Beijing Yang Guang was incorporated on October 25, 2010. On December 8, 2010, one of the Company’s VIEs, Shanghai Jing Yang acquired a 49% interest in Beijing Yang Guang for cash consideration of RMB7,350,000 (approximately US$1,112,000) and became the noncontrolling interest holder of Beijing Yang Guang. The investment in Beijing Yang Guang was accounted for under the equity method until the Company withdrew its investment and ceased to have any noncontolling interest in Beijing Yang Guang in August 2011.

The Company did not recognize its pro-rata share of losses in Beijing Yang Guang for the year ended December 31, 2010 as the amount is immaterial. For the year ended December 31, 2011, before the Company disposed its investment in Beijing Yang Guang, the Company recognized its pro-rata share of earnings in Beijing Yang Guang of approximately US$26,000, which was reflected in the caption of “Share of earnings (losses) in equity investment affiliates” in the Company’s consolidated statements of income and comprehensive income with a corresponding increase to the carrying value of the investment in Beijing Yang Guang in the Company’s consolidated balance sheet.

In August 2011, the Company withdrew its investment in Beijing Yang Guang and sold back its 49% equity interest to the majority shareholder of Beijing Yang Guang for cash consideration equal to the amount the Company paid for the acquisition of the 49% equity interest in December 2010, which amount has been fully collected as of December 31, 2011. In November 2011, Beijing Yang Guang also distributed to the Company its pro-rata share of net income of approximately US$26,000, generated by Beijing Yang Guang during the period when the Company held 49% of the equity interest of Beijing Yang Guang.

As of December 31, 2011, the Company collected the aggregate of RMB50,000,000 (approximately US$7,856,000) working capital loan borrowed by Beijing Yang Guang in 2010 and 2011, which was the total amount due under the loan.

Shenzhen Mingshan was incorporated on June 24, 2010 by one of the Company’s VIEs, Business Opportunities Online and three other individuals who were not affiliated with the Company. Shenzhen Mingshan was 51% owned by the Company and was a consolidated subsidiary of the Company from the date of incorporation through January 6, 2011. On January 6, 2011, an independent third party investor invested RMB15,000,000 (approximately US$2,357,000) cash into Shenzhen Mingshan in exchange for a 60% equity interest in Shenzhen Mingshan. The Company’s share of equity interest decreased from 51% to 20.4% accordingly. The carrying value of the investment to Shenzhen Mingshan upon the deconsolidation of approximately US$395,000 was included in the balance sheet as “Investment in equity investment affiliates”.

The deconsolidation of Shenzhen Mingshan was accounted for in accordance with ASC Topic 810 “Consolidation”. The Company recognized a gain of approximately US$237,000 upon deconsolidation of Shenzhen Mingshan, which has been recorded as a gain on deconsolidation of subsidiaries in the Company’s consolidated statements of income and comprehensive income with a corresponding increase in the carrying value of the investment in Shenzhen Mingshan in the Company’s consolidated balance sheet. This gain represents the excess of the fair value of the Company’s retained equity interest over its carrying value as of the date of deconsolidation.

The Company determined the estimated fair value of its retained equity interest in Shenzhen Mingshan based on the valuation of Shenzhen Mingshan used when an independent third party investor purchased an equity interest in Shenzhen Mingshan, which purchase price was negotiated on an arm’s length basis. Under these circumstances, the Company estimated the fair value of its retained equity interest based on the fair value of the equity interest purchased by the independent third party investor.

In March 2011, the Company, through its wholly-owned subsidiary Rise King WFOE, sold some spared computer servers to Shenzhen Mingshan for approximately US$42,000. The Company does not intend to collect this amount within one year, as the amount is immaterial. Therefore, this balance was recorded as part of the long-term investment to Shenzhen Mingshan.

In August 2011, the Company made an additional capital injection of RMB1,080,000 (approximately US$170,000) in cash to Shenzhen Mingshan for its portion of the unpaid registered capital, which was required to be fully contributed within two years from the incorporation of Shenzhen Mingshan. This amount was recorded as an increase in investment in equity investment affiliates in the Company’s consolidated balance sheet.

The Company applied the equity method of accounting prospectively from the date immediately after the deconsolidation. For the year ended December 31, 2011, the Company recognized its pro-rata share of losses in Shenzhen Mingshan of approximately US$249,000, which was reflected in the caption of “Share of earnings (losses) in equity investment affiliates” in the Company’s consolidated statements of income and comprehensive income with a corresponding decrease to the carrying value of the investment in Shenzhen Mingshan in the Company’s consolidated balance sheet.

Zhao Shang Ke Hubei was incorporated on April 18, 2011 by one of the Company’s VIEs, Business Opportunities Online Hubei and a co-founding individual who was not affiliated with the Company. Zhao Shang Ke Hubei was 51% owned by the Company and was a consolidated subsidiary of the Company from the date of incorporation through December 29, 2011. On December 29, 2011, two independent third party investors invested RMB10,000,000 (approximately US$1,571,000) cash into Zhao Shang Ke Hubei in exchange for an aggregate 50% equity interest in Zhao Shang Ke Hubei. The Company’s share of equity interest decreased from 51% to 25.5% accordingly. The carrying value of the investment to Zhao Shang Ke Hubei upon deconsolidation of approximately US$97,000 was included in the balance sheet as “Investment in equity investment affiliates”.

The deconsolidation of Zhao Shang Ke Hubei was accounted for in accordance with ASC Topic 810 “Consolidation”. The Company recognized a gain of approximately US$704,000 upon deconsolidation of Zhao Shang Ke Hubei, which has been recorded as a gain on deconsolidation of subsidiaries in the Company’s consolidated statements of income and comprehensive income with a corresponding increase in the carrying value of the investment in Zhao Shang Ke Hubei in the Company’s consolidated balance sheet. This gain represents the excess of the fair value of the Company’s retained equity interest over its carrying value as of the date of deconsolidation.

The Company determined the estimated fair value of its retained equity interest in Zhao Shang Ke Hubei based on the valuation of Zhao Shang Ke Hubei used when the two independent third party investors purchased equity interest in Zhao Shang Ke Hubei, which purchase price was negotiated on an arm’s length basis. Under these circumstances, the Company estimated the fair value of its retained equity interest based on the fair value of equity interest purchased by the independent third party investors.

The Company applied the equity method of accounting prospectively from the date immediately after the deconsolidation. For the year ended December 31, 2011, the Company did not recognize its pro-rata share of losses in Zhao Shang Ke Hubei as the amount is immaterial.