KongZhong Corporation Reports Unaudited Fourth Quarter 2013 Financial Results

KongZhong Corporation Reports Unaudited Fourth Quarter 2013 Financial Results

PR Newswire

BEIJING, Feb. 24, 2014

BEIJING, Feb. 24, 2014 /PRNewswire/ -- KongZhong Corporation (NASDAQ: KONG), a
leading provider of digital entertainment services for consumers in the PRC,
today announced its unaudited financial results for the fourth quarter of 2013
and full year 2013.

Fourth Quarter 2013 Financial Highlights:

  oRevenues exceed guidance- Total revenues for the fourth quarter of 2013
    decreased 0.6% from the third quarter of 2013 but increased 2.8% from the
    same period last year to US$ 43.84 mn, exceeding the guidance range of US$
    41.0 mn to US$ 42.0 mn.
  oGross profit exceed guidance- Total gross profit increased 13.7% from the
    third quarter of 2013 and 20.6% increase from the same period last year to
    US$ 21.72 mn, exceeding the guidance range of US$ 20.0 mn to US$ 21.0 mn.
  oNet income exceed guidance and a record high for Company- Net income
    increased from the third quarter of 2013 to US$ 10.03 mn, exceeding the
    guidance range of US$ 8.0 mn to US$ 9.0 mn. Net loss in 3Q13 was US$2.68
    mn, which included a $1.56 mn impairment loss on intangible assets and $
    2.0 mn impairment loss on long term investments. Basic net income per
    American Depositary Shares ("ADS") was US$ 0.22.
  oNon-GAAP net income exceed guidance and a record high for Company-
    Non-GAAP net income was US$ 10.65 mn, exceeding the guidance range of US$
    9.0 mn to US$ 10.0 mn. Non-GAAP diluted net income per ADS was US$ 0.23
    (Non-GAAP Financial Measures are described and reconciled to the
    corresponding GAAP measures in the section titled "Non-GAAP Financial
    Measures").
  oCash and cash equivalents- As of December 31, 2013, the Company had US$
    216.61 mn in cash and cash equivalents, term deposits, held-to-maturity
    securities and restricted cash or US$ 4.78 per ADS in cash and cash
    equivalents, term deposits, held-to-maturity securities and restricted
    cash.

Full Year 2013 Financial Highlights

  oTotal revenues were US$ 179.44 million for the full year 2013. Of which
    WVAS revenues were US$ 63.92 mn in 2013 compared to US$ 77.77 mn in 2012,
    mobile games revenues were US$ 17.07 mn in 2013 compared to US$ 21.19 mn
    in 2012 and Internet games revenues were US$ 98.45 mn in 2013 compared to
    US$ 87.42 mn in 2012.
  oFull year gross margin was 43.1% compared to 41.6% in 2012. Of which WVAS
    gross margin was 31.1%, Mobile games gross margin was 53.5% and Internet
    games gross margin was 49.0%.
  oNet income in 2013 was US$ 20.66 mn compared to US$ 25.74 mn in 2012.
    However, net income in 2013 included a $1.56 mn impairment loss on
    intangible assets and $ 2.0 mn impairment loss on long term investments.
  oNon-GAAP net income was US$ 28.87 mn compared to 2012 full year Non-GAAP
    net income of US$ 35.92 mn.

The Company's Chairman and Chief Executive Officer, Leilei Wang said, "In
2013, the Company spent great efforts preparing for the upcoming the official
launch of Guild Wars 2 and World of War Plane, as well as the development of
our smartphone games. Through in-house self-development and the licensing of
overseas games, we will continue to develop our strong pipeline in both mobile
and Internet games. Our goals in 2014 are to maintain stable cashflow from our
WVAS business, capture fast growth in our mobile game business and in Internet
games, achieving sustained growth in World of Tanks while having successful
launches of Guild Wars 2 and World of Warplanes. I believe 2014 is the year
the Company has the opportunity to see great performance."

                   For the Three       For the Three       For the Three
                   Months Ended        Months Ended        Months Ended

                   December 31,        September 30,       December 31,

                   2012                2013                2013

                   (US$ in thousands)  (US$ in thousands)  (US$ in thousands)
Revenues           $42,631             $44,084             $43,838
WVAS               14,620              18,012              13,832
Mobile Games       4,169               4,702               4,924
Internet Games     23,842              21,370              25,082
Sales Tax          $1,412              $1,506              $876
WVAS               178                 278                 276
Mobile Games       30                  37                  42
Internet Games     1,204               1,191               558
Cost of Revenue    $23,218             $23,483             $21,246
WVAS               10,286              11,277              8,937
Mobile Games       1,737               2,355               1,436
Internet Games     11,195              9,851               10,873
Gross Profit       $18,001             $19,095             $21,716
WVAS               4,156               6,457               4,619
Mobile Games       2,402               2,310               3,446
Internet Games     11,443              10,328              13,651
Gross Profit ratio 42%                 43%                 50%
WVAS               28%                 36%                 33%
Mobile Games       58%                 49%                 70%
Internet Games     48%                 48%                 54%

Revenues

WVAS Revenues

WVAS revenues in 4Q13 were US$ 13.83 mn, a 23.2% decrease from 3Q13, and a
5.4% decrease from the same period of last year. As discussed previously, our
WVAS business generally sees seasonal weakness at the end of each calendar
year based on our mobile operator policy and business practices. However, we
expect the WVAS operating environment to stabilize in 2014 from 2013 levels.

WVAS made up 31.6 % of total revenues in 4Q13.

Mobile Games Revenues

Total mobile game revenues in 4Q13 were US$ 4.92 mn, a 18.1% increase from the
same period last year and a 4.7% increase from 3Q13.

Feature phone mobile games revenues in 4Q13 were US$ 1.81 mn, compared to US$
3.21 mn in 3Q13. Our mobile operator partners continued to implement strict
operating policies and continued their de-emphasis of marketing feature phone
mobile games.

Smartphone mobile game revenues in 4Q13 were US$ 3.11 mn, a 108.4% increase
from 3Q13, and representing 63.2% of total mobile game revenues.

             For the Three  For the Three
             Months Ended   Months Ended
             September 30,  December 31,
             2013           2013
MAUs         1,030k         1,320k
APA          46k            86k
ARPU(RMB/Q)  198            222

For the 4Q13 3-month period, smartphone game operations achieved average
monthly active users ("MAUs") of 1.32 mn and aggregated paying accounts
("APAs") of 86k with quarterly average revenue per user ("ARPU") of RMB 222.

Total mobile game revenues made up 11.2% of total revenues in 4Q13.

Internet Games Revenues

Internet Game ("Net Game") revenues were US$ 25.08 mn in 4Q13, a 17.4%
increase from 3Q13 and a 5.2% increase from the same period last year.

Domestic Net Game revenues were US$ 24.22 mn, a 16.6% increase from 3Q13 and a
6.0% increase from the same period last year. Domestic Net game revenues
consisted primarily of revenues from World of Tanks.

Overseas net game revenues were US$ 0.86 mn, a 44.6% increase from 3Q13 but a
13.1% decrease from the same period last year. Overseas net game revenues
increased due to Kungfu hero license revenues contribution from South Korea
business partners.

For the 4Q13 3-month period, mainland China online game operations achieved
average concurrent users ("ACUs") of 467k and aggregated paying accounts
("APAs") of 774k with quarterly average revenue per user ("ARPU") of RMB 192.
ACUs in 4Q13 were up 11.0% from the same period last year and a 14.2% increase
from 3Q13.

            For the Three  For the Three  For the Three
            Months Ended   Months Ended   Months Ended
            December 31,   September 30,  December 31,

            2012           2013           2013
ACU         300k           399k           467k
APA         832k           763k           774k
ARPU(RMB/Q) 173            168            192

Internet game revenues made up 57.2% of total revenues in 4Q13.

Gross Profit

Total gross profit was US$ 21.72 mn in 4Q13, an increase of 13.7% from 3Q13
and an increase of 20.6% from the same period last year. Total gross margin
was 49.5% in 4Q13.

WVAS Gross Profit

WVAS gross profit in 4Q13 was US$ 4.62 mn, a 28.5% decrease from 3Q13. 4Q13
WVAS gross margin was 33.4% compared to 35.9% in 3Q13.

Mobile Game Gross Profit

Mobile games gross profit in 4Q13 was US$ 3.45 mn, a 49.2% increase from 3Q13
and a 43.5% increase from the same period last year. The increase in mobile
games gross profits was due to the increase in our higher gross margin
smartphone games revenue compared to feature phone game revenues in 4Q13. We
expect to launch a number of new smartphone games in the 1Q 2014 / 2Q 2014
period. 4Q13 mobile games gross margin was 70.0% compared to 57.6% in the same
period last year and 49.1% in 3Q13.

Internet Game Gross Profit

Internet game gross profit in 4Q13 was US$ 13.65 mn, a 32.2% increase from
3Q13 and an 19.3% increase from the same period last year. 4Q13 Internet game
gross margin was 54.4% compared to 48.0% in the same period last year and
48.3% in 3Q13.

Operating Expenses

                                                              For the Three
                         For the Three      For the Three     Months Ended

                         Months Ended       Months Ended      December 31,
                         December 31,       September 30,
                         2012               2013              2013
                         (US$ in            (US$ in
                         thousands)         thousands)        (US$ in
                                                              thousands)
Product development      $5,325             $6,991            $6,819
Sales and marketing      5,926              10,942            6,520
General and              3,179              2,029             2,356
administrative
Impairment loss on       -                  1,562             -
intangible assets
Total operating expenses $14,430            $21,524           $15,695

Total operating expenses in 4Q13 were US$ 15.70 mn compared to US$ 21.5 mn in
3Q13.

Product development expenses in 4Q13 were US$ 6.82 mn compared to US$ 6.99 mn
in 3Q13.

Sales and marketing expenses in 4Q13 were US$ 6.52 mn compared to US$ 10.94 mn
in 3Q13. As previously discussed, 3Q13 sales and marketing activities were
elevated due to increased promotion our smartphone games and WoT. The decline
in sales and marketing expenses in 4Q13 was a moderation of those activities.

General and administrative expenses in 4Q13 were US$ 2.36 mn compared to US$
2.03 mn in 3Q13.

The Company's total headcount remained stable in 4Q13 to 1,153 compared to
1,166 at the end of 3Q13.

Earnings

Net income and Non-GAAP net income in 4Q13 were US$ 10.03 mn and US$ 10.65 mn,
respectively. Diluted income per ADS and diluted Non-GAAP earnings per ADS
were US$ 0.21 and US$ 0.23 in 4Q13, respectively.

Total ADS on a diluted basis outstanding during 4Q13 were 46.85 mn, compared
to 43.50 mn outstanding during 3Q13.

                             Number during three Number during three
For the purpose of earnings  months ended        months ended
per share calculation        September 30, 2013
                                                 December 31,2013
ADS (in mns)                 43.50               45.32
Add: Dilution impact from    -                   0.58
options and nonvested shares
Warrants issued to business  -                   0.95
partners
ADS on diluted basis         43.50               46.85

Note: The options, warrants, non-vested shares were excluded from the
computation of diluted net loss per share for three months ended September 30,
2013 because their effect would be anti-dilutive.

Balance Sheet

As of December 31, 2013, the Company had US$ 216.61 mn in cash and cash
equivalents, term deposits, held-to-maturity securities and restricted cash or
US$ 4.78 per ADS in cash and cash equivalents, term deposits, held-to-maturity
securities and restricted cash.

Business Outlook (For the 3-month period ending March 31, 2014):

The Company expects total revenues for 1Q14 to be within the range of US$ 45.5
mn to US$ 46.5 mn, with business unit revenues at the mid-point expected to
roughly consist of WVAS revenues of US$ 13.5 mn, mobile game revenues of US$
8.5 mn and Net Game revenues of US$ 24.0 mn.

The Company expects total gross profit to be within the range of US$ 22.5 mn
to US$ 23.5 mn, net profit to be US$ 9.5 mn to US$ 10.5mn, and Non-GAAP net
profit is expected to be US$ 10.5 mn to US$ 11.5 mn.

Regarding Internet Game revenue guidance, beginning in September 2013, with
further implementation beginning on January 1, 2014, the Company began to
account for the majority part of Internet Game revenues under VAT. Under VAT,
the revenue is calculated excluding VAT that has to be paid to tax authority,
while under business tax in the prior periods, the revenue is fully recorded
including the business tax amount as per Chinese government tax policies. As
such, although our Internet Game revenues guidance for domestic Internet games
implies a slight decrease in revenues in 1Q14 compared to 4Q13, we expect
gross profits from domestic Internet games to remain stable after taking into
account the change from business tax to VAT.

Conference Call:

The Company's management team will conduct a conference call at 8:30 am
Beijing time on February 25, 2014 (19:30 pm Eastern time and 16:30 pm Pacific
time on February 24, 2014). A webcast of this conference call will be
accessible on the Company's web site at http://ir.kongzhong.com.



KongZhong Corporation
Condensed Consolidated Statements of Comprehensive Income
(US$ in thousands, except per share and share data)
(Unaudited)
                                                                     For the    For the
                                                      FortheThree  Three      Three

                                                      MonthsEnded   Months     Months
                                                                     Ended      Ended
                                                      December 31,
                                                                     September  December
                                                      2012           30,        31,

                                                                     2013       2013
Revenues $42,631        $44,084    $43,838
Sales tax                                             1,412          1,506      876
Cost of revenue                                       23,218         23,483     21,246
Gross profit                                          18,001         19,095     21,716
Operating expenses
Product development                                   5,325          6,991      6,819
Sales and marketing                                   5,926          10,942     6,520
General and administrative                            3,179          2,029      2,356
Impairment loss on intangible
                                                      -              1,562      -
assets
Total operating expenses                              14,430         21,524     15,695
Government subsidy                                    143            -          1,371
Interest income                                       1,176          1,685      2,170
Impairment loss on cost method
                                                      -              2,000      -
investment
Imputed interest on long-term
                                                      150            150        150
payables
Exchange gain                                         388            236        898
Investment income                                     42             -          -
Income(loss)beforetaxexpense                      5,170          (2,658)    10,310
Income tax expense                                    400            23         284
Net income (loss)                                     $4,770         ($2,681)   10,026
Basic earnings (loss) per ADS                         $0.11          ($0.06)    $0.22
Diluted earnings (loss) per ADS                       $0.11          ($0.06)    $0.21
Weighted average ADS
                                                      41.58          43.50      45.32
outstanding (million)
Weighted average ADS used in
                                                      42.43          43.50      46.85
diluted EPS calculation (million)
Net income (loss)                                     $4,770         ($2,681)   $10,026
Other comprehensive income                            2,195          1,915      2,043
Total comprehensive income
                                                      $6,965         $(766)     $12,069
(loss)



KongZhong Corporation
Condensed Consolidated Statements of Comprehensive Income
(US$ in thousands, except per share and share data)
(Unaudited)
                                           FortheTwelve  For the Twelve
                                           Months Ended   Months Ended
                                           December 31,    December 31,

                                           2012            2013
Revenues                                   $186,380        $179,440
Sales tax                                  5,794           5,786
Cost of revenues                           103,130         96,400
Gross profit                               77,456          77,254
Operating expenses
Product development                        18,382          26,402
Sales and marketing                        24,586          26,674
General and administrative                 11,629          8,976
Impairment loss on intangible assets       -               1,562
Total operating expenses                   54,597          63,614
Government subsidy                         301             2,176
Interest income                            5,231           6,764
Interest income from loans to third party  454             -
Interest expense                           263             693
Impairment loss on cost method investment  -               2,000
Exchange gain                              388             1,487
Investment income                          261             -
Income before tax expense                  29,231          21,374
Income tax expense                         3,491           712
Net income                                 $25,740         $20,662
Basic earnings per ADS                     $0.62           $0.48
Diluted earnings per ADS                   $0.60           $0.47
Weighted average ADS outstanding (million) 41.55           42.87
Weighted average ADS used in diluted EPS   43.04           43.79
calculation (million)
Net income                                 $25,740         $20,662
Other comprehensive income                 432             8,945
Total comprehensive income                 $26,172         $29,607



KongZhong Corporation
Condensed Consolidated Statements of Cash Flows
(US$ in thousands)
(Unaudited)
                                        For the Year Ended  For the Year Ended

                                        December 31, 2012   December 31, 2013
Cash Flows From Operating Activities
Net income                              $25,740             $20,662
Adjustments to reconcile net income to
net cash
provided by operating activities
Depreciation and amortization           7,628               4,988
(Gain) loss on disposal of property and (7)                 31
equipment
Provision of bad debt                   6                   342
Intangible assets impairment loss       -                   1,813
Impairment loss on cost method          -                   2,000
investment
Imputed interest on long-term payables  -                   600
Share-based compensation             4,464               1,574
Amortization of the debt discount       36                  -
Changes in operating assets and      8,788               3,720
liabilities
Net Cash Provided by Operating          46,655              35,730
Activities
Cash Flows From Investing Activities
Acquisition of business                 (8,413)             -
Purchase of intangible assets           (13,667)            (1,565)
Long-term investments                   (4,000)             -
Loan repayment from third party         22,190              -
Purchase term deposits                  -                   (20,824)
Proceeds from disposal of term deposits -                   16,711
Purchase of held-to-maturity securities (319,590)           (259,864)
Proceeds from disposal
                                        319,294             226,240
held-to-maturity securities
Purchase of property and equipment      (1,516)             (4,969)
Proceeds from disposal of property and  7                   -
equipment
Restricted cash                         (35,511)            247
Net Cash Used in Investing Activities   (41,206)            (44,024)
Cash Flows From Financing Activities
Proceeds from exercise of employee      277                 849
stock options
Proceeds for exercise of warrants       -                   27,820
Deferred payments for acquisition of    -                   (3,000)
business
Deferred payments for intangible asset  -                   (6,588)
Repurchase of ordinary shares           (14,590)            (10,124)
Proceeds from bank borrowing            -                   9,000
Repayment of bank borrowing             -                   (9,057)
Net Cash (Used in) Provided by          (14,313)            8,900
Financing Activities
Effect of foreign exchange rate changes 47                  1,799
Net (decrease) increase in Cash and     (8,817)             2,405
Cash Equivalents
Cash and Cash Equivalents, Beginning of 129,512             120,695
Period
Cash and Cash Equivalents, End of       120,695             123,100
Period



KongZhong Corporation
Condensed Consolidated Balance Sheets
(US$ in thousands)
(Unaudited)
                                     As of         As of          As of

                                     December 31,  September 30,  December 31,

                                     2012          2013           2013
Cash and cash equivalents            $120,695      $104,528       $123,100
Term deposits                        -             3,873          4,449
Held-to-maturity securities          17,465        49,248         52,194
Accounts receivable (net)            23,700        22,690         17,231
Restricted cash                      -             10,570         0
Other current assets                 4,718         6,993          7,762
Total current assets                 166,578       197,902        204,736
Rental deposits                      748           557            796
Intangible assets (net)              75,069        78,545         78,727
Property and equipment (net)         3,065         6,498          5,843
Long-term investments                4,000         2,000          2,000
Goodwill                             87,551        89,568         90,267
Restricted cash                      35,773        36,588         36,871
Total assets                         $372,784      $411,658       $419,240
Accounts payable (including accounts
payable of the consolidated variable
interest
entities ("VIE") without recourse to
KongZhong Corporation of $42,327,    $42,612       $43,307        $39,514
$43,198 and $39,488 as of December
31,
2012, September 30, 2013 and
December
31, 2013, respectively)
Deferred revenue (including deferred
revenue of the consolidated VIE
without
recourse to KongZhong Corporation of
$3,585, $3,212 and $ 2,262 as of     3,785         3,245          2,262
December
31, 2012, September 30, 2013 and
December
31,2013, respectively)
Other current liabilities (including
other
current liabilities of the
consolidated VIE
without recourse to KongZhong        24,833        25,790         25,595
Corporation
of $9,935, $13,478 and $15,437 as of
December 31, 2012, September 30,
2013 and
December 31, 2013, respectively)
Total current liabilities            71,230        72,342         67,371
Non-current deferred tax liability
(including non-current deferred tax
liability
of the consolidated VIE without
recourse to
KongZhong Corporation of $10, nil    10            -              -
and nil
as of December 31, 2012, September
30,
2013 and December 31,2013,
respectively)
Other long-term liabilities
(including
other long-term liabilities of the
consolidated VIE without recourse to 
KongZhong Corporation of $18,660,                  19,110         19,260
$19,110 and $19,260 as of December   18,660
31,
2012, September 30, 2013 and
December
31,2013, respectively)
Total liabilities                    $89,900       $91,452        $86,631
Shareholders' equity                 $282,884      $320,206       $332,609
Total liabilities and shareholders'  $372,784      $411,658       $419,240
equity

Non-GAAP Financial Measures

To supplement the unaudited condensed statements of comprehensive income
presented in accordance with US GAAP, the Company uses non-GAAP financial
measures (Non-GAAP Financial Measures) of net income and net income per
diluted ADS, which are adjusted from results based on GAAP to exclude certain
infrequent or unusual or non-cash based expenses, gains and losses. The
Non-GAAP Financial Measures are provided as additional information to help
both management and investors compare business trends among different
reporting periods on a consistent and more meaningful basis and enhance
investors' overall understanding of the Company's current financial
performance and prospects for the future.

The Non-GAAP Financial Measures should be considered in addition to results
prepared in accordance with GAAP, but should not be considered a substitute
for or superior to GAAP results. In addition, the Company's calculation of the
Non-GAAP Financial Measures may be different from the calculation used by
other companies, and therefore comparability may be limited.

For the periods presented, the Company's non-GAAP net income and non-GAAP net
income per diluted ADS exclude, as applicable, the amortization of
intangibles, share-based compensation expense, impairment loss on cost method
investment, impairment loss on intangible assets, imputed interest on
long-term payables, as well as is adjusted for the dilution impact on ADS
numbers from stock options, non-vested shares and warrants.

Reconciliation of the Company's Non-GAAP financial measures to the GAAP
financial measures is set forth below.

                    For the Three       For the Three       For the Three
                    Months Ended        Months Ended        Months Ended
                    December 31,        September 30,       December 31,
                    2012                2013                2013
                    (US$inthousands,  (US$inthousands,  (US$inthousands,
                    except per share    exceptpershare
                    and share data)                         except per share
                                        andshare data)     and share data)
GAAP net income     $4,770              ($2,681)            $10,026
(loss)
Share-based         1,022               284                 290
compensation
Impairment loss on
cost                -                   2,000               -

method investment
Impairment loss on
                    150                 1,562               -
intangible assets
Imputed interest on
                    -                   150                 150
long-term payables
Amortization of     1,798               185                 187
intangibles
Non-GAAP net income $7,740              $1,500              $10,653
Weighted average    
ADS                                     43.50               46.85
                    42.43
used in diluted
Non-GAAP diluted
net                 $0.18               $0.03               $0.23

income per ADS



                               For the Twelve Months  FortheTwelveMonths
                               Ended
                               December 31,           Ended
                               2012                   December 31,
                               (US$ in thousands,     2013
                               except per share       (US$ in thousands,
                               and share data)        exceptper share
                                                      and share data)
GAAP net income (loss)         $25,740                $20,662
Share-based compensation       4,465                  1,574
Impairment loss on cost method
                               -                      2,000
investment
Impairment loss on intangible  -                      1,562
assets
Imputed interest on long-term
                               262                    600
payables
Amortization of intangibles    5,453                  2,475
Non-GAAP net income            $35,920                $28,873
Weighted average ADS used in
                               43.04                  43.79
diluted
Non-GAAP diluted net income    
per ADS                                               $0.66
                               $0.83

About KongZhong:

We are one of the leading providers of digital entertainment services for
consumers in the PRC. We operate three main business units, namely WVAS,
mobile games and Internet games. We are one of the leading providers of WVAS
to mobile phone users and have been in cooperation with all major
telecommunications operators in the PRC since 2002. In 2005, we began
providing feature-phone mobile games on the networks of China Mobile with the
acquisition of Tianjin Mammoth, a feature phone mobile games developer. To
further expand our mobile games development capabilities, we acquired Noumena
in 2013 in order to develop smartphone mobile games on smartphone mobile
operating systems, such as iOS and Android. We commenced our Internet games
business in 2010 through our acquisition of Dacheng, a developer and operator
of Internet games in the PRC. In addition to developing and operating our
self-developed Internet games, such as Loong, Demon Code and Kung Fu Hero, we
are the exclusive operator of the popular World of Tanks game for the PRC
Internet games market. In May 2013, KONG entered into a strategic partnership
with Wargaming.net's granting KONG exclusive rights to all of Wargaming.net's
future games in mainland China, including but not limited to World of Tanks,
World of Warplanes and World of Warships. In addition, KONG is also the the
exclusive China partner for Guild War 2 from ArenaNet and Hawken from Meteor
Entertainment.

Safe  Harbor Statements

This press release contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements include,
without limitation, statements regarding trends in the wireless value-added
services, wireless media, mobile games and online games industries and our
future results of operations, financial condition and business prospects.
Although such statements are based on our own information and information from
other sources we believe to be reliable, you should not place undue reliance
on them. These statements involve risks and uncertainties, and actual market
trends and our results may differ materially from those expressed or implied
in these forward looking statements for a variety of reasons. Potential risks
and uncertainties include, but are not limited to, continued competitive
pressure in China's wireless value-added services, wireless media, mobile
games and online games industries and the effect of such pressure on revenues;
our ability to develop new products that are commercially successful;
unpredictable changes in technology, consumer demand and usage preferences in
the markets we operate; our ability to protect our intellectual property
rights; the short operating history of certain of our business segments, in
particular the online games segment; the state of and any change in our
relationship with China's telecommunications operators; our dependence on the
billing systems of telecommunications operators for our performance; the
outcome of our investment of operating income generated from the WVAS segment
into the development of our wireless Internet, mobile games and online games
segments; changes in the regulations or policies of the Ministry of Industry
and Information Technology and other government authorities relevant to our
businesses; and changes in political, economic, legal and social conditions in
China, including the Chinese government's policies with respect to economic
growth, foreign exchange, foreign investment and entry by foreign companies
into China's telecommunications and online games markets. For additional
discussion of these risks and uncertainties and other factors, please see the
documents we file from time to time with the Securities and Exchange
Commission. We assume no obligation to update any forward-looking statements,
which apply only as of the date of this press release.

SOURCE KongZhong Corporation

Website: http://www.kongzhong.com
Website: http://ir.kongzhong.com
Contact: Investor Contact: Jay Chang, Chief Financial Officer, Tel.: (+86-10)
8857 6000, Fax: (+86-10) 8857 5891, ir@kongzhong.com; or Media Contact: Yuan
Liu, Manager, Tel: (+86-10) 8857 6000, Fax: (+86-10) 8857 5900,
liuyuan@kongzhong.com
 
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