapsed during that month.

3. Conversion.  (a)     Subject to and in compliance with the provisions hereof, the Holder has the right, at any time prior to such time as the Principal Amount is paid or deemed to be paid (whether at maturity, by redemption, acceleration, conversion or cancellation), to convert the outstanding Principal Amount, or a portion thereof, into that number of Ordinary Shares (“Conversion”), obtained by dividing the outstanding Principal Amount of this Note, or portion thereof to be converted, by the conversion price of US$0.08915 (the “Conversion Price”), as adjusted from time to time in accordance with the provisions hereof, upon surrender of this Note, together with the delivery of a Conversion Notice in the form attached hereto as Exhibit A, to the principal executive office of the Company located at 35th Floor, Tengda Plaza,  No.168 Xizhimenwai Street, Beijing 100044, People’s Republic of China (or such other office or agency of the Company as the Company may designate by notice in writing to the Holder).  The Holder may exercise such right of Conversion, on each of up to three occasions, such that the portion of the outstanding Principal Amount of the Note to be converted on each occasion is not less than US$1,783,000.

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(b)             If the Holder on any occasion selects to convert less than the total Principal Amount of this Note then outstanding, the Holder will be entitled to receive from the Company within a reasonable time, and in any event not exceeding five Business Days after the date on which such portion of outstanding Principal Amount has been duly converted in accordance with the terms of this Note, a new note, substantially in form of this Note, for that amount of the Principal Amount equal to the difference between the Principal Amount outstanding prior to such Conversion and the portion of the Principal Amount that was so converted into Ordinary Shares.

(c)             Adjustments and Other Rights.  The Conversion Price shall be subject to adjustment from time to time as follows; provided, that if more than one clause of this Section 3(c) is applicable to a single event, no single event shall cause an adjustment under more than one clause of this Section 3(c) so as to result in duplication:

(i) Stock Splits, Subdivisions, Reclassifications or Combinations.  If the Company shall (i) declare and pay a dividend or make a distribution in Ordinary Shares to all holders of its outstanding Ordinary Shares, (ii) subdivide or reclassify the outstanding Ordinary Shares into a greater number of shares or (iii) combine or reclassify the outstanding Ordinary Shares into a smaller number of shares, the number of Ordinary Shares issuable upon Conversion at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the Holder after such date shall be entitled to convert into the number of Ordinary Shares which such Holder would have owned or been entitled to receive in respect of the Ordinary Shares subject to this Note after such date had the outstanding Principal Amount or such portion thereof been converted immediately prior to such date. In such event, the Conversion Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be adjusted to the number obtained by dividing (x) the product of (1) the number of Ordinary Shares issuable upon such Conversion before such adjustment and (2) the Conversion Price in effect immediately prior to the record or effective date, as the case may be, for the dividend, distribution, subdivision, combination or reclassification giving rise to this adjustment by (y) the new number of Ordinary Shares issuable upon Conversion determined pursuant to the immediately preceding sentence.

(ii) Business Combinations.  In case of any Business Combination or reclassification of the Ordinary Shares (other than a reclassification of Ordinary Shares referred to in Section 3(c)(i)), the Holder’s right to receive Ordinary Shares upon Conversion shall be converted into the right to convert the outstanding Principal Amount or a portion thereof to acquire the number of shares or other securities or property which the Ordinary Shares issuable (at the time of such Business Combination or reclassification) upon Conversion immediately prior to such Business Combination or reclassification would have been entitled to receive upon consummation of such Business Combination or reclassification; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the Holder shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to the Holder’s right to convert the outstanding Principal Amount or a portion thereof into any shares or other securities or property pursuant to this paragraph.  In determining the kind and amount of shares, securities or the property receivable upon Conversion following the consummation of such Business Combination, if the holders of Ordinary Shares have the right to elect the kind or amount of consideration receivable upon consummation of such Business Combination, then the Holder shall have the right to make a similar election (including, without limitation, being subject to similar proration constraints) upon Conversion with respect to the number of shares or other securities or property which the Holder will receive upon Conversion.  “Business Combination” means a merger, consolidation, statutory share exchange, sale, transfer or exclusive license of all or substantially all of assets or shares or similar transaction that requires the approval of the Company’s shareholders or other transactions or series of transactions that otherwise result in a change in control of the Company.

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(iii) Rounding of Calculations; Minimum Adjustments.  All calculations under this Section 3(c) shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a share, as the case may be.  Any provision of this Section 3(c) to the contrary notwithstanding, no adjustment in the Conversion Price or the number of Ordinary Shares into which the outstanding Principal Amount or a portion thereof is convertible shall be made if the amount of such adjustment would be less than US$0.01 or one-tenth (1/10th) of an Ordinary Share, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall in the aggregate be US$0.01 or 1/10th of an Ordinary Share, or more.

(iv) Timing of Issuance of Additional Ordinary Shares Upon Certain Adjustments.  In any case in which the provisions of this Section 3(c) shall require that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i) issuing to the Holder of this Note converted after such record date and before the occurrence of such event the additional Ordinary Shares issuable upon such Conversion by reason of the adjustment required by such event over and above the Ordinary Shares issuable upon such Conversion before giving effect to such adjustment and (ii) paying to such Holder any amount of cash in lieu of a fractional Ordinary Share; provided, however, that the Company upon request shall deliver to such Holder a due bill or other appropriate instrument evidencing such Holder’s right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment.

(v) Notice of Adjustment Event.  In the event that the Company shall propose to take any action of the type described in this Section 3(c) (but only if the action of the type described in this Section 3(c) would result in an adjustment in the Conversion Price or a change in the type of securities or property to be delivered upon Conversion), the Company shall give notice to the Holder, in the manner set forth in Section 9, which notice shall specify the record date, if any, with respect to any such action and the approximate date on which such action is to take place. Such notice shall also set forth the facts with respect thereto as shall be reasonably necessary to indicate the effect on the Conversion Price and the kind or class of shares or other securities or property which shall be deliverable upon Conversion. In the case of any action which would require the fixing of a record date, such notice shall be given at least fiveBusiness Days prior to the date so fixed, and in case of all other action, such notice shall be given at least 10 Business Days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

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(vi) Adjustment Rules.  Any adjustments pursuant to this Section 3(c) shall be made successively whenever an event referred to herein shall occur. If an adjustment in Conversion Price made hereunder would reduce the Conversion Price to an amount below the par value of the Ordinary Shares, then such adjustment in Conversion Price made hereunder shall reduce the Conversion Price to the par value of the Ordinary Shares.

(d)             Issuance of Shares; Authorization.  The Company shall enter the Holder in the Company’s Register of Members as the holder of the Ordinary Shares issued upon Conversion, and certificates for Ordinary Shares issued upon such Conversion will be issued in the name of the Holder, in each case, within a reasonable time, not to exceed five Business Days after the date on which this Note has been duly converted in accordance with the terms of this Note. The Company hereby represents and warrants that any Ordinary Share issuable upon Conversion in accordance with the provisions of Section 3 will be duly authorized and when issued upon Conversion in accordance with the terms of this Note, will be validly issued, fully paid and non-assessable.

(e)             Fractional Shares.  No fractional Ordinary Shares or scrip representing fractional Ordinary Shares shall be issued upon any Conversion.  In lieu of any fractional Ordinary Share to which the Holder would otherwise be entitled, the Holder shall be entitled to receive a cash payment therefor on the basis of the Conversion Price.

(f)              No Rights as Shareholders.  This Note does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the date of conversion hereof.

4. Redemption at the Option of the Company.  (a)    At any time on or after March 18, 2012, this Note may be redeemed, in whole but not in part, at the option of the Company at a redemption price equal to 100% of the Principal Amount then outstanding, together with interest accrued but unpaid to the date of redemption.  The Company shall give the Holder written notice of such redemption not less than 30 calendar days prior to the date when the Company intends to effect such redemption.

(b)             Except as set forth in Section 4(a) above, prepayment of principal, together with accrued interest thereon, may not be made without the prior written consent of the Holder.

5. Events of Default; Acceleration.

(a)          Event of Default.  For the purposes hereof, an Event of Default means:

  (i) a material default on any material debt instrument of the Company or any of its Subsidiaries;

  (ii) unless the Holder has waived in writing, the amount of the total current assets less the total liabilities of the Company, as calculated in accordance with GAAP, is less than 2.5 times the sum of the outstanding Principal Amount and accrued but unpaid interest as of the date of such event;

  (iii) default in the payment of any interest upon this Note when it becomes due and payable, and continuance of such default for a period of 30 calendardays;

  (iv) a material default on any of the covenants set forth in Article III of the Purchase Agreement, and continuance of such material default for a period of 30 calendardays;

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  (v) commencement of any action or proceeding to make any assignment for the benefit of creditors, or any bankruptcy, liquidation, dissolution, termination of existence or other similar action, voluntarily or involuntarily, of any of the Company, KongZhong Information Technologies (Beijing) Co., Ltd. or KongZhong China Co., Ltd; or

  (vi) involvement of the Company or any of the members of its Board of Directors or executive officers in litigation or regulatory or governmental investigations, actions or proceedings, that the Investor reasonably expects, after consultation with the Company, will have a material and adverse effect on the Nokia brand.

(b)           Acceleration.  If an Event of Default occurs and is continuing, the Holder may declare the Principal Amount then outstanding and any accrued but unpaid interest due and payable by a notice in writing to the Company.  Upon receipt of such notice and if the Event of Default is continuing, the Company shall make such payment to the Holder within 30 Business Days.  The Holder may, at any time, rescind such notice and/or waive an Event of Default by sending written notice thereof to the Company.

6. Transfer/Assignment.

(a) Neither this Note nor any rights hereunder are transferable, without the prior written consent of the Company.  Notwithstanding the foregoing, this Note may be transferred to the Permitted Transferee without the prior written consent of the Company in accordance with Section 4.5(b) of the Purchase Agreement.  In the event that this Note is transferred to the Permitted Transferee or to another transferee with the consent of the Company, a new note shall be made and delivered by the Company, of the same tenor and date as this Note but registered in the name of the such transferee, upon surrender of this Note, duly endorsed, to the office or agency of the Company described in Section 3.

(b) This Note and any rights hereunder, and any Ordinary Shares issued upon Conversion shall be subject to the applicable restrictions and other terms and conditions set forth in the Purchase Agreement.

(c)  If and for so long as required by the Purchase Agreement, this Note certificate shall contain a legend as set forth in Section 2.3(e) of the Purchase Agreement.

7. Loss, Theft, Destruction or Mutilation of this Note.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Note, the Company shall make and deliver, in lieu of such lost, stolen, destroyed or mutilated Note, a new note of like tenor and representing the same Principal Amount as provided for in such lost, stolen, destroyed or mutilated Note.

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8. Governing Law.  This Note shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of laws principles thereof. The Holder and the Company agree that all disputes arising in connection with this Note, or the breach, termination, interpretation or validity thereof, shall be finally settled by the HKIAC pursuant to UNCITRAL Rules with the Company, on the one hand, being entitled to designate one arbitrator, and with the Holder, on the other hand, being entitled to designate one arbitrator, while the third arbitrator will be selected by agreement between the two designated arbitrators or, failing such agreement within 10 calendar days of initial consultation between the two arbitrators, by the HKIAC pursuant to its arbitration rules.  If either the Holder or the Company fails to designate its arbitrator within 20 calendar days after the designation of the first of the three arbitrators, the HKIAC shall have the authority to designate any person whose interests are neutral to the Holder and the Company as the second of the three arbitrators.  The arbitration shall be conducted in English.  To the extent consistent with UNCITRAL rules, the Holder and the Company shall cooperate with the other in provision of information during any discovery process relating to arbitrations in connection with this Note.  The Holder and the Company hereto further agree that, to the extent consistent with UNCITRAL rules, the Holder and the Company shall be entitled to seek temporary and permanent injunctive relief from the arbitrators without the necessity of proving actual damages and without posting a bond or other security.  To the extent permitted by applicable law, the Holder and the Company hereby unconditionally waive trial by jury in any legal action or proceeding relating to this Note or the transactions contemplated hereby.  The Holder and the Company agree that notice may be served upon the other at the address and in the manner set forth in Section 9 hereof.

9. Notices.  Any notice, request, instruction or other document to be given hereunder will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the second Business Day following the date of dispatch if delivered by a recognized next day courier service.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the Holder or the Company, as applicable, to receive such notice.

(A)     If to the Company, to:

KongZhong Corporation

35Th Floor, Tengda Plaza

No. 168 Xizhimenwai Street

Beijing 100044

People’s Republic of China

Attention: Chief Financial Officer

Facsimile: (+86-10) 8857-5891

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with a copy to (which copy alone shall not constitute notice):

Sullivan & Cromwell LLP

Suite 501, Tower 1, China World Trade Center

One Jian Guo Men Wai Avenue

Beijing 100004

People’s Republic of China

Attention: Robert Chu

Facsimile: (+86-10) 5923-5950

(B)      If to the Investor to:

Nokia Growth Partners II, L.P.

c/o N.G. Partners II L.L.C., its general partner

545 Middlefield Road, Suite 210

Menlo Park, CA 94025

United States of America

Attention:  John Gardner

Facsimile: (+1-650) 462-7252

with a copy to (which copy alone shall not constitute notice):

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP

1200 Seaport Blvd.

Redwood City, CA  94063

United States of America

Attention:  Brian C. Patterson

Facsimile: (+1-650) 321-2800

10. Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding day that is a Business Day; provided, if any Interest Payment Date would otherwise be a day which is not a Business Day, and such Interest Payment Date is delayed as a result thereof, no additional interest shall be payable on account of such delayed payment.

11. Binding Effect.  This Note shall be binding upon any successors or assigns of the Company.

12. Amendments.  This Note may be amended and the observance of any term of this Note may be waived only with the written consent of the Company and the Holder.

13. Terms Defined in the Purchase Agreement.  All capitalized terms used in this Note, but not otherwise defined herein, shall have the respective meanings indicated in the Purchase Agreement.

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14. Entire Agreement. This Note and Exhibit A attached hereto, and the Purchase Agreement (and the other documents referenced in Section 5.7 of the Purchase Agreement), constitute the entire agreement among the parties, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

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EXHIBIT A

[FORM OF CONVERSION NOTICE]

If you want to convert this Note into Ordinary Shares of the Company, check the box:  ð

To convert only part of this Note, state the outstanding Principal Amount to be converted (which must be US$1,783,000 or above):

US$

Please fill in the form below:

(Insert the social security or tax ID no. of the person in whose name the Ordinary Shares should be issued)

(Print or type such person’s name, address and zip code and the address and other appropriate delivery information to which the Ordinary Shares should be delivered, if different)

Date:	By:
		Name:
		Title:

NOTICE: The name of the signatory must correspond with the name as written upon the face of this Note or its Permitted Transferee in every particular, without alteration or any change whatsoever.

ANNEX B: FORM OF WARRANT

THE WARRANT REPRESENTED BY THIS INSTRUMENT AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

THIS INSTRUMENT IS ISSUED PURSUANT TO AND SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A NOTE AND WARRANT PURCHASE AGREEMENT, DATED AS OF MARCH 18, 2009, AMONG THE ISSUER OF THESE SECURITIES, THE SPONSOR AND THE INVESTOR REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED BY THIS INSTRUMENT MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT.  ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

WARRANT

to purchase

Ordinary shares

of

KONGZHONG CORPORATION

an exempted limited liability company incorporated under the laws of the Cayman Islands

Issue Date:  March 18, 2009

1.     Definitions. Unless the context otherwise requires, when used herein, the following terms shall have the respective meanings indicated, and capitalized terms not otherwise defined herein shall have the respective meanings indicated in the Purchase Agreement.

“Business Combination” means a merger, consolidation, statutory share exchange, sale, transfer or exclusive license of all or substantially all of assets or shares or similar transaction that requires the approval of the Company’s shareholders or other transactions or series of transactions that otherwise result in a change in control of the Company.

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“Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the City of New York, New York, United States of America, or Beijing, People’s Republic of China generally are authorized or required by law or other governmental actions to close.

“Company” means KongZhong Corporation, an exempted limited liability company incorporated under the laws of the Cayman Islands.

 “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

“Exercise Price” means US$0.125 per Ordinary Share.

“Expiration Time” has the meaning set forth in Section 3.

 “HKIAC” has the meaning ascribed to it in the Purchase Agreement.

“Ordinary Shares” means the ordinary shares of the Company, par value US$0.0000005 per share.

“Permitted Transferee” has the meaning ascribed to it in the Purchase Agreement.

“Purchase Agreement” means the Note and Warrant Purchase Agreement, dated as of March 18, 2009, as amended from time to time, among the Company, Leilei Wang, as the Sponsor, and the Warrantholder, including all annexes thereto.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

“Transaction Documents” has the meaning ascribed to it in the Purchase Agreement.

 “Warrantholder” has the meaning set forth in Section 2.

“Warrant” means this Warrant, issued pursuant to the Purchase Agreement.

2.     Number of Shares; Exercise Price. This certifies that, for value received, Nokia Growth Partners II, L.P. or its Permitted Transferee, as the case may be as the holder of this Warrant (the “Warrantholder”), is entitled, upon the terms and subject to the conditions hereinafter set forth, to acquire from the Company up to an aggregate of 80,000,000 Ordinary Shares, at a purchase price per Ordinary Share equal to the Exercise Price. The number of Ordinary Shares and the Exercise Price are subject to adjustment as provided herein, and all references to “Ordinary Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments.

3.     Exerciseof Warrant; Term. To the extent permitted by applicable laws and regulations, the right to purchase the Ordinary Shares represented by this Warrant is exercisable , in whole but not in part by the Warrantholder, at any time after the execution and delivery of this Warrant by the Company on the date hereof, but in no event later than 5:00 p.m., New York City time, March 18, 2014 (the “Expiration Time”), by (A) the surrender of this Warrant and the delivery of the Notice of Exercise annexed hereto, duly completed and executed on behalf of the Warrantholder, at the principal executive office of the Company located at 35th Floor, Tengda Plaza, No. 168 Xizhimenwai Street, Beijing 100044, People’s Republic of China (or such other office or agency of the Company as it may designate by notice in writing to the Warrantholder) and (B) payment of the Exercise Price for the Ordinary Shares thereby purchased at the election of the Warrantholder by wire transfer of immediately available funds to an account designated by the Company.

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4.     Issuance of Shares; Authorization. The Company shall enter the Warrantholder in the Company’s Register of Members as the holder of the Ordinary Shares issued upon the exercise of this Warrant, and certificates for Ordinary Shares issued upon exercise of this Warrant will be issued in the name of the Warrantholder and delivered to the Warrantholder, in each case, as promptly as is reasonably practicable, not to exceed five Business Days after the date on which this Warrant has been duly exercised in accordance with the terms of this Warrant. The Company hereby represents and warrants that any Ordinary Shares issuable upon the exercise of this Warrant in accordance with the provisions of Section 3 will be duly authorized and when issued upon exercise of this Warrant against payment therefor in accordance with the terms of this Warrant, will be validly issued, fully paid and non-assessable.

5.     No Fractional Shares or Scrip. No fractional Ordinary Shares or scrip representing fractional Ordinary Shares shall be issued upon any exercise of this Warrant. In lieu of any fractional Ordinary Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be entitled to receive a cash payment therefore on the basis of the Exercise Price.

6.     No Rights as Shareholders. This Warrant does not entitle the Warrantholder to any voting rights or other rights as a shareholder of the Company prior to the date of exercise hereof.

7.     Transfer/Assignment.

(A)   Neither this Warrant nor any rights hereunder are transferable, without the prior written consent of the Company.  Notwithstanding the foregoing, this Warrant may be transferred to the Permitted Transferee without the prior written consent of the Company in accordance with Section 4.5(b) of the Purchase Agreement.  In the event that this Warrant is transferred to the Permitted Transferee or to another transferee with the consent of the Company, a new warrant shall be made and delivered by the Company, of the same tenor and date as this Warrant but registered in the name of the such transferee, upon surrender of this Warrant, duly endorsed, to the office or agency of the Company described in Section 3.

(B)   This Warrant and any rights hereunder, and any Ordinary Shares issued upon exercise of this Warrant, shall be subject to the applicable restrictions and other terms and conditions set forth in the Purchase Agreement.

(C)   If and for so long as required by the Purchase Agreement, this Warrant certificate shall contain a legend as set forth in Section 2.3(e) of the Purchase Agreement.

8.     Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Company shall make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new warrant of like tenor and representing the right to purchase the same aggregate number of Ordinary Shares as provided for in such lost, stolen, destroyed or mutilated Warrant.

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9.     Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding day that is a Business Day.

10.   Adjustments and Other Rights. The Exercise Price and the number of Ordinary Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as follows; provided, that if more than one subsection of this Section 10 is applicable to a single event, no single event shall cause an adjustment under more than one subsection of this Section 10 so as to result in duplication:

(A)   Stock Splits, Subdivisions, Reclassifications or Combinations.  If the Company shall (i) declare and pay a dividend or make a distribution in Ordinary Shares to all holders of its outstanding Ordinary Shares, (ii) subdivide or reclassify the outstanding Ordinary Shares into a greater number of shares or (iii) combine or reclassify the outstanding Ordinary Shares into a smaller number of shares, the number of Ordinary Shares issuable upon exercise of this Warrant at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the Warrantholder after such date shall be entitled to purchase the number of Ordinary Shares which such holder would have owned or been entitled to receive in respect of the Ordinary Shares subject to this Warrant after such date had this Warrant been exercised immediately prior to such date. In such event, the Exercise Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be adjusted to the number obtained by dividing (x) the product of (1) the number of Ordinary Shares issuable upon the exercise of this Warrant before such adjustment and (2) the Exercise Price in effect immediately prior to the record or effective date, as the case may be, for the dividend, distribution, subdivision, combination or reclassification giving rise to this adjustment by (y) the new number of Ordinary Shares issuable upon exercise of the Warrant determined pursuant to the immediately preceding sentence.

(B)   Business Combinations.  In case of any Business Combination or reclassification of the Ordinary Shares (other than a reclassification of Ordinary Shares referred to in Section 10(A)), the Warrantholder’s right to receive Ordinary Shares upon exercise of this Warrant shall be converted into the right to exercise this Warrant to acquire the number of shares or other securities or property which the Ordinary Shares issuable (at the time of such Business Combination or reclassification) upon exercise of this Warrant immediately prior to such Business Combination or reclassification would have been entitled to receive upon consummation of such Business Combination or reclassification; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the Warrantholder shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to the Warrantholder’s right to exercise this Warrant in exchange for any shares or other securities or property pursuant to this paragraph.  In determining the kind and amount of shares, securities or the property receivable upon exercise of this Warrant following the consummation of such Business Combination, if the holders of Ordinary Shares have the right to elect the kind or amount of consideration receivable upon consummation of such Business Combination, then the Warrantholder shall have the right to make a similar election (including, without limitation, being subject to similar proration constraints) upon exercise of this Warrant with respect to the number of shares or other securities or property which the Warrantholder will receive upon exercise of this Warrant.

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(C)   Rounding of Calculations; Minimum Adjustments.  All calculations under this Section 10 shall be made to the nearest one-tenth (1/10th) of a cent or to the nearest one-hundredth (1/100th) of a share, as the case may be. Any provision of this Section 10 to the contrary notwithstanding, no adjustment in the Exercise Price or the number of Ordinary Shares into which this Warrant is exercisable shall be made if the amount of such adjustment would be less than US$0.01 or one-tenth (1/10th) of an Ordinary Share, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall in the aggregate be US$0.01 or 1/10th of an Ordinary Share, or more.

(D)   Timing of Issuance of Additional Ordinary Shares Upon Certain Adjustments.  In any case in which the provisions of this Section 10 shall require that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (i) issuing to the Warrantholder of this Warrant exercised after such record date and before the occurrence of such event the additional Ordinary Shares issuable upon such exercise by reason of the adjustment required by such event over and above the Ordinary Shares issuable upon such exercise before giving effect to such adjustment and (ii) paying to such Warrantholder any amount of cash in lieu of a fractional Ordinary Share; provided, however, that the Company upon request shall deliver to such Warrantholder a due bill or other appropriate instrument evidencing such Warrantholder’s right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment.

(E)   Notice of Adjustment Event.  In the event that the Company shall propose to take any action of the type described in this Section 10 (but only if the action of the type described in this Section 10 would result in an adjustment in the Exercise Price or the number of Ordinary Shares into which this Warrant is exercisable or a change in the type of securities or property to be delivered upon exercise of this Warrant), the Company shall give prompt notice to the Warrantholder, in the manner set forth in Section 14, which notice shall specify the record date, if any, with respect to any such action and the approximate date on which such action is to take place. Such notice shall also set forth the facts with respect thereto as shall be reasonably necessary to indicate the effect on the Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable upon exercise of this Warrant. In the case of any action which would require the fixing of a record date, such notice shall be given at least five Business Days prior to the date so fixed, and in case of all other action, such notice shall be given at least 10 Business Days prior to the taking of such proposed action. Failure to give such notice, or any defect therein, shall not affect the legality or validity of any such action.

(F)   Adjustment Rules.  Any adjustments pursuant to this Section 10 shall be made successively whenever an event referred to herein shall occur. If an adjustment in Exercise Price made hereunder would reduce the Exercise Price to an amount below the par value of the Ordinary Shares, then such adjustment in Exercise Price made hereunder shall reduce the Exercise Price to the par value of the Ordinary Shares.

11.   Governing Law. This Warrant will be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of laws principles thereof. The Warrantholder and the Company agree that all disputes arising in connection with this Warrant, or the breach, termination, interpretation or validity thereof, shall be finally settled by the HKIAC pursuant to UNCITRAL Rules with the Company, on the one hand, being entitled to designate one arbitrator, and with the Warrantholder, on the other hand, being entitled to designate one arbitrator, while the third arbitrator will be selected by agreement between the two designated arbitrators or, failing such agreement within 10 calendar days of initial consultation between the two arbitrators, by the HKIAC pursuant to its arbitration rules. If the Warrantholder or the Company fails to designate its arbitrator within 20 calendar days after the designation of the first of the three arbitrators, the HKIAC shall have the authority to designate any person whose interests are neutral to the Warrantholder and the Company as the second of the three arbitrators. The arbitration shall be conducted in English. To the extent consistent with UNCITRAL rules, the Warrantholder and the Company shall cooperate with the other in provision of information during any discovery process relating to arbitrations in connection with this Warrant. The Warrantholder and the Company further agree that, to the extent consistent with UNCITRAL rules, the Warrantholder and the Company shall be entitled to seek temporary and permanent injunctive relief from the arbitrators without the necessity of proving actual damages and without posting a bond or other security. To the extent permitted by applicable law, the Warrantholder and the Company hereby unconditionally waive trial by jury in any legal action or proceeding relating to this Warrant or the transactions contemplated hereby. The Warrantholder and the Company agree that notice may be served at the address and in the manner set forth in Section 14.

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12.   Binding Effect. This Warrant shall be binding upon any successors or assigns of the Company.

13.   Amendments. This Warrant may be amended and the observance of any term of this Warrant may be waived only with the written consent of the Company and the Warrantholder.

14.   Notices. Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the second Business Day following the date of dispatch if delivered by a recognized next day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

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(A)                       If to the Company, to:

KongZhong Corporation

35th Floor, Tengda Plaza

No. 168 Xizhimenwai Street

Beijing 100044

People’s Republic of China

Attention: Chief Financial Officer

Facsimile: (+86-10) 8857 5891

with a copy to (which copy alone shall not constitute notice):

Sullivan & Cromwell LLP

Suite 501, Tower 1, China World Trade Center

One Jian Guo Men Wai Avenue

Beijing 100004

People’s Republic of China

Attention: Robert Chu

Facsimile: (+86-10) 5923 5950

(B)                       If to the Investor to:

Nokia Growth Partners II, L.P.

c/o N.G. Partners II L.L.C., its general partner

545 Middlefield Road, Suite 210

Menlo Park, CA 94025

United States of America

Attention:  John Gardner

Facsimile: (+1-650) 462-7252

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with a copy to (which copy alone shall not constitute notice):

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP

1200 Seaport Boulevard

Redwood City, CA  94063

United States of America

Attention:  Brian C. Patterson

Facsimile: (+1-650) 321-2800

15.   Entire Agreement. This Warrant and the form attached hereto, and the Purchase Agreement (and the other documents referenced in Section 5.7 of the Purchase Agreement), constitute the entire agreement among the parties, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

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[FORM OF NOTICE OF EXERCISE]

DATE:  _________

TO:  KongZhong Corporation

RE:  Election to Purchase Ordinary Shares

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees to subscribe for and purchase the number of Ordinary Shares set forth below covered by such Warrant.  The undersigned, in accordance with Section 3 of the Warrant, hereby agrees to pay the aggregate Exercise Price for such Ordinary Shares.

Number of Ordinary Shares: ____________________

Aggregate Exercise Price: _____________________________________]

Holder:	____________________________________________
By:	____________________________________________
Name:	____________________________________________
Title:	____________________________________________

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by a duly authorized officer.

Dated: March __, 2009

KONGZHONG CORPORATION
By:
	Name:
	Title:
Attest:
By:
	Name:
	Title:

[Signature page to warrant]

ANNEX C: FORM OF REGISTRATION RIGHTS AGREEMENT

Registration  Rights Agreement

Dated March 18, 2009

by and between

KongZhong Corporation

and

Nokia Growth Partners II, L.P.

TABLE OF CONTENTS

		Page
Recitals		1
Section 1.	Certain Definitions.	1
Section 2.	F-3 Registration.	3
Section 3.	Registration Procedures	4
Section 4.	Piggyback Registrations.	6
Section 5.	Registration Expenses.	7
Section 6.	Indemnification.	7
Section 7.	Securities Act Restrictions	9
Section 8.	Transfers of Rights.	9
Section 9.	Miscellaneous.	10

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Registration  Rights Agreement, dated March 18, 2009, by and between KongZhong Corporation, an exempted limited liability company incorporated under the laws of the Cayman Islands (the “Company”), and Nokia Growth Partners II, L.P., a Delaware limited partnership (the “Investor”).

Recitals:

WHEREAS:

A.          The Company and the Investor are parties to a Note and Warrant Purchase Agreement, dated as of March 18, 2009, pursuant to which the Company desires to issue and sell to the Investor (i) US$6,775,400aggregate principal amount of the Company’s Convertible Senior Note Due 2014 (the “Note”) and (ii) a warrant to purchase 80,000,000 ordinary shares of the Company, par value US$0.0000005 per share (the “Ordinary Shares”) (such warrant, the “Warrant”), and the Investor desires to purchase from the Company the Note and the Warrant; and

B.           In connection with the consummation of the transactions contemplated by the Purchase Agreement, the parties hereto desire to enter into this Agreement in order to create certain registration rights for the Investor as set forth below;

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

Section 1.     Certain Definitions.

In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings:

“Agreement” means this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to this Registration Rights Agreement as the same may be in effect at the time such reference becomes operative.

“Business Combination” means a merger, consolidation, statutory share exchange, sale, transfer or exclusive license of all or substantially all of assets or shares or similar transaction that requires the approval of the Company’s shareholders or other transactions or series of transactions that otherwise result in a change in control of the Company.

“Commission” means the United States Securities and Exchange Commission or any successor agency.

“Company” has the meaning set forth in the Preamble.

“Effectiveness Period” means the period from and including the date as of which the Shelf Registration Statement becomes effective until the Note Shares, the Warrant Shares and any securities issued by the Company after the date hereof in respect of the Note Shares or the Warrant Shares by way of a share dividend or share split or in connection with a combination, subdivision or reclassification of the Ordinary Shares or a Business Combination have ceased to be Registrable Shares.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Governmental Entity” means any United States of America, People’s Republic of China and other national, state, provincial, local and other governmental or regulatory authority.

“HKIAC” has the meaning set forth in Section 9(e)(ii).

“Investor” has the meaning set forth in the Preamble.  References herein to the Investor shall apply to the Permitted Transferee or any other transferee as consented to by the Company pursuant to Section 8.

“Issue Date” means the date of original issuance of the Note and the Warrant.

“Note” has the meaning set forth in Recital A hereto.

“Note Shares” means the Ordinary Shares acquired by the Investor upon conversion of the Note.

“Ordinary Shares” has the meaning set forth in Recital A hereto.

“Person” means any individual, corporation, trust, association, company, partnership, joint venture, limited liability company, joint stock company, Governmental Entity or other entity.

“Permitted Transferee” means Nokia Corporation.

“Piggyback Registration” has the meaning set forth in Section 4(a).

“Prospectus” means the prospectus or prospectuses (whether preliminary or final) included in any Registration Statement and relating to Registrable Shares, as amended or supplemented and including all materials incorporated by reference in such prospectus or prospectuses.

“Purchase Agreement” means the Note and Warrant Purchase Agreement specified in Recital A hereto, as such agreement may be amended from time to time.

“Registrable Shares” means, at any time, (i) the Note Shares, (ii) the Warrant Shares and (iii) any securities issued by the Company after the date hereof in respect of the Note Shares or the Warrant Shares by way of a share dividend or share split or in connection with a combination, subdivision or reclassification of the Ordinary Shares or a Business Combination, but excluding (iv) any and all Note Shares and Warrant Shares and other securities referred to in clauses (i), (ii) and (iii) that at any time after the date hereof (a) have been sold pursuant to an effective Registration Statement or Rule 144 under the Securities Act, (b) have been sold in any other transaction such that a subsequent public distribution of such securities would not require registration under the Securities Act, (c) are eligible for sale pursuant to Rule 144 under the Securities Act without limitation thereunder on volume or manner of sale, (d) are not outstanding or (e) have been transferred in violation of Section 8 hereof or any provision of the Purchase Agreement.  It is acknowledged that, once a security of the kind described in any of clauses (i), (ii) and (iii) above becomes a security of the kind described in clause (iv) above, such security shall cease to be a Registrable Share for all purposes of this Agreement and the Company’s obligations regarding Registrable Shares hereunder shall cease to apply with respect to such security.

“Registration Expenses” has the meaning set forth in Section 5(a).

“Registration Statement” means any registration statement of the Company which covers any of the Registrable Shares pursuant to this Agreement, including the Prospectus, and any pre-effective or post-effective amendments and supplements to such Registration Statement, all exhibits and all documents incorporated by reference in such Registration Statement.

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“Securities Act” means the Securities Act of 1933, as amended.

“Shelf Registration Statement” has the meaning set forth in Section 2(a).

“Shelf Takedown” has the meaning set forth in Section 2(b).

“Suspension Period” has the meaning set forth in Section 3(f).

“Warrant” has the meaning set forth in Recital A hereto.

“Warrant Shares” means the Ordinary Shares acquired by the Investor upon exercise of the Warrant.

In addition to the above definitions, unless the context requires otherwise:

(i)        all references to any statute, rule or regulation are to the statute, rule or regulation as amended, modified, supplemented or replaced from time to time (and, in the case of any statute, include any rules and regulations promulgated under such statute) and to any section of any statute, rule or regulation include any successor to the section;

(ii)       whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed followed by the words “without limitation”;

(iii)      when a reference is made in this Agreement to “Recitals” or “Sections”, such reference shall be to a Recital or Section of this Agreement unless otherwise indicated;

(iv)      references to “herein”, “hereof”, “hereunder” and the like refer to this Agreement as a whole and not to any particular section or provision, unless the context requires otherwise;

(v)       references to “Business Day” shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the City of New York, New York, United States of America, or Beijing, People’s Republic of China generally are authorized or required by law or other governmental actions to close;

(vi)      all references to “US$” mean the lawful currency of the United States of America; and

(vii)     the table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement.

Section 2.      F-3 Registration.

(a)       Initial Registration. Subject to the other provisions of this Agreement and the eligibility of the Company to use Form F-3, the Company shall use reasonable best efforts to prepare and file or cause to be prepared and filed with the Commission, as soon as practicable but in any event by the date that is 60 calendar days after the Issue Date, a Registration Statement on Form F-3 for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act registering the resale from time to time of the Registrable Shares by the Investor (the “Shelf Registration Statement”).

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(b)      Right to Effect Shelf Takedowns.  The Investor shall be entitled, at any time and from time to time when a Shelf Registration Statement is effective and until the expiration of the Effectiveness Period, to sell such Registrable Shares as are then registered pursuant to such Shelf Registration Statement (each, a “Shelf Takedown”). The Investor shall provide written notice to the Company of any plan to sell any Registrable Shares not less than 10 Business Days prior to the intended date of the first sale under such plan.  Such notice shall set forth the plan of sale for a period of 60 calendar days (or such other period upon which the Investor and the Company may mutually agree).  The Investor shall provide the Company with a new notice in accordance with the preceding two sentences prior to any sale of Registrable Shares after the expiration of the initial 60-day period (or such period upon which the Investor and the Company may mutually agree).  Itis acknowledged that, notwithstanding any other provisions herein, such Shelf Takedowns are not expected to be underwritten.

Section 3.      Registration Procedures.  (a) In connection with the registration obligations of the Company under Section 2 hereof, the Company shall:

(i) subject to the other provisions of this Agreement, use its reasonable best efforts to cause the Shelf Registration Statement to be declared effective under the Securities Act as promptly as is practicable but in any event by the date that is 120 calendar days after the Issue Date and to keep the Shelf Registration Statement continuously effective under the Securities Act until the expiration of the Effectiveness Period.  At the time the Shelf Registration Statement is declared effective, the Investor shall be named as a selling security holder in the Shelf Registration Statement and the related Prospectus in such a manner as to permit the Investor to deliver such Prospectus to purchasers of Registrable Shares in accordance with applicable law;

(ii) use reasonable best efforts to prepare and file with the Commission such amendments and supplements to such Shelf Registration Statementand the Prospectus used in connection therewith as may be necessary to comply with the applicable requirements of the Securities Act and to keep such Shelf Registration Statement effective until the expiration of the Effectiveness Period, and to comply with the applicable requirements of the Securities Act with respect to the disposition of all the Registrable Shares covered by such Shelf Registration Statement until the expiration of the Effectiveness Period in accordance with the intended methods of disposition set forth in such Shelf Registration Statement;

(iii) use reasonable best efforts to obtain promptly the withdrawal or lifting of any order suspending the effectiveness of the Shelf Registration Statement;

(iv) notify the Investor, as soon as reasonably practicable, at any time when a Prospectus would be required under the Securities Act to be delivered by a distributor, of the occurrence of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and, at the request of the Investor, use reasonable best efforts to prepare, as soon as reasonably practicable, a supplement or amendment to such Prospectus so that, as thereafter delivered to any prospective purchasers of such Registrable Shares, such Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

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(v) notify the Investor, as soon as reasonably practicable, at any time of (A) any request by the Commission or any other Governmental Entity for amendments or supplements to a Registration Statement or Prospectus and (B) the issuance by the Commission or any other Governmental Entity of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Shares or the initiation of any proceedings for that purpose; and

(vi) cooperate with the Investor with respect to the Registrable Shares being offered and, to the extent applicable, use reasonable best efforts to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend, except as required by applicable law) representing the Registrable Shares to be offered and resold pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor may reasonably request.

(b)      The Company may require the Investor to furnish to the Company information regarding such Investor and each distributor of the Registrable Shares as to which any registration is being effected and the distribution of such Registrable Shares as the Company may from time to time reasonably request in connection with such registration.

(c)      The Investor agrees that, upon being advised in writing by the Company of the occurrence of an event pursuant to Sections 3(a)(iv) and 3(a)(v), the Investor will immediately discontinue (and direct any other Persons making offers and sales of the Registrable Shares to immediately discontinue) offers and sales of such Registrable Shares pursuant to any Registration Statement until the Investor is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by Section 3(a)(iv), and, if so directed by the Company, the Investor will deliver to the Company all copies of the Prospectus covering such Registrable Shares current at the time of receipt of such notice.  The Company will use reasonable best efforts to ensure that the use of the Prospectus may be resumed as promptly as practicable.

(d)      It is acknowledged that any failure of the Company to file a Registration Statement or any amendment or supplement thereto or to cause any such document to become or remain effective until the expiration of the Effectiveness Period, due to reasons that are not reasonably within its control, or due to any refusal of the Commission to permit a Registration Statement or Prospectus to become or remain effective or to be used because of unresolved comments thereon from the Commission (or on any documents incorporated therein by reference) despite the Company’s good faith and reasonable best efforts to resolve those comments, shall not be a breach of this Agreement.

(e)      The Investor shall provide, at least five Business Days prior to the anticipated filing date of the Registration Statement, all requested information required to be provided by the Investor for inclusion therein.  If the Investor fails to provide such information at least five Business Days prior to the anticipated filing date, the Company shall have the right to defer the filing of the Registration Statement by such an amount of time as it takes to obtain and reflect in the Registration Statement all information that is necessary or advisable to be reflected in the Registration Statement and as would be necessary or advisable under the then-existing market conditions.  The Investor shall, as soon as reasonably practicable, notify the Company in the event that any information supplied by the Investor for inclusion in any Registration Statement or related Prospectus contains an untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and immediately discontinue (and direct any other Persons making offers and sales of the Registrable Shares to immediately discontinue) offers and sales of such Registrable Shares pursuant to such Registration Statement until the Investor is advised in writing by the Company that the use of the Prospectus may be resumed and is furnished with a supplemented or amended Prospectus as contemplated by Section 3(a)(iv), and, if so directed by the Company, the Investor shall deliver to the Company all copies of the Prospectus covering such Registrable Shares current at the time of such notice.

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(f)      The Company may (i) delay the filing or effectiveness of a Registration Statement or (ii) prior to the pricing of any offering of Registrable Shares pursuant to a Registration Statement, delay such offering (and, if it so chooses, withdraw any Registration Statement that has been filed) if the Company determines in its sole discretion (x) that proceeding with such an offering would require the Company to disclose material information that would not otherwise be required to be disclosed at that time and that the disclosure of such information at that time would not be in the best interests of the Company or its shareholders or (y) that the registration or offering to be delayed would, if not delayed, materially and adversely affect the Company and its subsidiaries, taken as a whole, or materially interfere with, or jeopardize the success of, any pending or proposed material transaction, including any debt or equity financing, any acquisition or disposition, any recapitalization or reorganization or any other material transaction, whether due to commercial reasons, a desire to avoid premature disclosure of information or any other reason. Any period during which the Company has delayed a filing, an effective date or an offering pursuant to this Section 3(f) is herein called a “Suspension Period”.  The Company shall provide prompt written notice to the Investor of the commencement and termination of any Suspension Period (and any withdrawal of a Registration Statement pursuant to this Section 3(f)), but shall not be obligated under this Agreement to disclose the reasons therefor.  The Investor shall keep the existence of each Suspension Period confidential and refrain from making offers and sales of Registrable Shares (and direct any other Persons making such offers and sales to refrain from doing so) during each Suspension Period.

Section 4.      Piggyback Registrations.

(a)      Right to Piggyback.

If the Company proposes to register any Ordinary Shares under the Securities Act (other than on a registration statement on Form S-8, F-8, S-4 or F-4) at any time prior to the expiration of the Effectiveness Period, whether for its own account or for the account of one or more holders of Ordinary Shares (other than the Investor), and the form of registration statement to be used may be used for any registration of Registrable Shares (a “Piggyback Registration”), the Company shall give written notice to the Investor of its intention to effect such a registration and, subject to Sections 4(b) and 4(c), shall include in such registration statement and in any offering of Ordinary Shares to be made pursuant to that registration statement such amount of Registrable Shares that the Company and the Investor have mutually agreed upon, with respect to which the Company has received a written request for inclusion therein from the Investor no more than five Business Days after the Company’s dispatch of its notice to the Investor or, in the case of a primary offering, such shorter time as is reasonably specified by the Company in light of the circumstances, provided that such amount of Registrable Shares shall account for not less than 20% of the total number of Ordinary Shares to be so registered.  The Company shall have no obligation to proceed with any Piggyback Registration and may abandon, terminate and/or withdraw such registration for any reason at any time prior to the pricing thereof.

(b)      Priority on Primary Piggyback Registrations.  If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriters advise the Company that in their opinion the number of Ordinary Shares proposed to be included in such offering exceeds the number of Ordinary Shares which can be sold in such offering without materially delaying or jeopardizing the success of the offering (including the price per share of the Ordinary Shares proposed to be sold in such offering), the Company shall include in such registration and offering (i) first, the number of Ordinary Shares that the Company proposes to sell and (ii) second, to the extent the number of Ordinary Shares which can be sold in such offering without materially delaying or jeopardizing the success of the offering (including (i)) exceeds the number of Ordinary Shares proposed under (i), the number of Ordinary Shares requested to be included therein by holders of Ordinary Shares, including the Investor (if the Investor has elected to include Registrable Shares in such Piggyback Registration), pro rata among all such holders on the basis of the number of Ordinary Shares requested to be included therein by all such holders or as such holders and the Company may otherwise agree, such that the sum of the Ordinary Shares proposed under (i) and the number of Ordinary Shares proposed under (ii) does not exceed the number of Ordinary Shares which can be sold in such offering without materially delaying or jeopardizing the success of the offering (including (i)).

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(c)      Priority on Secondary Piggyback Registrations.  If a Piggyback Registration is initiated as an underwritten registration on behalf of a holder of Ordinary Shares other than the Investor, and the managing underwriters advise the Company that in their opinion the number of Ordinary Shares proposed to be included in such registration exceeds the number of Ordinary Shares which can be sold in such offering without materially delaying or jeopardizing the success of the offering (including the price per share of the Ordinary Shares to be sold in such offering), the Company shall include in such registration the number of Ordinary Shares requested to be included therein by the holders of Ordinary Shares, including the Investor (if the Investor has elected to include Registrable Shares in such Piggyback Registration), pro rata among such holders on the basis of the number of Ordinary Shares requested to be included therein by such holders or as such holders and the Company may otherwise agree, such that the aggregate number of Ordinary Shares proposed to be included in the offering does not exceed the number of Ordinary Shares which can be sold in such offering without materially delaying or jeopardizing the success of the offering.

(d)      Selection of Underwriters.  If any Piggyback Registration is a primary or secondary underwritten offering, the Company shall have the sole right and discretion to select the managing underwriter or underwriters to administer any such offering.

(e)      Basis of Participations.  The Investor may not sell Registrable Shares in any offering pursuant to a Piggyback Registration unless it (a) agrees to sell such Registrable Shares on the same basis provided in the underwriting or other distribution arrangements approved by the Company and that apply to the Company and/or any other holders involved in such Piggyback Registration and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lockups and other documents required under the terms of such arrangements.

Section 5.      Registration Expenses. All expenses incident to the Company’s performance of or compliance with this Agreement, including all registration and filing fees, fees and expenses of compliance with securities laws and printing expenses and fees and disbursements of counsel for the Company and all independent certified public accountants and other Persons retained by the Company (such expenses, the “Registration Expenses”) (but not including any fees attributable to the sale of Registrable Shares), shall be borne by the Company. The Investor shall bear the cost of all underwriting discounts and commissions associated with any sale of Registrable Shares and shall pay all of its own costs and expenses, including all fees and expenses of any counsel (and any other advisers) representing the Investor, and any share transfer taxes and duties.

Section 6.      Indemnification.

(a)      The Company shall indemnify, to the fullest extent permitted by law, the Investor and each Person who controls the Investor (within the meaning of the Securities Act) against all losses, claims, damages, liabilities, judgments, costs (including reasonable costs of investigation) and expenses (including reasonable attorneys’ fees) arising out of or based upon any untrue or allegedly untrue statement of a material fact contained in any Registration Statement or Prospectus or any amendment thereof or supplement thereto or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are made in reliance and in conformity with information furnished to the Company by the Investor for use therein.

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(b)      In connection with any Registration Statement in which the Investor is participating, the Investor shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus, or amendment or supplement thereto, and shall indemnify, to the fullest extent permitted by law, the Company, its officers and directors and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities, judgments, costs (including reasonable costs of investigation) and expenses (including reasonable attorneys’ fees) arising out of or based upon any untrue or allegedly untrue statement of material fact contained in the Registration Statement or Prospectus, or any amendment or supplement thereto, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the same are made in reliance and in conformity with information furnished to the Company by or on behalf of the Investor for use therein.

(c)      Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying Person of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying Person to assume the defense of such claim with counsel reasonably satisfactory to the indemnified Person.  Failure to so notify the indemnifying Person shall not relieve it from any liability that it may have to an indemnified Person except to the extent that the indemnifying Person is materially and adversely prejudiced thereby.  The indemnifying Person shall not be subject to any liability for any settlement made by the indemnified Person without its consent (but such consent shall not be unreasonably withheld).  An indemnifying Person who is entitled to, and elects to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel (in addition to one local counsel) for all Persons indemnified (hereunder or otherwise) by such indemnifying Person with respect to such claim (and all other claims arising out of the same circumstances), unless in the reasonable judgment of any indemnified Person, there may be one or more legal or equitable defenses available to such indemnified Person which are in addition to or may conflict with those available to another indemnified Person with respect to such claim, in which case such maximum number of counsel for all indemnified Persons shall be two rather than one.  If an indemnifying Person is entitled to, and elects to, assume the defense of a claim, the indemnified Person shall continue to be entitled to participate in the defense thereof, with counsel of its own choice, but, except as set forth above, the indemnifying Person shall not be obligated to reimburse the indemnified Person for the costs thereof.  The indemnifying Person shall not consent to the entry of any judgment or enter into or agree to any settlement relating to a claim or action for which any indemnified Person would be entitled to indemnification hereunder, unless such judgment or settlement imposes no ongoing obligations on any such indemnified Person and includes as an unconditional term the giving, by all relevant claimants and plaintiffs to such indemnified Person, a release, satisfactory in form and substance to such indemnified Person, from all liabilities in respect of such claim or action for which such indemnified Person would be entitled to such indemnification.  The indemnifying Person shall not be liable hereunder for any amount paid or payable or incurred pursuant to or in connection with any judgment entered or settlement effected with the consent of an indemnified Person unless the indemnifying Person has also consented to such judgment or settlement.

(d)      The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified Person or any officer, director or controlling Person of such indemnified Person and shall survive the transfer of securities and the expiration of the Effectiveness Period but only with respect to offers and sales of Registrable Shares made before the expiration of the Effectiveness Period.

(e)      If the indemnification provided for in or pursuant to this Section 6 is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying Person, in lieu of indemnifying such indemnified Person, shall contribute to the amount paid or payable by such indemnified Person as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying Person, on the one hand, and of the indemnified Person, on the other hand, in connection with the statements or omissions which result in such losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations.  The relative fault of the indemnifying Person, on the one hand, and of the indemnified Person, on the other hand, shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying Person or by the indemnified Person, and by such Person’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  In no event shall the liability of the indemnifying Person be greater in amount than the amount for which such indemnifying Person would have been obligated to pay by way of indemnification if the indemnification provided for under Section 6(a) or 6(b) hereof had been available under the circumstances.

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Section 7.      Securities Act Restrictions. The Registrable Shares are restricted securities under the Securities Act and may not be offered or sold except pursuant to an effective Registration Statement or an available exemption from registration under the Securities Act. Accordingly, the Investor shall not, directly or through others, offer or sell any Registrable Shares except pursuant to a Registration Statement as contemplated herein or pursuant to Rule 144 or another exemption from registration under the Securities Act, if available. Prior to any Transfer of the Purchased Securities, Note Shares or Warrant Shares, the Investor shall notify the Company of such Transfer (it being understood that the notification of any sale of Note Shares and/or Warrant Shares pursuant to an effective registration statement shall be made in accordance with Section 2(b) of this Agreement). With respect to any such Transfer (other than pursuant to an effective registration statement), the Company may require the Investor to provide, prior to such Transfer, such evidence that the Transfer will comply with the Securities Act (including written representations and an opinion of counsel) as the Company may reasonably request. The Company may impose stop-transfer instructions with respect to any Registrable Shares that are to be transferred in contravention of this Agreement. Any certificates representing the Registrable Shares may bear a legend (and the Company’s register of members may bear a notation) referencing the restrictions on transfer contained in this Agreement and the Purchase Agreement, until such time as such securities have ceased to be (or are to be transferred in a manner that results in their ceasing to be) Registrable Shares.

Section 8.      Assignment; Transfers of Rights. Neither this Agreement nor any rights hereunder are assignable or transferable, without the prior written consent of the Company; provided, however, if the Investor transfers the Purchased Securities to the Permitted Transferee in accordance with Section 4.5(b) of the Purchase Agreement, this Agreement may also be assigned to the Permitted Transferee without the prior written consent of the Company. Such Permitted Transferee shall, together with all other such transferees as consented to by the Company, also have the rights of the Investor under this Agreement, but only if such transferee signs and delivers to the Company a written acknowledgment (in form and substance satisfactory to the Company) that it has joined with the Investor as a party to this Agreement and has assumed the rights and obligations of the Investor hereunder with respect to the rights transferred to it by the Investor. Such permitted transfer shall be effective when (but only when) such transferee has signed and delivered the written acknowledgment to the Company. Upon any such effective transfer, such transferee shall automatically have the rights so transferred, and the Investor’s obligations under this Agreement, and the rights not so transferred, shall continue, provided that under no circumstances shall the Company be required to provide more than one Shelf Registration. Notwithstanding any other provision of this Agreement, no Person who acquires securities transferred in violation of this Agreement or the Purchase Agreement, or who acquires securities that are not or upon acquisition cease to be Registrable Shares, shall have any rights under this Agreement with respect to such securities, and such securities shall not have the benefits afforded hereunder to Registrable Shares.

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Section 9.      Miscellaneous.

(a)      Future Registration Rights.  The Company agrees that it shall not grant any registration rights to any third party (i) unless such rights are expressly made subject to the rights of the Investor in a manner consistent with this Agreement or (ii) if such registration rights are senior to, or take priority over, the registration rights granted to the Investor under this Agreement.

(b)      Amendment.  No amendment of any provision of this Agreement will be effective unless made in writing and signed by a duly authorized officer or representative of each party.

(c)      Waiver of Conditions.  The conditions to each party’s duty to perform its obligations under this Agreement are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable laws.  No waiver will be effective unless it is in a writing signed by a duly authorized officer or representative of the waiving party that makes express reference to the provision or provisions subject to such waiver.

(d)      Counterparts and Facsimile.  For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this Agreement may be delivered by facsimile and such facsimiles will be deemed as sufficient as if actual signature pages had been delivered.

(e)      Governing Law; Submission to Jurisdiction, Etc.

(i) This Agreement will be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflict of laws principles thereof.

(ii) Each of the parties hereto agrees all disputes arising among the parties in connection with this Agreement, or the breach, termination, interpretation or validity thereof, shall be finally settled by the Hong Kong International Arbitration Centre (the “HKIAC”) pursuant to UNCITRAL Rules with the Company, on the one hand, being entitled to designate one arbitrator, and with the Investor, on the other hand, being entitled to designate one arbitrator, while the third arbitrator will be selected by agreement between the two designated arbitrators or, failing such agreement, within 10 calendar days of initial consultation between the two arbitrators, by the HKIAC pursuant to its arbitration rules.  If any party fails to designate its arbitrator within 20 calendar days after the designation of the first of the three arbitrators, the HKIAC shall have the authority to designate any person whose interests are neutral to the parties as the second of the three arbitrators.  The arbitration shall be conducted in English.  To the extent consistent with UNCITRAL rules, each of the parties hereto shall cooperate with the others in provision of information during any discovery process relating to arbitrations in connection with the Transaction Documents.  The parties hereto further agree that, to the extent consistent with UNCITRAL rules, the parties shall be entitled to seek temporary and permanent injunctive relief from the arbitrators without the necessity of proving actual damages and without posting a bond or other security.

(iii) Each of the parties hereto agrees that notice may be served upon such party at the address and in the manner set forth for such party in Section 9(f).

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(iv) To the extent permitted by applicable laws, each of the parties hereto hereby unconditionally waives trial by jury in any legal action or proceeding relating to this Agreement or the transactions contemplated hereby.

(f)      Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally, or by facsimile, upon confirmation of receipt, or (b) on the second Business Day following the date of dispatch if delivered by a recognized next day courier service.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

(A)     If to the Investor:

Nokia Growth Partners II, L.P.

c/o N.G. Partners II, L.L.C., its general partner

545 Middlefield Road, Suite 210

Menlo Park, CA 94025

United States of America

Attention:  John Gardner

Facsimile: (+1-650) 462-7252

with a copy to:

Gunderson Dettmer Stough

Villeneuve Franklin & Hachigian, LLP

1200 Seaport Boulevard

Redwood City, CA 94063

United States of America

Attention: Brian C. Patterson

Facsimile: (+1-650) 321-2800

(B)      If to the Company:

KongZhong Corporation

35th Floor, Tengda Plaza

No. 168 Xizhimenwai Street

Beijing 100044

People’s Republic of China

Attention: Chief Financial Officer

Facsimile: (+86-10) 8857-5891

with a copy to:

Sullivan & Cromwell LLP

Suite 501, Tower 1, China World Trade Center

One Jian Guo Men Wai Avenue

Beijing 100004

People’s Republic of China

Attention: Robert Chu

Facsimile: (+86-10) 5923-5950

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(g)      Entire Agreement.  This Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.

(h)Severability.  If any provision of this Agreement, or the application hereof to any person or circumstance, is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

(i)No Third-Party Beneficiaries. Nothing contained in this Agreement, expressed or implied, is intended to confer upon any person or entity other than the Company and the Investor (and the Permitted Transferee or other transferee to which a transfer is made in accordance with this Agreement), any benefits, rights, or remedies (except as specified in Section 6 hereof).

*           *           *

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In Witness Whereof, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.

KONGZHONG CORPORATION
By:
	Name:           Leilei Wang
	Title:             CEO of the Company

NOKIA GROWTH PARTNERS II, L.P.
By: N.G. Partners II, L.L.C.
	Name:           John Gardner
	Title:             Managing Member

ANNEX D: FORM OF LEGAL OPINION OF COMPANY’S CAYMAN ISLANDS COUNSEL

Nokia Growth Partners II, L.P

c/o N.G. Partners II L.L.C., its general partner

545 Middlefield Road, Suite 210

Menlo Park, CA 94025

USA

__ March 2009

Dear Sirs

KongZhong Corporation

We have acted as counsel as to Cayman Islands law to KongZhong Corporation (the "Company") in connection with its issue to the Investor of (i) an adjustable rate convertible senior note due 2014 in the aggregate principal amount of US$6,775,400 (the “Note”) and (ii) a warrant (the “Warrant”) to purchase up to 80,000,000 ordinary shares of the Company, par value US$0.0000005 per share (“Ordinary Shares”).

1 Documents Reviewed

We have reviewed originals, copies, drafts or conformed copies of the following documents:

1.1 The Certificate of Incorporation and Memorandum and Articles of Association of the Company adopted by a special resolution passed on 11 June 2004 and further amended by special resolutions passed on 6 September 2005.

1.2 The written resolutions of the board of directors of the Company dated __ March 2009 (the "Resolutions") and the corporate records of the Company maintained at its registered office in the Cayman Islands.

1.3 A Certificate of Good Standing dated __ March 2009 issued by the Registrar of Companies in the Cayman Islands (the "Certificate of Good Standing").

1.4 A certificate from a director of the Company a copy of which is annexed hereto (the "Director's Certificate").

1.5 The Note and Warrant Purchase Agreement between the Investor, the Company and Leilei Wang dated __ March 2009 (the "Purchase Agreement").

1.6 The registration rights agreement between the Company and the Investor.

1.7 The Warrant included as an Annex to the Purchase Agreement.

1.8 The Note included as an Annex to the Purchase Agreement.

The document listed in paragraph 1.5 to 1.6 above are collectively referred to as the "Transaction Documents".

2 Assumptions

The following opinion is given only as to, and based on, circumstances and matters of fact existing and known to us on the date of this opinion. This opinion only relates to the laws of the Cayman Islands which are in force on the date of this opinion.  In giving this opinion we have relied (without further verification) upon the completeness and accuracy of the Director's Certificate and the Certificate of Good Standing. We have also relied upon the following assumptions, which we have not independently verified:

2.1 The Transaction Documents, the Note and the Warrant have been or will be authorised and duly executed and unconditionally delivered by or on behalf of all relevant parties in accordance with all relevant laws (other than, with respect to the Company, the laws of the Cayman Islands).

2.2 The Transaction Documents, the Note and the Warrant are, or will be, legal, valid, binding and enforceable against all relevant parties in accordance with their terms under the laws of the State of New York and all other relevant laws (other than, with respect to the Company, the laws of the Cayman Islands).

2.3 The choice of the laws of the State of New York as the governing law of the Transaction Documents, the Note and the Warrant has been made in good faith and would be regarded as a valid and binding selection which will be upheld by the courts of the State of New York and any other relevant jurisdiction (other than the Cayman Islands) as a matter of New York law and all other relevant laws (other than the laws of the Cayman Islands).

2.4 The validity and binding effect under the laws of the State of New York of the submission by the parties (including the Company) in the Transaction Documents, the Note and the Warrant to arbitration in the Hong Kong Special Administrative Region of the People's Republic of China ("Hong Kong") under the auspices of the Hong Kong International Arbitration Centre.

2.5 Copy documents, conformed copies or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals, and translations of documents provided to us are complete and accurate.

2.6 All signatures, initials and seals are genuine.

2.7 The power, authority and legal right of all parties under all relevant laws and regulations (other than, with respect to the Company, the laws of the Cayman Islands) to enter into, execute, unconditionally deliver and perform their respective obligations under the Transaction Documents.

2.8 The Note and the Warrant will be issued in accordance with the provisions of the Purchase Agreement.

2.9 Payment obligations of the Company under the Transaction Documents are unsubordinated and undeferred as a contractual matter under the governing law of the Transaction Documents and the parties to the Transaction Documents do not subsequently agree to subordinate or defer their claims.

2.10 All conditions precedent contained in the Purchase Agreement have been satisfied or duly waived and there has been no breach of the Purchase Agreement at the date of this opinion.

2.11 No invitation has been or will be made by or on behalf of the Company to the public in the Cayman Islands to subscribe for the Note or the Warrant.

2.12 There is nothing under any law (other than the law of the Cayman Islands) which would or might affect the opinions hereinafter appearing. Specifically, we have made no independent investigation of the laws of Hong Kong or the State of New York.

3 Opinions

Based upon, and subject to, the foregoing assumptions and the qualifications set out below, and having regard to such legal considerations as we deem relevant, we are of the opinion that:

3.1 The Company has been duly incorporated as an exempted company with limited liability and is validly existing and in good standing under the laws of the Cayman Islands.

3.2 The Company has full power and authority under its Memorandum and Articles of Association to enter into, execute and perform its obligations under the Transaction Documents, the Note and the Warrant including the issue of the Note and the Warrant pursuant to the Purchase Agreement.

3.3 The execution and delivery of the Transaction Documents and the issue of the Note and the Warrant by the Company and the performance of its obligations thereunder do not conflict with or result in a breach of any of the terms or provisions of the Memorandum and Articles of Association of the Company or any law, public rule or regulation applicable to the Company in the Cayman Islands currently in force.

3.4 The execution, delivery and performance of the Transaction Documents have been authorised by and on behalf of the Company and, assuming the Transaction Documents have been executed and unconditionally delivered by any Director of the Company, the Transaction Documents have been duly executed and delivered on behalf of the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms.

3.5 The Note and the Warrant have been duly authorised by the Company and when the Note and the Warrant are signed in facsimile or manually by a Director on behalf of the Company and delivered against due payment therefor will be duly executed, issued and delivered and will constitute the legal, valid and binding obligations of the Company enforceable in accordance with their respective terms.

3.6 Based upon review of the Memorandum and Articles of Association, the authorized share capital of the Company consists of 1,000,000,000,000 Ordinary Shares with a par value of US$0.0000005 each of which 1,443,156,120 shares are issued and outstanding.  The issued and outstanding Ordinary Shares have been duly authorized and are validly issued as fully paid and non-assessable (meaning that no further sums are payable to the Company on such shares), and are not subject to any pre-emptive rights under Cayman Islands law or the Memorandum and Articles of Association. The Ordinary Shares have the rights, preferences, privileges and restrictions set forth in the Memorandum and Articles of Association.

3.7 When Ordinary Shares are issued upon exercise of the Warrant (the "Warrant Shares") in accordance with the terms of the Warrant and the Purchase Agreement against payment in full of the consideration therefor set forth in the Warrant and the Purchase Agreement and entered as fully paid in the register of members (shareholders), the Warrant Shares will be legally issued and allotted, as fully paid and non-assessable, and upon entry in the register of members (shareholders), the Warrantholder (as defined in the Warrant) will be the holder of such Warrant Shares as is set out against its name in such register.

3.8 When Ordinary Shares are issued upon conversion of the Note (the "Conversion Shares") in accordance with the terms of the Note and the Purchase Agreement and entered as fully paid in the register of members (shareholders), the Conversion Shares will be legally issued and allotted, as fully paid and non-assessable, and upon entry in the register of members (shareholders), the Holder (as defined in the Note) will be the holder of such Conversion Shares as is set out against its name in such register.

3.9 No authorisations, consents, approvals, licences, validations or exemptions are required by law from any governmental authorities or agencies or other official bodies in the Cayman Islands in connection with:

(a) the execution, creation or delivery of the Transaction Documents by the Company;

(b) subject to the payment of stamp duty, the enforcement of the Transaction Documents, the Note and the Warrant against the Company;

(c) the execution, issue or delivery of the Note and the Warrant;

(d) the performance by the Company of its obligations under the Note, the Warrant and the Transaction Documents;

(e) the payment of the principal and interest and any other amounts under the Note;

(f) the creation, allotment or issue of the Conversion Shares upon the conversion of the Note; and

(g) the creation, allotment or issue of the Warrant Shares upon the exercise of the Warrant.

3.10 No taxes, fees or charges (other than stamp duty or any applicable court fees) are payable (either by direct assessment or withholding) to the government or other taxing authority in the Cayman Islands under the laws of the Cayman Islands in respect of:

(a) the execution or delivery of the Transaction Documents, the Note or the Warrant;

(b) the enforcement of the Transaction Documents, the Note or the Warrant;

(c) payments made under, or pursuant to, the Transaction Documents, the Note or the Warrant;

(d) the issue, transfer or redemption of the Note;

(e) the creation, allotment or issue of the Conversion Shares upon the conversion of the Note; or

(f) the creation, allotment or issue of the Warrant Shares upon the exercise of the Warrant.

The Cayman Islands currently have no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax.

3.11 The courts of the Cayman Islands will observe and give effect to the choice of the laws of the State of New York law as the governing law of the Transaction Documents, the Note and the Warrant.

3.12 The unsecured obligations of the Company under the Transaction Documents, the Note and Warrant rank and will rank at least pari passu with all its other present and future unsecured obligations (other than those preferred by law).

3.13 Based solely on our search of the Register of Writs and Other Originating Process (the "Court Register") maintained by the Clerk of the Court of the Grand Court of the Cayman Islands [from the date of incorporation of the Company to__ March 2009 (the "Litigation Search"), the Court Register disclosed no writ, originating summons, originating motion, petition or third party notice ("Originating Process") pending before the Grand Court of the Cayman Islands in which the Company is a defendant or respondent.

3.14 Although there is no statutory enforcement in the Cayman Islands of judgments obtained in Hong Kong or the State of New York, a judgment obtained in such jurisdiction will be recognised and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment:

(a) is given by a foreign court of competent jurisdiction;

(b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;

(c) is final;

(d) is not in respect of taxes, a fine or a penalty; and

(e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands.

3.15 The courts of the Cayman Islands will recognise and enforce arbitral awards made pursuant to an arbitration agreement in a jurisdiction which is a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention").  Hong Kong and the Cayman Islands are parties to the New York Convention with the result that an arbitral award made in Hong Kong pursuant to the Transaction Documents, the Note or the Warrant will be recognised and enforced in the Cayman Islands unless the party against whom enforcement is sought can establish one of the defences set out in section 7 of the Foreign Arbitral Awards Enforcement Law (1997 Revision) of the Cayman Islands.

3.16 It is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Transaction Documents, the Note or the Warrant that any document be filed, recorded or enrolled with any governmental authority or agency or any official body in the Cayman Islands.

3.17 Neither the Investor nor any other holder of the Note or the Warrant will be treated as resident, domiciled or carrying on or transacting business in the Cayman Islands solely by reason of the negotiation, preparation or execution of the Transaction Documents or the issue of the Note or the Warrant, or the holding of the Conversion Shares or the Warrant Shares.

3.18 Neither the Investor nor any other holder of the Note or the Warrant will be required to be licenced, qualified, or otherwise entitled to carry on business in the Cayman Islands in order to enforce their respective rights under the Transaction Documents, the Note or the Warrant, or as a consequence of the execution, delivery and performance of the Transaction Documents or the issue of the Note or the Warrant, or the holding of the Conversion Shares or the Warrant Shares.

3.19 There is no exchange control legislation under Cayman Islands law and accordingly there are no exchange control regulations imposed under Cayman Islands law.

4 Qualifications

The opinions expressed above are subject to the following qualifications:

4.1 The term "enforceable" as used above means that the obligations assumed by the Company under the Transaction Documents, the Note and the Warrant are of a type which the courts of the Cayman Islands will enforce.  It does not mean that those obligations will necessarily be enforced in all circumstances in accordance with their terms.  In particular:

(a) enforcement may be limited by bankruptcy, insolvency, liquidation, reorganisation, readjustment of debts or moratorium or other laws of general application relating to or affecting the rights of creditors;

(b) enforcement may be limited by general principles of equity.  For example, equitable remedies such as specific performance may not be available, inter alia, where damages are considered to be an adequate remedy;

(c) some claims may become barred under the statutes of limitation or may be or become subject to defenses of set off, counterclaim, estoppel and similar defenses;

(d) where obligations are to be performed in a jurisdiction outside the Cayman Islands, they may not be enforceable in the Cayman Islands to the extent that performance would be illegal under the laws of that jurisdiction;

(e) the Cayman Islands court has jurisdiction to give judgment in the currency of the relevant obligation and statutory rates of interest payable upon judgments will vary according to the currency of the judgment.  If the Company becomes insolvent and is made subject to a liquidation proceeding, the Cayman Islands court will require all debts to be proved in a common currency, which is likely to be the "functional currency" of the Company determined in accordance with applicable accounting principles. Currency indemnity provisions have not been tested, so far as we are aware, in the courts of the Cayman Islands;

(f) arrangements that may be regarded as penalties will not be enforceable;

(g) the courts of the Cayman Islands may decline to exercise jurisdiction in relation to substantive proceedings brought under or in relation to the Transaction Documents in matters where they determine that such proceedings may be tried in a more appropriate forum; and

(h) a company cannot, by agreement or in its articles of association, restrict the exercise of a statutory power, and there exists doubt as to enforceability of any provision in the Transaction Documents, the Note or the Warrant whereby the Company covenants not to exercise powers specifically given to its shareholders by the Companies Law (2007 Revision) of the Cayman Islands, including, without limitation, the power to increase its authorised share capital, amend its memorandum and articles of association, or present a petition to a Cayman Islands court for an order to wind up the Company.

4.2 Cayman Islands stamp duty may be payable if the original Transaction Documents, the original Note or the original Warrant are brought to or executed in the Cayman Islands.

4.3 To maintain the Company in good standing under the laws of the Cayman Islands, annual filing fees must be paid and returns made to the Registrar of Companies.

4.4 The obligations of the Company may be subject to restrictions pursuant to United Nations sanctions as implemented under the laws of the Cayman Islands.

4.5 A certificate, determination, calculation or designation of any party to the Transaction Documents, the Note or the Warrant as to any matter provided therein might be held by a Cayman Islands court not to be conclusive final and binding if, for example, it could be shown to have an unreasonable or arbitrary basis, or in the event of manifest error.

4.6 The Litigation Search of the Court Register would not reveal, amongst other things, an Originating Process filed with the Grand Court which, pursuant to the Grand Court Rules or best practice of the Clerk of the Courts' office, should have been entered in the Court Register but was not in fact entered in the Court Register (properly or at all) or an Originating Process not otherwise filed or disclosed.

4.7 In principle a Cayman Islands court will award costs and disbursements in litigation in accordance with the relevant contractual provisions but there remains some uncertainty as to the way in which the rules of the Grand Court will be applied in practice.  Whilst it is clear that costs incurred prior to judgment can be recovered in accordance with the contract, it is likely that post-judgment costs (to the extent recoverable at all) will be subject to taxation in accordance with Grand Court Rules Order 62.

4.8 Preferred creditors under Cayman Islands law will rank ahead of unsecured creditors of the Company.  Furthermore, all costs, charges and expenses properly incurred in the voluntary winding up of a company, including the remuneration of the liquidators, are payable out of the assets of the company in priority to all other unsecured claims.

4.9 We reserve our opinion as to the extent to which a Cayman Islands court would, in the event of any relevant illegality, sever the offending provisions and enforce the remainder of the transaction of which such provisions form a part, notwithstanding any express provisions in this regard.

4.10 We make no comment with regard to the references to foreign statutes in the Transaction Documents, the Note or the Warrant.

4.11 Under the Companies Law (2007 Revision) of the Cayman Islands, the register of members of a Cayman Islands company is by statute regarded as prima facie evidence of any matters which the Companies Law (2007 Revision) directs or authorises to be inserted therein.  A third party interest in the shares in question would not appear.  An entry in the register of members may yield to a court order for rectification (for example, in the event of fraud or manifest error).

We express no view as to the commercial terms of the Transaction Documents, the Note or the Warrant or whether such terms represent the intentions of the parties and make no comment with respect to any representations which may be made by the Company.

This opinion is addressed to and is for the benefit solely of the addressees and may not be relied upon by, or disclosed to, any other person without our prior written consent.

Yours faithfully

Maples and Calder

EX-4.104

EXECUTION VERSION

Exhibit 4.104

First Amendment to Note and Warrant Purchase Agreement

First Amendment, dated April 9, 2009 (this “Amendment”), to the Note and Warrant Purchase Agreement, dated March 18, 2009 (the “Purchase Agreement”), among KongZhong Corporation, an exempted limited liability company incorporated under the laws of the Cayman Islands (the “Company”), Leilei Wang, Chief Executive Officer of the Company (the “Sponsor”), and Nokia Growth Partners II, L.P., a Delaware limited partnership (the “Investor”).

Recitals:

WHEREAS, the Company, the Sponsor and the Investor desire to amend the Purchase Agreement to reflect certain modified terms.

NOW, THEREFORE, in consideration of the premises and mutual representations and agreements set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

1. All capitalized terms used and not otherwise defined in this Amendment have the respective meanings indicated in the Purchase Agreement.

2. Section 2.2(b) of the Purchase Agreement is hereby amended and restated in its entirety as follows:

“Capitalization.  The authorized share capital of the Company consists of 1,000,000,000,000 Ordinary Shares, of which, as of December 31, 2008 (the “Capitalization Date”), 1,443,156,120 Ordinary Shares were issued and outstanding (it being understood that the number of 1,443,156,120 includes (i) 8,923,600 Ordinary Shares which the Company had agreed to repurchase on or before December 31, 2008 pursuant to its share repurchase program and were in the process of being cancelled and of which such cancellation had not yet been reflected in the Register of Members of the Company as of December 31, 2008, and (ii) 13,321,960 Ordinary Shares held by Citi (Nominees) Limited as of December 31, 2008 for future exercise of stock options and vesting of restricted share units under the Company’s equity incentive plans).  The issued and outstanding Ordinary Shares have been duly authorized and are validly issued as fully paid and non-assessable (meaning that no further sums are payable to the Company on such shares), and are not subject to any preemptive rights under Cayman Islands law or the Memorandum and Articles of Association of the Company.”

3.           This Amendment shall become effective as of the date hereof.

4. This Amendment shall not constitute an amendment or waiver of any other provision of the Purchase Agreement not expressly referred to herein.  Except as expressly amended hereby, the provisions of the Purchase Agreement are and shall remain in full force an effect.

5. The provisions of Article V (Miscellaneous) of the Purchase Agreement shall apply mutatis mutandis to this Amendment.

*                *                *

In Witness Whereof, this Amendment has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first herein above written.

KONGZHONG CORPORATION
By:	/s/ Leilei Wang
Name:    Leilei Wang
Title:      CEO of the Company

LEILEI WANG
By:	/s/ Leilei Wang
Name:    Leilei Wang
Title:      CEO of the Company

NOKIA GROWTH PARTNERS II, L.P.
By:	N.G. Partners II, L.L.C.
	/s/ John Gardner
	Name:	John Gardner
	Title:	Managing Member

EX-8.1

Exhibit 8.1

List of Subsidiaries and Consolidated Entities of KongZhong Corporation, as of April 24, 2009

Name of the Subsidiaries	State or Jurisdiction of Incorporation
Anjian Xingye Technology (Beijing) Co., Ltd.	People’s Republic of China
Beijing AirInbox Information Technologies Co., Ltd.	People’s Republic of China
Beijing Boya Wuji Technologies Co., Ltd.	People’s Republic of China
Beijing Chengxitong Information Technology Co., Ltd.	People’s Republic of China
Beijing Shiyuan Leya Culture Communication Co., Ltd.	People’s Republic of China
Beijing Wireless Interactive Network Technologies Co., Ltd.	People’s Republic of China
Beijing Xinrui Network Technology Co., Ltd.	People’s Republic of China
KongZhong China Co., Ltd.	People’s Republic of China
KongZhong Information Technologies (Beijing) Co., Ltd.	People’s Republic of China
Monkey King Search Corporation	Cayman Islands
Shanghai Mailifang Communications Ltd.	People’s Republic of China
Sigma Interactive Inc.	British Virgin Islands
Tianjin Mammoth Technology Co., Ltd.	People’s Republic of China
Wukong Shentong Search Co., Ltd.	People’s Republic of China

EX-12.1

Exhibit 12.1

CERTIFICATION

I, Leilei Wang, certify that:

1. I have reviewed this annual report on Form 20-F of KongZhong Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:	April 29, 2009
		/s/ Leilei Wang
		Name:  Leilei Wang Title:    Chief Executive Officer

EX-12.2

Exhibit 12.2

CERTIFICATION

I, Jay Chang, certify that:

1. I have reviewed this annual report on Form 20-F of KongZhong Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of company’s board of directors (or persons performing the equivalent function):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date:	April 29, 2009
		/s/ Jay Chang
		Name:  Jay Chang Title:    Chief Financial Officer

EX-13.1

Exhibit 13.1

KONGZHONG CORPORATION

Certification

Pursuant to 18 U.S.C. § 1350, the undersigned, Leilei Wang, Chief Executive Officer of KongZhong Corporation (the “Company”), hereby certifies, to his knowledge, that the Company’s annual report on Form 20-F for the year ended December 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 29, 2009
		/s/ Leilei Wang
		Name:  Leilei Wang Title:    Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-13.2

Exhibit 13.2

KONGZHONG CORPORATION

Certification

Pursuant to 18 U.S.C. § 1350, the undersigned, Jay Chang, Chief Financial Officer of KongZhong Corporation (the “Company”), hereby certifies, to his knowledge, that the Company’s annual report on Form 20-F for the year ended December 31, 2008 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	April 29, 2009
		/s/ Jay Chang
		Name:  Jay Chang Title:    Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-23.1

Exhibit 23.1

KongZhong Corporation

35th Floor, Tengda Plaza

No. 168 Xizhimenwai Street

Beijing, China 100044

RE: KONGZHONG CORPORATION

Dear Sirs/Madams,

We have acted as legal advisors as to the People's Republic of China law to KongZhong Corporation, an exempted limited liability company incorporated in the Cayman Islands (the “Company”), in connection with the filing by the Company with the United States Securities and Exchange Commission of an annual report on Form 20-F for the year ended December 31, 2008.

We hereby consent to the reference of our firm under the headings “Risk Factors”, “Our Corporate Structure” and “Regulation” and elsewhere in the Form 20-F.

In giving this consent we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended.

Sincerely,

  /s/ King & Wood

King & Wood

Date: April 28, 2009

EX-23.2

  
    Unassociated Document
    
    
    
    
    
    

EX-23.3

  

Exhibit 23.3

April 20, 2009

The Directors

KongZhong Corporation

35/F Tenda Plaza,

No. 168 Xiwai Street,

Haidian District, Beijing, China

Post Code: 100044

Subject:                      WRITTEN CONSENT OF AMERICAN APPRAISAL CHINA LIMITED

We hereby consent to the references to our name and our financial appraisal reports, dated May 15, 2006 and addressed to the board of directors of KongZhong Corporation, and to references to our valuation methodologies, assumptions and conclusions associated with such reports, in the annual reports on Form20-F of KongZhong Corporation and any amendments thereto (the “Registration Statements”) filed or to be filed with the U.S. Securities and Exchange Commission. We further consent to the filing of this letter as an exhibit to the annual report on Form 20-F for the year ended December 31, 2008.

The Reports relates to valuation of acquired intangible assets (the “Intangible Assets”) of Sharp Edge Group Limited.  In reaching our value conclusions, we relied on the accuracy and completeness of the financial statements and other data provided by KongZhong Corporation and its representatives. We did not audit or independently verify such financial statements or other data and take no responsibility for the accuracy of such information.  The Company determined the fair value of the Intangible Assets and our valuation reports were used to assist KongZhong Corporation in reaching its determinations.

In giving such consent, we do not hereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the rules and regulations adopted by the Securities and Exchange Commission thereunder (the “Act”), nor do we admit that we are experts with respect to any part of such Registration Statement within the meaning of the term “experts” as used in the Act.

Yours faithfully,

/s/ American Appraisal China Limited

AMERICAN APPRAISAL CHINA LIMITED