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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED
STATES <BR>
SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549<BR>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 26%; border-top: 1px solid #000000">&nbsp;</DIV></DIV></B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 20-F</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">(Mark One)
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 1pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Registration statement pursuant to Section&nbsp;12(b) or 12(g) of the Securities Exchange Act of
1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>or</B></DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Annual report pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>for the fiscal year ended December&nbsp;31, 2005.
</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>or</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Transition report pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission file number 001-</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>Focus Media Holding Limited</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>(Exact Name of Registrant as Specified in Its Charter)</B></DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Cayman Islands<BR>
(Jurisdiction of Incorporation or Organization)</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>28-30/F, Zhao Feng World Trade Building<BR>
369 Jiangsu Road, Shanghai 200050, PRC<BR>
(Address of Principal Executive Offices)</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(b) of the Act:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
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    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><B>Title of Each Class</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Name of Each Exchange on Which Registered</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>Ordinary Shares, par value US$0.00005 per share</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>Nasdaq National Market Inc.</B></TD>
</TR>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities registered or to be registered pursuant to Section 12(g) of the Act:
</DIV>

<DIV align="center" style="font-size: 10pt">None</DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt"><B>(Title of Class)</B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
</DIV>

<DIV align="center" style="font-size: 10pt">None</DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="center" style="font-size: 10pt"><B>(Title of Class)</B></DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate the number of outstanding shares of each of the Issuer&#146;s classes of capital
or common stock as of the close of the period covered by the annual report.
</DIV>
<DIV align="center" style="font-size: 10pt"><B>523,166,773 Ordinary Shares</B></DIV>


<DIV align="center"><DIV style="font-size: 3pt; margin-top: 1pt; width: 100%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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&nbsp;13 or 15(d) of the
Securities Exchange Act of 1934.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Note &#151; Checking the box above will not relieve any registrant required to file
reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be
filed by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registration was required to file such
reports), and (2)&nbsp;has been subject to such filing requirements for the past 90&nbsp;days.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of &#147;accelerated filer and
large accelerated filer&#148; in Rule&nbsp;12b-2 of the Exchange Act. (Check one):
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 1pt">Large accelerated filer <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer <FONT face="Wingdings">&#254;</FONT></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark which financial statement item the registrant has elected to follow.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>
Item&nbsp;17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Item&nbsp;18 <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule&nbsp;12b-2 of the Exchange Act).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS.)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Section&nbsp;12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 1pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <FONT face="Wingdings">&#111;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <FONT face="Wingdings">&#111;</FONT>
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>








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<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>FORM 20-F ANNUAL REPORT<BR>
FISCAL YEAR ENDED DECEMBER 31, 2005</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>Table of Contents</B>

</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
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<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>Page</B></TD>
</TR>

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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#101">SUPPLEMENTAL INFORMATION
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#102">FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT MAY NOT BE REALIZED
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top" align="center"><DIV style="margin-left:0px; text-indent:-0px"><A href="#103">PART I
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#104">ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#105">ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#106">ITEM 3. KEY INFORMATION
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#107">ITEM 4. INFORMATION ON THE COMPANY
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#108">ITEM 4A. UNRESOLVED STAFF COMMENTS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#109">ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">63</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#110">ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">91</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#111">ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">99</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#112">ITEM 8. FINANCIAL INFORMATION
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">108</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#113">ITEM 9. THE OFFER AND LISTING
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">109</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#114">ITEM 10. ADDITIONAL INFORMATION
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">110</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#115">ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">121</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#116">ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">122</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top" align="center"><DIV style="margin-left:0px; text-indent:-0px"><A href="#117">PART II
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">122</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#118">ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">122</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#119">ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">122</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#120">ITEM 15. CONTROLS AND PROCEDURES
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">123</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#121">ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">124</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#122">ITEM 16B. CODE OF ETHICS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">124</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#123">ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">124</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#124">ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">124</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#125">ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">124</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top" align="center"><DIV style="margin-left:0px; text-indent:-0px"><A href="#126">PART III
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">125</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#127">ITEM 17. FINANCIAL STATEMENTS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">125</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#128">ITEM 18. FINANCIAL STATEMENTS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">125</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1em">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><A href="#129">ITEM 19. EXHIBITS
</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">126</TD>
    <TD nowrap valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00605exv12w1.htm">EX-12.1 Certificate Of Our Chief Executive Officer</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00605exv12w2.htm">EX-12.2 Certificate Of Our Chief Financial Officer</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00605exv13w1.htm">EX-13.1 Certification of Periodic Financial Report</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00605exv13w2.htm">EX-13.2 Certification of Periodic Financial Report</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00605exv15w1.htm">EX-15.1 CONSENT OF CONYERS DILL & PEARMAN</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00605exv15w2.htm">EX-15.2 CONSENT OF GLOBAL LAW OFFICE</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&nbsp;
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">i
</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SUPPLEMENTAL INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In this annual report, unless otherwise indicated:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the terms &#147;we,&#148; &#147;us,&#148; &#147;our company,&#148; &#147;our&#148; and &#147;Focus Media&#148; refer to Focus Media
Holding Limited, its predecessor entities and subsidiaries, and, in the context of
describing our operations, also include our affiliated Chinese entities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;shares&#148; and &#147;ordinary shares&#148; refer to our ordinary shares, par value $0.00005,
&#147;ADSs&#148; refers to our American depositary shares, each of which represents ten ordinary shares, and &#147;ADRs&#148; refers to the American depositary receipts which evidence our ADSs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;China&#148; and &#147;PRC&#148; refer to the People&#146;s Republic of China, excluding Taiwan, Hong
Kong and Macau;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all references to &#147;RMB&#148; are to the legal currency of China and all references to
&#147;U.S. dollars,&#148; &#147;US$,&#148; &#147;dollars&#148; and &#147;$&#148; are to the legal currency of the United
States. Any discrepancies in any table between the amounts identified as total amounts
and the sum of the amounts listed therein are due to rounding;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Framedia&#148; refers to Infoachieve and its consolidated subsidiaries and affiliates,
which we acquired in January&nbsp;2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Target Media&#148; refers to Target Media Holdings Limited and its consolidated
subsidiaries and affiliates, which we acquired in February&nbsp;2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Focus Media Wireless&#148; refers to Dotad Media Holdings, and its consolidated
subsidiary and affiliate, which we acquired in March&nbsp;2006 and renamed Focus Media
Wireless; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>references to our network, our commercial location network and our superstore
network include the network of Focus Media and the network formerly owned and operated
by Target Media, whose flat-panel displays were incorporated into our network as of
March&nbsp;1, 2006.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This annual report on Form 20-F includes our audited consolidated financial statements for the
years ended December&nbsp;31, 2003, 2004 and 2005, and as of December&nbsp;31, 2004 and 2005 and our
unaudited consolidated financial statements for and as of the three months ended March&nbsp;31, 2005 and
2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We and certain selling shareholders of our company completed an initial public offering of
11,615,000 ADSs on July&nbsp;19, 2005. On July&nbsp;13, 2005, we listed our ADSs on the Nasdaq National
Market, or Nasdaq, under the symbol &#147;FMCN.&#148; We and certain selling shareholders of our company
completed a public offering and sale of an additional 7,415,389 ADSs
on January&nbsp;27, 2006. On June&nbsp;21, 2006, we and certain selling shareholders of our company completed an additional public offering
of 7,700,000 ADSs.
</DIV>
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT<BR>
MAY NOT BE REALIZED</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This annual report on Form 20-F contains forward-looking statements that are based on our
current expectations, assumptions, estimates and projections about us and our industry. All
statements other than statements of historical fact in this annual report are forward-looking
statements. These forward-looking statements can be identified by words or phrases such as &#147;may&#148;,
&#147;will&#148;, &#147;expect&#148;, &#147;anticipate&#148;, &#147;estimate&#148;, &#147;plan&#148;, &#147;believe&#148;, &#147;is/are likely to&#148; or other similar
expressions. The forward-looking statements included in this annual report relate to, among others:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our goals and strategies;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our future business development, financial condition and results of operations;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>projected revenues, profits, earnings and other estimated financial information;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to complete acquisitions we have entered into and costs related to and
potential liabilities resulting from completing such acquisitions and integrating the
acquired companies into our business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>achieving anticipated or potential synergies with companies we acquire, including
Framedia, Target Media and Focus Media Wireless;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our plans to expand our advertising network into new cities and regions in China and
diversify into new networks and advertising channels such as airports, hospitals and
other possible commercial locations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the growth or acceptance of our in-store network, our outdoor LED network and
Framedia&#146;s poster frame network;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our plan to develop our business into a multi-platform out-of-home advertising
network, including through operation of Focus Media Wireless&#146;s mobile phone network
advertising services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our plan to identify and create additional advertising channels that target specific
consumer demographics, which could allow us to increase our advertising revenue;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>competition in the PRC advertising industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the expected growth in the urban population, consumer spending, average income
levels and advertising spending levels;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>PRC governmental policies and regulations relating to the advertising industry and
regulations and policies promulgated by the State Administration of Foreign Exchange;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other risks outlined in our filings with the Securities and Exchange Commission,
including our registration statements on Form F-1, as amended; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>those other risks identified in &#147;Item&nbsp;3. Key Information&#151;D. Risk Factors&#148; of this
annual report.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These forward-looking statements involve various risks and uncertainties. Although we believe
that our expectations expressed in these forward-looking statements are reasonable, we cannot
assure you that our expectations will turn out to be correct. Our actual results could be
materially different from or worse than our expectations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The forward-looking statements made in this annual report relate only to events or information
as of the date on which the statements are made in this annual report. We undertake no obligation
to update any forward-looking statements to reflect events or circumstances after the date on which
the statements are made or to reflect the occurrence of unanticipated events.
</DIV>

<P align="center" style="font-size: 10pt">4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">PART I
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 3. KEY INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Selected Financial Data</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following selected consolidated financial information has been derived from our
consolidated financial statements. Our consolidated financial statements are prepared by including
the financial statements of Focus Media Advertisement, formerly Aiqi Advertising, through May&nbsp;2003
and our consolidated financials, which include the consolidation of Focus Media Advertisement as a
variable interest entity, thereafter and presented in accordance with U.S. GAAP. Our statements of
operations for 2002, 2003, 2004 and 2005 and our balance sheets as of December&nbsp;31, 2002, 2003, 2004
and 2005 have been audited by Deloitte Touche Tohmatsu CPA Ltd., an independent registered public
accounting firm. The report of Deloitte Touche Tohmatsu CPA Ltd. on those financial statements is
included elsewhere in this annual report. Our statement of operations for each of the three months
ended March&nbsp;31, 2005 and 2006 and balance sheet data as of March&nbsp;31, 2005 and 2006 has been derived
from our unaudited consolidated financial data which has been included elsewhere in this annual
report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our selected consolidated financial information for the years ended December&nbsp;31, 2001 have
been derived from Focus Media Advertisement unaudited consolidated financial statements, which are
not included in this annual report. Our statement of operations for each of the three months ended
March&nbsp;31, 2005 and 2006 and balance sheet data as of March&nbsp;31, 2005 and 2006 has been derived from
our unaudited consolidated financial data which has been included elsewhere in this annual report. We
have prepared the unaudited consolidated financial data on the same basis as the audited
consolidated financial statements and have included, in our opinion, all adjustments, consisting
only of normal and recurring adjustments, that we consider necessary for a fair presentation of the
financial information set forth in those statements. Our historical results for any prior or
interim period are not necessarily indicative of results to be expected for a full fiscal year or
for any future period. The selected consolidated financial information for the periods and as of
the dates indicated should be read in conjunction with our financial statements and the
accompanying notes and &#147;Item&nbsp;5. Operating and Financial Review and Prospects&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to May&nbsp;2003, we operated as an advertising agency, the operations and services of which
differ markedly from our current business. As an advertising agency, we assisted media companies in
selling their advertising time or space to companies seeking to advertise in exchange for a
commission. In May&nbsp;2003, we ceased acting as an advertising agency and commenced our current
business as an operator of an out-of-home advertising network, consisting first of our commercial
location network. In April&nbsp;2005, we commenced commercial operations of our in-store network and
through our acquisition of Framedia, we commenced operation of our poster frame network on January
1, 2006. In February&nbsp;2006, we acquired Target Media and in March&nbsp;2006, we acquired Focus Media
Wireless.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>For the year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>For the three months</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Selected Consolidated Statements of
Operations Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Commercial location network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61,435</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,472</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">In-store network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Poster frame network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,067</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap><DIV style="margin-left:30px; text-indent:-15px">Advertising service revenue(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising equipment revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>For the year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>For the three months</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;<B>2001</B>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000">&nbsp;&nbsp;&nbsp;&nbsp;<B>2002</B>&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net advertising service cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Commercial location network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,973</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising equipment cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,637</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,499</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,395</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,057</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of acquired intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,451</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(161</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in fair value of derivative
liability
associated with Series&nbsp;B
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,692</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes and
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">908</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity loss of affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,433</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>For the year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>For the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="27"><B>(in thousands of U.S. dollars, except share and per share data)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share
data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on
Series&nbsp;A convertible
redeemable preference
shares(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on
Series&nbsp;B convertible
redeemable preference
shares(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,191</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on
Series&nbsp;C-1 convertible
redeemable preference
shares(2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,356</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premium of Series&nbsp;B
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)
attributable to
holders of ordinary
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(10,577</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,433</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;per share
&#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.07</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;per share
&#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.07</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in
calculating basic
income per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,657,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,998,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,128,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,464,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">438,232,094</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in
calculating diluted
income per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,657,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,998,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">365,938,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315,212,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465,895,318</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23"><B>(in thousands of U.S.
dollars, except share data)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Consolidated Balance Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">36,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,863</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other current assets(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,440</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-current assets(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">523,442</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,745</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">460</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mezzanine equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ordinary
shares (nil, nil, 200,000,000, 142,464,600, 378,306,000 and
506,457,633 shares issued and outstanding in 2001, 2002, 2003, 2004,
2005, and as of March&nbsp;31, 2006, respectively)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other
shareholders&#146; equity (deficiency)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">1,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,580</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">191,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">555,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity (deficiency)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(5,573</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">191,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">555,882</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>As of March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Selected Operating Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of displays in our commercial location network:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Our direct cities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Our regional distributors(5)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of displays in our in-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of stores in our in-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of installed frames in our poster frame network(6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,353</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%" nowrap>&nbsp; &nbsp; &nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%" nowrap>&nbsp; &nbsp; &nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%" nowrap>&nbsp; &nbsp; &nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%" nowrap>&nbsp; &nbsp; &nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>For and as of the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;&nbsp;&nbsp;<B>March 31,</B>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;&nbsp;&nbsp;<B>June 30,</B>&nbsp;&nbsp;&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Commercial Location Network(7):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of time slots available for sale(8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,717</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of time slots sold(9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,904</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average utilization rate(10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">45.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">50.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">51.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average quarterly advertising service revenue
per time slot sold (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,882</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>In-store Network(11):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of time slots available for sale(8)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of time slots sold(9)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,498</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average utilization rate(10)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average quarterly advertising service revenue
per time slot sold (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Poster Frame Network(12):</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of frame slots available for sale(13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,659</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of frame slots sold(14)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Occupancy rate(15)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">43.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Average advertising service revenue per frame
slot (US$) (ASP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Advertising service revenue is presented net of business tax. Business tax on
advertising service revenue from our commercial location network amounted to $311,770,
$2,788,233, $5,991,497, $936,405 and $2,081,512 in 2003, 2004 and 2005 and for the three
months ended March&nbsp;31, 2005 and 2006, respectively. Business tax on advertising service
revenue for our in-store network amounted to $524,271, $nil and $524,357 in 2005 and for the
three months ended March&nbsp;31, 2005 and 2006. Business tax on advertising service revenue for
our poster frame network amounted to $590,972 for the three months ended March&nbsp;31, 2006.
Business tax includes business tax of 5.55% and cultural industries tax of 4.0% of our gross
advertising service revenue.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>We are no longer required to record deemed dividends prospectively following conversion at
the closing of our initial public offering of our Series&nbsp;A, Series&nbsp;B, Series&nbsp;C-1 and Series
C-2 convertible redeemable preference shares into ordinary shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Other current assets is equal to total current assets less cash and cash equivalents.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Non-current assets is equal to total assets less total current assets.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Data that has been provided by our regional distributors is based on the results of surveys
we requested them to provide to us and it is possible such data is not entirely accurate or
exact.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Number of installed frames includes frames we currently market and frames that have been
installed, for instance, in buildings that are still under construction and which we have not
yet begun to market.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Starting January&nbsp;1, 2006, time slot data presented for our commercial location network
includes only data related to our premier office building A channel. For the three months
ended March&nbsp;31, 2006, advertising services revenues from our premier office building A channel
accounted for 91.2% of advertising service revenue for our commercial location network.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(8)</TD>
    <TD>&nbsp;</TD>
    <TD>For our commercial location network, includes the time slots for our directly operated cities
and the time slots we are entitled to sell on the portion of our network operated by our
regional distributors. Number of time slots available refers to the number of 30-second
equivalent time slots available on our network during the period presented and is calculated
by taking the total advertising time available on our network during the period presented,
calculated in aggregate seconds, which we then divide by 30 to determine the number of
30-second equivalent time slots available. For our commercial location network, the number of
advertising time slots available for sale is determined by the number of cities in which we
directly operate, the two-ninths portion of time slots on our regional distributors&#146; networks
which we have the right to sell and the length of the advertising cycle, which is currently
twelve minutes in all of our directly operated cities. For our in- store network, the number
of advertising time slots available for sale is determined by the number of stores in which we
operate.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(9)</TD>
    <TD>&nbsp;</TD>
    <TD>Number of time slots sold refers to the number of 30-second equivalent time slots sold during
the period presented and is calculated by taking the total advertising time we sold during the
period presented, calculated in aggregate seconds, which we then divide by 30 to determine the
number of 30-second equivalent time slots sold.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(10)</TD>
    <TD>&nbsp;</TD>
    <TD>Utilization rate refers to total time slots sold as a percentage of total time slots
available during the relevant period.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(11)</TD>
    <TD>&nbsp;</TD>
    <TD>We commenced operation of our in-store network in April&nbsp;2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(12)</TD>
    <TD>&nbsp;</TD>
    <TD>We commenced operation of our poster frame network in January&nbsp;2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(13)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes the number of frame slots available on a monthly basis within each three month
period.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(14)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes the number of frame slots sold on a monthly basis within each three month period.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(15)</TD>
    <TD>&nbsp;</TD>
    <TD>Occupancy rate refers to the total number of frame slots sold as a percentage of total frame
slots available during the relevant period.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Consolidated Pro Forma Financial Data of Focus Media, Framedia, Target Media Holdings and
Other Acquired Entities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited pro forma condensed consolidated financial information is derived from
the historical financial statements of Focus Media Holding Limited, appearing elsewhere in this
annual report, after giving effects to the pro forma adjustments described in the notes to such pro
forma financial statements. Financial information with respect to the acquisitions are derived from
the historical financial statements of Capital Beyond Limited, or Capital Beyond, Infoachieve
Limited, or Framedia, and Target Media Holdings Limited or Target Media, appearing in our
registration statement on Form F-1 (File No.&nbsp;333-134714).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of the unaudited pro forma condensed consolidated statements of operations
appearing below is based on financial statements prepared in accordance with U.S. GAAP. These
principles require the use of estimates that affect the reported amounts of revenues and expenses.
Actual results could differ from those estimates. The objective of the unaudited pro forma
condensed consolidated statements of operations is to provide information on the impact of the
acquisitions of Capital Beyond, Framedia and Target Media. We refer to these businesses
collectively as the acquired businesses. The acquired businesses have permitted us to expand our
network, including the growth and further specialized targeting of consumers of our commercial
location and in-store networks, and the addition of our poster frame advertising network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited pro forma condensed consolidated statement of operations for the year ended
December&nbsp;31, 2005 presents adjustments as if the acquisitions of Capital Beyond, Framedia and
Target Media had been consummated on January&nbsp;1, 2005. The unaudited pro forma condensed
consolidated statement of operations for the three months ended March&nbsp;31, 2006 presents adjustments
as if the acquisition of Target Media had been consummated on January&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following unaudited pro forma condensed consolidated statements of operations should be
read in conjunction with the historical consolidated financial statements, unaudited pro forma
condensed consolidated statements of operations and &#147;Item&nbsp;5. Operating and Financial Review and
Prospects&#148; included elsewhere in this annual report.
</DIV>


<P align="center" style="font-size: 10pt">8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited pro forma condensed consolidated financial information presented in this annual
report includes all the adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of the operating results in the historical periods. However, because such
adjustments are based on estimates such as the estimated amortization period for the acquired
intangible assets for Framedia and Target Media, it is not intended to show how the consolidated
companies would have actually performed if the events described above had in fact occurred on the
dates assumed or to project the results of operations or financial position for any future date or
period. In addition, the financial information of Target Media for the two month period ended
February&nbsp;28, 2006 has not been audited or reviewed by an independent registered public accounting
firm but is derived from management accounts. Accordingly, the financial information of Target
Media for that period, including the statement of operations relating to Target Media, that has
been used to calculate the pro forma financial information as of and for the three month period
ended March&nbsp;31, 2006 may differ significantly from any actual consolidated statement of operations
financial information had it been audited or reviewed by an independent registered public
accounting firm. See &#147;Item&nbsp;3.D Key Information&#151;Risk Factors &#151; The unaudited pro forma condensed
consolidated financial information included in this annual report contains financial information that
has not been audited or reviewed by an independent certified public accounting firm and that is
derived in part by estimates, and accordingly the pro forma financial information may differ
significantly from the actual consolidated financial information&#148;.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Focus Media</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Framedia for</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Target Media</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Holding for the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Capital Beyond</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>the year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>for the year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>for the three</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>March 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>31, 2005</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26"><B>(in thousands of U.S. dollars, except share and per share data)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Unaudited Pro Forma Condensed Consolidated
Statement of Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Commercial locations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61,435</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">95,128</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,469</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,828</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising Service Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,425</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising Equipment Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,325</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">113,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Commercial locations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,330</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,423</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,233</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising Service Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,986</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising Equipment Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">976</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(56</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,962</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,788</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,186</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,363</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of acquired intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,639</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,228</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,196</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,750</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,560</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income/(expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(171</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,659</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(161</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(259</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income taxes and
minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,371</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,750</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,960</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income taxes:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">717</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">696</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;after income taxes before
minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,373</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,750</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,264</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,373</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,750</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,141</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,187</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,187</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;A-1 convertible
redeemable preference shares &#151; Redesignation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,136</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;A-1 convertible
redeemable preference shares &#151; Accretion of
redemption premium</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(379</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;A-2 convertible
redeemable preference shares &#151; Redesignation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(624</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">624</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;A-2 convertible
redeemable preference shares &#151; Accretion
of redemption premium</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(208</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">9
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Focus Media</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Framedia for</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Target Media</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Holding for the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Capital Beyond</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>the year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>for the year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>for the three</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>March 31, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>31, 2005</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26"><B>(in thousands of U.S. dollars, except share and per share data)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion to Series&nbsp;A redeemable convertible
preferred shares redemption value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,288</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accretion to Series&nbsp;B redeemable convertible
preferred shares redemption value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(960</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beneficial conversion of Series&nbsp;A redeemable
convertible preferred shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,021</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,021</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beneficial conversion of Series&nbsp;B redeemable
convertible preferred shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(806</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(806</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)&nbsp;attributable to holders of
ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(21,907</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,236</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,127</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income per share &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in calculating basic income per
share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,128,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">351,285,548</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income per share &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in calculating diluted income per
share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">365,938,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465,095,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Focus Media Holding</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Target Media for the</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>for the three months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>two months ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pro forma</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ended March 31, 2006</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>February 28, 2006</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(2)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Adjustments</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Pro Forma</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in thousand of U.S. dollars, except share and per share data)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Unaudited Pro Forma Condensed Consolidated Statement of
Operations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; Commercial locations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,540</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,067</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising Service Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,900</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising Equipment Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,205</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cost of Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; Commercial locations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,828</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,973</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">&#151; Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising Service Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,198</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising Equipment Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,430</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Gross profit (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(725</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,774</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,936</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,172</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of acquired intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,204</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,312</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income (loss)&nbsp;from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,380</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Interest income/(expenses)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">893</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,755</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,709</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income (loss)&nbsp;before income taxes and minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,158</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,647</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(59</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">558</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (loss)&nbsp;after income taxes before minority
interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,099</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,089</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Minority interests</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(40</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(31</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(70</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net income (loss)&nbsp;attributable to holders of ordinary
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,068</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(205</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income per share &#151; basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in calculating basic income per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">438,232,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">488,709,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income per share &#151; diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in calculating diluted income per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465,895,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516,373,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The translations of amounts from RMB into United States dollars as of and for the
year ended December&nbsp;31, 2005, are solely for the convenience of the reader and were calculated at
the rate of US$1.00 = RMB8.0702, on December&nbsp;31, 2005, representing the noon buying rate in the
City of New York for cable transfers of RMB, as certified for customs purposes by the Federal
Reserve Bank of New York.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">10
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">is intended to imply that the RMB amounts could have been, or could be, converted, realized or
settled into US$ at that rate on December&nbsp;31, 2005, or at any other rate.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;Translations of amounts from RMB into United States dollars are solely for the convenience
of the reader and were calculated at the rate of US$1.00 = RMB8.0415, on February&nbsp;28, 2006,
representing the noon buying rate in the City of New York for cable transfers of RMB, as certified
for customs purposes by the Federal Reserve Bank of New York. No representation is intended to
imply that the RMB amounts could have been, or could be, converted, realized or settled into US$ at
that rate on February&nbsp;28, 2006, or at any other date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;Reflects amortization for the acquired intangible assets recorded as a result of our
acquisitions of Capital Beyond in March&nbsp;2005, Framedia in January&nbsp;2006 and Target Media in February
2006 to reflect amortization for the year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate purchase price of $94.3&nbsp;million of Framedia is comprised of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(in thousands</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash consideration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">39,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other acquisition costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair Value of ordinary shares issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,418</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">94,329</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair value of the ordinary shares issued for purchase price allocation purposes
was estimated using the closing market price for a reasonable period before and after the date of
the announcement of the acquisition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Preliminary purchase price allocation:

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(in thousands</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amortization</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>period</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net tangible liabilities acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquired intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7 years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">94,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preliminary purchase price allocation and preliminary intangible asset
valuations for each of the acquisitions described above were based on a valuation report provided
by a third party valuation firm. The valuation report utilizes and considers generally accepted
valuation methodologies such as the income, market, cost and actual transaction of shares approach.
We have incorporated certain assumptions which include projected cash flows and replacement costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amortization expense for Framedia and Target Media of $2.9&nbsp;million and $1.2&nbsp;million,
respectively, for the year ended December&nbsp;31, 2005 have been estimated based on a valuation report
provided by a third-party valuation firm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;Reflects amortization for the intangible assets recorded as a result of our acquisition of
Target Media which occurred on February&nbsp;26, 2006 to reflect amortization from January&nbsp;1, 2006 to
February&nbsp;28, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The aggregate purchase price of $327.1&nbsp;million of Target Media is comprised of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(in thousands</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash consideration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">94,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other acquisition costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fair Value of ordinary shares
issued</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">327,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The cash portion of the purchase price will be paid in three installments. The first
installment of $45&nbsp;million was paid at closing. The second installment of $25&nbsp;million was paid on
April&nbsp;28, 2006. The final installment of $24&nbsp;million is to be paid on July&nbsp;31, 2006. The fair value
of the ordinary shares issued for purchase price allocation purposes was estimated using the
closing market price for a reasonable period before and after the date of the announcement of the
acquisition.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(in thousands</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Amortization</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>period</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net tangible assets acquired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquired intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7 year</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">327,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preliminary purchase price allocation and preliminary intangible asset
valuations for each of the acquisitions described above were based on a valuation report provided
by a third-party valuation firm. The valuation report utilizes and considers generally accepted
valuation methodologies such as the income, market, cost and actual transaction of shares approach.
We have incorporated certain assumptions which include projected cash flows and replacement costs.
</DIV>

<P align="center" style="font-size: 10pt">11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amortization expense for Target Media of $205,350, for the period ended March&nbsp;31, 2006
have been estimated based on a valuation report provided by a third party valuation firm.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;Assumes the conversion upon completion of the acquisitions of all convertible redeemable
convertible preference shares of Framedia and Target Media. Accordingly, the deemed dividends and
redemption value accretion relating to these shares have been reversed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)&nbsp;Reflects the adjustment relating to the conformity in accounting policy of Target Media
for employee stock options from FAS 123(R) to APB 25 which is the accounting policy adopted by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)&nbsp;The following table sets forth the shares used in computing pro forma per share amounts
for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in calculating basic income per share on a pro forma basis:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average ordinary shares outstanding used in computing basic income
per share for Focus Media Holding Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">252,128,545</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">438,232,094</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of ordinary shares for the acquisition of Infoachieve Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,157,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of ordinary shares for the acquisition of Target Media</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,477,778</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">351,285,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">488,709,872</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>March 31, 2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in calculating diluted income per share on a pro forma basis:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average ordinary shares outstanding used in computing diluted
income per share for Focus Media Holding Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">365,938,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465,895,318</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of ordinary shares for the acquisition of Infoachieve Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,157,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of ordinary shares for the acquisition of Target Media</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,477,778</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">465,095,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">516,373,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8)&nbsp;There have been no pro forma tax adjustments recorded because none of the pro
forma adjustments discussed above has any tax impact.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Currency Translations and Exchange Rates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating businesses are currently conducted in China and substantially all of our
revenues and expenses are denominated in Renminbi. The People&#146;s Bank of China, or PBOC, 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 PBOC also takes into account other factors, such as the general conditions
existing in the international foreign exchange markets. Since 1994, the conversion of Renminbi into
foreign currencies, including Hong Kong dollars and U.S. dollars, has been based on rates set by
the PBOC, which are set daily based on the previous day&#146;s inter-bank foreign exchange market rates
and current exchange rates in the world financial markets. From 1994 to July&nbsp;20, 2005, the official
exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. 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 securities, requires the
approval of the State Administration for Foreign Exchange and other relevant authorities. On July
21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value
of the Renminbi to fluctuate within a regulated band based on market supply and demand and by
reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by 2.0%
against the U.S. dollar. Since then, the PRC government has made, and may in the future make,
further adjustments to the exchange rate system. The PBOC announces the closing price of a foreign
currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of
the market on each working day, and makes it the central parity for the trading against the
Renminbi on the following working day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The conversion of Renminbi into U.S. dollars in this annual report is based on the noon buying
rate in The City of New York for cable transfers of Renminbi as certified for customs purposes by
the Federal Reserve Bank of New
York. For your convenience, this annual report contains translations of Renminbi at $1.00 to
RMB8.0167, which was the prevailing rate on March&nbsp;31, 2006. The
prevailing rate at June&nbsp;23, 2006 was
$1.00 to RMB7.9997. We make no representation that any Renminbi or U.S. dollar amounts could have
been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular
rate, the rates stated below, or at all. The PRC government imposes controls over its foreign
currency reserves in part through direct regulation of the conversion of Renminbi into foreign
exchange and through restrictions on foreign trade.
</DIV>

<P align="center" style="font-size: 10pt">12
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning exchange rates between the Renminbi and
the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and
are not necessarily the exchange rates that we used in this annual report or will use in the
preparation of our periodic reports or any other information to be provided to you.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>RENMINBI PER U.S. DOLLAR NOON BUYING RATE</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>AVERAGE</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>HIGH</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>LOW</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>PERIOD-END</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2774</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2769</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">January</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0654</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0608</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">February</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0415</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">March</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">April</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0140</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">May</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">June (through June 23)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9997</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Capitalization and Indebtedness</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Reasons for the Offer and Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Risk Factors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Our business and operations are subject to various risks, many of which are beyond our
control. If any of the risks described below actually occurs, our business, financial condition or
results of operations could be seriously harmed.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Relating to Our Business and Industry</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We have a limited operating history, which may make it difficult for you to evaluate our business
and prospects.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We began operations of our commercial location network in May&nbsp;2003. In addition, we have
operated our in-store network since April&nbsp;2005 and acquired and began to operate our poster frame
network from January&nbsp;2006 under the brand name &#147;Framedia&#148;. In March and April&nbsp;2006, respectively,
we added a WAP-based mobile phone advertising network and outdoor LED digital billboard advertising
network to our business. Accordingly, we have a very limited operating history for our current
operations upon which you can evaluate the viability and sustainability of our business and its
acceptance by advertisers and consumers. It is also difficult to evaluate the viability of our use
of audiovisual advertising displays in commercial buildings, hypermarkets, supermarkets and
convenience stores and other out-of-home commercial locations and our use of advertising poster
frames in residential complexes and
WAP-based mobile handset advertising as a business model because we do not have sufficient
experience to address the risks frequently encountered by early stage companies using new forms of
advertising media and entering new and rapidly evolving markets. These circumstances may make it
difficult for you to evaluate our business and prospects.
</DIV>


<P align="center" style="font-size: 10pt">13
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We derive a substantial majority of our revenues from the provision of advertising services,
and advertising is particularly sensitive to changes in economic conditions and advertising trends.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Demand for advertising time slots and advertising frame space on our networks, and the
resulting advertising spending by our clients, is particularly sensitive to changes in general
economic conditions and advertising spending typically decreases during periods of economic
downturn. Advertisers may reduce the money they spend to advertise on our networks for a number of
reasons, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a general decline in economic conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a decline in economic conditions in the particular cities where we conduct business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a decision to shift advertising expenditures to other available advertising media; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a decline in advertising spending in general.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A decrease in demand for advertising media in general and for our advertising services in
particular would materially and adversely affect our ability to generate revenue from our
advertising services, and our financial condition and results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>A substantial majority of our revenues is currently concentrated in four of China&#146;s major cities.
If any of these major cities experiences an event negatively affecting its advertising industry,
our advertising network, and our ability to generate adequate cash flow would be materially and
adversely affected.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A substantial majority of our revenues are currently concentrated in Beijing, Shanghai,
Guangzhou and Shenzhen, four of China&#146;s major cities. For example, for the three months ended March
31, 2006, more than 55% of advertising service revenue from the premier office building A channel
of our commercial location network was derived from these four cities. We expect these four cities
to continue to constitute important sources of our revenues, and as a result of our acquisitions of
Framedia and Target Media, this percentage may increase, as a substantial majority of Framedia&#146;s
revenues are derived from these four cities, and a majority of Target Media&#146;s network, before its
business and operations were merged into ours, was also located in these four cities. If any of
these major cities experiences an event negatively affecting its advertising industry, such as a
serious economic downturn, a construction moratorium that would have the effect of materially
limiting the supply of new buildings in which we can place our flat-panel displays or advertising
poster frames or similar changes in government policy, or a natural disaster, our advertising
network and our ability to generate adequate cash flow would be materially and adversely affected.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our quarterly operating results are difficult to predict and may fluctuate significantly from
period to period in the future.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our quarterly operating results are difficult to predict and may fluctuate significantly from
period to period based on the seasonality of consumer spending and corresponding advertising trends
in China. In addition, advertising spending generally tends to decrease during January and February
each year due to the Chinese Lunar New Year holiday. We also experience a slight decrease in
revenues during the hot summer months of July and August each year, when there is a relative
slowdown in overall commercial activity in urban areas in China. As a result, you may not be able
to rely on period to period comparisons of our operating results as an indication of our future
performance. Factors that are likely to cause our operating results to fluctuate, such as the
seasonality of advertising spending in China, a deterioration of economic conditions in China and
potential changes to the regulation of the advertising industry in China, are discussed elsewhere
in this annual report. If our revenues for a particular quarter are lower than we expect, we may be
unable to reduce our operating expenses for that quarter by a corresponding amount, which would
harm our operating results for that quarter relative to our operating results from other quarters.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The unaudited pro forma condensed consolidated financial information included in this annual report
contains financial information that has not been audited or reviewed by an independent registered
public accounting</I></B>
</DIV>



<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>firm and that is derived in part by estimates, and accordingly the pro forma financial information
may differ significantly from the actual consolidated financial information.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited pro forma condensed consolidated financial information presented in this
annual report includes all the adjustments, consisting of normal recurring adjustments, necessary for
a fair presentation of the operating results in the historical periods. However, because such
adjustments are based on estimates such as the estimated amortization period for the acquired
intangible assets for Framedia and Target Media, it is not intended to show how the consolidated
companies would have actually performed if the events described above had in fact occurred on the
dates assumed or to project the results of operations or financial position for any future date or
period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The U.S. dollar convenience translation used to present the statement of operations of Target
Media for 2005 contained in the unaudited pro forma condensed consolidated financial information
may not be the same had U.S. dollars been used as the reporting currency for Target Media&#146;s audited
statement of operations for 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the financial information of Target Media for the two month period ended February
28, 2006 has not been audited or reviewed by an independent registered public accounting firm but
is derived from management accounts. Accordingly, the financial information of Target Media for
that period, including the statement of operations relating to Target Media, that has been used to
calculate the pro forma financial information as of and for the three month period ended March&nbsp;31,
2006 may differ significantly from any actual consolidated statement of operations financial
information had it been audited or reviewed by an independent registered public accounting firm.
See &#147;Item&nbsp;3.A Key Information&nbsp;&#151; Selected
Financial Data&nbsp;&#151; Consolidated Pro Forma Financial Data of Focus Media, Framedia, Target Media Holdings and
Other Acquired Entities&#148;.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our failure to maintain existing relationships or obtain new relationships with businesses that
allow us to place our flat-panel displays and advertising poster frames in their buildings and
other commercial locations and to lease outdoor LED digital billboards placed in desirable
locations would harm our business and prospects.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to generate revenues from advertising sales depends largely upon our ability to
provide large networks of flat-panel displays placed in desirable building, commercial and store
locations, of advertising poster frames placed in residential complexes, and as of April&nbsp;2006, to
secure desirable locations of large outdoor LED digital billboards, throughout major urban areas in
China. We also depend on the ability of our third-party location provider to secure desirable LED
digital billboard locations for our outdoor LED network. This, in turn, requires that we develop
and maintain business relationships with real estate developers, landlords, property managers,
hypermarkets, retailers and other businesses and locations in which we rent space for our displays
and digital billboards. As of March&nbsp;31, 2006, with regard to our commercial location network, we
had entered into separate display placement agreements with landlords and property managers to
operate 71,230 flat-panel displays in 50 cities in China, and our regional distributors had entered
into their own separate display placement agreements with landlords and property managers to
operate approximately 3,780 flat-panel displays in 36 other cities in China. In addition, as of
March&nbsp;31, 2006, with regard to our in-store network, we had entered into separate display placement
agreements with hypermarkets, supermarkets and convenience stores to operate 33,765 flat-panel
displays in 5,218 stores throughout China. As of April&nbsp;2006, we sell advertising time slots on
approximately 75 outdoor LED billboards in locations throughout Shanghai leased through an
agreement with a third-party location provider. Although a majority of our display placement
agreements and advertising frame placement agreements have terms ranging from three to five years
and two to three years, respectively, and upon expiration give us the right to renew the agreement
on terms no less favorable than those offered by competing bidders, we may not be able to maintain
our relationships with them on satisfactory terms, or at all. If we fail to maintain our
relationships with landlords and property managers, or if a significant number of our existing
display or advertising frame placement agreements are terminated or not renewed or if we fail to
maintain our relationship with our location provider of LED billboard space, advertisers may find
advertising on our networks unattractive and may not wish to purchase advertising time slots or
advertising frame space on our networks, which would cause our revenues to decline and our business
and prospects to deteriorate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under some of our display placement agreements in Guangzhou, Shenzhen, Dalian and Chongqing,
the property manager has the right to terminate the agreement if landlords or tenants in the
building lodge complaints about our flat-panel displays. In addition, some of our display placement
agreements in other cities allow the
</DIV>

<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">property manager to terminate the agreement if we fail to keep each flat-panel display
operational for a minimum amount of time each year. If these tenants complain about our displays,
or if the property manager claims we have failed to keep the flat-panel displays operational for
the stipulated number of days each year, we may be required to remove our panels from these
commercial locations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with PRC real estate laws and regulations, prior consent of landlords and
property managers is required for any commercial use of the public areas or facilities of
residential properties. With regard to our network of advertising poster frames and some of our
flat-panel displays placed in the elevators and public areas of residential complexes, we have
entered into frame or display placement agreements with property managers and landlords. For those
frame or display placement agreements entered into with property managers, we intend to obtain or
urge property managers to obtain consents from landlords. However, if the landlords of a
residential complex object to our placing advertising poster frames or flat-panel displays in the
elevators and public areas of the complex, we may be required to remove our advertising poster
frames or flat-panel displays from the complex and may be subject to fines. We may not be able to
successfully expand our out-of-home advertising network into new regions or diversify our network
into new advertising networks or media platforms, which could harm or reverse our growth potential
and our ability to increase our revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are pursuing a strategy to expand our network into new regions, new advertising channels,
such as our travel, fashion, elite and health-care channels, as well as into residential complexes.
We are also expanding our network into new advertising media, such as advertising poster frames,
mobile-phone WAP-based advertising, and outdoor LED billboard advertising. For example:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in January&nbsp;2006, we acquired Framedia and E-Times, providing us with our poster
frame network located primarily in residential complexes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we recently began marketing separate channels of our commercial location network,
such as our travel, fashion, elite and health-care channels, to enable advertisers to
focus on more specifically targeted consumer audiences;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in March&nbsp;2006, we acquired Focus Media Wireless, which operates a mobile-phone
WAP-based advertising service in China through China Mobile and China Unicom&#146;s mobile
phone networks; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in April&nbsp;2006, we commenced operation of an outdoor LED network consisting of
approximately 75 leased 5&#146; x 5&#146; LED digital billboards installed on the street-sides in
major shopping districts and other locations with high pedestrian traffic in Shanghai.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because portions of our existing network are rapidly reaching saturation, in order to
successfully expand our networks, we must expand our networks to include new regions and new
advertising channels. In order to expand our networks into new regions, we must enter into new
display or frame placement agreements in new cities. In the case of our commercial location
network, we generally expand our networks into new cities by means of establishing new operations
through entering into contractual relationships with regional distributors. If these regional
distributors are not successful in expanding our commercial location network in other cities, our
ability to grow our commercial location network in other regions may be hampered. We may also
expand our outdoor LED network into cities other than Shanghai in the future. The process of
diversifying our networks into new advertising channels is also time consuming and requires us to
expend time and resources in educating landlords and property managers about the benefits of
separate advertising channels that are dedicated to specific demographics characteristics. If we
are unable to grow our in-store network, poster frame network or outdoor LED network or to
successfully diversify into other new advertising channels, our advertising network may not be as
attractive as those of our competitors, which could harm or reverse our growth potential and our
ability to increase our revenues, or even result in a decrease in revenues.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to obtain or retain desirable placement locations for our flat-panel displays,
advertising poster frames and outdoor LED billboards on commercially advantageous terms or if the
supply of desirable locations diminishes or ceases to expand, we could have difficulty in
maintaining or expanding our network,</I></B>
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>our operating margins and earnings could decrease and our results of operations could be materially
and adversely affected.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our location costs, which include lease payments to landlords and property managers under our
display placement agreements, maintenance and monitoring fees and other associated costs, comprise
a significant portion of our cost of revenues. In 2005, our location costs accounted for 61.7% of
our cost of revenues and 24.0% of our total revenues, respectively. For the three months ended
March&nbsp;31, 2006, our location costs accounted for 66.4% of our cost of revenues and 28.9% of our
total revenues, respectively. In the future, we may need to increase our expenditures on our
display and frame placement agreements to obtain new and desirable locations, to renew existing
locations, and to secure favorable exclusivity and renewal terms. In addition, lessors of space for
our flat-panel displays, advertising poster frames and LED billboards may charge increasingly
higher display location lease fees, or demand other compensation arrangements, such as profit
sharing. If we are unable to pass increased location costs on to our advertising clients through
rate increases, our operating margins and earnings could decrease and our results of operations
could be materially and adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, in more developed cities, it may be difficult to increase the number of desirable
locations in our network because most such locations have already been occupied either by us or by
our competitors, or in the case of outdoor LED billboards, because the placement of outdoor
installments may be limited by municipal zoning and planning policies. In recently developing
cities, the supply of desirable locations may be small and the pace of economic development and
construction levels may not provide a steadily increasing supply of desirable commercial and
residential locations. If, as a result of these possibilities, we are unable to increase the
placement of our out-of-home television and poster frame advertising networks into commercial and
residential locations that advertisers find desirable, we may be unable to expand our client base,
sell advertising time slots and poster frame space on our network or increase the rates we charge
for time slots and poster frame space, which could decrease the value of our network to
advertisers.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>When our out-of-home television advertising networks reach saturation in the cities where we
operate, we may be unable to grow our revenue base or to satisfy all of our advertisers&#146; needs,
which could hamper our ability to generate higher levels of revenues over time.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our commercial location and in-store networks currently operate primarily with a repeating
twelve-minute cycle of advertisements per week broadcast repeatedly approximately 60 times per day
consisting of 24 30-second time slots per week, with a limited number of our regional distributors
using a nine-minute cycle, and our outdoor LED network using a repeating six-minute cycle. Where
demand for time slots by advertisers is high, such as in our Tier I cities, our out-of-home
television networks may reach saturation, meaning we cannot sell additional advertising time slots
for that week&#146;s cycle without further increasing the length of the cycle and correspondingly
reducing the number of broadcasts per day of each advertisement. If our commercial location,
in-store and outdoor LED networks reach saturation in any particular city, we will be forced to
lengthen our advertising cycle to accommodate additional advertisers, as we have done in all of our
directly operated cities, or increase our advertising rates to increase our revenues in our
existing cities of operation. However, advertisers may be unwilling to accept rate increases or the
placement of their advertisement on a longer time cycle that gives their advertisement less
exposure each day. If we are unable to increase the duration of our advertising cycle in cities
that reach saturation, or if we are unable to pass through rate increases to our advertising
clients in those cities, we may be unable to grow our revenue base or to satisfy all of our
advertisers&#146; needs, which could hamper our ability to generate higher levels of revenues over time.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to attract advertisers to advertise on our networks, we will be unable to maintain
or increase our advertising fees and the demand for time on our networks, which could negatively
affect our ability to grow revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amounts of fees we can charge advertisers for time slots on our out-of-home television
networks depend on the size and quality of our out-of-home television networks and the demand by
advertisers for advertising time on our out-of-home television networks. Advertisers choose to
advertise on our out-of-home television networks in part based on the size of the networks and the
desirability of the locations where we have placed our flat-panel displays and where we lease LED
digital billboards as well as the quality of the services we offer. If we fail to maintain or
increase the number of locations, displays and billboards in our networks, diversify advertising
channels in our
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">networks, or solidify our brand name and reputation as a quality provider of advertising
services, advertisers may be unwilling to purchase time on our networks or to pay the levels of
advertising fees we require to remain profitable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the fees we can charge advertisers for frame space on our poster frame network
depends on the quality of the locations in which we place advertising poster frames, demand by
advertisers for frame space and the quality of our service. If we are unable to continue to secure
the most desirable residential locations for deployment of our advertising poster frames, we may be
unable to attract advertisers to purchase frame space on our poster frame network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our failure to attract advertisers to purchase time slots and frame space on our networks will
reduce demand for time slots and frame space on our networks and the number of time slots and
amount of frame space we are able to sell, which could necessitate lowering the fees we charge for
advertising time on our network and could negatively affect our ability to increase revenues in the
future.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be unable to maintain the growth of our network of flat-panel displays into hypermarkets,
supermarkets, convenience stores and other types of businesses that have control over many stores,
and our failure to maintain such growth could materially reduce the attractiveness of our network
and harm our business, reputation and results of operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our strategy includes expanding our in-store network into hypermarkets and other types of
businesses that have control over many store locations such as supermarkets and convenience stores.
We commenced operation of our in-store network in April&nbsp;2005. As of March&nbsp;31, 2006, we had placed
33,765 flat-panel displays in 5,218 hypermarkets, supermarkets and convenience stores. As a
relatively new and untested portion of our business, it is difficult to evaluate whether our
in-store network will continue to attract advertisers, and there exists the risk that it may not
succeed at all. In 2005 and for the three months ended March&nbsp;31, 2006 revenues from our in-store
network accounted for 9.0% and 16.1% of our advertising service revenue, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of our arrangements with such businesses are and will continue to be handled through a
single or small number of display placement agreements designed to cover a chain&#146;s entire network
of stores, either nationwide or throughout an entire city. We may, therefore, increase our
dependence on one or a small number of retail store chains in terms of our coverage. If our network
becomes more concentrated in major chains, any dispute we have with any single chain, or any
failure to renew our display placement agreements or maintain our exclusivity terms with any single
chain, could materially reduce the attractiveness of our in-store network and harm our business,
reputation and results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our acquisitions of Framedia, Target Media, Focus Media Wireless and any future acquisitions may
expose us to potential risks and have an adverse effect on our ability to manage our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selective acquisitions, such as our recent acquisitions of Framedia, Target Media and Focus
Media Wireless, form part of our strategy to further expand our business. If we are presented with
appropriate opportunities, we may acquire additional businesses, services or products that are
complementary to our core business. Our integration of the acquired entities into our business may
not be successful and may not enable us to expand into new advertising platforms as well as we
expect. This would significantly affect the expected benefits of these acquisitions. Moreover, the
integration of Framedia, Target Media and Focus Media Wireless into our operations have required,
and will continue to require, significant attention from our management. Future acquisitions will
also likely present similar challenges.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The diversion of our management&#146;s attention and any difficulties encountered in any
integration process could have an adverse effect on our ability to manage our business. In
addition, we may face challenges trying to integrate new operations, services and personnel with
our existing operations. Our recent acquisitions and possible future acquisitions may also expose
us to other potential risks, including risks associated with unforeseen or hidden liabilities, the
diversion of resources from our existing businesses and technologies, our inability to generate
sufficient revenue to offset the costs, expenses of acquisitions and potential loss of, or harm to,
relationships with employees and advertising clients as a result of our integration of new
businesses and new regulations governing cross-border investment by PRC residents. In addition, we
cannot assure you that we will be able to realize the benefits we anticipate from acquiring
Framedia, Target Media, Focus Media Wireless and other companies, or that
</DIV>

<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">we will not incur costs, including those relating to intangibles or goodwill, in excess of our
projected costs for these transactions. The occurrence of any of these events could have a material
and adverse effect on our ability to manage our business, our financial condition and our results
of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>There may be unknown risks inherent in our acquisitions of Framedia and Target Media.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we have conducted due diligence with respect to Framedia and Target Media, we may not
be aware of all of the risks associated with Framedia or Target Media. Any discovery of adverse
information concerning Framedia or Target Media since we acquired these entities could have a
material adverse effect on our business, financial condition and results of operations. While we
are entitled to seek indemnification in certain circumstances, successfully asserting
indemnification or enforcing such indemnification could be costly and time consuming or may not be
successful at all.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our recent entry into mobile handset advertising through our acquisition of Focus Media Wireless
may expose us to risks associated with operating in the telecommunications industry in China which
could materially affect our financial condition or results of operation.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we completed our acquisition of Focus Media Wireless, which operates a mobile
handset WAP-based advertising service over China Mobile&#146;s and China Unicom&#146;s mobile
telecommunications networks. As a result, we now operate a portion of our advertising network on
mobile telecommunications networks and are subject to risks associated with operations in the
telecommunications sector in China. These potential risks include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loss or deterioration of our relationship with China Mobile or China Unicom, the two
primary mobile telecommunications operators in China that currently provide wireless
value-added services to mobile phone users;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loss or deterioration of our relationship with Internet service providers who use
our WAP-based advertisement platform;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure to reach traditional advertisers and to take advantage of marketing networks
through our existing business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in operating policies or guidelines by mobile telecommunications operators
applicable to all wireless value-added service providers using their platforms or which
restrict content supplied by others to us;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>regulation of the telecommunications sector in China that could impose burdensome
approval or licensing requirements on value-added service providers such as advertising
companies that sell advertising time on mobile telecommunications networks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a decision by either or both China Mobile and China Unicom to directly enter into
the WAP-based advertising business; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>consumer dissatisfaction with, or any related regulations restricting, the use or
&#147;pushing&#148; of unsolicited advertisements, commonly known as &#147;spam&#148;.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of any such change or event, the operation of our advertising network using the
mobile telecommunications networks of the mobile telecommunications operators in China may be
disrupted, which could in turn lower our advertising revenues or result in higher operating costs
to us, and we cannot assure you that our financial condition and results of operation would not be
materially adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, under PRC law, the services offered by Focus Media Wireless may be deemed
value-added telecommunication services, which requires an operation permit that has a valid period
of five years. Focus Media Wireless has applied for the operation permit for its wireless
advertising operations. If Focus Media Wireless is deemed by the PRC regulatory authorities to be
providing value-added telecommunication services but an operation
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">permit is not issued or, once issued, if it were revoked or if we are unable to renew its
operation permit upon expiration, we will be required to suspend our services relating to our
mobile handset advertising network, and our advertising service revenue derived from this portion
of our network would be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We currently rely on a single third-party location provider to secure sites for our outdoor LED
billboard network, and any disruption in its business operations or in our relationship with it
would materially and adversely impact the operation of our outdoor LED network, resulting in the
loss of a portion of our revenue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To secure locations in Shanghai for our new outdoor LED network, we have entered into a
four-year exclusive agreement with Shanghai Yihukuan Media Co., Ltd., or Yihukuan, which leases all
of its current, and any future developed, LED digital billboard space in Shanghai to us for an
annual fee. Our reliance on a single third-party location provider for the billboard space on our
outdoor LED network exposes us to a number of risks in connection with this part of our advertising
network. In order to place LED digital billboards in public areas, Yihukuan must apply for and
receive approval from relevant authorities of the Shanghai municipal government and continue to
comply with relevant outdoor advertising laws and regulations. If the approvals that have been
granted to Yihukuan are revoked for any reason, including any failure by Yihukuan to comply with
relevant outdoor advertising laws and regulations, or if Yihukuan fails to receive approvals to
place additional LED billboards, the outdoor LED network could become unavailable to us, be reduced
in size or fail to grow, which may make it less attractive to advertising customers. Moreover,
because we pay the annual fee to Yihukuan in advance, we may be unable to recover any deposits and
rental fees we pay to it in the event that its network becomes inoperable or is suspended, reduced
in size or fails to attract advertisers. In addition, because we rely on Yihukuan for digital
billboard space on our outdoor LED network, any loss or deterioration of our relationship with
Yihukuan, including any failure to renew our contract with them, may result in disruption to our
outdoor LED network operations and the loss of a portion of our revenue.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>One or more of our regional distributors could engage in activities that are harmful to our
reputation in the industry and to our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we covered 36 out of the 86 cities where we provide our commercial
location network through contractual arrangements with regional distributors. Under these
arrangements, we provide our business model and operating expertise to local advertising companies
in exchange for their acting as regional distributors of our advertising services. We also sell our
flat-panel displays to our regional distributors, who are responsible for developing and
maintaining an advertising network in office buildings and other commercial locations in the city
where they operate. We also grant our regional distributors the right to use our &#147;Focus Media&#148;
brand name and logo. However, our contractual arrangements with our regional distributors do not
provide us with control or oversight over their everyday business activities, and one or more of
our regional distributors may engage in activities that violate PRC laws and regulations governing
the advertising industry and advertising content, or other PRC laws and regulations generally. Some
of our regional distributors may not possess all the licenses required to operate an advertising
business, or may fail to maintain the licenses they currently hold, which could result in local
regulators suspending the operations of the network in those cities. In addition, we do not
independently review the advertising content that our regional distributors display on the portion
of our commercial location network that they operate independently, and our regional distributors
may include advertising content on their part of the commercial location network and violate PRC
advertising laws or regulations or expose them and us to lawsuits or result in the revocation of
their business license. If any of these events occurs, it could harm our reputation in the
industry.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Suodi Advertising, our network development and maintenance agent in Beijing, may have a claim
against us under the non-competition clause of our contract with it, and if Suodi Advertising were
successful in bringing a claim against us, our financial condition and results of operations may be
materially and adversely affected.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We entered into an agency agreement with Beijing Suodi Advertising Co., Ltd., or Suodi
Advertising, that contains a non-competition clause which restricts us from developing new network
locations in commercial buildings in Beijing without the assistance of Suodi Advertising through
2008. We have entered into display and frame placement agreements with landlords and property
managers of commercial buildings in Beijing without the assistance of Suodi Advertising. We believe
that Suodi Advertising does not have the right to require us to terminate or otherwise void the
display placement agreements we have entered into without its assistance, although it can pursue
claims against us for monetary damages. Although Suodi Advertising has not pursued any claim
against us in
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">connection with our having entered into such display and frame placement agreements, we cannot
assure you that Suodi will not do so in the future. If Suodi Advertising successfully pursues a
claim against us, we could be liable for monetary damages we may have caused to Suodi Advertising.
If we are found to have violated our contract with Suodi Advertising, our payment obligations over
the five year term of the contract can be accelerated, and we estimate our liability under the
agreement could reach as much as $730,000, excluding possible consequential damages, which could
materially and adversely affect our financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Failure to manage our growth could strain our management, operational and other resources and we
may not be able to achieve anticipated levels of growth in the new networks and media platforms we
are beginning to operate, either of which could materially and adversely affect our business and
growth potential.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been rapidly expanding, and plan to continue to rapidly expand, our operations in
China. We must continue to expand our operations to meet the demands of advertisers for larger and
more diverse network coverage and the demands of current and future landlords and property managers
for installing and configuring flat-panel displays, advertising poster frames and outdoor LED
billboards in our existing and future commercial, store, residential and curbside locations. This
expansion has resulted, and will continue to result, in substantial demands on our management
resources. It has also increased our need for a reliable supply of equipment, particularly
flat-panel displays and large LED digital billboards for our out-of-home television networks which
are manufactured by a few third-party contract assemblers according to our specifications. To
manage our growth, we must develop and improve our existing administrative and operational systems
and, our financial and management controls and further expand, train and manage our work force. We
have also commenced providing advertising services to mobile phone users through our recent
acquisition of Focus Media Wireless. As we continue this effort, we may incur substantial costs and
expend substantial resources in connection with any such expansion due to, among other things,
different technology standards, legal considerations and cultural differences. We may not be able
to manage our current or future international operations effectively and efficiently or compete
effectively in such markets. We cannot assure you that we will be able to efficiently or
effectively manage the growth of our operations, recruit top talent and train our personnel. Any
failure to efficiently manage our expansion may materially and adversely affect our business and
future growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we continue to expand into new networks and new media platforms, we expect the percentage
of revenues derived from our commercial location network to decline. However, the new advertising
networks and media platforms we pursue may not present the same opportunities for growth that we
have experienced with our commercial location network and, accordingly, we cannot assure you that
the level of growth of our networks will not decline over time. Moreover, we expect the level of
growth of our commercial location network to decrease as many of the more desirable locations have
already been leased by us or our competitors.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If advertisers or the viewing public do not accept, or lose interest in, our out-of-home
advertising network, our revenues may be negatively affected and our business may not expand or be
successful.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for out-of-home advertising networks in China is relatively new and its potential
is uncertain. We compete for advertising spending with many forms of more established advertising
media. Our success depends on the acceptance of our out-of-home advertising network by advertisers
and their continuing interest in these mediums as components of their advertising strategies. Our
success also depends on the viewing public continuing to be receptive towards our advertising
network. Advertisers may elect not to use our services if they believe that consumers are not
receptive to our networks or that our networks do not provide sufficient value as effective
advertising mediums. Likewise, if consumers find some element of our networks, such as the audio
feature of our commercial location, in-store and outdoor LED networks, to be disruptive or
intrusive, commercial locations and stores may decide not to place our flat-panel displays in their
properties and advertisers may view our advertising network as a less attractive advertising medium
compared to other alternatives. In that event, advertisers may determine to reduce their spending
on our advertising network. If a substantial number of advertisers lose interest in advertising on
our advertising network for these or other reasons, we will be unable to generate sufficient
revenues and cash flow to operate our business, and our advertising service revenue, liquidity and
results of operations could be negatively affected.
</DIV>

<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We depend on the leadership and services of Jason Nanchun Jiang, who is our founder, chairman,
chief executive officer and our largest shareholder, and our business and growth prospects may be
severely disrupted if we lose his services.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future success is dependent upon the continued service of Jason Nanchun Jiang, our
founder, chairman and chief executive officer and our largest shareholder. We rely on his industry
expertise and experience in our business operations, and in particular, his business vision,
management skills, and working relationships with our employees, our other major shareholders, many
of our clients and landlords and property managers of the locations in our network. We do not
maintain key-man life insurance for Mr.&nbsp;Jiang. If he was unable or unwilling to continue in his
present position, or if he joined a competitor or formed a competing company in violation of his
employment agreement and noncompetition agreement, we may not be able to replace him easily or at
all. As a result, our business and growth prospects may be severely disrupted if we lose his
services.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may need additional capital and we may not be able to obtain it, which could adversely affect
our liquidity and financial position.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our current cash and cash equivalents, cash flow from operations and the
proceeds from this offering will be sufficient to meet our anticipated cash needs including for
working capital and capital expenditures, for the foreseeable future. We may, however, require
additional cash resources due to changed business conditions or other future developments. If these
sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or
debt securities or obtain a credit facility. The sale of convertible debt securities or additional
equity securities, including from this offering, could result in additional dilution to our
shareholders. The incurrence of indebtedness would result in increased debt service obligations and
could result in operating and financing covenants that would restrict our operations and liquidity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>investors&#146; perception of, and demand for, securities of alternative advertising media companies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conditions of the U.S. and other capital markets in which we may seek to raise funds</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our future results of operations, financial condition and cash flows;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>PRC governmental regulation of foreign investment in advertising services companies in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>economic, political and other conditions in China; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>PRC governmental policies relating to foreign currency borrowings.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that financing will be available in amounts or on terms acceptable to us,
if at all. Any failure by us to raise additional funds on terms favorable to us could have a
material adverse effect on our liquidity and financial condition.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to adapt to changing advertising trends and the technology needs of advertisers
and consumers, we will not be able to compete effectively and we will be unable to increase or
maintain our revenues which may materially and adversely affect our business prospects and
revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for out-of-home advertising requires us to continuously identify new advertising
trends and the technology needs of advertisers and consumers, which may require us to develop new
features and enhancements for our advertising network. The majority of our displays use 17-inch
liquid crystal displays screens. We also have a growing number of displays that use larger LCD and
plasma screens as well as large size LED digital billboards. We currently broadcast advertisements
on our commercial location network and in-store network primarily through compact flash, or CF,
cards that are manually installed in our flat-panel displays each week. Through our recent
acquisition of Focus Media Wireless, we now also provide advertising services to mobile phone users
over the mobile phone networks of China Mobile and China Unicom. In the future, subject to relevant
PRC laws and
</DIV>

<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">regulations, we may use other technology, such as cable or broadband networking, advanced
audio technologies and high-definition panel technology. We may be required to incur development
and acquisition costs in order to keep pace with new technology needs but we may not have the
financial resources necessary to fund and implement future technological innovations or to replace
obsolete technology. Furthermore, we may fail to respond to these changing technology needs. For
example, if the use of wireless or broadband networking capabilities on our advertising network
becomes a commercially viable alternative and meets all applicable PRC legal and regulatory
requirements, and we fail to implement such changes on our commercial location network and in-store
network or fail to do so in a timely manner, our competitors or future entrants into the market who
do take advantage of such initiatives could gain a competitive advantage over us. If we cannot
succeed in developing and introducing new features on a timely and cost-effective basis, advertiser
demand for our advertising networks may decrease and we may not be able to compete effectively or
attract advertising clients, which would have a material and adverse effect on our business
prospects and revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be subject to, and may expend significant resources in defending against, government actions
and civil suits based on the content and services we provide through our out-of-home television
advertising networks, poster frame network or mobile handset advertising network.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PRC advertising laws and regulations require advertisers, advertising operators and
advertising distributors, including businesses such as ours, to ensure that the content of the
advertisements they prepare or distribute are fair and accurate and are in full compliance with
applicable law. Violation of these laws or regulations may result in penalties, including fines,
confiscation of advertising fees, orders to cease dissemination of the advertisements and orders to
publish an advertisement correcting the misleading information. In circumstances involving serious
violations, the PRC government may revoke a violator&#146;s license for advertising business operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As an out-of-home advertising service provider, we are obligated under PRC laws and
regulations to monitor the advertising content that is shown on our out-of-home advertising
networks for compliance with applicable law. In addition, each of our regional distributors is
obligated under PRC laws and regulations to monitor the advertising content shown on the portion of
our out-of-home television advertising network each of them operates. In general, the
advertisements shown on our out-of-home television advertising network and the portion of our
advertising network operated by our regional distributors have previously been broadcast over
public television networks and have been subjected to internal review and verification of such
networks. We and our regional distributors are still separately required to independently review
and verify these advertisements for content compliance before displaying the advertisements. In
addition, where a special government review is required for specific product advertisements before
broadcasting, we and our regional distributors are separately obligated to confirm that such review
has been performed and approval has been obtained. We employ, and our regional distributors are
required under the terms of our agreements with them to employ, qualified advertising inspectors
who are trained to review advertising content for compliance with relevant PRC laws and
regulations. In addition, for advertising content related to specific types of products and
services, such as alcohol, cosmetics, pharmaceuticals and medical procedures, we and our
distributors are required to confirm that the advertisers have obtained requisite government
approvals including the advertiser&#146;s operating qualifications, proof of quality inspection of the
advertised products, government pre-approval of the contents of the advertisement and filing with
the local authorities. We endeavor to comply, and encourage our regional distributors to take
measures to comply, with such requirements, including by requesting relevant documents from the
advertisers. Starting in January&nbsp;2006, we began to operate a network of advertising poster frames
placed primarily in elevators and public areas of residential complexes. The advertisements shown
on our poster frame network are defined as print advertisements under PRC laws and regulations and
are also subject to the same legal requirements as advertisements shown on our out-of-home
television advertising networks. Outdoor advertisements must be registered with the local SAIC
before dissemination, and advertising distributors are required to submit a registration
application form and the content of the advertisement to the local SAIC and receive an advertising
registration certificate from the local SAIC. Our reputation will be tarnished and our results of
operations may be adversely affected if advertisement shown on our out-of-home television
advertising networks, poster frame network or outdoor LED network is provided to us by our
advertising clients in violation of relevant PRC advertising laws and regulations or that the
supporting documentation and government approvals provided to us by our advertising clients in
connection with such advertising content are not complete or that the advertisements that our
regional distributors have procured for broadcasting on our network have not received required
approval from the relevant local supervisory bodies or are not content compliant.
</DIV>

<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we commenced operation of our outdoor LED digital billboard network in April
2006. The placement and installation of LED billboards are subject to municipal zoning requirements
and governmental approvals, including application for an outdoor advertising registration
certificate for each LED billboard subject to a term of use of no more than six years for each LED
billboard. If the existing LED billboards placed by our LED location provider or us are required to
be removed, the attractiveness of this portion of our advertising network will be diminished.
Moreover, failure by an owner of LED billboards to maintain outdoor advertising registration
certificates would result in the inability to lease or market such space for the placement of
advertisements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China has also enacted regulations governing telecommunication service providers and the
distribution of news and other information. In the past, the Chinese government has stopped the
distribution of information over the Internet and telecommunications networks that it believes to
violate Chinese law, including content that is pornographic or obscene, incites violence, endangers
national security, is contrary to the national interest or is defamatory. China Unicom and China
Mobile also have their own policies regarding the distribution of inappropriate content by wireless
value-added service providers and have punished certain providers for distributing inappropriate
content, including the imposition of fines and service suspensions. Focus Media Wireless undertakes
to the telecommunication operators which grant us access to their mobile phone networks that we
will not distribute any advertisements with illegal content. We require the Internet service
providers which use our WAP-based advertising platform to provide us the same undertaking, but we
cannot completely control the content of their advertisements. If any of the content that we
deliver through our mobile handset advertising network is found to violate Chinese laws and
regulations or the policies of China Mobile and China Unicom, we could be subject to fines or
suspensions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, civil claims may be filed against us for fraud, defamation, subversion, negligence,
copyright or trademark infringement or other violations due to the nature and content of the
information displayed on our advertising network. If consumers find the content displayed on our
advertising network to be offensive, landlords, property managers, other location providers or
telecommunication network operators may seek to hold us responsible for any consumer claims or may
terminate their relationships with us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if the security of our content management system is breached through the
placement of unauthorized CF cards in our flat-panel displays and unauthorized images, text or
audio sounds are displayed on our advertising network, viewers or the PRC government may find these
images, text or audio sounds to be offensive, which may subject us to civil liability or government
censure despite our efforts to ensure the security of our content management system. Any such event
may also damage our reputation. If our advertising viewers do not believe our content is reliable
or accurate, our business model may become less appealing to viewers in China and our advertising
clients may be less willing to place advertisements on our advertising network.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may be subject to intellectual property infringement claims, which may force us to incur
substantial legal expenses and, if determined adversely against us, may materially disrupt our
business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot be certain that our advertising displays or other aspects of our business do not or
will not infringe upon patents, copyrights or other intellectual property rights held by third
parties. Although we are not aware of any such claims, we may become subject to legal proceedings
and claims from time to time relating to the intellectual property of others in the ordinary course
of our business. If we are found to have violated the 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 alternatives. In addition, we may incur substantial expenses in defending against these
third party infringement claims, regardless of their merit. Successful infringement or licensing
claims against us may result in substantial monetary liabilities, which may materially and
adversely disrupt our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We face significant competition, and if we do not compete successfully against new and existing
competitors, we may lose our market share, and our profitability may be adversely affected.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete with other advertising companies in China. We compete for advertising clients
primarily on the basis of network size and coverage, location, price, the range of services that we
offer and our brand name. We also face competition from other out-of-home television advertising
network operators for access to the most desirable locations in cities in China. Individual
buildings, hotels, restaurants and other commercial locations and hypermarket, supermarket and
convenience store chains may also decide to independently, or through third-party
</DIV>

<P align="center" style="font-size: 10pt">24
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">technology providers, install and operate their own flat-panel television advertising screens.
We also compete for overall advertising spending with other alternative advertising media
companies, such as Internet, street furniture, billboard, frame and public transport advertising
companies, and with traditional advertising media, such as newspapers, television, magazines and
radio.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the future, we may also face competition from new entrants into the out-of-home television
advertising sector. Our sector is characterized by relatively low fixed costs and, as is customary
in the advertising industry, we do not have exclusive arrangements with our advertising clients.
These two factors present potential entrants to our sector of the advertising industry with
relatively low entry barriers. In addition, since December&nbsp;10, 2005, wholly foreign-owned
advertising companies are allowed to operate in China, which may expose us to increased competition
from international advertising media companies attracted to opportunities in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increased competition could reduce our operating margins and profitability and result in a
loss of market share. Some of our existing and potential competitors may have competitive
advantages, such as significantly greater financial, marketing or other resources, or exclusive
arrangements with desirable locations, and others may successfully mimic and adopt our business
model. Moreover, increased competition will provide advertisers with a wider range of media and
advertising service alternatives, which could lead to lower prices and decreased revenues, gross
margins and profits. We cannot assure you that we will be able to successfully compete against new
or existing competitors.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our senior management and employees have worked together for a short period of time, which may make
it difficult for you to evaluate their effectiveness and ability to address challenges.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to our limited operating history and recent additions to our management team, some of our
senior management and employees have worked together at our company for only a relatively short
period of time. For example, following our acquisition of Framedia in January&nbsp;2006, Tan Zhi, the
former chairman and chief executive officer of Framedia, continues to be involved in the operation
of our poster frame network. In addition, David Yu, the former chairman and chief executive officer
of Target Media, has joined Focus Media as a co-chairman of our board of directors and president as
of March&nbsp;2006. As a result, it may be difficult for you to evaluate the effectiveness of our senior
management and other key employees and their ability to address future challenges to our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We do not maintain any business liability disruption or litigation insurance coverage for our
operations, and any business liability, disruption or litigation we experience might result in our
incurring substantial costs and the diversion of resources.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The insurance industry in China is still at an early stage of development. Insurance companies
in China offer limited business insurance products and do not, to our knowledge, offer business
liability insurance. While business disruption insurance is available to a limited extent in China,
we have determined that the risks of disruption, cost of such insurance and the difficulties
associated with acquiring such insurance on commercially reasonable terms make it impractical for
us to have such insurance. As a result, we do not have any business liability, disruption or
litigation insurance coverage for our operations in China. Any business disruption or litigation
may result in our incurring substantial costs and the diversion of resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For example, on March&nbsp;16, 2006, Shanghai Xicheng Cultural Dissemination Co., Ltd., also
referred to as CGEN, brought a suit against us in the Shanghai No.&nbsp;1 Intermediate People&#146;s Court on
the grounds of unfair competition. CGEN, which is developing a network of flat-panel displays in
hypermarkets and supermarkets, claims to have established an exclusive business relationship with
the Hymart chain of supermarkets in Shanghai. Hymart notified us that it had requested in writing
to terminate its relationship with CGEN. In CGEN&#146;s pleadings, it alleges that Focus Media
encouraged and supported Hymart to allegedly violate its agreement with CGEN, resulting in losses
to CGEN. In its pleadings, CGEN has requested that the court order Focus Media to cease any alleged
unfair competitive behavior, to undo the effects of any alleged unfair competition and to pay RMB
13,570,920 (US$1.7&nbsp;million) to CGEN. We intend to defend against CGEN&#146;s claims to the fullest
extent of the law. However, there can be no assurance that we will prevail in any such litigation.
</DIV>

<P align="center" style="font-size: 10pt">25
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We may become a passive foreign investment company, or PFIC, which could result in adverse U.S. tax
consequences to U.S. investors.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based upon the past and projected composition of our income and valuation of our assets,
including goodwill, we believe we were not a passive foreign investment company for 2005, we do not
expect to be a passive foreign investment company for 2006, and we do not expect to become one in
the future, although there can be no assurance in this regard. If, however, we were a passive
foreign investment company, such characterization could result in adverse U.S. tax consequences to
you if you are a U.S. investor. For example, if we are a PFIC, our U.S. investors will become
subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to
burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an
annual basis and will depend on the composition of our income and assets from time to time.
Specifically, we will be classified as a PFIC for U.S. tax purposes if either: (i)&nbsp;75% or more of
our gross income in a taxable year is passive income, or (ii)&nbsp;the average percentage of our assets
by value in a taxable year which produce or are held for the production of passive income (which
includes cash) is at least 50%. The calculation of the value of our assets will be based, in part,
on the then market value of our ADSs, which is subject to change. In addition, the composition of
our income and assets will be affected by how, and how quickly, we spend the cash we raise in this
offering. We cannot assure you that we will not be a PFIC for 2006 or any future taxable year. For
more information on PFICs, see &#147;Item&nbsp;10.E Additional Information Taxation &#151; United States Federal
Income Taxation&#148;.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Investor confidence and market price of our ADSs may be adversely impacted if we or our independent
registered public accountants are unable to attest to the adequacy of the internal controls over
our financial reporting for the fiscal year ending December&nbsp;31, 2007, as required by Section&nbsp;404 of
the U.S. Sarbanes-Oxley Act.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the reporting requirements of the U.S. Securities and Exchange Commission,
or SEC. The SEC, as directed by Section&nbsp;404 of the U.S. Sarbanes-Oxley Act of 2002, adopted rules
requiring public companies, including us, to include a report of management of their internal
control structure and procedures for financial reporting in their annual reports on Form 10-K or
Form 20-F, as the case may be, that contain an assessment by management of the effectiveness of
their internal controls over financial reporting. In addition, independent registered public
accountants of these public companies must attest to and report on management&#146;s assessment of the
effectiveness of their internal controls over financial reporting. These requirements will first
apply to our annual report on Form 20-F for the fiscal year ending on December&nbsp;31, 2007. Our
management may not conclude that our internal controls over financial reporting are effective.
Moreover, even if our management does conclude that our internal controls over financial reporting
are effective, if our independent registered public accountants are not satisfied with our internal
control structure and procedures, the level at which our internal controls are documented,
designed, operated or reviewed, or if the independent registered public accountants interpret the
requirements, rules or regulations differently from us, they may decline to attest to our
management&#146;s assessment or may issue a report that is qualified. For example, when our auditors
audited our financial statements as of and for the period ended December&nbsp;31, 2004, they identified
one &#147;reportable condition&#148;, as that term is defined under standards established by the American
Institute of Certified Public Accountants, in our internal accounting controls. This reportable
condition was cured at the time our auditors audited our financial statements for the period ended
December&nbsp;31, 2005. We cannot assure you that additional internal control and procedure problems
will not occur in the future. 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 financial
statements, which could negatively impact the market price of our ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Relating to Regulation of Our Business and to Our Structure</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If the PRC government finds that the agreements that establish the structure for operating our
China business do not comply with PRC governmental restrictions on foreign investment in the
advertising industry, we could be subject to severe penalties.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our operations are or will be conducted through Focus Media Technology
(Shanghai) Co., Ltd., or Focus Media Technology, Framedia Investment and Beijing Dotad Technology
Co., Ltd., or Dotad Technology, our indirectly wholly-owned operating subsidiaries in China, and
Focus Media Digital Information Technology (Shanghai) Co., Ltd., or Focus Media Digital, a
90%-owned subsidiary of Focus Media Technology,
</DIV>

<P align="center" style="font-size: 10pt">26
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">which we collectively refer to as our PRC operating subsidiaries, and through our contractual
arrangements with several of our consolidated affiliated entities in China. PRC regulations require
any foreign entities that invest in the advertising services industry to have at least two years of
direct operations in the advertising industry outside of China. Since December&nbsp;10, 2005, foreign
investors have been allowed to own directly 100% of PRC companies operating an advertising business
if the foreign entity has at least three years of direct operations in the advertising business
outside of China or less than 100% if the foreign investor has at least two years of direct
operations in the advertising industry outside of China. We do not currently directly operate an
advertising business outside of China and cannot qualify under PRC regulations any earlier than two
or three years after we commence any such operations outside of China or until we acquire a company
that has directly operated an advertising business outside of China for the required period of
time. Accordingly, our PRC operating subsidiaries are currently ineligible to apply for the
required licenses for providing advertising services in China. Substantially all of our advertising
business is currently provided through our contractual arrangements with our PRC operating
subsidiaries&#146; consolidated affiliated entities in China, including Focus Media Advertisement and
its subsidiaries with regard to our out-of-home television networks, Framedia Advertisement,
Guangdong Framedia and New Structure Advertisement with regard to our poster frame network, and
Focus Media Wireless with regard to our mobile handset advertising network, which we collectively
refer to as our PRC operating affiliates. Our PRC operating affiliates are currently owned in each
case either (i)&nbsp;by two PRC citizens designated by us or (ii)&nbsp;by two PRC entities owned by our
subsidiaries or by our designated appointees. Our PRC operating affiliates, certain of their
respective subsidiaries, and New Focus Media Advertisement hold the requisite licenses to provide
advertising services in China. Our PRC operating affiliates and their respective subsidiaries
directly operate our advertising network. We have been and are expected to continue to be dependent
on these PRC operating affiliates and their subsidiaries to operate our advertising business for
the foreseeable future. We have entered into contractual arrangements with PRC operating affiliates
and their respective subsidiaries, pursuant to which we, through our PRC operating subsidiaries,
provide technical support and consulting services to our PRC operating affiliates and their
subsidiaries. In addition, we have entered into agreements with our PRC operating affiliates and
each of their shareholders which provide us with the substantial ability to control these
affiliates and their existing and future subsidiaries.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we, our existing or future PRC operating subsidiaries and affiliates are found to be in
violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of
the required permits or approvals, the relevant PRC regulatory authorities, including the State
Administration for Industry and Commerce, or SAIC, which regulates advertising companies, would
have broad discretion in dealing with such violations, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>revoking the business and operating licenses of our PRC subsidiaries and affiliates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discontinuing or restricting our PRC subsidiaries&#146; and affiliates&#146; operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>imposing conditions or requirements with which we or our PRC subsidiaries and
affiliates may not be able to comply;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us or our PRC subsidiaries and affiliates to restructure the relevant
ownership structure or operations; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restricting or prohibiting our use of the proceeds of this offering to finance our
business and operations in China.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The imposition of any of these penalties would result in a material and adverse effect on our
ability to conduct our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We rely on contractual arrangements with our PRC operating affiliates and their subsidiaries and
shareholders for our China operations, which may not be as effective in providing operational
control as direct ownership.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have in the past relied, and to a lesser but significant extent will continue in the future
to rely, on contractual arrangements with our PRC operating affiliates and their respective
subsidiaries and shareholders to operate our advertising business. For a description of these
contractual arrangements, see the sections titled &#147;Organizational
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Structure&#148;
&#147;Business Overview &#151; Recent Developments&#148; in Item&nbsp;4. &#147;Information on the Company&#148;
and &#147;Item&nbsp;7. &#151; Major Shareholders and Related Party Transactions&#148;. These contractual arrangements
may not be as effective in providing us with control over Focus Media Advertisement and its
subsidiaries as direct ownership. If we had direct ownership of our PRC operating affiliates and
their respective subsidiaries, we would be able to exercise our rights as a shareholder to effect
changes in the board of directors of those companies, which in turn could effect changes, subject
to any applicable fiduciary obligations, at the management level. However, under the current
contractual arrangements, as a legal matter, if our PRC operating affiliates or any of their
subsidiaries and shareholders fails to perform its or his respective obligations under these
contractual arrangements, we may have to incur substantial costs and resources to enforce such
arrangements, and rely on legal remedies under PRC law, including seeking specific performance or
injunctive relief, and claiming damages, which we cannot assure you to be effective. For example,
if Jason Nanchun Jiang were to refuse to transfer his equity interest in Focus Media Advertisement
to us or our designee when we exercise the purchase option pursuant to these contractual
arrangements, or if Mr.&nbsp;Jiang were otherwise to act in bad faith toward us, then we may have to
take legal action to compel him to fulfill his contractual obligations. In addition, Focus Media
Advertisement, which holds certain of the business licenses required to operate our advertising
network in China, is jointly owned and effectively managed by Mr.&nbsp;Jiang and Mr.&nbsp;Yu. Accordingly, it
may be difficult for us to change our corporate structure or to bring claims against Focus Media
Advertisement if Focus Media Advertisement does not perform its obligations under its contracts
with us or Mr.&nbsp;Jiang and Mr.&nbsp;Yu do not cooperate with any such actions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of these contractual arrangements are governed by PRC law and provide for the resolution
of disputes through either arbitration or litigation in the PRC. Accordingly, these contracts would
be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC
legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions,
such as the United States. As a result, uncertainties in the PRC legal system could limit our
ability to enforce these contractual arrangements. In the event we are unable to enforce these
contractual arrangements, we may not be able to exert effective control over our operating
entities, and our ability to conduct our business may be negatively affected.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Contractual arrangements we have entered into among our subsidiaries and affiliated entities may be
subject to scrutiny by the PRC tax authorities and a finding that we owe additional taxes or are
ineligible for our tax exemption, or both, could substantially increase our taxes owed, and reduce
our net income and the value of your investment.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under PRC law, arrangements and transactions among related parties may be subject to audit or
challenge by the PRC tax authorities. If any of the transactions we have entered into among our
subsidiaries and affiliated entities are found not to be on an arm&#146;s-length basis, or to result in
an unreasonable reduction in tax under PRC law, the PRC tax authorities have the authority to
disallow our tax savings, adjust the profits and losses of our respective PRC entities and assess
late payment interest and penalties. See &#147;Item&nbsp;5. Operating and Financial Review and Prospects &#151;
Taxation&#148; for a discussion of the transactions referred to above. A finding by the PRC tax
authorities that we are ineligible for the tax savings we achieved in 2004, or that Focus Media
Digital, Shanghai Focus Media Advertising Agency Co., Ltd., or Focus Media Advertising Agency, New
Focus Media Advertisement or New Structure Advertisement are ineligible for their tax exemptions,
would substantially increase our taxes owed and reduce our net income and the value of your
investment. As a result of this risk, you should evaluate our results of operations and financial
condition without regard to these tax savings.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We rely principally on dividends and other distributions on equity paid by our wholly-owned
operating subsidiaries to fund any cash and financing requirements we may have, and any limitation
on the ability of our operating subsidiary to pay dividends to us could have a material adverse
effect on our ability to conduct our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a holding company, and we rely principally on dividends and other distributions on
equity paid by our PRC operating subsidiaries for our cash requirements, including the funds
necessary to service any debt we may incur. If any of our PRC operating subsidiaries incurs debt on
its own behalf in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other distributions to us. In addition, the PRC tax authorities may require us to
adjust our taxable income under the contractual arrangements our PRC operating subsidiaries
currently have in place with our PRC operating affiliates and their respective subsidiaries in a
manner that would materially and adversely affect our PRC operating subsidiaries&#146; ability to pay
dividends and other
</DIV>


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</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">distributions to us. Furthermore, relevant PRC laws and regulations permit payments of
dividends by our PRC operating subsidiaries only out of their retained earnings, if any, determined
in accordance with PRC accounting standards and regulations. Under PRC laws and regulations, each
of our PRC operating subsidiaries is also required to set aside a portion of its net income each
year to fund specific reserve funds. These reserves are not distributable as cash dividends. In
addition, subject to certain cumulative limits, the statutory general reserve fund requires annual
appropriations of 10% of after-tax income to be set aside prior to payment of dividends. As a
result of these PRC laws and regulations, our PRC operating subsidiaries and our PRC operating
affiliates are restricted in their ability to transfer a portion of their net assets to us whether
in the form of dividends, loans or advances. As of December&nbsp;31, 2005, the amount of these
restricted portions was approximately $75,911,158. Any limitation on the ability of our PRC
operating subsidiaries to pay dividends to us could materially and adversely limit our ability to
grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends,
or otherwise fund and conduct our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Some of our PRC operating affiliates previously engaged in activities outside the authorized scope
of their business licenses. This could subject those companies to fines and other penalties, which
could have a material adverse effect on our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under PRC law, the business license of a company sets forth the authorized scope of business
it may legally undertake, and in order to engage in activities outside its authorized scope of
business, it must apply for and receive approval to expand its scope of business. Three of our PRC
operating affiliates, Focus Media Advertisement, Focus Media Technology and Shanghai On-Target
Advertisement Co., Ltd., and, prior to our acquisition of them, four of our additional operating
affiliates, Zhejiang Ruihong Focus Media Advertising Co., Ltd., Xiamen Advertising Co., Ltd.,
Shanghai Qianjian Advertising Co., Ltd. and Shanghai Perfect Media Advertising Co., Ltd.,
historically engaged in business activities that were not within the authorized scope of their
respective business licenses. Each of these companies subsequently ceased such conduct or expanded
the business scope of their respective business licenses to include such activities; and in the
case of the four entities who exceeded their authorized business scope prior to our acquisition of
them, we required such companies to cease such conduct or expand their business scope during the
process of our acquiring them. While these companies all currently operate within their authorized
scope of business, the relevant PRC authorities have the authority to impose fines or other
penalties. In rare instances, these authorities may require the disgorgement of profits or
revocation of the business license, but as a matter of practice, the authorities will typically
only impose such an extreme penalty after repeated warnings where a violation is blatant and
continuing. While we do not believe these past violations will have a material effect on our
business, operations or financial condition, due to the discretionary nature of regulatory
enforcements in the PRC, we cannot assure you that those of our PRC operating companies that
exceeded the scope of their business licenses in the past will not be subject to such fines or
penalties, including the disgorgement of profits or revocation of the business license of one or
more of these companies, or that such fines or penalties will not have a material adverse effect on
our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our business operations may be affected by legislative or regulatory changes.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no existing PRC laws or regulations that specifically define or regulate out-of-home
television or mobile handset advertising. It has been reported that the relevant PRC government
authorities are currently considering adopting new regulations governing out-of-home television
advertising. We cannot predict the timing and effects of such new regulations. Changes in laws and
regulations or the enactment of new laws and regulations governing placement or content of
out-of-home advertising or distribution of mobile handset advertising, our business licenses or
otherwise affecting our business in China may materially and adversely affect our business
prospects and results of operations. For example, the PRC government has promulgated regulations
allowing foreign companies to hold a 100%-interest in PRC advertising companies starting from
December&nbsp;10, 2005. We are not certain how the PRC government will implement this regulation or how
it could affect our ability to compete in the advertising industry in China.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>PRC regulation of loans and direct investment by offshore holding companies to PRC entities may
delay or prevent us from using the proceeds of this offering to make loans or additional capital
contributions to our PRC operating subsidiaries and affiliates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In utilizing the proceeds of this offering, as an offshore holding company of our PRC
operating subsidiaries and affiliates, we may make loans to our PRC subsidiaries and consolidated
PRC affiliated entities, or we may make additional capital contributions to our PRC subsidiaries.
Any loans to our PRC subsidiaries or consolidated PRC affiliated entities are subject to PRC
regulations and approvals. For example:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loans by us to Focus Media Technology or to Framedia Investment, each a foreign
invested enterprise, to finance its activities cannot exceed statutory limits and must
be registered with the PRC State Administration of Foreign Exchange or its local
counterpart; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>loans by us to Focus Media Advertisement or its subsidiaries, which are domestic PRC
enterprises, must be approved by the relevant government authorities and must also be
registered with the PRC State Administration of Foreign Exchange or its local
counterpart.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may also determine to finance Focus Media Technology, Focus Media Digital and New Focus
Media Advertisement through Focus Media Technology or Framedia Investment, by means of capital
contributions. These capital contributions to Focus Media Technology and Framedia Investment must
be approved by the PRC Ministry of Commerce or its local counterpart. Because Focus Media
Advertisement and its subsidiaries are domestic PRC enterprises, we are not likely to finance their
activities by means of capital contributions due to regulatory issues relating to foreign
investment in domestic PRC enterprises, as well as the licensing and other regulatory issues
discussed in &#147;Business Overview &#150; Regulatory Matters&#148; of Item&nbsp;4. &#147;Information on the Company&#148; of
this annual report. We cannot assure you that we can obtain these government registrations or
approvals on a timely basis, if at all, with respect to future loans or capital contributions by us
to Focus Media Technology, Focus Media Digital, New Focus Media Advertisement, Framedia Investment,
Focus Media Advertisement or any of their respective subsidiaries, including Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement. If we fail to receive such
registrations or approvals, our ability to use the proceeds of this offering and to capitalize our
PRC operations would be negatively affected which would adversely and materially affect our
liquidity and our ability to expand our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Risks Relating to the People&#146;s Republic Of China</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our assets are located in China and substantially all of our revenues are
derived from our operations in China. Accordingly, our business, financial condition, results of
operations and prospects are subject, to a significant extent, to economic, political and legal
developments in China.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The PRC&#146;s economic, political and social conditions, as well as governmental policies, could affect
the financial markets in China and our liquidity and access to capital and our ability to operate
our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. While the PRC economy has experienced significant
growth over the past, growth has been uneven, both geographically and among various sectors of the
economy. The PRC government has implemented various measures to encourage economic growth and guide
the allocation of resources. Some of these measures benefit the overall PRC economy, but may also
have a negative effect on us. For example, under current PRC regulations, starting December&nbsp;10,
2005, foreign entities are allowed to directly own 100% of a PRC advertising business if the
foreign entity has at least three years of direct operations of an advertising business outside of
China, or to directly own less than 100% of a PRC advertising business if the foreign entity has at
least two years of direct operations of an advertising business outside of China. This may
encourage foreign advertising companies with more experience, greater technological know-how and
larger financial resources than we have to compete against us and limit the potential for our
growth. Moreover, 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.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC economy has been transitioning from a planned economy to a more market-oriented
economy. Although the PRC government has implemented measures since the late 1970s emphasizing the
utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of improved corporate governance in business enterprises, a
substantial portion of productive assets in China 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. The PRC government also exercises significant control
over China&#146;s economic growth through the allocation of resources, controlling payment of foreign
currency- denominated obligations, setting monetary policy and providing preferential treatment to
particular industries or companies. Since late 2003, the PRC government implemented a number of
measures, such as raising bank reserves against deposit rates to place additional limitations on
the ability of commercial banks to make loans and raise interest rates, in order to slow down
specific segments of China&#146;s economy which it believed to be overheating. These actions, as well as
future actions and policies of the PRC government, could materially affect our liquidity and access
to capital and our ability to operate our business.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The PRC legal system embodies uncertainties which could limit the legal protections available to
you and us.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. In 1979, the
PRC government began to promulgate a comprehensive system of laws and regulations governing
economic matters in general. The overall effect of legislation over the past 26&nbsp;years has
significantly enhanced the protections afforded to various forms of foreign investment in China.
Each of our PRC operating subsidiaries and affiliates is subject to PRC laws and regulations.
However, these laws, regulations and legal requirements change frequently, and their interpretation
and enforcement involve uncertainties. For example, we may have to resort to administrative and
court proceedings to enforce the legal protection that we enjoy either by law or contract. However,
since PRC administrative and court authorities have significant discretion in interpreting and
implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of
administrative and court proceedings and the level of legal protection we enjoy than in more
developed legal systems. For example, these uncertainties may impede our ability to enforce the
contracts we have entered into with Focus Media Advertisement and its subsidiaries. In addition,
such uncertainties, including the inability to enforce our contracts, could materially and
adversely affect our business and operation. In addition, intellectual property rights and
confidentiality protections in China may not be as effective as in the United States or other
countries. Accordingly, we cannot predict the effect of future developments in the PRC legal
system, particularly with regard to the advertising industry, including the promulgation of new
laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of
local regulations by national laws. These uncertainties could limit the legal protections available
to us, including our ability to enforce our agreements with Focus Media Advertisement and its
subsidiaries, and other foreign investors, including you.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Recent PRC regulations relating to offshore investment activities by PRC residents may increase our
administrative burden and restrict our overseas and cross-border investment activity. If our
shareholders who are PRC residents fail to make any required applications and filings under such
regulations, we may be unable to distribute profits and may become subject to liability under PRC
laws.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC National Development and Reform Commission, or NDRC, and SAFE recently 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 apply to our shareholders who are PRC residents
and may apply to any offshore acquisitions that we make in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the SAFE regulations, PRC residents who make, or have previously made, direct or
indirect investments in offshore companies will be required to register those investments. In
addition, any PRC resident who is a direct or indirect shareholder of an offshore company is
required to file with the local branch of SAFE, with respect to that offshore company, any material
change involving capital variation, such as an increase or decrease in capital, transfer or swap of
shares, merger, division, long term equity or debt investment or creation of any security interest
over the assets located in China. If any PRC shareholder fails to make the required SAFE
registration, the PRC subsidiaries of that offshore parent company may be prohibited from
distributing their profits and the proceeds from any reduction in capital, share transfer or
liquidation, to their offshore parent company, and the offshore parent company may also be
prohibited from injecting additional capital into their PRC subsidiaries. Moreover, failure to
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">comply with the various SAFE registration requirements described above could result in
liability under PRC laws for evasion of applicable foreign exchange restrictions.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that all of our shareholders who are PRC residents will comply with our
request to make or obtain any registrations or approvals required under these regulations or other
related legislation. Furthermore, as the regulations are relatively new, the PRC government has yet
to publish implementing rules, and much uncertainty remains concerning the reconciliation of the
new regulations with other approval requirements. It is unclear how these regulations, and any
future legislation concerning offshore or cross-border transactions, will be interpreted, amended
and implemented by the relevant government authorities. The failure or inability of our PRC
resident shareholders to comply with these regulations may subject us to fines and legal sanctions,
restrict our overseas or cross-border investment activities, limit our ability to inject additional
capital into our PRC subsidiaries and the ability of Focus Media Technology, Focus Media Digital,
New Focus Media Advertisement or Framedia Investment, our PRC subsidiaries, to make distributions
or pay dividends, or materially and adversely affect our ownership structure. If any of the
foregoing events occur, our acquisition strategy and business operations and our ability to
distribute profits to you could be materially and adversely affected. See &#147;Exchange Controls&#148; in
Item&nbsp;10. &#147;Additional Information&#148; in this annual report.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The PRC tax authorities may require us to pay additional taxes in connection with our acquisitions
of offshore entities that conducted their PRC operations through their affiliates in China.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations and transactions are subject to review by the PRC tax authorities pursuant to
relevant PRC laws and regulations. However, these laws, regulations and legal requirements change
frequently, and their interpretation and enforcement involve uncertainties. For example, in the
case of some of our acquisitions of offshore entities that conducted their PRC operations through
their affiliates in China, we cannot assure you that the PRC tax authorities will not require us to
pay additional taxes in relation to such acquisitions, in particular where the PRC tax authorities
take the view that the previous taxable income of the PRC affiliates of the acquired offshore
entities needs to be adjusted and additional taxes be paid. In the event that the sellers failed to
pay any taxes required under PRC law in connection with these transactions, the PRC tax authorities
might require us to pay the tax, together with late-payment interest and penalties. See &#147;Item&nbsp;5.
Operating and Financial Review and Prospects &#151; Acquisitions&#148;.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>If any of our PRC affiliates becomes the subject of a bankruptcy or liquidation proceeding, we may
lose the ability to use and enjoy those assets, which could reduce the size of our advertising
network and materially and adversely affect our business, ability to generate revenue and the
market price of our ADSs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To comply with PRC laws and regulations relating to foreign ownership restrictions in the
advertising business, we currently conduct our operations in China through contractual arrangements
with Focus Media Advertisement, its shareholders and subsidiaries. As part of these arrangements,
Focus Media Advertisement and its subsidiaries hold some of the assets that are important to the
operation of our business. If any of these entities goes bankrupt and all or part of their assets
become subject to liens or rights of third-party creditors, we may be unable to continue some or
all of our business activities, which could materially and adversely affect our business, financial
condition and results of operations. If any of Focus Media Advertisement and its subsidiaries
undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated
third-party creditors may claim rights to some or all of these assets, thereby hindering our
ability to operate our business, which could materially and adversely affect our business, our
ability to generate revenue and the market price of our ADSs.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Restrictions on currency exchange may limit our ability to utilize our revenues effectively.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our revenues and operating expenses are denominated in Renminbi. The
Renminbi is currently convertible under the &#147;current account&#148;, which includes dividends, trade and
service-related foreign exchange transactions, but not under the &#147;capital account&#148;, which includes
foreign direct investment and loans. Currently, each of Focus Media Technology and Framedia
Investment may purchase foreign exchange for settlement of &#147;current account transactions&#148;,
including payment of dividends to us, without the approval of SAFE. However, we cannot assure you
that the relevant PRC governmental authorities will not further limit or eliminate our ability to
purchase foreign currencies in the future. Since a significant amount of our future revenues will
be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our
ability to utilize revenues generated in Renminbi to fund our business activities outside China, if
any, or expenditures denominated
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">in foreign currencies. Foreign exchange transactions under the capital account are still
subject to limitations and require approvals from, or registration with, the State Administration
of Foreign Exchange and other relevant PRC governmental authorities. This could affect the ability
of each of Focus Media Technology and Framedia Investment to obtain foreign exchange through debt
or equity financing, including by means of loans or capital contributions from us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Fluctuations in exchange rates could result in foreign currency exchange losses.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because our earnings and cash and cash equivalent assets are denominated in Renminbi and the
net proceeds from this offering will be denominated in U.S. dollars, fluctuations in exchange rates
between U.S. dollars and Renminbi will affect the relative purchasing power of these proceeds and
our balance sheet and earnings per share in U.S. dollars following this offering. In addition,
appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect
our financial results reported in U.S. dollar terms without giving effect to any underlying change
in our business or results of operations. Since July&nbsp;2005 the Renminbi is no longer pegged solely
to the U.S. dollar. Instead, it is reported to be pegged against a basket of currencies, determined
by the People&#146;s Bank of China, against which it can rise or fall by as much as 0.3% each day. For
example, on June&nbsp;23, 2006 the Renminbi was revalued against the U.S. dollar to approximately
RMB7.9997 to the U.S. dollar. The Renminbi may appreciate or depreciate significantly in value against
the U.S. dollar in the long term, depending on the fluctuation of the basket of currencies against
which it is currently valued or it may be permitted to enter into a full float, which may also
result in a significant appreciation or depreciation of the Renminbi against the U.S. dollar.
Fluctuations in the exchange rate will also affect the relative value of any dividend we issue in
the future which will be exchanged into U.S. dollars and earnings from and the value of any U.S.
dollar-denominated investments we make in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Very limited hedging transactions are available in China to reduce our exposure to exchange
rate fluctuations. To date, we have not entered into any hedging transactions in an effort to
reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging
transactions in the future, the availability and effectiveness of these hedges may be limited and
we may not be able to successfully hedge our exposure at all. In addition, our currency exchange
losses may be magnified by PRC exchange control regulations that restrict our ability to convert
Renminbi into foreign currency.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Any future outbreak of severe acute respiratory syndrome or avian flu in China, or similar adverse
public health developments, may severely disrupt our business and operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From December&nbsp;2002 to June&nbsp;2003, China and other countries experienced an outbreak of a new
and highly contagious form of atypical pneumonia now known as severe acute respiratory syndrome, or
SARS. On July&nbsp;5, 2003, the World Health Organization declared that the SARS outbreak had been
contained. Since September&nbsp;2003, however, a number of isolated new cases of SARS have been
reported, most recently in central China in April&nbsp;2004. During May and June of 2003, many
businesses in China were closed by the PRC government to prevent transmission of SARS. In addition,
many countries, including China, have encountered incidents of the H5N1 strain of bird flu, or
avian flu. This disease, which is spread through poultry populations, is capable in some
circumstances of being transmitted to humans and is often fatal. A new outbreak of SARS or an
outbreak of avian flu may result in health or other government authorities requiring the closure of
our offices or other businesses, including office buildings, retail stores and other commercial
venues, which comprise the primary locations where we provide our advertising services. Any
recurrence of the SARS outbreak, an outbreak of avian flu or a development of a similar health
hazard in China, may deter people from congregating in public places, including a range of
commercial locations such as office buildings and retail stores. Such occurrences would severely
impact the value of our out-of-home advertising network to advertisers, significantly reduce the
advertising time purchased by advertisers and severely disrupt our business and operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Risks Relating to Our ADSs and Our Trading Markets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The price of our ADSs has been volatile and may continue to be volatile, which may make it
difficult for holders to resell the ADSs when desired or at attractive prices.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The trading price of our ADSs has been and may continue to be subject to wide fluctuations.
Since July&nbsp;13, 2005, the closing prices of our ADSs on the Nasdaq National Market has ranged from
$17.60 to $69.95 per ADS
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and the
last reported sale price on June&nbsp;23, 2006 was
$64.36. Our ADS price may fluctuate in
response to a number of events and factors. The financial markets in general, and the market prices
for many PRC companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of such companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to market and industry factors, the price and trading volume for our ADSs may be
highly volatile for specific business reasons. Factors such as variations in our revenues, earnings
and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and
fluctuations in market prices for our advertising network could cause the market price for our ADSs
to change substantially. Any of these factors may result in large and sudden changes in the volume
and price at which our ADSs will trade. We cannot give any assurance that these factors will not
occur in the future.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The sale or availability for sale of substantial amounts of our ADSs could adversely affect their
market price.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of substantial amounts of our ADSs in the public market, or the perception that these
sales could occur, could adversely affect the market price of our ADSs and could materially impair
our future ability to raise capital through offerings of our ADSs. For example, we issued
22,157,003 new ordinary shares in connection with our acquisition of Framedia and in 2007 we may be
required to issue additional new ordinary shares based on a fixed ordinary share price of $2.456
per ordinary share up to $88.0&nbsp;million to the former shareholders of Framedia if Framedia meets
agreed upon earnings and operating targets in 2006. In addition, upon completion of our acquisition
of Target Media in February&nbsp;2006, we issued 77.0&nbsp;million of our ordinary shares to the current
shareholders of Target Media Holdings. We may also be required to issue up to 3.0&nbsp;million of our
ordinary shares to the former shareholders of Focus Media Wireless based on certain earnings
targets for 2006 and 2007. See &#147;Item&nbsp;10.C Additional Information&#151;Material Contracts&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are 523,166,773 ordinary shares (equivalent to 52,316,677 ADSs) outstanding as of the
date of this annual report. In addition, as of June&nbsp;13, 2006, there were outstanding options to
purchase 36,102,420 ordinary shares, 6,555,580 of which are exercisable as of that date.
291,715,933 of our ordinary shares outstanding as of the date of this annual report are &#147;restricted
securities&#148; as defined in Rule&nbsp;144 and may not be sold in the absence of registration other than in
accordance with Rule&nbsp;144 under the Securities Act or another exemption from registration
thereunder.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>A significant percentage of our outstanding ordinary shares is beneficially owned by Jason Nanchun
Jiang, our founder, chairman and chief executive officer, and as a result, he may have
significantly greater influence on us and our corporate actions by nature of the size of his
shareholdings relative to our public shareholders.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jason Nanchun Jiang beneficially owns, through his 100% ownership of JJ Media Investment
Holding Ltd., approximately 16.63% of our outstanding ordinary shares. Jason Nanchun Jiang is
currently and is expected to remain an affiliate within the meaning of the Securities Act after the
offering, due to the size of his respective shareholdings in us after the offering. Accordingly,
Jason Nanchun Jiang has significant influence in determining the outcome of any corporate
transaction or other matter submitted to the shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets, election of directors and
other significant corporate actions. Further, Jason Nanchun Jiang is also an 85% shareholder of our
affiliated PRC entity, Focus Media Advertisement, with which we have contractual arrangements that
are essential to our business. The continuing cooperation of Focus Media Advertisement, and its
shareholders, branches and subsidiaries, is important to our business. Without Jason Nanchun
Jiang&#146;s consent, we could be prevented from entering into transactions or conducting business that
could be beneficial to us. Accordingly, Mr.&nbsp;Jiang&#146;s control of Focus Media Advertisement could
hinder any change in control of our business, particularly where such change of control would
benefit shareholders other than Mr.&nbsp;Jiang. It would be difficult for us to change our corporate
structure if any disputes arise between us and Mr.&nbsp;Jiang or if he fails to carry out his
contractual and fiduciary obligations to us. Thus, Jason Nanchun Jiang&#146;s interests as an officer
and employee may differ from his interests as a shareholder or from the interests of our other
shareholders, including you.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Anti-takeover provisions in our charter documents may discourage our acquisition by a third party,
which could limit our shareholders&#146; opportunity to sell their shares at a premium.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our amended and restated memorandum and articles of association include provisions that could
limit the ability of others to acquire control of us, modify our structure or cause us to engage in
change-of-control
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">transactions. These provisions could have the effect of depriving our shareholders of an
opportunity to sell their shares at a premium over prevailing market prices by discouraging third
parties from seeking to obtain control of us in a tender offer or similar transaction.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For example, our board of directors will have the authority, without further action by our
shareholders, to issue preference shares in one or more series and to fix the powers and rights of
these shares, including dividend rights, conversion rights, voting rights, terms of redemption and
liquidation preferences, any or all of which may be greater than the rights associated with our
ordinary shares. Preference shares could thus be issued quickly with terms calculated to delay or
prevent a change in control or make removal of management more difficult. In addition, if the Board
of Directors issues preference shares, the market price of our ordinary shares may fall and the
voting and other rights of the holders of our ordinary shares may be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, some actions require the approval of a supermajority of at least two thirds of
our board of directors which, among other things, would allow our non-independent directors to
block a variety of actions or transactions, such as a merger, asset sale or other change of
control, even if all of our independent directors unanimously voted in favor of such action,
further depriving our shareholders of an opportunity to sell their shares at a premium. In
addition, our directors serve terms of three years each, which terms are not staggered. The length
of these terms could present an additional obstacle against the taking of action, such as a merger
or other change of control, that could be in the interest of our shareholders.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>We are a Cayman Islands company and, because judicial precedent regarding the rights of
shareholders is more limited under Cayman Islands law than under U.S. law, you may have less
protection of your shareholder rights than you would under U.S. law.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our corporate affairs are governed by our amended and restated memorandum and articles of
association, the Cayman Islands Companies Law and the common law of the Cayman Islands. The rights
of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived
in part from comparatively limited judicial precedent in the Cayman Islands as well as from English
common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The
rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands
law are not as clearly established as they would be under statutes or judicial precedent in some
jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of
securities laws than the United States. In addition, some U.S. states, such as Delaware, have more
fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of all of the above, public shareholders may have more difficulty in protecting
their interests in the face of actions taken by management, members of the board of directors or
controlling shareholders than they would as public shareholders of a U.S. company.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Judgments obtained against us by our shareholders may not be enforceable.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a Cayman Islands company and substantially all of our assets are located outside of the
United States. All of our current operations are conducted in the PRC. In addition, most of our
directors and officers are nationals and residents of countries other than the United States. A
substantial portion of the assets of these persons are located outside the United States. As a
result, it may be difficult for you to effect service of process within the United States upon
these persons. It may also be difficult for you to enforce in U.S. courts judgments obtained in
U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us
and our officers and directors, most of whom are not resident in the United States and the
substantial majority of whose assets are located outside of the United States. In addition, there
is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce
judgments of United States courts against us or such persons predicated upon the civil liability
provisions of the securities laws of the United States or any state. In addition, there is
uncertainty as to whether such Cayman Islands or PRC courts would be competent to hear original
actions brought in the Cayman Islands or the PRC against us or such persons predicated upon the
securities laws of the United States or any state.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The voting rights of holders of ADSs are limited by the terms of the deposit agreement.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our ADSs may only exercise their voting rights with respect to the underlying
ordinary shares in accordance with the provisions of the deposit agreement. Upon receipt of voting
instructions from a holder of ADSs in the manner set forth in the deposit agreement, the depositary
will endeavor to vote the underlying ordinary shares in accordance with these instructions. Under
our amended and restated memorandum and articles of association and Cayman Islands law, the minimum
notice period required for convening a general meeting is ten days. When a general meeting is
convened, you may not receive sufficient notice of a shareholders&#146; meeting to permit you to
withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter at
the meeting. In addition, the depositary and its agents may not be able to send voting instructions
to you or carry out your voting instructions in a timely manner. We will make all reasonable
efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot
assure you that you will receive the voting materials in time to ensure that you can instruct the
depositary to vote your shares. Furthermore, the depositary and its agents will not be responsible
for any failure to carry out any instructions to vote, for the manner in which any vote is cast or
for the effect of any such vote. As a result, you may not be able to exercise your right to vote
and you may lack recourse if your ordinary shares are not voted as you requested.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares
underlying your ADSs if you do not vote at shareholders&#146; meetings, except in limited circumstances,
which could adversely affect your interests.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to
vote our ordinary shares underlying your ADSs at shareholders&#146; meetings if you do not vote, unless:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we have failed to timely provide the depositary with our notice of meeting and
related voting materials;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we have instructed the depositary that we do not wish a discretionary proxy to be
given;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we have informed the depositary that there is substantial opposition as to a matter
to be voted on at the meeting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a matter to be voted on at the meeting would have a material adverse impact on shareholders; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>voting at the meeting is made on a show of hands.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effect of this discretionary proxy is that you cannot prevent our ordinary shares
underlying your ADSs from being voted, absent the situations described above, and it may make it
more difficult for shareholders to influence the management of our company. Holders of our ordinary
shares are not subject to this discretionary proxy.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>You may not receive distributions on our ordinary shares or any value for them if it is illegal or
impractical to make them available to you.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The depositary of our ADSs has agreed to pay you the cash dividends or other distributions it
or the custodian for our ADSs receives on our ordinary shares or other deposited securities after
deducting its fees and expenses. You will receive these distributions in proportion to the number
of our ordinary shares your ADSs represent. However, the depositary is not responsible if it is
unlawful or impractical to make a distribution available to any holders of ADSs. For example, it
would be unlawful to make a distribution to a holder of ADSs if it consists of securities that
require registration under the Securities Act but that are not properly registered or distributed
pursuant to an applicable exemption from registration. The depositary is not responsible for making
a distribution available to any holders of ADSs if any government approval or registration required
for such distribution cannot be obtained after reasonable efforts made by the depositary. We have
no obligation to take any other action to permit the distribution of our ADSs, ordinary shares,
rights or anything else to holders of our ADSs. This means that you may not receive the
distributions we make on our ordinary shares or any value for them if it is illegal or impractical
for us to make them available to you. These restrictions may have a material and adverse effect on
the value of your ADSs.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>You may be subject to limitations on transfer of your ADSs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your ADSs represented by American Depositary Receipts are transferable on the books of the
depositary. However, the depositary may close its books at any time or from time to time when it
deems expedient in connection with the performance of its duties. The depositary may close its
books from time to time for a number of reasons, including in connection with corporate events such
as a rights offering, during which time the depositary needs to maintain an exact number of ADS
holders on its books for a specified period. The depositary may also close its books in
emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or
register transfers of our ADSs generally when our books or the books of the depositary are closed,
or at any time if we or the depositary thinks it is advisable to do so because of any requirement
of law or any government or governmental body, or under any provision of the deposit agreement, or
for any other reason.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. INFORMATION ON THE COMPANY</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. History and Development of the Company</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our legal and commercial name is Focus Media Holding Limited. Our principal executive offices
are located at 28-30/F, Zhao Feng World Trade Building, 369 Jiangsu Road, Shanghai 200050 PRC, and
our telephone number is 86-21-3212-4661. Our Internet website address
is <U>www.focusmedia.cn</U>. Our
predecessor company, Shanghai Aiqi Advertisement Co., Ltd., or Aiqi Advertisement, was established
by immediate family members of Jason Nanchun Jiang in September&nbsp;1997 and operated as an advertising
agency. In May&nbsp;2003, Aiqi Advertisement discontinued its advertising agency business, was renamed
Shanghai Focus Media Advertisement Co., Ltd., commenced operation of our out-of-home television
advertising network in China and reorganized its shareholdings. At the same time, we entered into
arrangements with Focus Media Advertisement that resulted in the consolidation of Focus Media
Advertisement. Following this reorganization Jason Nanchun Jiang continued to hold a controlling
interest in Focus Media Advertisement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In conjunction with the change in our business model in May&nbsp;2003 and to facilitate foreign
investment in our company, we established our offshore holding company, Focus Media Holding Limited
as a company registered in the British Virgin Islands. On April&nbsp;1, 2005, we completed the process
of changing Focus Media Holding Limited&#146;s corporate domicile to the Cayman Islands and we are now a
Cayman Islands company. On July&nbsp;13, 2005, our ADSs were listed for quotation on the Nasdaq National
Market and on July&nbsp;19, we and certain of our shareholders completed an initial public offering and
sale of 11,615,000 ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, we acquired Framedia, which operates a network of advertising poster frames
placed primarily in elevators and public areas of residential complexes in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, we and certain of our shareholders completed a public offering and sale of
7,415,389 ADSs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, we acquired Skyvantage Group Limited, or Skyvantage, which operate a local
out-of-home poster frame advertising network placed in commercial and residential buildings for a
purchase price of $5,000,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2006, we acquired Target Media. Target Media operates an out-of-home advertising
network using flat-panel displays placed in elevator lobbies and other public areas in commercial
buildings, hospitals, hotels, banks, residential buildings, convenience stores and other locations
in cities in China. Since the completion of the acquisition of Target Media, the legal entities of
Target Media and its affiliates and subsidiaries have been dissolved and their operations have been
integrated with our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we acquired Dotad Media Holdings, which operates a mobile-phone advertising
service in China through China Mobile and China Unicom&#146;s mobile phone networks. Following the
acquisition of Dotad Media Holdings, we renamed the acquired company Focus Media Wireless Co.,
Ltd., which is also referred to as Focus Media Wireless in this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;21, 2006, we and certain of our shareholders completed a public offering and sale of
7,700,000 ADSs.
</DIV>

<P align="center" style="font-size: 10pt">37
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of our principal capital expenditures and divestitures, see &#147;Acquisitions&#148;
and &#147;Capital Expenditure&#148; in &#147;Item&nbsp;5. Operating and Financial Review and Prospects&#151;Acquisitions&#148;
and &#147;&#151;B. Liquidity and Capital Resources&#151;Capital Expenditures&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Business Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate the largest out-of-home advertising network in China using audiovisual television
displays, based on the number of locations and number of flat-panel television displays in our
network. It is our goal to create the largest multi-platform out-of-home advertising network in
China, reaching urban consumers at strategic locations over a number of media formats, including
audiovisual television displays in buildings and stores, advertising poster frames and other new
and innovative media, such as outdoor LED digital billboard and mobile handset advertising
networks. To date, our out-of-home advertising network consists of the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our commercial location network</I>, which refers to our network of flat-panel
television displays placed in high-traffic areas of commercial buildings, such as in
lobbies and near elevators, as well as in beauty parlors, karaoke parlors, golf country
clubs, auto shops, banks, pharmacies, hotels, airports, airport shuttle buses and
in-air flights. Our commercial location network is also marketed to advertisers as six
separate channels targeting different types of consumers: our premier A and B office
building channels, our travel channel, our fashion channel, our elite channel and our
healthcare channel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our in-store network</I>, which refers to our network of flat-panel television displays
placed in specific product areas such as the personal care and food and beverage
sections and other store locations with high-traffic concentration such as the main
aisles and check-out lines in large-scale chain retail stores, which are referred to in
China as hypermarkets, as well as inside selected supermarkets and convenience stores;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our poster frame network</I>, which refers to our network of advertising poster frames
placed mainly in the elevators and public areas of residential complexes which we
market under the brand name Framedia;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our mobile handset advertising network</I>, which refers to our mobile handset
advertising services offered on the mobile telecommunications networks of China Mobile
Communications Corporation, or China Mobile, and China United Telecommunications
Corporation, or China Unicom; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>our outdoor LED network</I>, which refers to our network of leased 5&#146; x 5&#146; LED digital
billboards installed on the street-sides in major shopping districts and other
locations with high pedestrian traffic in Shanghai.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We derive revenue principally by:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>selling advertising time slots on our commercial location, in-store and outdoor LED networks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>selling frame space on our poster frame network; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>selling advertisements on our WAP-based mobile handset advertising network.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A majority of the content displayed on our commercial location and in-store networks consists
of advertisements which are broadcast repeatedly approximately 60 times per day in twelve minute
cycles. Some of our regional distributors use a nine-minute cycle. Advertisements on our outdoor
LED network are broadcast repeatedly using a six-minute cycle. Our poster frame network consists of
advertising poster frames placed in elevators and public areas in residential complexes and
commercial locations. For advertising poster frames placed in elevators, generally two or three
advertising poster frames can be placed in each elevator. Advertisements on our mobile handset
advertising network are WAP-based advertisements that are sent to mobile handset users over China
Mobile&#146;s and China Unicom&#146;s networks.
</DIV>

<P align="center" style="font-size: 10pt">38
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, approximately 1,800 advertisers purchased advertising time slots on our
out-of-home television advertising networks. Our five largest advertising clients in terms of
revenue, which include leading international and domestic brand name advertisers, were Dong Feng
Auto (including joint venture brands with Toyota and Peugeot), China Mobile, Samsung, NEC and
Motorola, which together accounted for approximately 18.4% of our revenue in 2005. In addition,
over 340 advertisers have bought frame space from Framedia since 1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our network has the following key features:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Substantially all of the content we broadcast on our flat-panel displays and place
on our advertising poster frames consists of advertisements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The advertising cycle on our out-of-home television advertising networks consists of
twelve minutes of advertising content broadcast repeatedly 60 times per day, or six
minutes broadcast repeatedly in the case of our outdoor LED network, and is sold to
advertising clients in 30-, 15- or five-second time slots.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The advertising cycle of our out-of-home television advertising networks is
broadcast repeatedly, for approximately twelve-hours per day.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The majority of our flat-panel displays contain a 17-inch LCD screen, while the
remainder contain larger size plasma or LCD screens.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Over 74,000 450 mm x 600 mm plastic advertising poster frames have been installed in
elevators on our poster frame network.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Approximately 75 5&#146; x 5&#146; LED digital billboards that we lease from a third party and
that are installed on the street-sides in major shopping districts and other locations
with high pedestrian traffic.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A WAP-based advertising platform that delivers approximately eight million messages
per day with a customer base of over 100 wireless value-added service providers in
China and a database of over 70&nbsp;million mobile handset users with WAP capability.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since we commenced our current business operations in May&nbsp;2003, we have experienced
significant growth in our network and in our financial results. As of March&nbsp;31, 2006, we operated
our commercial location network directly in a total of 50 cities throughout China, comprising (i)
Beijing, Shanghai, Guangzhou and Shenzhen, which we refer to as our Tier I cities, and (ii)&nbsp;46
other directly operated cities. As of March&nbsp;31, 2006, we covered an additional 36 cities through
contractual arrangements with regional distributors that, together with the other 46 directly
operated cities, we refer to as our Tier II cities. Between January&nbsp;1, 2005 and March&nbsp;31, 2006, the
number of displays in our commercial location network increased from 15,415 to 71,230. As of March
31, 2006, our commercial location network operated by our regional distributors consisted of
approximately 3,780 flat-panel displays. We commenced commercial operations of our in-store network
in April&nbsp;2005. As of March&nbsp;31, 2006, our in-store network consisted of 33,765 flat-panel displays
placed in 5,218 store locations in our directly operated cities, including 809 hypermarkets, 1,126
supermarkets and 3,283 convenience stores. As of March&nbsp;31, 2006, we had installed over 74,000
advertising poster frames in our poster frame network primarily in six cities throughout China,
including our Tier I cities. As of April&nbsp;2006, our outdoor LED network consisted of approximately
75 leased 5&#146; x 5&#146; digital billboards placed along curbsides in high-pedestrian traffic areas in
Shanghai. As of May&nbsp;2006, our mobile handset advertising network consisted of a WAP-based
advertising platform that delivers approximately eight million messages per day to mobile handset
users with WAP capability in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth operating data related to our network for the periods
indicated:
</DIV>

<P align="center" style="font-size: 10pt">39
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="31" style="border-bottom: 1px solid #000000"><B>For and as of the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Commercial location
network:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of displays:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Our direct cities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,267</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Our regional
distributors(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,847</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,779</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,352</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Time slot data:(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Number of time slots
available for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,717</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Number of time slots sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,904</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Utilization rate(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">35.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">42.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">45.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">50.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">51.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average advertising service
revenue per time slot
(ASP) (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,573</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,882</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>In-store network:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of displays in our in-
store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,779</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,061</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of stores in our
in-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Time slot data:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Number of time slots
available for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">245,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Number of time slots sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,498</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Utilization rate(3)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average advertising service
revenue per time slot
(ASP) (US$)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Poster Frame Network:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of frames installed in
our poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,353</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Frame slot data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Number of frame slots
available for sale</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,659</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Number of frame slots
sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,262</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Occupancy rate(4)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">43.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Average advertising service
revenue per frame (US$)
(ASP)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Data that has been provided by our regional distributors is based on the results of surveys
we requested them to provide to us and it is possible such data is not entirely accurate or
exact.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Starting January&nbsp;1, 2006, time slot data presented for our commercial location network
includes only data related to our premier office building A channel. For the three months
ended March&nbsp;31, 2006, advertising services revenues from our premier office building A channel
accounted for 91.2% of advertising service revenue for our commercial location network.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Utilization rate refers to total time slots sold as a percentage of total time slots
available during the relevant period.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Occupancy rate refers to the total frame space sold as a percentage of total frame space
available during the relevant period.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Competitive Strengths</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we have the following competitive strengths:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Effective and Focused Advertising Network Accepted by Both Advertisers and Consumers.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since commencing our current business operations in May&nbsp;2003, we have created an advertising
network that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Targets Segmented Consumer Groups. Our flat-panel displays and frames are primarily
placed in venues that have a high concentration of consumers with higher-than-average
disposable incomes or that have a high concentration of consumers who are likely to be
interested in particular types of products and services. As a result, our network
enables advertisers to target consumers with demographic profiles attractive to them.
Moreover, our network allows advertisers to further segment these consumers through
separate specified advertising channels, such as our premier A and B office building
channels, our travel channel, our fashion channel, our elite channel and our healthcare
channel, which are marketed as stand-alone channels of our commercial location network.
Because our network is able to target specific consumer groups, it allows advertisers
to more cost-effectively reach consumers with demographic profiles desirable to them.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Reaches Captive Viewers in Low Distraction Environments. Our flat-panel displays
are placed in lobbies, near elevator banks and in other environments where there are
few broadcast or display media competing for viewers&#146; attention, which we believe
increases the effectiveness of our network. In</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">40
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>addition, the advertising poster frames on our poster frame network are placed primarily
in elevators of residential complexes presenting advertisements to viewers in what we
believe is a relatively captive and low-distraction environment.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe these characteristics and advantages of our business model have made us an
effective and well-accepted alternative advertising medium with a strong market position that
enables us to compete successfully in China&#146;s advertising market.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>The Largest Out-of-home Television Advertising Network in China with Nation-wide Coverage</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we operate the largest out-of-home television advertising network in China based on
the number of locations and the number of flat-panel displays in our network. As of March&nbsp;31, 2006,
we operated:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>71,230 flat-panel displays installed in 50 cities in China, and through our regional
distributors, we also operated approximately 3,780 flat-panel displays in 36 cities in
China; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>33,765 flat-panel displays installed in 809 hypermarkets, 1,126 supermarkets and
3,283 convenience stores in cities in China.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Out-of-home Advertising Network with Multiple Media Platforms Provides Advertisers with
Complementary and Reinforcing Methods of Reaching Targeted Consumers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our network provides advertisers with multiple advertising media to reach their target
audience. Our network currently enables advertisers to reach (1)&nbsp;consumers with higher than average
incomes through our commercial location network, (2)&nbsp;consumers at the point-of-purchase through our
in-store network, (3)&nbsp;consumers as they leave and return home through our poster frame network, (4)
mobile handsets users throughout the day via our WAP-based advertising push campaigns and (5)&nbsp;urban
consumers throughout the day via our strategically placed outdoor LED billboards in shopping and
high pedestrian traffic areas in Shanghai. By offering advertisers a range of advertising media
that can reach consumers during different times of the day in a wide variety of locations, we
believe our network has enhanced appeal to advertisers over competitors who offer limited
advertising media or channels to advertisers. We believe that by offering multiple advertising
media platforms, we enable advertisers to reach a wide range of consumers with complementary and
mutually reinforcing advertising campaigns and are better able to attract advertisers who want to
reach targeted consumer groups through a number of different advertising media in different venues
and at different times of the day.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Sustainable Competitive Advantages through the Size of Our Network and Our Exclusive, Renewable
Agreements.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe the following factors provide us with a sustainable business advantage over
existing and prospective competitors:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Early Market Presence and Coverage in Many of the Most Desirable Locations. We were
one of the first companies to establish a large-scale out-of-home television
advertising network in commercial buildings and other commercial locations in China. By
recognizing this market opportunity and entering this sector early, we have occupied
many of the most desirable locations and have grown the size of our network, which we
believe has created high barriers to entry for potential competitors. We believe that
we have secured a high percentage of the most desirable locations in many of China&#146;s
major urban centers, and that this early market presence advantage is important because
landlords and building managers typically permit only one out-of-home television
advertising network operation in each building. We believe that, through our
acquisition of Target Media, we have enhanced these advantages. Through our acquisition
of Framedia, we also gain a strong market presence in the poster frame advertising
market in residential complexes. We also believe we have established the first outdoor
LED digital billboard advertising network in China, currently comprising approximately
75 5&#039; x 5&#039; LED digital billboards placed in high pedestrian traffic outdoor locations
in Shanghai that we lease from a third-party location provider.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">41
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Large-scale Network that Attracts Advertising Clients. Our multi-platform
out-of-home advertising network includes flat-panel displays located in a wide range of
commercial, retail locations and in-store locations in over 80 cities in China, poster
frames placed in residential complexes in cities in China, LED digital billboards
placed in high pedestrian curbside locations in Shanghai, and advertising services
provided to mobile handset users. We believe the extent of our network coverage makes
us more attractive to advertising clients than competing networks. Through the number
of advertising media platforms we operate and the national scope of our network, we
enable advertising clients to reach a wide audience in urban consumer markets across
China. We believe the size and scope of our network has attained a scale that draws
advertising clients to our network and gives us a competitive edge over competing
networks as well as over many traditional advertising media.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Exclusive and Renewable Display Placement Agreements. As of March&nbsp;31, 2006, the
majority of our display placement agreements on our out-of-home television advertising
networks give us the exclusive right to place our flat-panel displays in the elevator
and lobby areas of the locations in which we operate and, in the cities we operate
directly, give us the right to renew the contract under terms that are no less
favorable than those offered by competing bidders, enabling us to maintain exclusive
coverage of many of the most desirable locations in our network for significant lengths
of time.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our high market share of desirable locations in key cities in China, the wide
extent of our network coverage and the exclusivity and renewal terms contained in the majority of
our display placement agreements with landlords and property managers create higher barriers to
entry for potential competitors than other out-of-home and outdoor advertising business models,
such as billboards.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Our Brand Name And Reputation Have Attracted A Large Base Of Leading Advertising Clients.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we are building a respected brand name in the advertising industry in China by
developing a reputation for innovative and effective delivery of large-scale yet focused
high-quality television advertising to consumers with desirable demographic profiles. This has
enabled us to develop a strong client base consisting of major international and brand name
advertisers such as Dong Feng Auto (including joint venture brands with Toyota and Peugeot), China
Mobile, Samsung, NEC and Motorola which were our five largest customers and together accounted for
approximately 18.4% of our revenue in 2005. All of our top ten advertisers based on total
advertising contracts in 2005 had entered into advertising contracts with us in 2004. Moreover, the
total contract amount accounted for by these advertisers increased by approximately 150% from 2004
to 2005. In addition, as of March&nbsp;31, 2006, more than 1,800 advertisers purchased advertising time
on our out-of-home television networks. The strength and depth of our client base enhance our
reputation in the industry and position us to further expand our advertising network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our acquisitions of Framedia, E-Times and Focus Media Wireless have further
enhanced our brand name in China by adding a large out-of-home poster frame advertising network and
a WAP-based mobile handset advertising network in China to our network. Over 340 advertisers have
bought frame space on Framedia&#146;s advertising network since 1999.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Strong Management and Sales Team with Extensive Industry Experience.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have assembled a management and sales team with extensive experience in China&#146;s advertising
industry. Jason Nanchun Jiang, our founder, chairman, chief executive officer and a major
shareholder, has 10&nbsp;years of experience in China&#146;s advertising industry, including his previous
experience until 2003 as chief executive officer of Shanghai Everease Advertising Corporation, or
Everease, one of China&#146;s top 50 advertising agencies. Daniel Mingdong Wu, our chief financial
officer, has over six years of experience in investment banking, including for Merrill Lynch and
Lehman Brothers, and served as chief financial officer of Harbour Networks, a telecommunications
equipment provider in China. In August&nbsp;2005, we hired our chief strategy officer Cindy Yan Chan,
who was deputy general manager for iMPACT, ZenithOptimedia&#146;s outdoor media department and the
largest outdoor media buyer in China. With our acquisition of Framedia, Zhi Tan, chairman and chief
executive officer of Framedia, continues to be involved in the operation of our poster frame
network. Following our acquisition of Target Media, David Yu, the founder and former chairman and
chief executive officer of Target Media, has joined
</DIV>

<P align="center" style="font-size: 10pt">42
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">us as co-chairman and president. In addition, we employ experienced and knowledgeable managers
to run operations in each of the cities we operate directly. Our marketing managers have an average
of eight years&#146; experience in the advertising industry in China and have worked for a number of
major domestic and international advertising firms in China. We believe the strength and experience
of our management and sales teams have enabled us to expand our advertising network, enhance our
reputation in our industry and build up a strong client base.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Our Strategies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our objective is to become the leading multi-platform advertising media brand in China&#146;s
advertising industry. We intend to achieve this objective by implementing the following strategies:
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Enhance Our Market Position and Revenues by Expanding Our Networks.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to aggressively expand our flat-panel display and frame networks in order to erect
barriers to expansion and entry by current and prospective competitors, enhance critical mass
appeal to our advertisers, and increase our fee rates and revenues. To achieve this goal, we intend
to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Increase the Number of Locations and Flat-Panel and Poster Frame Displays in Our
Network. We intend to aggressively enter into new display and poster frame placement
agreements to increase the number of locations in which we install our flat-panel
displays and poster frames in order to enhance our current position in many of the most
desirable locations in key urban areas in China.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Expand into New Cities including through Strategic Acquisitions of Important
Regional Distributors. We expect to continue to acquire certain of our regional
distributors as a means to expand the size and scope of our network. Pursuant to our
arrangements with our regional distributors, they are licensed to use our technology,
and bear all of the revenues, profits or losses of their operations. This method
enables us to evaluate the potential profitability of executing our business model in a
specific city and expanding the size of the network before we incur the expense of
operating in the city directly. As of March&nbsp;31, 2006, we have successfully acquired 17
of our regional distributors. We will continue to pursue this strategy as a means of
expanding our national coverage and offering advertising clients wider distribution of
their advertising content.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Identify And Create New Networks and Advertising Channels that Target Specific Consumer
Demographics and Expands Network Capacity.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>In-store Network</I></B>. We commenced commercial operations of our in-store network in April&nbsp;2005,
enabling our advertising clients to target consumers at the time and place where consumers are
likely to purchase a range of consumer and household products. As of March&nbsp;31, 2006, we had placed
33,765 flat-panel displays in 5,218 locations on our in-store network. We intend to expand this
network and will continue to strengthen efforts to enter into long-term and exclusive relationships
with hypermarkets, supermarkets and convenience stores and to market this service to advertisers.
For example, we recently increased the size of our in-store network by adding the convenience
stores from Target Media&#146;s former network to our in-store network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Targeted Advertising Channels</I></B>. We have placed flat-panel displays in office buildings,
shopping malls, restaurants, beauty parlors, golf country clubs, automobile repair shops, banks,
pharmacies, airports, hospitals and other commercial locations. As many of these venues are
suitable for targeting specific consumer groups, we have begun to separate some of them into
distinct stand-alone networks and to market them to specific advertising clients who wish to
advertise their products and services to targeted consumer groups. Currently, our premier A and B
office building channels, travel channel, fashion channel, elite channel and healthcare channel are
marketed as independent channels of our commercial location network, as we believe these channels
are attractive to a diverse range of advertisers who wish to target consumers likely to frequent
these venues. We believe our ability to identify and create focused advertising networks
distinguishes us from our competitors and attracts additional advertising clients who will use our
services to reach their target consumers in a more effective manner.
</DIV>

<P align="center" style="font-size: 10pt">43
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Complementary Advertising Media Platforms</I></B>. We intend to continue expanding the scope of our
advertising activities and type of media platforms we employ by entering into new types of
advertising media businesses, such as large-size outdoor LED digital billboards. We believe by
expanding our business into complementary media businesses that focus on venues and at periods of
the day less comprehensively covered by traditional advertising media, we will enhance the value of
our advertising services to advertisers and provide us with a marketing advantage over existing and
potential competitors. We intend to continue expanding into new and complementary advertising media
platforms, such as direct marketing advertising, which will enable us to provide advertisers with
additional out-of-home advertising platforms to reach targeted consumers.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Promote Our Brand Name and Augment Our Service Offerings to Attract a Wider Client Base and
Increase Revenues.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Enhancing our brand name in the industry will allow us to solidify and broaden our client base
by enhancing market awareness of our services and our ability to target discrete consumer groups
more effectively than mass media. We believe the low cost of reaching consumers with
higher-than-average disposable incomes through our network and our development of additional
advertising media platforms and channels within our network we plan to develop in the future can
enable advertisers to reach that goal. As we increase our advertising client base and increase
sales, demand for and sale of time slots and frame space on our network will grow. As demand for
time slots and frame space on our network increases, we believe we will be able to increase our
rates and thereby improve our results of operations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Continue to Explore New Digital Media Opportunities to Target Segmented Consumer Groups.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumer acceptance of technology-driven advertising and entertainment media, including the
Internet and advanced mobile communications systems, is a feature of the advertising industry in
China. We intend to identify and take advantage of new opportunities in the PRC advertising market
in order to enhance our ability to target segmented consumer groups through innovative advertising
techniques and media. As new opportunities that fit our brand image and business model present
themselves, we expect to expand our operations and continue to pursue innovative advertising
techniques and media that provide effective solutions to advertising clients and target consumers
with desirable demographic profiles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Network</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our network includes:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commercial locations, which consists of our premier A and B office building, travel,
fashion, elite and healthcare channels, each of which can be marketed separately to
advertisers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>supermarkets, convenience stores and large-scale chain retail stores, which we refer
to as hypermarkets, comprising our in-store network;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our poster frame network of advertising poster frames placed primarily in elevators
and public areas of residential complexes and marketed under the brand name Framedia;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>as of March&nbsp;2006, our mobile handset advertising network offered on China Mobile&#146;s
and China Unicom&#146;s mobile telecommunications networks; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>as of April&nbsp;2006, approximately 75 leased LED digital billboards installed on the
street-sides in major shopping districts and other locations with high pedestrian
traffic in Shanghai.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our commercial locations network and in-store network use audiovisual flat-panel LCD and
plasma displays, while Framedia&#146;s poster frame network consists of advertising poster frames. Our
mobile handset advertising services consist of the sale of short message advertisements that are
delivered to mobile handset users through the mobile telecommunication networks of China&#146;s mobile
telecommunications operators using a WAP-based
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">advertisement delivery platform. Our outdoor LED network uses large 5&#146; x 5&#146; LED digital
billboards that we lease from a third-party location provider.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Commercial Location Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The majority of displays on our commercial location network are currently placed in
high-traffic areas of commercial office buildings. The locations in our commercial location network
also include shopping malls, banks and hotels as well as more specialized locations such as
hospitals, beauty parlors and golf country clubs. We market our commercial location network to
advertisers of consumer products and services, such as home electronics, mobile communications
devices and services, cosmetics, health products and financial services. As of March&nbsp;31, 2006, our
commercial location network, including the portions of our commercial location network operated by
our regional distributors, was comprised of approximately 75,000 flat-panel displays placed in 86
cities throughout China. We operate our commercial location network directly in 50 cities and
indirectly through contractual arrangements with regional distributors in an additional 36 cities.
We have established joint ventures in several cities outside of China, including Hong Kong, Taipei
and Singapore through contracts with local operators which operate local commercial locations
networks and which license our brand name. None of these arrangements outside of China currently
constitutes a material part of our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we expand the number of venues in our commercial location network, we continue to separate
certain types of venues into distinct stand-alone channels of this network. As of March&nbsp;31, 2006,
we had established six such stand-alone channels that are marketed as separate focused channels of
our commercial location network: our premier office building A and B, travel, fashion, elite and
healthcare channels. We believe that by increasingly offering new advertising channels on our
out-of-home television networks, we will be able to offer advertisers more targeted and effective
audience reach, thereby enabling us to increase our advertising rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our Direct Operations</I></B>. As of March&nbsp;31, 2006, we operated our commercial location network
directly in 50 cities throughout China, including Beijing, Shanghai, Guangzhou and Shenzhen, or our
Tier I cities. We believe that many of the other cities in which we operate directly will
contribute to our future revenue growth as the populations and income levels in these cities
continue to grow. Following our acquisition of Target Media on February&nbsp;28, 2006, we incorporated
Target Media&#146;s advertising network, which included a network substantially similar to our
commercial location network with a focus on office buildings as well as on convenience stores, into
our pre-existing commercial location and in-store networks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our Regional Distributors</I></B>. As of March&nbsp;31, 2006, we entered into distribution agreements with
36 regional distributors who currently operate in 36 of the 86 cities covered by our commercial
locations network. Under the terms of our contractual relationships with our regional distributors:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We provide training, operational and logistical instructions to our regional
distributors and allow them to use our brand name, all at no cost.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We also sell our flat-panel displays to our regional distributors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each regional distributor is responsible for signing display placement agreements
with commercial locations to establish and grow a network presence in the city in which
they operate.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each regional distributor is responsible for selling advertising time slots to
advertisers and for maintenance, monitoring and other client services.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our regional distributors have the right to sell seven-ninths of the cycle time,
while we retain the right to sell two-ninths of the cycle time on the portion of the
network for which they are responsible. This gives us the flexibility to sell those
time slots directly to advertisers or to sell the time to the regional distributor.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We do not share any of the revenues, profits or losses of our regional distributors.</TD>
</TR>

</TABLE>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Expanding our network through regional distributors enables us to provide our advertisers with
broader nationwide coverage and to test, develop and evaluate these regional advertising markets
without our having to incur start-up and ongoing expenses at the early stages of their development.
We also seek to acquire our regional distributors when we believe it is more likely for us to
benefit economically from the full integration of their operations into our network. We do not have
the contractual right to purchase our regional distributors, and any such acquisition must be
negotiated with each regional distributor separately.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our regional distributors operates independently from us and is responsible for
independently complying with all relevant PRC laws and regulations including those related to
advertising. We periodically monitor our regional distributors to ensure they have obtained all
required licenses and are complying with regulations relating to advertising content. See &#147;Item&nbsp;3.D
Risk Factors &#151; Risks Relating to Our Business and Industry &#151; One or more of our regional
distributors could engage in activities that are harmful to our reputation in the industry and to
our business&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>In-store Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our growth strategy, we commenced operations of our in-store network in April&nbsp;2005.
As of March&nbsp;31, 2006, we had placed 33,765 flat-panel displays in 809 hypermarkets, 1,126
supermarkets and 3,283 convenience stores throughout China. We believe the rapid expansion of
hypermarkets and other chain retail stores in China provides opportunities and incentives for
advertisers to take advantage of in-store television advertising networks such as our in-store
network. Our in-store network primarily attracts advertisers of food and beverage products,
household, kitchen and bathroom products, and household appliances. We increased the size of our
in-store network by adding the convenience stores from Target Media&#146;s former network to our
in-store network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Poster Frame Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We own and operate a network of advertising poster frames deployed primarily in the elevators
and public areas of residential complexes under the brand name &#147;Framedia&#148;. We place two or three
advertising frames in each elevator in which we lease space and sell frame space to advertising
clients on a per frame per month basis. As of March&nbsp;31, 2006, we had installed approximately 74,000
frames in cities throughout China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Mobile Handset Advertising Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through Focus Media Wireless, we operate a WAP-based advertising delivery platform on the
mobile telecommunications networks of China Mobile and China Unicom. Focus Media Wireless delivers
WAP-based advertisements to mobile handset users accessed through service providers in China. Focus
Media Wireless receives a fee from WAP service providers for delivering advertisements and pays
mobile service providers a fee for accessing their networks. It also sells WAP-based advertising to
other WAP service providers and to traditional advertisers. Our WAP-based advertising platform
currently delivers approximately eight million WAP messages per day. Focus Media Wireless&#146;s
customer base includes over 100 wireless value-added service providers in China. Focus Media
Wireless has accumulated a database of over 70&nbsp;million mobile handset users with WAP capability to
whom it can deliver advertisements. Focus Media Wireless is able to deliver advertisements tailored
to the users&#146; consumer preferences based on information in the database such as a user&#146;s historical
purchases, handset model and other indicative data.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Outdoor LED Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, we commenced operations of an outdoor LED network consisting of 5&#146; x 5&#146; LED
digital billboards that we lease from a third-party location provider and that are installed on the
street-sides in major shopping districts and other locations with high pedestrian traffic in
Shanghai. Full-color audiovisual commercials are displayed on the digital billboards in a repeating
six-minute cycle. The commercials displayed on the LED displays are highly visible even during
bright daylight. As of May&nbsp;1, 2006, our outdoor LED network
consisted of approximately 75 leased 5&#039;
x 5&#039; LED digital billboards.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Advertising Clients, Sales and Marketing</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our Advertising Clients</I></B>. The quality and coverage of our network has attracted a broad base
of international and domestic advertising clients. As of March&nbsp;31, 2006, more than 1,800
advertisers purchased advertising time slots on our out-of-home television networks. Our
advertising clients include leading international and domestic brand name advertisers such as Dong
Feng Auto (including joint venture brands with Toyota and Peugeot), China Mobile, Samsung, NEC and
Motorola, which were our five largest customers and together accounted for 18.4% of our total
revenues in 2005. Our top ten customers in 2005 accounted for 28.5% of our total revenues in that
year. In addition, over 340 advertisers have bought frame space on Framedia&#146;s poster frame network
since 1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertisers purchase advertising time slots on our advertising network either directly from us
or through their advertising agencies which purchase advertising time on our network on behalf of
their domestic and international clients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our top thirty advertising clients accounted for 46.6%, 39.0% and 44.9% of our revenues in
2003, 2004 and 2005, respectively. No single advertising client accounted for more than 7% of our
revenues in 2003, 2004 or 2005. We believe the appeal and effectiveness of our advertising network
is largely evidenced by the number of advertising clients who place multiple advertising campaigns
on our network, which is reflected in the percentage increase of advertising fees we receive from
clients over time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sales</I></B>. We employ an experienced advertising sales force in each city in which we operate. Our
marketing managers have an average of eight years&#146; experience in the advertising industry in China.
We provide in-house education and training to our sales force to ensure they provide our current
and prospective clients with comprehensive information about our services, the advantages of using
our out-of-home television advertising network as a marketing channel, and relevant information
regarding the advertising industry. Our sales team is organized by city, industry and client
accounts. We also market our advertising services from time to time by placing advertisements on
third-party media, including primarily magazines and Internet websites. We maintain separate
devoted sales teams for our commercial locations network, including our outdoor LED network, and
our in-store network. We maintain separate sales teams for our poster frame network and our mobile
handset advertising network. We have begun engaging in cross-selling initiatives to enable existing
and potential advertising clients to take advantage of our multi-platform advertising network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Advertising Contracts</I></B>. We offer advertisers five-, fifteen- or thirty-second time slots on
our out-of-home television advertising networks, including our commercial location, in-store and
outdoor LED networks. For our commercial location network, our standard advertising package
includes a time slot on our entire network or a particular channel in each city in which the
advertiser wishes to display the advertisement. Our sales are made pursuant to written contracts
with commitments ranging from one week to several months. Our advertising rates vary by city and by
the number of cities in which the advertisement is placed, as well as by the length of the time
slot purchased and the duration of the advertising campaign.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our standard advertising contract provides that up to 10% of the specific locations at which
an advertisement will be displayed for an advertiser may vary from the list of sites provided under
the relevant contract. If the number of locations and/or the actual sites where advertisements are
displayed vary from the sites prescribed under the contract by more than 10%, we will arrange to
extend the duration of the advertising campaign or display such advertisements at additional sites,
although to date, we have never needed to do so. This provision gives us flexibility to account for
any potential technical problems, advertiser conflicts or turnover in the composition of our
physical network location.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generally require our clients to submit advertising content at least seven days prior to
the campaign start date. We also reserve the right to refuse to disseminate advertisements that are
not in compliance with content requirements under PRC laws and regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertising contracts for our in-store network and outdoor LED network are substantially
similar to those used for our commercial location network. Advertising clients generally purchase
time slots on our in-store network on a store-by-store basis, while time slots on the outdoor LED
network cover the entire network.
</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For our poster frame network, advertising clients purchase frame space on a per-frame basis
for terms of one month or more. For our mobile handset advertising network, our contracts agree to
reach the WAP users from among our list of WAP service providers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Network Monitoring and Evaluation</I></B>. We provide a number of services in connection with each
client&#146;s advertising campaign following the sales process. Our network operations team monitors the
displays in our network on a daily basis. They are also responsible for compiling reports that are
supplied under some of our agreements to clients as evidence of the broadcast of their
advertisements on our network. The report generally includes a list of buildings the advertisements
of clients were broadcast as well as photographs of representative television displays showing
their advertisements being displayed. The advertising campaign reports are provided to our clients
for information purposes and do not constitute a customer acceptance provision. The reports we
provide to our clients may also contain portions prepared by independent third-party research
companies that verify the proper functioning of our flat-panel displays and the proper
dissemination of the advertisement, by conducting on-site evaluations and polls to analyze the
effectiveness of and public reaction to the advertisement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Aside from third-party verification services, we and our regional distributors conduct
substantially all client services using our own employees or the employees of the relevant regional
distributor. In Beijing and Guangzhou, we contract some of these services to third-party agents.
These agents provide us with network development, installation, maintenance, monitoring and
reporting services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Market Research</I></B>. We believe our advertising clients derive substantial value from our ability
to provide advertising services targeted at specific segments of consumer markets. Market research
is an important part of evaluating the effectiveness and value of our business to advertisers. We
conduct market research, consumer surveys, demographic analysis and other advertising industry
research for internal use to evaluate new and existing advertising channels. We also purchase or
commission studies containing relevant market study data from reputable third-party market research
firms, such as Nielsen Media Research, CTR Market Research and Sinomonitor. We typically consult
such studies to assist us in evaluating the effectiveness of our network to our advertisers. A
number of these studies contains research on the numbers and socio-economic and demographic
profiles of the people who visit the locations of our network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Programming</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of the content on our out-of-home television advertising networks consists
of audiovisual television advertising provided to us by our advertising clients. We also provide a
limited amount of time for landlords and property managers to display location-specific
information, building announcements and related promotional material on our network. We do not
produce or create any of the advertising content shown on our network, except our own marketing
content. All of the advertising content displayed on the portion of the network we operate directly
is reviewed by qualified members of our staff to ensure compliance with PRC laws and regulations,
while our agreements with our regional distributors require each of them to review the contents
shown on the portion of the network they operate for compliance with PRC laws and regulations. See
&#147;Item&nbsp;4.B Information on the Company&#151;Business Overview&#151;Regulatory Matters &#151; Regulation of
Advertising Services &#151; Advertising Content&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each flat-panel display contains a pre-recorded CF card containing a twelve-minute cycle of
advertising content and other information, such as building-specific promotional information. We
change the CF cards to update the advertising content in each flat-panel display in our network on
a weekly basis. We and each regional distributor compile each twelve-minute cycle from
advertisements of five, 15 or 30 seconds in length provided by advertisers to us and our regional
distributors. Each of our flat-panel displays plays the advertising content on the CF card
repeatedly throughout the day so that the twelve-minute cycle is broadcast in each building within
our network a total of approximately 60 times per day, respectively. See &#147;&#151; Technology and
Suppliers&#148;. Some of our regional distributors use a nine-minute cycle, while our outdoor LED
network uses a six-minute cycle.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertisements on our poster frame network consist of full-color glossy advertising posters
designed and provided by our advertising clients. Advertisements on Focus Media Wireless&#146;s
WAP-based advertisement delivery platform consist of WAP-based messages sent to individual mobile
handset users.
</DIV>


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</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pricing</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Commercial Location Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generate revenues through the sale of advertising time slots on our commercial location
network. Our revenues are directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of advertising time slots that we have available to sell, which is
determined by the number of cities in which we directly operate, our expansion into
additional cities, the two- ninths portion of cycle time available on our regional
distributors&#146; networks and the length of the advertising cycle, which is currently
twelve minutes except in some cities operated by our regional distributors that use a
nine minute cycle. We calculate the number of time slots available by taking the total
advertising time available on our network during a particular period, calculated in
aggregate seconds, which we then divide by 30 to determine the number of 30-second
equivalent time slots available. We can increase the number of advertising time slots
that we have available to sell by expanding into additional cities or acquiring our
regional distributors, which provides us with the remaining seven-ninths of the time
slots per cycle operated by the regional distributor. The length of our advertising
cycle can potentially be extended to longer durations depending on demand in each city.
The twelve-minute advertising cycle amounts to the equivalent of 24 30-second time
slots per week. In cities where our regional distributors use a nine-minute advertising
cycle, the cycle amounts to the equivalent of 18 30-second time slots per week; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>In-store Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising service revenue derived from our in-store network is directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of advertising time slots that we have available to sell, which is
determined by the number of stores in which we operate, our expansion into additional
stores, and the length of the advertising cycle, which is currently twelve minutes, or
24 30-second equivalent time slots. As with our commercial location network, for our
in-store network we calculate the number of time slots according to the number of
30-second equivalent time slots available. The length of our advertising cycle can
potentially be extended to longer durations depending on demand in each city; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Poster Frame Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising service revenue derived from our poster frame network is directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of frames in our poster frame network. We sell frame space on our poster
frame network on a per frame basis. Increasing the number of residential and other
locations on our poster frame network allows us to increase the number of frames on our
network, thereby increases the available frame space for sale to advertisers. We
currently place up to three advertising poster frames in each elevator where we deploy
frames; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge for frame space on a per frame basis, after taking into
account any discount offered.</TD>
</TR>


</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Mobile Handset Advertising Network</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising service revenue derived from our mobile handset advertising network is
directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of messages we deliver to WAP users. We agree to send WAP message
advertisements to WAP users from approximately 100 WAP service providers, and we charge
fees based on the number of successfully delivered messages; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge per message.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prices for time slots on our commercial location and in-store networks and for frame space on
our poster frame network also vary significantly from city to city as income levels, standards of
living and general economic conditions vary significantly from region to region in China, which in
turn affect the advertising rates we are able to charge for time slots and frame space.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Relationships with Location Providers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We install our flat-panel displays in selected spaces we lease in office buildings and other
commercial locations, hypermarkets, supermarkets and convenience stores. We install our advertising
poster frames in elevators and other public areas in residential complexes. Establishing and
maintaining long-term relationships with landlords and property managers is a critical aspect of
our business. We employ a team of location relationship personnel in each city in which we operate
directly who are responsible for identifying desirable locations, negotiating display and frame
placement agreements and engaging in ongoing site placement relations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to helping us expand our network, our location relationship personnel ensure that
the needs and concerns of landlords and property managers are being met and addressed effectively
and on a timely basis. These concerns generally include ensuring that the flat-panel displays are
properly installed and are in proper working condition. We undertake to landlords and property
managers in our network to maintain the proper operation of our flat-panel displays. We generally
rely on our own employees to install, maintain, monitor and repair our flat-panel displays and
advertising poster frames. Each of our flat-panel displays is inspected at least once daily.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We enter into display placement agreements with individual landlords, property managers,
hotels, shopping malls and chain store companies under which we generally pay a fixed annual rent
in exchange for the right to display advertising and commercial media in lobby and elevator areas
in the case of our commercial location network and in specific product areas in the major aisles
and near check-out counters in hypermarkets, supermarkets and convenience stores in the case of our
in-store network. In Beijing and Guangzhou, we contract a portion of the location development,
monitoring and maintenance work to local agents. We attempt to maintain terms favorable to our
network operations in our display placement agreements, such as long-term leases and exclusivity
provisions. For example, as of March&nbsp;31, 2006, approximately 90% of our display placement
agreements in our commercial location and in-store networks gave us the exclusive right to place
television advertising in the lobby and elevator bank area of the locations in which we operate. We
are not reliant on any one landlord or property manager for a material portion of our network
coverage and as of March&nbsp;31, 2006, no individual landlord or property manager accounted for more
than 1% of the locations in our commercial location network. As hypermarkets, supermarkets and
convenience stores have control over multiple locations, a smaller number of display placement
agreements and contractual arrangements account for a larger percentage of our in-store network
coverage. As of March&nbsp;31, 2006, we had entered into display placement agreements covering 809
hypermarkets, 1,126 supermarkets and 3,283 convenience stores on our in-store network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that landlords and property managers generally do not view us as a major source of
revenue and are instead primarily attracted to our flat-panel displays as an innovative and
visually pleasing medium that complements their public areas and that provides an engaging means of
conveying building-related information to their tenants. In connection with certain of our display
placement agreements, we agree to provide concessions and services, such as displaying
building-related notifications, publicity and other information provided by the landlord or
property manager or granting time slots to the landlord or property manager for their own
promotional purposes.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our display placement agreements have initial terms ranging anywhere from one to ten years. As
of March&nbsp;31, 2006, approximately 41.4% of our display placement agreements will expire after
December&nbsp;31, 2007. As of March&nbsp;31, 2006, we had the right under the majority of our display
placement agreements to renew the display placement agreements provided that the terms offered by
us are no less favorable than those offered by competing bidders. The rental terms and fees under
our display placement agreements vary considerably depending on the city, location of the building,
size of the building and number of flat-panel displays that may be installed. Under our display
placement agreements, we retain ownership of the flat-panel displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We enter into similar frame placement agreements for the deployment of its advertising poster
frames in elevators and public areas of residential complexes and commercial buildings. The
majority of our frame placement agreements have terms of two to three years, and contain
exclusivity and best offer renewal rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To secure locations in Shanghai for our outdoor LED network, we have entered into a four-year
exclusive agreement with Shanghai Yihukuan Media Co., Ltd., which leases all of its current, and
any future developed, LED digital billboard space in Shanghai to us for an annual fee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Technology and Suppliers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Out-of-home television advertising is a relatively new advertising medium that owes its
development in large part to the emergence of new technologies, such as low-cost, light-weight,
flat-panel television displays and compact storage technology. The primary hardware required for
the operation of our business consists of components that comprise the flat-panel displays we use
in our advertising network. We also develop and install software in our flat-panel displays to
assist us with the configuration, editing and operation of our advertising content cycles.
Maintaining a steady supply of our proprietary flat-panel displays is important to our operations
and the growth of our advertising network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design the distinctive shape of our flat-panel displays, identify suppliers of component
parts used in our displays and contract the assembly of our flat-panel displays to third-party
contract assemblers. Our contract assemblers are responsible for purchasing the component parts
from suppliers we identify each month and assembling the flat-panel displays according to our
specifications using components purchased in off-the-shelf form from wholesale distributors. We
select component suppliers based on price and quality. Since we commenced our current operations,
we have used only one contract assembler at any one time, which we believe is logistically more
efficient and also enables us to better protect the proprietary design of our flat-panel displays.
As there are many qualified alternative suppliers for our equipment, our obligation to our current
contract assemblers is not exclusive. We have never experienced any material delay or interruption
in the supply of our flat-panel displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete with other advertising companies in China including companies that operate
out-of-home advertising media networks, such as JCDecaux and ClearMedia. We compete for advertising
clients primarily on the basis of network size and coverage, location, price, the range of services
that we offer and our brand name. We also compete for overall advertising spending with other
alternative advertising media companies, such as Internet, street furniture, billboard, frame and
public transport advertising companies, and with traditional advertising media, such as newspapers,
television, magazines and radio.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the future, we may also face competition from new entrants into the out-of-home television
advertising network sector. In addition, starting December&nbsp;10, 2005, wholly foreign-owned
advertising companies are allowed to be established. China&#146;s ongoing deregulation of the
advertising market in China will expose us to greater competition with existing or new advertising
companies in China including PRC subsidiaries of large well-established multi-national companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Facilities</B>
</DIV>


<P align="center" style="font-size: 10pt">51
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently maintain our headquarters at 28-30/F, Zhao Feng World Trade Building, 369 Jiangsu
Road, Shanghai 200050, People&#146;s Republic of China.We also have offices in 53 other cities including
those operated by our regional distributors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Regulatory Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate our business in China under a legal regime consisting of the State Council, which
is the highest authority of the executive branch of the PRC central government, and several
ministries and agencies under its authority including the State Administration for Industry and
Commerce, or SAIC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China&#146;s Advertising Law was promulgated in 1994. In addition, the State Council, SAIC and
other ministries and agencies have issued regulations that regulate our business, which are
discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitations on Foreign Ownership in the Advertising Industry</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulations governing foreign ownership in the advertising industry in China include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Catalogue for Guiding Foreign Investment in Industry (2004); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Administrative Regulations on Foreign-invested Advertising Enterprises (2004).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These regulations require foreign entities that directly invest in the advertising industry to
have at least two years of direct operations in the advertising industry outside of China. Since
December&nbsp;10, 2005, foreign investors have been permitted to own directly a 100% interest in
advertising companies in China, but such foreign investors are also required to have at least three
years of direct operations in the advertising industry outside of China. PRC laws and regulations
do not permit the transfer of any approvals, licenses or permits, including business licenses
containing a scope of business that permits engaging in the advertising business. In the event we
are able to qualify to acquire the equity interest of Focus Media Advertisement under the rules
allowing complete foreign ownership, Focus Media Advertisement would continue to exist as the
holder of the required advertising license consistent with current regulatory requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since we have not been involved in advertising outside of China for the required number of
years, our domestic PRC operating subsidiaries, which are considered foreign invested, are
currently ineligible to apply for the required advertising services licenses in China. Our
advertising business is currently mainly provided through our contractual arrangements with our
consolidated affiliated entities in China, including Focus Media Advertisement and its
subsidiaries, New Focus Media Advertisement, Framedia Advertisement, Guangdong Framedia, New
Structure Advertisement and Focus Media Wireless. Each of our PRC operating affiliates is currently
owned or controlled either by Jason Nanchun Jiang and Jimmy Wei Yu, both of whom are PRC citizens,
or by PRC companies owned by them or by us. Our PRC operating affiliates and certain of their
respective subsidiaries hold the requisite licenses to provide advertising services in China. We,
Focus Media Technology, Focus Media Digital, New Focus Media Advertisement, Framedia Investment and
Dotad Technology have entered into a series of contractual arrangements with our PRC operating
affiliates and their respective subsidiaries and shareholders under which:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we are able to exert effective control over our PRC operating affiliates and their
respective subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a substantial portion of the economic benefits of our PRC operating affiliates and
their respective subsidiaries will be transferred to us; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we have an exclusive option to purchase all or part of the equity interests in our
PRC operating affiliates and all or part of the equity interests in Focus Media
Advertisement&#146;s subsidiaries that are owned by Focus Media Advertisement or its nominee
holders, as well as all or a part of the assets of our PRC operating affiliates, in
each case when and to the extent permitted by PRC law.</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;4.C Information on the Company&#151;Organizational Structure&#148; and &#147;Item&nbsp;7.B Major
Shareholders and Related Party Transactions&#151;Related Party Transactions&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of Global Law Office, our PRC legal counsel,
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the respective ownership structures of Focus Media, Framedia, Focus Media Wireless
and their respective PRC affiliates and subsidiaries are in compliance with existing
PRC laws and regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the contractual arrangements (i)&nbsp;among Focus Media, Framedia, Focus Media Wireless
and their respective PRC affiliates, subsidiaries and PRC shareholders, in each case
governed by PRC law are valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in effect; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the PRC business operations of Focus Media, Framedia, Focus Media Wireless and their
respective affiliates and subsidiaries as described in this annual
report, are in
compliance with existing PRC laws and regulations in all material respects.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been advised by our PRC legal counsel, however, that there are substantial
uncertainties regarding the interpretation and application of current and future PRC laws and
regulations. Accordingly, there can be no assurance that the PRC regulatory authorities, in
particular the SAIC which regulates advertising companies, will not in the future take a view that
is contrary to the opinion of our PRC legal counsel. We have been further advised by our PRC
counsel that if the PRC government determines that the agreements establishing the structure for
operating our PRC advertising business do not comply with PRC government restrictions on foreign
investment in the advertising industry, we could be subject to severe penalties. See &#147;Item&nbsp;3.D Key
Information&#151;Risk Factors &#151; Risks Relating to Regulation of Our Business and to Our Structure &#151; If
the PRC government finds that the agreements that establish the structure for operating our China
business do not comply with PRC governmental restrictions on foreign investment in the advertising
industry, we could be subject to severe penalties&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Regulation of Advertising Services</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Business License for Advertising Companies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulations governing advertising businesses in China include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Advertising Law (1994);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Advertising Administrative Regulations (1987); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Implementing Rules for the Advertising Administrative Regulations (2004).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These regulations stipulate that companies that engage in advertising activities must obtain
from the SAIC or its local branches a business license which specifically includes operating an
advertising business within its business scope. Companies conducting advertising activities without
such a license may be subject to penalties, including fines, confiscation of advertising income and
orders to cease advertising operations. The business license of an advertising company is valid for
the duration of its existence, unless the license is suspended or revoked due to a violation of any
relevant law or regulation. We do not expect to encounter any difficulties in maintaining our
business licenses. Each of Focus Media Advertisement, its subsidiaries and New Focus Media
Advertisement has obtained, or in the case of some of our new directly-operated cities, are in the
process of obtaining such a business license from the local branches of the SAIC as required by the
existing PRC regulations. Some of our regional distributors may not possess all the licenses
required to operate an advertising business, or may fail to maintain the licenses they currently
hold. We periodically monitor our regional distributors to ensure they have obtained all required
licenses and are complying with regulations relating to advertising content, although it is
possible that one or more of our regional distributors may not be in compliance with
all PRC
regulations at all times. To our knowledge, all of our regional distributors have received, or are
in the process of obtaining, the licenses required to operate an advertising business. If we learn
that any of our regional distributors are not in compliance with
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">applicable terms and regulations
we notify such regional distributors of the need to complete any necessary procedures and to report
any developments to us. If a regional distributor fails to complete the steps necessary to receive
the required licenses, we will take steps to terminate the contract with such regional distributor.
See &#147;Item&nbsp;3.D Key Information&#151;Risk Factors &#151; Risks Relating to Our Business and Industry &#151; One or
more of our regional distributors could engage in activities that are harmful to our reputation in
the industry and to our business&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Advertising Content</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PRC advertising laws and regulations set forth certain content requirements for advertisements
in China, which include prohibitions on, among other things, misleading content, superlative
wording, socially destabilizing content or content involving obscenities, superstition, violence,
discrimination or infringement of the public interest. Advertisements for anesthetic, psychotropic,
toxic or radioactive drugs are prohibited. It is prohibited to disseminate tobacco advertisements
via broadcast or print media. It is also prohibited to display tobacco advertisements in any
waiting lounge, theater, cinema, conference hall, stadium or other public area. There are also
specific restrictions and requirements regarding advertisements that relate to matters such as
patented products or processes, pharmaceuticals, medical instruments, agrochemicals, foodstuff,
alcohol and cosmetics. In addition, all advertisements relating to pharmaceuticals, medical
instruments, agrochemicals and veterinary pharmaceuticals advertised through radio, film,
television, newspaper, magazine, out-of-home and other forms of media, together with any other
advertisements which are subject to censorship by administrative authorities according to relevant
laws and administrative regulations, must be submitted to the relevant administrative authorities
for content approval prior to dissemination. We do not believe that advertisements containing
content subject to restriction or censorship comprise a material portion of the advertisements
shown on our network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertisers, advertising operators and advertising distributors are required by PRC
advertising laws and regulations to ensure that the content of the advertisements they prepare or
distribute are true and in full compliance with applicable law. In providing advertising services,
advertising operators and advertising distributors must review the prescribed supporting documents
provided by advertisers for advertisements and verify that the content of the advertisements comply
with applicable PRC laws and regulations. In addition, prior to distributing advertisements for
certain commodities which are subject to government censorship and approval, advertising
distributors are obligated to ensure that such censorship has been performed and approval has been
obtained. Violation of these regulations may result in penalties, including fines, confiscation of
advertising income, orders to cease dissemination of the advertisements and orders to publish an
advertisement correcting the misleading information. In circumstances involving serious violations,
the SAIC or its local branches may revoke violators&#146; licenses or permits for advertising business
operations. Furthermore, advertisers, advertising operators or advertising distributors may be
subject to civil liability if they infringe on the legal rights and interests of third parties in
the course of their advertising business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We employ qualified advertising inspectors who are trained to review advertising content for
compliance with relevant laws and regulations.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Outdoor Advertising</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Advertising Law stipulates that the exhibition and display of outdoor advertisements must not:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>utilize traffic safety facilities and traffic signs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>impede the use of public facilities, traffic safety facilities and traffic signs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obstruct commercial and public activities or create an eyesore in urban areas;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be placed in restrictive areas near government offices, cultural landmarks or
historical or scenic sites; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>be placed in areas prohibited by the local governments from having outdoor
advertisements.</TD>
</TR>


</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In additional to the Advertising Law, the SAIC promulgated the Outdoor Advertising
Registration Administrative Regulations on December&nbsp;8, 1995, as amended on December&nbsp;3, 1998, which
governs the outdoor advertising industry in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Outdoor advertisements in China must be registered with the local SAIC before dissemination.
The advertising distributors are required to submit a registration application form and other
supporting documents for registration. After review and examination, if an application complies
with the requirements, the local SAIC will issue an Outdoor Advertising Registration Certificate
for such advertisement. The content of the outdoor advertisement must be submitted for filing with
the local SAIC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The placement and installation of LED billboards are subject to municipal zoning requirements
and governmental approvals, including application for an outdoor advertising registration
certificate for each LED billboard subject to a term of use of no more than six years for each LED
billboard. If the existing LED billboards placed by our LED location provider or us are required to
be removed, the attractiveness of this portion of our advertising network will be diminished.
Moreover, failure by an owner of LED billboards to maintain outdoor advertising registration
certificates would result in the inability to lease or market such space for the placement of
advertisements.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Print Advertising</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Following our acquisition of Framedia on January&nbsp;1, 2006, we also operate a network of
advertising poster frames placed primarily in the elevators and public areas of residential
complexes. The advertisements shown on our poster frame network are defined as &#147;normal print
advertisements&#148; under the Print Advertisements Administrative Regulations promulgated by the SAIC
on January&nbsp;13, 2000, as amended on November&nbsp;30, 2004, or the Print Advertisements Regulations.
Under these regulations, print advertisements must not be placed in areas prohibited by laws or
regulations from posting print advertisements.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Regulation of Telecommunications Value-added Service Providers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Telecommunications Regulations (2000), or the Telecom Regulations, and the Administrative
Measures for Telecommunications Business Operating License (2002), or the Telecom License Measures,
contain provisions governing providers of telecommunications services, including value-added
service providers. The Telecom Regulations categorize all telecommunication services businesses in
China as either infrastructure telecommunication services businesses or value-added
telecommunication services businesses. The latter category includes WAP services. Under the Telecom
Regulations, certain services are classified as being of a value-added nature and require the
commercial mobile operator of such services to obtain an operating license, including online data
processing and transaction processing, call centers and Internet access. The Telecom Regulations
also set forth extensive guidelines with respect to different aspects of telecommunications
operations in China. Under the Telecom License Measures, an approved value-added telecommunication
services provider must conduct its business in accordance with the specifications recorded on its
value-added telecommunication services operating license. Under PRC law, it is unclear whether the
services offered by Focus Media Wireless should be deemed value-added telecommunication services,
which requires an operation permit which has a valid period of five years. Focus Media Wireless has
applied for an operation permit for its wireless advertising operations. If Focus Media Wireless is
deemed by the PRC regulatory authorities to be providing value-added telecommunication services but
an operation permit is not issued or if, once issued, it is revoked or if we are unable to renew
its operation permit upon its expiration, we will be required to suspend our services relating to
our mobile handset advertising network, and our advertising service revenue derived from this
portion of our network would be adversely affected. See &#147;Item&nbsp;3.D Key Information&#151;Risk Factors &#151;
Our recent entry into mobile handset advertising through our acquisition of Focus Media Wireless
may expose us to risks associated with operating in the telecommunications industry in China which
could materially affect our financial condition or results of operation&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Organizational Structure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our predecessor company, Shanghai Aiqi Advertisement Co., Ltd., or Aiqi Advertisement, was
established by immediate family members of Jason Nanchun Jiang in September&nbsp;1997 and operated as an
advertising agency. In May&nbsp;2003, Aiqi Advertisement discontinued its advertising agency business,
was renamed Shanghai Focus Media
</DIV>

<P align="center" style="font-size: 10pt">55
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Advertisement Co., Ltd., commenced operation of our out-of-home
television advertising network in China and reorganized its shareholdings. At the same time, we
entered into arrangements with Focus Media
Advertisement that resulted in the consolidation of
Focus Media Advertisement. Following this reorganization Jason Nanchun Jiang continued to hold a
controlling interest in Focus Media Advertisement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In conjunction with the change in our business model in May&nbsp;2003 and to facilitate foreign
investment in our company, we established our offshore holding company, Focus Media Holding Limited
as a company registered in the British Virgin Islands in April&nbsp;2003. In April&nbsp;2005, we completed
the process of changing Focus Media Holding Limited&#146;s corporate domicile to the Cayman Islands and
we are now a Cayman Islands company. On July&nbsp;13, 2005, our ADSs were listed for quotation on the
Nasdaq National Market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, we acquired Framedia and E-Times, which operate networks of advertising
poster frames placed primarily in elevators and public areas of residential complexes in China. In
February&nbsp;2006, we acquired Target Media. Target Media operated an out-of-home advertising network
using flat-panel displays placed in elevator lobbies and other public areas in commercial
buildings, hospitals, hotels, banks, residential buildings, convenience stores and other locations
in cities in China. Following the acquisition of Target Media, we combined Target Media&#146;s network
into our existing commercial location and in-store networks. Other than holding their existing
contracts, the former Target Media entities no longer conduct any operations, and the combined
network is operated through our existing corporate entities. In March&nbsp;2006, we acquired Focus Media
Wireless, which operates a WAP-based advertising delivery platform on the mobile telecommunications
networks of China Mobile and China Unicom. See &#147;Item&nbsp;10.C Additional Information&#151;Material
Contracts&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Our Corporate Structure and Contractual Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our operations are conducted in China as follows:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>with regard to the operation of our out-of-home television networks, through Focus
Media Technology, our indirect wholly-owned subsidiaries in China, Focus Media Digital,
a 90%-owned subsidiary of Focus Media Technology, and New Focus Media Advertisement, a
90%-owned subsidiary of Focus Media Digital, and through our contractual arrangements
with several of our consolidated affiliated entities in China, including Focus Media
Advertisement, and its subsidiaries. Focus Media Advertisement owns the remaining 10%
equity interest in Focus Media Digital and New Focus Media Advertisement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>with regard to the operation of our poster frame network, through Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement, each of which is 90%
owned by Focus Media Advertisement and 10% owned by Focus Media Advertising Agency,
respectively; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>with regard to the operation of our mobile handset advertising network, through
Focus Media Wireless, which is 90% owned by Focus Media Advertisement and 10% owned by
Focus Media Advertising Agency, respectively.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of Framedia Investment and Dotad Technology and their respective affiliated entities and
shareholders, have entered into contractual arrangements substantially similar to those control
agreements entered into among Focus Media Technology, Focus Media Digital, New Focus Media
Advertisements, Focus Media Advertisement and its shareholders and subsidiaries. See &#147;Item&nbsp;7.B
Major Shareholders and Related Party Transactions&#151;Related Party Transactions &#151; Agreements Among
Focus Media Advertisement, Focus Media Advertising Agency, Framedia Investment, Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement&#148; and &#147;&#151; Agreements Among Focus
Media Advertisement, Focus Media Advertising Agency, Focus Media Wireless and Dotad Technology&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following diagram illustrates our current corporate structure other than dormant entities
and the former Target Media entities, which aside from holding their existing contracts, no longer
conduct any operations:
</DIV>
<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><IMG src="h00605h0060501.gif" alt="(CORPORATE STRUCTURE CHART)">
</DIV>



<P align="center" style="font-size: 10pt">56
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Loans used to capitalize our PRC operating companies and to facilitate our control over
them.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Agreements that give us effective control over Focus Media Advertisement and its
subsidiaries, as described in &#147;Item&nbsp;7.B Major Shareholders and Related Party
Transactions&#151;Related Party Transactions&#148;.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Agreement that transfer a substantial portion of the economic benefits of Focus Media
Advertisement and its subsidiaries to us, as described in &#147;Related Party Transactions&#148;.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Agreements that give Framedia Investment effective control over the PRC-based operations of
Framedia, as described in &#147;Item&nbsp;7.B Major Shareholders and Related Party Transactions&#151;Related
Party Transactions&#148;.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>The remaining equity interests in Focus Media Advertisement&#146;s subsidiaries are held by Jimmy
Wei Yu, Focus Media Advertising Agency or unrelated third parties.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Agreements that give Dotad Technology effective control over the PRC-based operations of
Focus Media Wireless, as described in &#147;Item&nbsp;7.B Major Shareholders and Related Party
Transactions&#151;Related Party Transactions&#148;.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(7)</TD>
    <TD>&nbsp;</TD>
    <TD>Our out-of-home television network operations comprises our commercial location, in-store and
outdoor LED networks.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with its entry into the World Trade Organization, China is required to
relax restrictions on foreign investment in the advertising industry in China. Accordingly, PRC
regulations stipulate that starting from December&nbsp;10, 2005, foreign investors are allowed to
directly own 100% of PRC companies operating an advertising business if the foreign entity has at
least three years of direct operations in the advertising business outside of China or to directly
own less than 100% if the foreign entity has at least two years of direct operations in the
advertising business outside of China. We do not currently directly operate an advertising business
outside of China and cannot qualify for direct ownership of a PRC advertising company under PRC
regulations any earlier than two or three years, respectively, after we commence any such
operations or until we acquire a company which has directly operated an advertising business for
the required period of time. We do not currently know how or when we will be able to qualify under
these regulations. Even if we do qualify in the future, it may be burdensome or not cost effective
for us to meet the required criteria for direct ownership. If and when we qualify for direct
ownership, we intend to explore the commercial feasibility of changing our current structure,
including possibly direct ownership of Focus Media Advertisement and its subsidiaries, taking into
consideration relevant cost, market, competitive and other factors. In the event we take such
steps, we cannot assure you that we will be able to identity or acquire a qualified foreign company
for a possible future restructuring or that any restructuring we may undertake to facilitate direct
ownership will be successful.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accordingly, since we have not been involved in the direct operation of an advertising
business outside of China, our domestic PRC subsidiaries, Focus Media Technology and Focus Media
Digital, which are considered foreign-invested, are currently ineligible to apply for the required
advertising services licenses in China. Our advertising business is currently mainly provided
through contractual arrangements with our consolidated affiliated entities in China, including (i)
Focus Media Advertisement and its subsidiaries with regard to our commercial location, in-store and
outdoor LED networks, (ii)&nbsp;Framedia Advertisement, Guangdong Framedia and New Structure
Advertisement with regard to our poster frame network, and (iii)&nbsp;Focus Media Wireless with regard
to our mobile handset advertising network. Focus Media Advertisement is owned by two PRC citizens,
Jason Nanchun Jiang, our chairman and chief executive officer, and Jimmy Wei Yu, one of our
directors, affiliated with UCI Group (China) Limited, one of our principal shareholders, while each
of Framedia Advertisement, Guangdong Framedia, New Structure Advertisement and Focus Media Wireless
is owned by Focus Media Advertisement and Focus Media Advertising Agency. Each of Focus Media
Advertisement, several of its subsidiaries, our newly established indirect subsidiary New Focus
Media Advertisement, Framedia Advertisement, Guangdong Framedia, New Structure Advertisement and
Focus Media Wireless, which we refer to collectively as our PRC operating affiliates, holds the
requisite licenses to provide advertising services in China. In 2006, we expect to begin operating
a portion of our advertising business through our 90%-owned indirect subsidiary New Focus Media
Advertisement after which time we will no longer entirely rely on contractual arrangements with our
PRC operating affiliates and their respective subsidiaries and shareholders for the operation of
our advertising business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been and are expected to continue to be dependent on our PRC operating affiliates to
operate our advertising business until we acquire them as our wholly-owned subsidiaries. We and
Focus Media Technology,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Focus Media Digital, New Focus Media Advertisement, Framedia Investment and
Dotad Technology, which we refer to as our wholly-foreign owned entities, have entered into
contractual arrangements with their respective PRC operating affiliates and shareholders, pursuant
to which:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we are able to exert effective control over our PRC operating affiliates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a substantial portion of the economic benefits of our PRC operating affiliates will
be transferred to us; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each of our wholly-foreign owned entities or their respective designees has an
exclusive option to purchase all or part of the equity interests in our PRC affiliated
entities or their respective nominee holders, or, in some cases, all or part of the
assets of our PRC affiliated entities, in each case when and to the extent permitted by
PRC law.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our contractual arrangements with our PRC affiliated entities and their respective
shareholders and subsidiaries can only be amended with the approval of our audit committee or
another independent body of our board of directors. See &#147;Item&nbsp;7.B Major Shareholders and Related
Party Transactions&#151;Related Party Transactions&#148; for further information on our contractual
arrangements with these parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of Global Law Office, our PRC legal counsel:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the respective ownership structures of Focus Media, Framedia, Focus Media Wireless
and their respective PRC operating affiliates and subsidiaries are in compliance with
existing PRC laws and regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the contractual arrangements among Focus Media, Framedia, Focus Media Wireless and
their respective PRC operating affiliates, subsidiaries and shareholders, in each case
governed by PRC law are valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in effect; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the PRC business operations of Focus Media, Framedia, Focus Media Wireless and their
respective PRC operating affiliates and subsidiaries as described in this annual report,
are in compliance with existing PRC laws and regulations in all material respects.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been advised by our PRC legal counsel, however, that there are substantial
uncertainties regarding the interpretation and application of current and future PRC laws and
regulations. Accordingly, there can be no assurance that the PRC regulatory authorities, in
particular the SAIC which regulates advertising companies, will not in the future take a view that
is contrary to the above opinion of our PRC legal counsel. We have been further advised by our PRC
counsel that if the PRC government finds that the agreements that establish the structure for
operating our PRC advertising business do not comply with PRC government restrictions on foreign
investment in advertising businesses, we could be subject to severe penalties. See &#147;Item&nbsp;7.B Major
Shareholders and Related Party Transactions&#151;Risk Factors &#151; If the PRC government finds that the
agreements that establish the structure for operating our China business do not comply with PRC
governmental restrictions on foreign investment in the advertising industry, we could be subject to
severe penalties&#148;, &#147;&#151; Our business operations may be affected by legislative or regulatory changes&#148;
and &#147;&#151; The PRC legal system embodies uncertainties which could limit the legal protections
available to you and us&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Subsidiaries of Focus Media Holding Limited</B>
</DIV>


<P align="center" style="font-size: 10pt">58
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning our direct subsidiaries:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Place of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Percentage</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Subsidiary </B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Incorporation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of ownership</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media (China) Holding Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hong Kong
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media Technology (Shanghai) Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PRC
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Perfect Media Holding Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">British Virgin Islands<BR>
(&#147;BVI&#148;)
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media Qingdao Holding Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media Dalian Holding Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media Changsha Holding Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media Digital Information Technology (Shanghai) Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PRC
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">New Focus Media Technology (Shanghai) Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PRC
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sorfari Holdings Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Focus Media Tianjin Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">80</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Capital Beyond Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shanghai New Focus Media Advertisement Co
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PRC
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">90</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Infoachieve Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shanghai Framedia Investment Consultation Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PRC
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Target Media Holdings Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cayman Islands
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Target Media Multi-Media Technology (Shanghai) Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">PRC
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dotad Holdings Limited
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">BVI
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">100</TD>
    <TD nowrap valign="top">%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Subsidiaries of Focus Media Advertisement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning Focus Media Advertisement&#146;s subsidiaries
each of which is incorporated in China:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Focus Media</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Advertisement</B>&#146;<B>s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Region of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Ownership Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Operations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Primary Business</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shenzhen Bianjie Building
Advertisement Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shenzhen
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
frame advertising
network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai Focus Media Advertising Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advertising agency</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai Perfect Media Advertising
Agency Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advertising company
that operates advertising
services network on
shoe-shining
machines</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Qingdao Fukesi Advertisement Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Qingdao
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Changsha Focus Media Shiji
Advertisement Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Changsha
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Dalian Focus Media Advertising Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dalian
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai Qianjian Advertising Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
in banking
locations</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">59
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Focus Media</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Advertisement</B>&#146;<B>s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Region of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Ownership Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Operations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Primary Business</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Guangzhou Framedia Advertising Company
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Guangzhou
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Zhuhai Focus Media Culture and
Communication Company Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Zhuhai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Hebei Tianma Weiye Advertising Company
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hebei
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Xiamen Focus Media Advertising Company
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Xiamen
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Sichuan Focus Media Advertising
Communications Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chengdu
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai New Structure Advertisement
Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Technical and
business
consultancy for
poster frame
network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai Framedia Advertising
Development Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
advertising poster
frame network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Guangzhou Shiji Shenghuo Advertisement
Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Guangzhou
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
advertising poster
frame network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Nanjing Focus Media Advertising Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nanjing
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Hefei Fukesi Advertising Co. Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hefei
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Jinan Focus Media Advertising Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jinan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shenzhen E-Times Consulting Co.,
Ltd
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shenzhen
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
advertising poster
frame network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai Target Media Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dormant (Former
operation and
maintenance of
Target Media&#146;s
out-of-home
television
advertising network)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">60
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Focus Media</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Advertisement</B>&#146;<B>s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Region of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Ownership Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Operations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Primary Business</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shenyang Target Media Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shenyang
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dormant (Former
operation and
maintenance of
Target Media&#146;s
out-of-home
television
advertising network)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Fuzhou Hengding United Media
Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fuzhou
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dormant (Former
operation and
maintenance of
Target Media&#146;s
out-of-home
television
advertising network)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai New Target Media Co.,
Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dormant (Former
operation and
maintenance of
Target Media&#146;s
out-of-home
television
advertising network)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Beijing Focus Media Wireless Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">90.0%<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Beijing
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation of mobile
handset advertising
service network</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Yunnan Focus Media Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">89.5%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kunming
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Tianjin Focus Tongsheng Advertising
Company Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">80.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tianjin
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Zhejiang Ruihong Focus Media
Advertising Communications Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">80.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Hangzhou
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Wuhan Geshi Focus Media Advertising
Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">75.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wuhan
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Xi&#146;an Focus Media Advertising &#038;
Information Company Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">70.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Xian
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shenyang Focus Media Advertising Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">70.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shenyang
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Fuzhou Focus Media Advertising Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">70.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Fuzhou
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">61
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Focus Media</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Advertisement</B>&#146;<B>s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Region of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Ownership Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Operations</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Primary Business</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Chongqing Geyang Focus Media Culture &#038;
Broadcasting Co., Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">60.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chongqing
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">Shanghai On-Target Advertisement Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="3" align="center" valign="top">60.0%<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advertising agency</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:15px; text-indent:-15px">New Focus Media Advertisement Co.,
Ltd.
</DIV></TD>
    <TD>&nbsp;</TD>


<TD nowrap colspan="3" align="center" valign="top">&nbsp;&nbsp;&nbsp;19%<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP>
</TD>

    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sells advertising
time slots on our
out-of-home television
advertising
networks</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The remaining equity interest is held by Jimmy Wei Yu as our nominee holder.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The remaining equity interest is held by Focus Media Advertising Agency.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>The remaining equity interest in this entity is owned by unrelated third paries.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>The remaining equity interest in this entity is owned by Focus Media Digital.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">62
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Property, Plants and Equipment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to &#147;&#151;B. Business Overview&#151;Facilities&#148; for a discussion of our property, plants and equipment.
</DIV>
<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4A. UNRESOLVED STAFF COMMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You should read the following discussion and analysis of our financial condition and results
of operations in conjunction with our consolidated financial statements and the related notes
included elsewhere in this annual report. Our consolidated financial statements have been prepared in
accordance with U.S. GAAP. In addition, our consolidated financial statements and the financial
data included in this annual report reflect our reorganization and have been prepared as if our
current corporate structure had been in place throughout the relevant periods. The following
discussion and analysis contains forward-looking statements that involve risks and uncertainties.
Actual results could differ materially from those projected in the forward-looking statements. For
additional information regarding these risks and uncertainties, see &#147;Item&nbsp;3.D Key Information &#151;
Risk Factors&#148;.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our out-of-home advertising network consists of (i)&nbsp;our commercial location, in-store and
outdoor LED networks, which we collectively refer to as our out-of-home television networks, (ii)
our poster frame network and (iii)&nbsp;our mobile handset advertising network. We have experienced
significant revenue and earnings growth, and the size of our network has grown significantly, since
the commercial launch of our advertising network in May&nbsp;2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The significant increase in our operating results since we commenced our current business
operations is attributable to a number of factors, including the substantial expansion of our
flat-panel display network, the launch and ongoing expansion of our in-store network, the
commencement of operations of our poster frame network, the successful execution of strategic
acquisitions, such as our acquisition of Framedia, Target Media, Focus Media Wireless and a number
of our regional distributors, and the growing acceptance of our multi-platform network as an
appealing advertising medium by our clients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect our future growth to be driven by a number of factors and trends including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Overall economic growth in China, which we expect to contribute to an increase in
advertising spending in major urban areas in China where consumer spending is
concentrated;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The expansion of our commercial location network since we completed our acquisition
of Target Media;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to expand our network into new locations and additional cities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to expand our sales force and engage in increased sales and marketing efforts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to increase sales of advertising time slots and extend the duration of
our advertising cycle on our commercial location and in-store networks;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to expand our client base through promotion of our services and
cross-selling;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to successfully operate and expand our poster frame network, which we
acquired from Framedia in January&nbsp;2006, including increasing the number of residential
complexes in which we place advertising poster frames;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">63
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to expand our in-store network which commenced operation in April&nbsp;2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to integrate Target Media&#146;s former out-of-home television advertising
networks into our commercial location network and in-store network;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to identify and create new advertising channels by establishing separate
advertising networks that enable advertisers to target a diverse range of consumer
groups with specific demographic profiles. Our commercial location network is currently
marketed as six separate channels targeting different types of consumers: our premier A
and B office building channels, our travel channel, our fashion channel, our elite
channel and our healthcare channel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to successfully enter into the mobile handset network advertising
business, in part through our recent acquisition of Focus Media Wireless;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to successfully operate and market our new outdoor LED network; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our ability to acquire companies that operate advertising businesses complementary
to our existing operations.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because our primary source of revenue is our advertising service revenue, we focus on factors
that directly affect our advertising service revenue such as the number of advertising time slots
that we have available for sale and the price we charge for our advertising time slots after taking
into account any discounts. The effective price we charge advertising clients for time slots on our
network is affected by the attractiveness of our network to advertisers, the level of demand for
time slots in each city and the perceived effectiveness of our network in achieving the goals of
our advertising clients. The attractiveness and effectiveness of our commercial location network is
in turn directly related to our ability to secure and retain prime locations for our displays and
to increase the number of displays, locations and cities in our network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we continue to expand our network, we expect to face a number of challenges. We have
expanded our network rapidly, and we, as well as our competitors, have occupied many of the most
desirable locations in China&#146;s major cities. In order to continue expanding our network in a manner
that is attractive to potential advertising clients, we may continue to enter into new advertising
media platforms and to establish additional stand-alone networks that provide effective channels
for advertisers. In addition, we must react to continuing technological innovations, such as the
potential uses of wireless and broadband technology in our network, and changes in the regulatory
environment, such as the regulations allowing 100% foreign ownership of PRC advertising companies
and new regulations governing cross-border investment by PRC persons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial results since the beginning of 2006 also include those of Framedia that we
acquired on January&nbsp;1, 2006, of Target Media that we acquired on February&nbsp;28, 2006 and, starting in
the second quarter of 2006, those of Focus Media Wireless that we acquired in March&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revenues</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, 2004 and 2005, and for the three months ended March&nbsp;31, 2006, we had total revenues
of $3.8&nbsp;million, $29.2&nbsp;million, $68.2&nbsp;million and $33.1&nbsp;million, respectively. We generate revenues
primarily from the sale of advertising time slots on our out-of-home television advertising
networks and, beginning in 2006, from the sale of frame space on our poster frame network. Our
advertising service revenue includes the sale of advertising time slots on our network, as well as
a small amount of revenue attributable to other advertising related services we provide to our
advertising clients. We also derive revenues from the sale of our flat-panel displays to regional
distributors, which we refer to as our advertising equipment revenue. In 2003, 2004 and 2005, and
for the three months ended March&nbsp;31, 2006, our advertising service revenue accounted for 89.6%,
90.1%, 98.1% and 99.1% of our total revenues, respectively. The following table sets forth a
breakdown of our total revenues for the periods indicated:
</DIV>

<P align="center" style="font-size: 10pt">64
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>For the three months ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="38"><B>(in thousands of U.S. dollars, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial location
network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">26,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">61,435</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">64.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">In-store
network:(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,469</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">16.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Poster frame
network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising service
revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Advertising
equipment
revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Advertising service revenue is presented net of business tax. Business tax on advertising
service revenue from our commercial location network amounted to $311,770, $2.8&nbsp;million, $6.0
million, $936,405 and $2.1&nbsp;million in 2003, 2004 and 2005, and for the three months ended
March&nbsp;31, 2005 and 2006, respectively. Business tax on advertising service revenue for our
in-store network amounted to $524,271, $nil and $524,357 in 2005 and for the three months
ended March&nbsp;31, 2005 and 2006. Business tax on advertising service revenue for our poster
frame network amounted to $590,972 for the three months ended March&nbsp;31, 2006. Business tax
includes business tax of 5.55% and cultural industries tax of 4.0%.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also break down our total revenues into related-party and unrelated-party sources. The
following table presents a more detailed breakdown of our gross revenues and its component parts:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>For the three months ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="38"><B>(in thousands of U.S. dollars, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross Advertising
Service</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Commercial Locations</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Unrelated parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">86.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">91.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,234</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">96.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">64.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">29.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,793</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Commercial
Locations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">97.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">108.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">71.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>In-store Network</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Unrelated parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total in-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">17.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Poster Frame Network</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Unrelated parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">20.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total Poster Frame
Network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">20.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross Advertising
Services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">97.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">107.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,368</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">108.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">108.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Sales taxes:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Commercial
Locations</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>In-store Network</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Poster Frame
Network</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total sales taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">311</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Advertising Service
Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">98.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">99.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: Advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment Revenue:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">65
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Advertising Service Revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sources of Revenues. We derive most of our total revenues from the sale of time slots on our
commercial location network and our in-store network to unrelated third parties and to some of our
related parties. Beginning in the first quarter of 2006, we began to derive revenue from the sale
of frame space on our poster frame network and WAP-based mobile handset advertisements. We report
our advertising revenue between related and unrelated parties because historically more than 10% of
our advertising service revenues came from clients related to some of our directors. Our
advertising services to related parties were provided in the ordinary course of business on the
same terms as those provided to our unrelated advertising clients on an arm&#146;s-length basis. In
addition, we generate a small percentage of advertising services revenue from other advertising
related services we provide to our advertising clients. Prior to May&nbsp;2003, these other
advertising-related services included commissions we received when we operated as an advertising
agent. Since May&nbsp;2003, these other advertising-related services have been derived from technical
services we provide to some of our regional distributors and other advertising-related services
commissioned by some of our advertising clients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising service revenue is recorded net of any sales discounts from our standard
advertising rate cards that we may provide to our advertising clients. These discounts include
volume discounts and other customary incentives offered to our advertising clients, including
additional broadcast time for their advertisements if we have unused time slots available in a
particular city&#146;s advertising cycle, and represent the difference between our standard rate card
and the amount we charge our advertising clients. Our advertising clients include advertisers that
directly engage in advertisement placements with us and advertising agencies retained by some
advertisers to place advertisements on the advertiser&#146;s behalf. We expect that our advertising
service revenue will continue to be the primary source, and constitute the substantial majority of,
our revenues for the foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising service revenue reflects a deduction for business taxes and related surcharges
incurred in connection with the operations of Focus Media Advertisement and its subsidiaries. Their
revenues are subject to a sales tax consisting of a 5.55% business tax and a 4.0% cultural
industries tax on revenues earned from their advertising services provided in China. We deduct
these amounts from our advertising service revenues to arrive at our total revenues attributable to
advertising services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Factors that Affect Our Advertising Service Revenue.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial location network. Our advertising service revenue derived from our commercial
location network is directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of advertising time slots that we have available to sell, which is
determined by the number of cities in which we directly operate, our expansion into
additional cities, the two- ninths portion of cycle time available on our regional
distributors&#146; networks and the length of the advertising cycle, which is currently
twelve minutes except in some cities operated by our regional distributors that use a
nine minute cycle. We calculate the number of time slots available by taking the total
advertising time available on our network during a particular period, calculated in
aggregate seconds, which we then divide by 30 to determine the number of 30-second
equivalent time slots available. We can increase the number of advertising time slots
that we have available to sell by expanding into additional cities or acquiring our
regional distributors, which provides us with the remaining seven-ninths of the time
slots per cycle operated by the regional distributor. The length of our advertising
cycle can potentially be extended to longer durations depending on demand in each city.
The twelve-minute advertising cycle amounts to the equivalent of 24 30-second time
slots per week. In cities where our regional distributors use a nine-minute advertising
cycle, the cycle amounts to the equivalent of 18 30-second time slots per week; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered. We
calculate average quarterly advertising service revenue for our Tier I, Tier II cities
and as a blended average of all cities each quarter.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">66
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In-store network. Our advertising service revenue derived from our in-store network is
directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of advertising time slots that we have available to sell, which is
determined by the number of stores in which we operate, our expansion into additional
stores, and the length of the advertising cycle, which is currently twelve minutes, or
24 30-second equivalent time slots. As with our commercial location network, for our
in-store network we calculate the number of time slots according to the number of
30-second equivalent time slots available. The length of our advertising cycle can
potentially be extended to longer durations depending on demand in each city; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered. Our
revenues are also affected by the average quarterly advertising service revenue we
derive per 30-second equivalent time slot sold per quarter.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Poster frame network</I>. Our advertising service revenue derived from our poster frame network
is directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of frames in our poster frame network. We sell frame space on our poster
frame network on a per frame basis. Increasing the number of residential and other
locations on our poster frame network allows us to increase the number of frames on our
network, thereby increases the available frame space for sale to advertisers. We
generally place up to three advertising poster frames in each elevator where we deploy
frames per display; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge for frame space on a per frame basis, after taking into
account any discount offered.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mobile handset advertising network</I>. Our advertising service revenue derived from our mobile
handset advertising network is directly affected by:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the number of messages we deliver to WAP users. We send WAP message advertisements
to WAP users from approximately 100 WAP service providers, and we charge fees based on
the number of successfully delivered messages; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the average price we charge per message.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prices for time slots on our commercial location and in-store networks and for frame space on
our poster frame network also vary significantly from city to city as income levels, standards of
living and general economic conditions vary significantly from region to region in China, which in
turn affect the advertising rates we are able to charge for time slots and frame space.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Network Expansion</I></B>. Many of the most desirable locations for our network have been occupied,
either by our network as a result of our expansion or by our competitors. As a result, we will need
to rely on means other than the rapid increase in the number of locations, flat-panel displays and
advertising poster frames in order to continue growing our revenues. We have focused, and expect to
continue to focus, on developing new channels in our out-of-home television advertising networks
and entering into new types of advertising media operations to continue to grow our revenues and to
address these potential capacity constraints on our existing network. In recent months, these steps
have included: (1)&nbsp;expanding our in-store network and (2)&nbsp;establishing discrete stand-alone
channels on our commercial location network, such as our premier A and B office building, travel,
fashion, elite and healthcare channels, enabling us to increase the number of time slots available
for sale. We expect to continue to explore opportunities to open up additional channels on our
existing network and to enter into new advertising media platforms in China. We believe these
measures will enable us to continue the future growth of our business. We have also expanded our
advertising network with the addition of Framedia&#146;s poster frame network in January&nbsp;2006. We intend
to continue expanding our out-of-home advertising network both through increasing the number of
</DIV>

<P align="center" style="font-size: 10pt">67
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">locations, displays and advertising poster frames on our commercial location, in-store and poster
frame networks and through strategic acquisition of competitors and businesses that complement our
existing out-of-home advertising network. Following our acquisition of Target Media in February
2006, we expanded our network significantly by combining Target Media&#146;s flat-panel display network
with our network. In addition, we recently entered into new advertising platforms through Focus
Media Wireless&#146; WAP-based mobile handset advertising network and our outdoor LED digital billboard
network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Seasonality</I></B>. Our advertising service revenue is subject to key factors that affect the level
of advertising spending in China generally. In addition to fluctuations in advertising spending
relating to general economic and market conditions, advertising spending is also subject to
fluctuations based on the seasonality of consumer spending. In general, a disproportionately larger
amount of advertising spending is concentrated on product launches and promotional campaigns prior
to the holiday season in December. In addition, advertising spending generally tends to decrease in
China during January and February each year due to the Chinese Lunar New Year holiday as office
buildings and other commercial venues in China tend to be closed during the holiday. We believe
this effect will be less pronounced with regard to advertising spending on our in-store network, as
we believe commercial activity in hypermarkets and supermarkets is stable or even enhanced during
the period of Chinese Lunar New Year. We also experience a slight decrease in revenues during the
hot summer months of July and August each year, when there is a relative slowdown in overall
commercial activity in urban areas in China. Our past experience, although limited, indicates that
our revenues would tend to be lower in the first quarter and higher in the fourth quarter of each
year, assuming other factors were to remain constant, such as our advertising rates and the number
of available time slots on our network. We expect this effect to be partially offset by steady or
enhanced advertising service revenue from our in-store network, which we believe is less
susceptible to the effects of seasonality than our commercial location network, poster frame
network and mobile handset advertising network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Revenue Recognition</I></B>. We typically sign standard advertising contracts with our advertising
clients, which require us to run the advertiser&#146;s advertisements on our network in specified cities
for a specified period, typically from four to twelve weeks. We recognize advertising service
revenue ratably over the performance period of the advertising contract, so long as collection of
our fee remains probable. We do not bill our advertising clients under these contracts until we
perform the advertising service by broadcasting the advertisement on our network. Revenue collected
from our poster frame network is recognized in substantially the same manner as revenues collected
under the advertising contracts used for our commercial location and in-store networks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generally collect our advertising service fees by billing our advertising clients within 60
to 90&nbsp;days after completion of the advertising contract and book these unbilled or unpaid amounts
as accounts receivable until we receive payment or determine the account receivable to be
uncollectible. Target Media&#146;s accounts receivable historically remained outstanding for longer
periods of time than ours. We expect the average number of days outstanding for our accounts
receivable to be higher as a result of our acquiring Target Media&#146;s accounts receivable. We expect
the average period that our accounts receivable will remain outstanding to revert to our historical
levels after we begin to apply our accounts receivable policy to Target Media&#146;s accounts
receivable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our accounts receivable are general unsecured obligations of our advertising clients and we do
not receive interest on unpaid amounts. We make specific reserves for accounts that we consider to
be uncollectible. We also provide a general reserve for uncollectible accounts that we reassess on
an annual basis. We made no provision for uncollectible accounts in 2003. In 2004 and 2005 and for
the three months ended March&nbsp;31, 2006, we made provision of $173,837, $235,604 and $194,723,
respectively, for accounts receivable that were outstanding for longer than six months. The average
number of days outstanding of our accounts receivable, including from related parties, was 71, 66,
71 and 75, respectively, as of December&nbsp;31, 2003, 2004 and 2005 and March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Advertising Equipment Revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also derive a portion of our total revenues from the sale of flat-panel displays to our
regional distributors on a cost-plus basis, which we record as advertising equipment revenue. Our
advertising equipment revenue represented 10.4%, 9.9%, 1.9% and 0.9% of our total revenues in 2003,
2004 and 2005 and for the three months ended March&nbsp;31, 2006, respectively. Our advertising
equipment revenue is recorded net of the 17% value added tax to which equipment sales in China are
subject.
</DIV>


<P align="center" style="font-size: 10pt">68
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect that advertising equipment sales as a percentage of our total revenues will
continue to be low because as we acquire our regional distributors, any growth in our network in
these cities will not involve any future sales of advertising equipment; and growth in the size of
the networks of our regional distributors is expected to slow as the most desirable locations have
been occupied by them or our competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognize advertising equipment revenue when delivery of flat-panel displays has occurred
and risk of ownership has passed to the distributor. We bill our regional distributors for
flat-panel displays upon delivery and generally require payment within three to five days of
delivery.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cost of Revenues</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of revenues consists of costs directly related to the offering of our advertising
services and costs related to our sales of advertising equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our cost of revenues, divided into its major components, by
amount and percentage of our total revenues for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22"><B>For the year ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>For the three months ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="38"><B>(in thousands of U.S. dollars, except percentages)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">29,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">68,229</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net advertising
service cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Commercial
location network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">26.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">30.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Poster frame
network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:60px; text-indent:-15px">Advertising
service cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">41.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">33.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">43.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net advertising
equipment cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">6.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">1.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total cost of
revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">49.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">29.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">38.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">34.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">44.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">51.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">70.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net Advertising Service Costs</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of revenues related to the offering of our advertising services on our advertising
network consists of location costs, flat-panel display depreciation costs and other cost items,
including salaries for and travel expenses incurred by our network maintenance staff and costs for
materials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our location costs for our out-of-home television networks consist of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>rental fees and one-time signing payments we pay to landlords, property managers and
stores pursuant to the display placement agreements we enter into with them;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commissions and public relations expenses we incur in connection with developing and
maintaining relationships with landlords and property managers; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintenance fees for keeping our displays in proper operating condition.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">69
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, we capitalize the cost of our media displays and recognize depreciation costs on a
straight-line basis over the term of their useful lives, which we estimate to be five years. The
primary factors affecting our depreciation costs are the number of flat-panel displays in our
network and the unit cost for those displays, as well as the remaining useful life of the displays.
We expect our results of operations for a period of at least seven years beginning in 2006 to be
negatively affected by the amortization of intangible assets in relation to, among other things,
material contracts and customer lists as a result of several acquisitions, particularly Framedia
and Target Media.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our other cost of revenues consists of salary for and travel expenses incurred by our network
maintenance staff and costs for materials and maintenance in connection with the upkeep of our
advertising network. The primary factor affecting our other costs of revenues is the size of our
network maintenance staff. As the size of our network increases, we expect our network maintenance
staff, and associated costs, to increase in absolute terms, but to decrease as a percentage of
total revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commercial Location Network. Location costs are the largest component of our cost of revenues
for our commercial location network. The primary factors affecting the amount of our location costs
include the number of display placement agreements we enter into and the rental fees we pay under
those agreements. We expect these costs to decrease as a percentage of our advertising service
revenue for our commercial location network in the future, as our advertising service revenue for
our commercial location network is expected to increase faster than the additional cost we incur
from entering into new display placement agreements and any increases we may experience in renewing
existing display placement agreements. However, when our display placement agreements expire, we
may be unable to renew these agreements on favorable terms and the rental fee portion of our
location costs attributable to these existing locations could increase. As we continue to increase
the size of our network and as we update and replace our existing displays with new technology, our
depreciation costs in connection with our commercial location network are expected to increase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In-store Network. The primary costs of revenues connected with our in-store network are
location costs resulting from rental and maintenance fees and depreciation costs for our displays.
We expect these costs to continue to increase in 2006 as we expand our in-store network and to
decrease as a percentage of advertising service revenue for our in-store network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Poster Frame Network. The primary costs of revenues connected with our poster frame network
are location costs resulting from rental fees. Depreciation costs for our frames and other costs
for salary and maintenance fees also account for a significant portion of cost of revenues for our
poster frame network. We expect these costs to increase in 2006 as we expand our poster frame
network but to decrease as a percentage of advertising service revenue for our poster frame
network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Net Advertising Equipment Cost</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net advertising equipment cost consists of the amounts we pay to the contract assembler
who purchases the components and assembles them into the flat-panel displays we sell to our
regional distributors. Our net advertising equipment cost accounted for 7.3%, 6.6%, 1.4% and 0.7%
of our total revenues in 2003, 2004 and 2005 and for the three months ended March&nbsp;31, 2006,
respectively. The primary factors affecting our net advertising equipment cost are the number of
flat-panel displays we sell and the unit cost we pay to our contract assembler for each such
flat-panel display.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Operating Expenses and Net Income</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating expenses consist of general and administrative and selling and marketing
expenses. In 2004, our operating expenses also included a goodwill impairment loss. The following
table sets forth our operating expenses, divided into their major categories by amount and as a
percentage of our total revenues for the periods indicated.
</DIV>

<P align="center" style="font-size: 10pt">70
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>For the three months ended March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>% of total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>total</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>revenues</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18"><B>(in thousands of U.S. dollars, except percentages)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">51.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">70.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">41,887</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">61.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">65.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">55.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and
administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">26.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">19.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">13.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling and
marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">14.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">15.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,057</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">12.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amortization of
acquired
intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill impairment
loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">37.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">26.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">28.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">28.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from
operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">14.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">44.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">33.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">30.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">27.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>General and Administrative</I></B>. General and administrative expenses primarily consist of
salary and benefits for management, business tax mainly relating to license fees paid by our
affiliated PRC companies to Focus Media Advertisement and to Focus Media Digital, accounting and
administrative personnel, office rental, maintenance and utilities expenses, depreciation of office
equipment, other office expenses and professional services fees. General and administrative
expenses accounted for 26.2%, 13.7%, 13.4% and 13.3% of our total revenues in 2003, 2004 and 2005
and for the three months ended March&nbsp;31, 2006, respectively. Salaries and benefits accounted for
28.1%, 20.2%, 26.9% and 20.2% of our general and administrative expenses in 2003, 2004 and 2005 and
for the three months ended March&nbsp;31, 2006, respectively. We expect that our general and
administrative expenses will be relatively stable as a percentage of total revenues in the near
term but to increase in absolute terms as we hire additional personnel and incur additional costs
in connection with the expansion of our business and with being a publicly traded company,
including costs of enhancing our internal controls.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Share-based Compensation Relating to General and Administrative</I></B>. Our share-based compensation
expense relating to general and administrative consists of the amortized portion of deferred
share-based compensation recognized by us. We issued options representing 10.87% of our issued
share capital under our 2003 Employee Share Option Scheme, or the 2003 Option Plan. In addition, we
have issued options representing 3.95% of our issued share capital under our 2005 Share Option
Plan, or the 2005 Option Plan. Our share-based compensation relating to general and administrative
accounted for 7.5% and 25.7% of our general and administrative expenses in 2005 and for the three
months ended March&nbsp;31, 2006, respectively. Our general and administrative expenses, including our
share-based compensation, have increased and are expected to continue to increase following the
effectiveness, as of January&nbsp;2006, of the new accounting treatment Statement of Financial
Accounting Standards No.&nbsp;123(R) relating to share-based compensation. As a result, we recorded
compensation expense of $1.5&nbsp;million for the three months ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Selling and Marketing</I></B>. Our selling and marketing expenses primarily consist of salaries and
benefits for our sales staff, marketing and promotional expenses, and other costs related to
supporting our sales force. Selling and marketing expenses accounted for 10.8%, 11.8%, 14.0% and
12.2% of our total revenues in 2003, 2004 and 2005 and for the three months ended March&nbsp;31, 2006,
respectively. As we acquired more of our regional distributors, continue to expand our client base
and have commenced operation of new advertising platforms, we increased our sales force, which
resulted in an increase in salary expenses. We now budget approximately 15% of our advertising
revenues to be used for selling and marketing. We expect selling and marketing expenses to remain
relatively stable as a percentage of total revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Amortization of Acquired Intangibles</I></B>. Our amortization of acquired intangibles consists of
the amortized portion of intangible assets we acquired through our acquisition of other companies,
businesses and assets. Amortization of acquired intangibles accounted for 0.6%, 0.7% and 3.0% of
our total revenues in 2005 and for the three months ended March&nbsp;31, 2005 and 2006, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Critical Accounting Policies</B>

</DIV>

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We prepare our financial statements in conformity with U.S. GAAP, which requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities on the date of the financial statements and the reported amounts
of revenues and expenses during the financial reporting period. We continually evaluate these
estimates and assumptions based on the most recently available information, our own historical
experience and on various other assumptions that we believe to be reasonable under the
circumstances. Since the use of estimates is an integral component of the financial reporting
process, actual results could differ from those estimates. Some of our accounting policies require
higher degrees of judgment than others in their application. We consider the policies discussed
below to be critical to an understanding of our financial statements as their application places
the most significant demands on our management&#146;s judgment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Share-based Compensation</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through 2005, we accounted for our stock option plan using the intrinsic value method under
Accounting Principles Board, or APB, No.&nbsp;25. Effective the beginning of 2006, we adopted Statement
of Financial Accounting Standards, or SFAS, No.&nbsp;123-R, &#147;Share-Based Payment&#148;, and elected to adopt
the modified prospective application method. SFAS No.&nbsp;123-R requires us to use a fair-value based
method to account for share-based compensation. Accordingly, share-based expense is measured at the
grant date, based on the fair value of the award, and is recognized as expense over the employees&#146;
requisite service period. Total compensation cost of our share plan in the first quarter 2006 was
$1.5&nbsp;million. The expected impact that the adoption of the standard will have on our stock-based
compensation costs for 2006 is $6.1&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We estimated the fair value of share options granted using the Black-Scholes-Merton option
pricing model formula and a simple option award approach. The fair value was then amortized on a
straight-line basis over the requisite service periods of the awards, which is generally the
vesting period. This option-pricing model requires the input of highly subjective assumptions,
including the option&#146;s expected life, estimated forfeitures and the price volatility of the
underlying shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Income Taxes</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for income taxes under the provisions of SFAS No.&nbsp;109, &#147;Accounting for Income
Taxes&#148;, with the required disclosures as described in note 15 to our consolidated financial
statements. We record a valuation allowance to reduce our deferred tax assets to the amount that we
believe is more likely than not to be realized. In the event we were to determine that we would be
able to realize our deferred tax assets in the future in excess of their recorded amount, an
adjustment to our deferred tax assets would increase our income in the period such determination
was made. Likewise, if we determine that we would not be able to realize all or part of our net
deferred tax assets in the future, an adjustment to our deferred tax assets would be charged to our
income in the period such determination is made. We record income tax expense on our taxable income
using the balance sheet liability method at the effective rate applicable to each of our affiliated
entities in China in our consolidated statements of operations and comprehensive income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Goodwill and Acquisition Impairment</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning in 2002, with the adoption of SFAS No.&nbsp;142, &#147;Goodwill and Other Intangible Assets&#148;,
goodwill is no longer amortized, but instead tested for impairment upon first adoption and annually
thereafter, or more frequently if events or changes in circumstances indicate that it might be
impaired. SFAS No.&nbsp;142 requires us to complete a two-step goodwill impairment test. The first step
compares the fair values of each business unit to its carrying amount, including goodwill. If the
fair value of each business unit exceeds its carrying amount, goodwill is not considered to be
impaired and the second step will not be required. SFAS No.&nbsp;142 requires completion of this first
step within the first six months of initial adoption and annually thereafter. If the carrying
amount of a reporting unit exceeds its fair value, the second step compares the implied fair value
of goodwill to the carrying value of a business unit&#146;s 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.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2003, 2004 and 2005 and March&nbsp;31, 2006, we had a goodwill balance of nil,
$9.1&nbsp;million, $13.3&nbsp;million and $406.8&nbsp;million, respectively, which is not deductible for tax
purposes. We incurred a goodwill impairment loss of $58,397 in 2004 in connection with our
acquisition of Perfect Media. In conducting our annual impairment test, we undertook a valuation of
Perfect Media using the expected present value of cash flow and the income approach valuation
methods, which resulted in a goodwill impairment loss of $58,397 in 2004, indicating that the value
of Perfect Media was less than what we paid at the time we acquired it. We will perform the annual
goodwill impairment test generally as of December&nbsp;31, to determine if there is any further goodwill
impairment. We recorded goodwill of $9.1&nbsp;million in 2004 in connection with the acquisition of ten
of the eleven companies we acquired during that year, which will be subject to the annual goodwill
impairment test on December&nbsp;31 of each year. The purpose of our acquisitions of our regional
distributors was to expand the size of our network while our acquisition of Shanghai Qianjian
Advertising Co., Ltd., or Qianjian, and Perfect Media enhanced our advertising services by adding
to our existing network complementary lines of business, such as advertising networks placed in
commercial banks, in the case of Qianjian, and advertising services offered at automatic shoe-shine
machines located in buildings, in the case of Perfect Media. The recognition of goodwill from these
acquisitions was a result of a purchase price in excess of the tangible assets of these companies
and the goodwill they had generated from the operation of various advertising services. We recorded
goodwill of $392&nbsp;million in connection with Infoachieve, Target Media and Focus Media Wireless
which we acquired during the first quarter of 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commencing in 2005, we reorganized the financial information reviewed by the chief decision
maker, the chief executive officer, whereby the financial information of Perfect Media was prepared
and presented together with that of out-of-home media display advertising services. Accordingly, we
believe we have only one operating segment which is out-of-home advertising services as of December
31, 2005. As a result, for the purpose of SFAS No.&nbsp;142, goodwill was tested for impairment at the
consolidated level as of December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the acquisition of Infoachieve and Dotad in the period ended March&nbsp;31, 2006, we
have two new operating and reporting segments, including poster frame network advertising services
and mobile-phone advertising service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may incur additional goodwill impairment charges in the future although we cannot predict
whether this will occur when we perform our goodwill impairment test each year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Taxation</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cayman Islands, the British Virgin Islands and Hong Kong.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current laws of the Cayman Islands, the British Virgin Islands and Hong Kong,
neither Focus Media Holding Limited, incorporated in the Cayman Islands, nor Infoachieve Limited
and Dotad Holdings Limited, incorporated in the British Virgin Islands, are subject to tax on its
income or capital gains. Focus Media Hong Kong, our wholly owned subsidiary incorporated in Hong
Kong, is subject to profits tax rate of 17.5% on its assessable profits, yet interest derived from
deposits placed in Hong Kong with authorized institutions are exempted from the Hong Kong profits
tax. In addition, payment of dividends by either company is not subject to withholding tax in those
jurisdictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>PRC</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our PRC entities are subject to PRC business tax. We primarily pay business tax on gross
revenues generated from our advertising services. Focus Media Advertisement and its subsidiaries,
and New Focus Media Advertisement, pay a 5% business tax on the gross revenues derived from
advertising services and this business tax is deducted from total revenues in calculating the net
revenues. Focus Media Technology and Focus Media Digital pay a 5% business tax on the gross
revenues derived from their contractual arrangements with Focus Media Advertisement and its
subsidiaries and these taxes are primarily recorded in operating expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to business tax and cultural industries tax imposed on our advertising business
and VAT imposed on our sales of advertising equipment. Focus Media Technology, Focus Media Digital
and Focus Media Advertisement and its subsidiaries, including Focus Media Advertising Agency and
New Focus Media Advertisement, are subject
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to PRC enterprise income tax on their taxable income, except to the extent some of them enjoy
temporary tax exempt status as described in further detail below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to PRC law, enterprise income tax is generally assessed at the rate of 33% of taxable
income. Focus Media Technology, Focus Media Digital, Focus Media Advertisement and its subsidiaries
and New Focus Media Advertisement are currently subject to this 33% enterprise income tax. State
Administration of Taxation and its delegates of the PRC are authorized to grant an exemption from
enterprise income tax of up to two years to newly established domestic companies that have no
direct foreign ownership and that are financially independent and engaged in consulting services,
technology services or the information industry, which includes advertising services. A qualifying
company must apply for this tax-exempt status for each of the two years separately. Focus Media
Digital and Focus Media Advertising Agency were established in October&nbsp;2004 and both were granted
exemptions from enterprise income tax in 2004 and 2005. In 2006 and 2007, we intend to continue our
tax exempt status through New Focus Media Advertisement, which were established in December&nbsp;2005
and has obtained tax-exempt approval for 2006 and 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, Focus Media Technology, Focus Media Advertisement and some of its
subsidiaries sold all of their flat-panel display equipment to Focus Media Digital at fair market
value. As a result of this sale, Focus Media Technology and Focus Media Advertisement recorded a
non-cash charge to earnings in the aggregate of $4,773,030 in the fourth quarter of 2004, which
reflected the difference between the fair market value of the equipment and its then current book
value. In addition, since its establishment, through December&nbsp;31, 2005, Focus Media Advertising
Agency has generated revenue by selling time slots on our advertising network and pays a
dissemination fee to Focus Media Advertisement and its certain subsidiaries, which places
advertisements for Focus Media Advertising Agency&#146;s clients on our network. Finally, Focus Media
Advertisement and its subsidiaries also license technology used in our business operations from
Focus Media Digital in exchange for license fees paid to Focus Media Digital. As a result of Focus
Media Advertisement&#146;s amortization of the license fee paid to Focus Media Digital, it incurred a
charge to earnings of $3.7&nbsp;million in the fourth quarter of 2004. See &#147;Item&nbsp;7.B Major Shareholders
and Related Party Transactions &#151; Related Party Transactions&#148; for further information on these
transactions and contractual agreements. Although these transactions were eliminated upon
consolidation as transactions among members of our consolidated companies for financial accounting
purposes, they did have the affect of reducing our total income tax expense and increasing our
after tax net income in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of these transactions, our effective tax rates were 72% and 2.9% in 2004 and 2005,
respectively. Excluding the non-recurring non-cash charge resulting from the change in fair value
of derivative liability associated with Series&nbsp;B convertible redeemable preference shares and
goodwill impairment loss, our effective tax rate for 2004 would have been 7.0%. The tax savings
resulting from the non-cash charge to earnings from the write-down of flat-panel display equipment
in 2004 and the charge to earnings from the amortization of the license fee paid in 2004 will not
continue in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2005, we established New Focus Media Advertisement which has received tax-exempt
approval for 2006 and 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2005, Focus Media Digital sold all of its flat-panel display equipment to New
Focus Media Advertisement at fair market value and Focus Media Digital sold all of its technology
to New Focus Media Advertisement in January&nbsp;2006 at a fixed fee. As of January&nbsp;2006, New Focus
Media Advertisement generates revenue by selling time slots on our advertising network and pays a
dissemination fee to Focus Media Advertisement and its certain subsidiaries, which places
advertisements for New Focus Media Advertisement&#146;s clients on our network. While we expect these
transactions to be eliminated upon consolidation as transactions among members of our consolidated
companies for financial accounting purposes, we expect them to have the affect of reducing our
total income tax expense and increasing our after tax net income in 2006 and 2007. See &#147;Item&nbsp;7.B
Major Shareholders and Related Party Transactions &#151; Related Party Transactions&#148; for further
information on these transactions and contractual agreements. In addition, upon expiration of these
tax exemptions, we will consider available options, in accordance with applicable law, that would
enable us to qualify for further tax exemptions, if any, to the extent they are then available to
us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under PRC law, arrangements and transactions among related parties may be subject to audit or
challenge by the PRC tax authorities. If any of the transactions described above are found not to
be on an arm&#146;s-length basis, or to
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">result in an unreasonable reduction in tax under PRC law, the PRC tax authorities have the
authority to disallow our tax savings, adjust the profits and losses of our respective PRC entities
and assess late-payment interest and penalties. A finding by the PRC tax authorities that we are
ineligible for the tax savings we achieved in 2004 and 2005, or that we expect to achieve in 2006
and 2007, or that Focus Media Digital, Focus Media Advertising Agency, New Focus Media
Advertisement, New Structure Advertisement, or Framedia Advertisement are ineligible for their tax
exemptions, would substantially increase our taxes owed and reduce our net income and the value of
your investment. As a result of this risk, you should evaluate our results of operations and
financial condition without regard to these tax savings. See &#147;Item&nbsp;3.D Key Information &#151; Risk
Factors &#151; Risks Relating to Regulation of Our Business and to Our Structure &#151; Contractual
arrangements we have entered into among our subsidiaries and affiliated entities may be subject to
scrutiny by the PRC tax authorities and a finding that we owe additional taxes or are ineligible
for our tax exemption, or both, could substantially increase our taxes owed, and reduce our net
income and the value of your investment.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Recently Issued Accounting Standards</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2006, the Financial Accounting Standards Board, or FASB, issued Statement of
Financial Accounting Standard, or SFAS, No.&nbsp;155, &#147;Accounting for Certain Hybrid Instruments-an
amendment of FASB Statements 133 and 140&#148;, which is effective for all financial instruments
acquired or issued after the beginning of an entity&#146;s first fiscal year that begins after September
15, 2006. The statement improves financial reporting by eliminating the exemption from applying
SFAS No.&nbsp;133 to interests in securitized financial assets so that similar instruments are accounted
for similarly regardless of the form of the instruments. The statement also improves financial
reporting by allowing a preparer to elect fair value measurement at acquisition, at issuance, or
when a previously recognized financial instrument is subject to a re-measurement event, on an
instrument-by-instrument basis, in cases in which a derivative would otherwise have to bifurcated,
if the holder elects to account for the whole instrument on a fair value basis. We are currently
evaluating the impact, if any, of this statement on our consolidated combined financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154, &#147;Accounting Changes and Error Corrections&#148;, or SFAS
154, which replaces Accounting Principles Board Opinions No.&nbsp;20, &#147;Accounting Changes&#148; and SFAS No.
3, &#147;Reporting Accounting Changes in Interim Financial Statements &#151; An Amendment of APB Opinion No.
28.&#148; SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the latest practicable date, as the
required method for reporting a change in accounting principle and the reporting of a correction of
an error. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal
years beginning after December&nbsp;15, 2005. The adoption of this statement will not have a material
effect on our financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148;, or SFAS
123-R, which is a revision of SFAS No.&nbsp;123, &#147;Accounting for Share-Based Compensation&#148;, or SFAS 123.
SFAS 123-R supersedes APB 25, &#147;Accounting for Stock Issued to Employees&#148;. Generally, the approach
in SFAS 123-R is similar to the approach described in SFAS 123. However, SFAS 123-R requires all
share-based payments to employees, including grants of employee stock options, to be recognized in
the income statement based on the grant-date fair values. Pro forma disclosure previously permitted
under SFAS 123 is no longer an alternative. Through 2005, we accounted for our share option plans
using the intrinsic value method under APB 25. Effective the beginning of 2006, we adopted SFAS
123-R and elected to adopt the modified prospective application method. SFAS 123-R requires us to
use a fair-value based method to account for share-based compensation. Accordingly, share-based
compensation cost is measured at the grant date. As a result, we recorded compensation expense of
$1.5&nbsp;million for the three months ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, &#147;Inventory Costs &#151; an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4&#148;, or SFAS 151. SFAS 151 clarifies the accounting that requires abnormal amounts of idle
facility expenses, freight, handling costs, and spoilage costs to be recognized as current-period
charges. It also requires that allocation of fixed production overheads to the costs of conversion
be based on the normal capacity of the production facilities. SFAS 151 will be effective for
inventory costs incurred on or after July&nbsp;1, 2005. The adoption of this standard will not have a
material effect on our financial position or results of operations.
</DIV>

<P align="center" style="font-size: 10pt">75
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;153, &#147;Exchanges of Nonmonetary Assets &#151; an
amendment of APB Opinion No.&nbsp;29&#148;, or SFAS 153, which amends Accounting Principles Board Opinion No.
29, &#147;Accounting for Nonmonetary Transactions&#148;, to eliminate the exception for nonmonetary exchanges
of similar productive assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. SFAS 153 is effective for nonmonetary assets
exchanges occurring in fiscal periods beginning after June&nbsp;15, 2005. The adoption of this statement
will not have a material effect on our financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Acquisitions</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since we commenced our current business operations in May&nbsp;2003, we have acquired 24 companies
to expand the coverage of our network in China and to acquire businesses that are complementary to
our operations. See &#147;Item&nbsp;10.C Additional Information &#151; Material Contracts&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some of the businesses we acquired had entities located both in and outside of China. The
consideration we paid for these businesses was made in two parts, one part for the entity located
in China, and the other part for the entity located outside of China. For consideration paid to
acquire entities located in China, we withheld on behalf of sellers who are natural persons 20% of
the amount by which the acquisition price exceeded the registered capital of such PRC entity as
required under the PRC Individual Income Tax Law and related implementation rules. We were not
required to and did not withhold any tax in connection with payments made to acquire the entities
located outside of China. See &#147;Item&nbsp;3.D Key Information &#151; Risk Factors &#151; Risks Relating to the
People&#146;s Republic of China &#151; The PRC tax authorities may require us to pay additional taxes in
connection with our acquisitions of offshore entities that conducted their PRC operations through
their affiliates in China&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Infoachieve, for the periods ended, and as of, December&nbsp;31, 2003, 2004 and 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Target Media Holdings, for the periods ended, and as of, December&nbsp;31, 2004 and 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Perfect Media Holding Ltd. for the periods ended, and as of, December&nbsp;31, 2003 and
September&nbsp;30, 2004;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Focus Media Changsha Holding Ltd., Focus Media Qingdao Holding Ltd. and Focus Media
Dalian Holding Ltd. for the period ended, and as of, October&nbsp;31, 2004; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Capital Beyond Limited for the periods ended, and as of, December&nbsp;31, 2004 and March
31, 2005, respectively,</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;are available in our registration statement on Form F-1 (File No.&nbsp;333-134714).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Quarterly Results of Operation</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables present unaudited consolidated quarterly financial data by amount and as
a percentage of our total revenues for each of the eight quarters in the period from April&nbsp;1, 2004
to March&nbsp;31, 2006. You should read the following table in conjunction with our audited consolidated
financial statements and related notes included elsewhere in this
annual report. We have prepared the
unaudited consolidated quarterly financial information on substantially the same basis as our
audited consolidated financial statements and using information derived from our unaudited
consolidated financial statements which are not included in this annual
report. The following
information contains normal recurring adjustments which are, in the opinion of our management,
necessary for a fair presentation of the results for such unaudited period. Our operating results
for any quarter are not necessarily indicative of results that may be expected for any future
period.
</DIV>

<P align="center" style="font-size: 10pt">76
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="30" style="border-bottom: 0px solid #000000"><B>For the three months ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Consolidated Statement</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>of Operations Data</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commercial location network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,472</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">In-store network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Poster frame network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,067</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total advertising service
revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising equipment revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial location network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,035</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,973</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,397</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising service cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising equipment cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">285</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,628</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,637</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,499</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,105</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,395</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">936</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,057</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of acquired
intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">999</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Goodwill impairment loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;                        &#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,451</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,898</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expenses), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(171</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in fair value of
derivative liability associated
with Series&nbsp;B convertible
redeemable preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,166</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,526</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income
taxes
and minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,302</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,065</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,382</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(248</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(155</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(87</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(204</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(617</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(52</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity income (loss)&nbsp;of
affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(999</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,326</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,433</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;A
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;B
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,191</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on Series&nbsp;C-1
convertible redeemable
preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,356</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premium of Series&nbsp;B convertible
redeemable preference shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,906</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;attributable to
holders of ordinary shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(8,515</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(999</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,776</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,433</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Advertising service revenue is presented net of business tax. Business tax on advertising
service revenue from our commercial location network amounts to, $574,729, $714,647, $1.6
million, $936,405, $1.4&nbsp;million, $1.8&nbsp;million, $1.9&nbsp;million and $2.1&nbsp;million for the three
months ended June&nbsp;30, 2004, September&nbsp;30, 2004, December&nbsp;31, 2004, March&nbsp;31, 2005, June&nbsp;30,
2005, September&nbsp;30, 2005, December&nbsp;31, 2005 and March&nbsp;31, 2006, respectively. Business tax on
advertising service revenue for our in-store network amounted to $31,927, $187,515, $301,828
and $524,357 for the three months ended June&nbsp;30, 2005, September&nbsp;30, 2005, December&nbsp;31, 2005
and March&nbsp;31, 2006. Business tax on advertising service revenue for our poster frame network
amounted to $590,972 for the three months ended March&nbsp;31, 2006. Business tax includes business
tax of 5.55% and cultural industries tax of 4.0%.</TD>
</TR>

</TABLE>






<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>

    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
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    <TD width="1%">&nbsp;&nbsp;&nbsp;&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="31" style="border-bottom: 1px solid #000000"><B>For the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Statement of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Operations Data</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Commercial location
network(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">85.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">89.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">94.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">98.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">95.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">88.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">84.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">64.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advertising
equipment revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">77
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
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    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Consolidated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="31" style="border-bottom: 1px solid #000000"><B>For the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Statement of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Operations Data</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net advertising
service cost:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commercial location
network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">21.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">27.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">In-store network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">12.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Poster frame network</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net advertising
equipment cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total cost of revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">32.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">34.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">38.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">39.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">44.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">67.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">70.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">75.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">61.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">55.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and
administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">14.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">17.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">19.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">12.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">12.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">15.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">12.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible
amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill impairment
loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating
expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">26.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">48.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">44.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">44.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">27.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.04</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other expenses, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.01</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.7</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in fair value
of derivative
liability associated
with Series&nbsp;B
convertible
redeemable preference
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40.0</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(72.5</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before
income taxes and
minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">48.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(28.1</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">37.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">39.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">30.2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(16.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17.4</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.0</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.9</TD>
    <TD nowrap>)%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Minority interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.4</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.3</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity income (loss)
of
affiliates</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11.3</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">27.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">38.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on
Series&nbsp;A convertible
redeemable preference
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(129.8</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on
Series&nbsp;B convertible
redeemable preference
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(34.2</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deemed dividend on
Series&nbsp;C-1
convertible
redeemable preference
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">113.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Premium of Series&nbsp;B
convertible
redeemable preference
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">109.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)
attributable to
holders of ordinary
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(133.0</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.6</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.1</TD>
    <TD nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">27.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">38.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">28.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Advertising service revenue is presented net of business tax. Business tax on advertising
service revenue from our commercial location network represents 9.0%, 9.0%, 13.6%, 9.8%, 9.5%,
9.1%, 7.6% and 6.3% of total revenues for the three months ended June&nbsp;30, 2004, September&nbsp;30,
2004, December&nbsp;31, 2004, March&nbsp;31, 2005, June&nbsp;30, 2005, September&nbsp;30, 2005, December&nbsp;31, 2005
and March&nbsp;31, 2006, respectively. Business tax on advertising service revenue for our in-store
network represented 0.2%, 1.0%, 1.2% and 1.6% of total revenues for the three months ended
June&nbsp;30, 2005, September&nbsp;30, 2005, December&nbsp;31, 2005 and March&nbsp;31, 2006. Business tax on
advertising service revenue for our poster frame network represented 1.8% of total revenues
for the three months ended March&nbsp;31, 2006. Business tax includes business tax of 5.55% and
cultural industries tax of 4.0%.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Operating Results</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Results of Operations</B>

</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Three Months Ended March&nbsp;31, 2006 Compared to Three Months Ended March&nbsp;31, 2005</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Total Revenues</I></B>. Our total revenues increased substantially from $9.6&nbsp;million for the three
months ended March&nbsp;31, 2005 to $33.1&nbsp;million for the three months ended March&nbsp;31, 2006 due
primarily to an increase in our advertising service revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total advertising service revenue increased significantly from $9.4&nbsp;million for the three
months ended March&nbsp;31, 2005 to $32.8&nbsp;million for the three months ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Commercial location network</I>. Advertising service revenue from our commercial location network
increased significantly from $9.4&nbsp;million for the three months ended March&nbsp;31, 2005 to $21.5
million for the three months ended March&nbsp;31, 2006. The increase in advertising service revenue for
our commercial location network is attributable to an increase in the number of
30-second-equivalent advertising time slots we sold on our commercial location network, together
with an increase in the average selling price per time slot sold. For example, the number of time
slots we sold on our premier office A channel, which accounted for 91.2% of advertising service
revenue from our commercial location network for the three months ended March&nbsp;31, 2006, increased
from 1,998 for the three months ended March&nbsp;31, 2005 to 3,904 for the three months ended March&nbsp;31,
2006 while the average selling price per time slot sold also increased from $4,721 for the three
months ended March&nbsp;31, 2005 to $4,882 for the three months ended March&nbsp;31, 2006. Network capacity
on our premier office A channel, measured by number of available time slots, also increased from
6,010 as of March&nbsp;31, 2005 to 10,717 as of March&nbsp;31, 2006. The increase in the number of
30-second-equivalent advertising time slots sold between these two periods on our commercial
location network including on individually marketed channels of the network, such as the premier
office A channel, was due primarily to the following factors:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our network reach increased from 44 cities as of March&nbsp;31, 2005, including 22 cities
directly operated by our company and 22 cities operated by our regional distributors,
to 86 cities as of March&nbsp;31, 2006, including 50 cities directly operated by our company
and 36 cities operated by our regional distributors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We gained an additional seven minutes of advertising cycle time from each of the
four regional distributors we acquired during the period between April&nbsp;1, 2005 and
March&nbsp;31, 2006;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On July&nbsp;1, 2005, we extended the cycle time in our directly operated Tier II cities
from nine minutes to twelve minutes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On February&nbsp;28, 2006, we completed our acquisition of Target Media and integrated
its network into our out-of-home television networks, increasing the number of cities
in which we operate and increasing the overall number of time slots available and sold
on our network; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On March&nbsp;1, 2006, we launched several additional channels, which enable advertisers
to reach targeted consumer groups under our commercial location network.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>In-store network</I>. Advertising service revenue from our in-store network, which commenced
operations in April&nbsp;2005, was $5.3&nbsp;million for the three months ended March&nbsp;31, 2006. During the
first quarter of 2006, we expanded the size of our in-store network to 5,218 stores, including 809
hypermarkets, 1,126 supermarkets and 3,283 convenience stores, which included the addition on March
1, 2006 of Target Media&#146;s displays placed in convenience stores. The number of displays installed
in the in-store network amounted to 33,765 as of March&nbsp;31, 2006 and the total number of 30-second
equivalent time slots (calculated on a per week per store basis) sold for the three months ended
March&nbsp;31, 2006 was 76,498. The number of 30-second equivalent time slots available for sale, or
network capacity, was 245,314, for an in-store network utilization rate of 31.2%. Average
advertising revenue per 30-second equivalent time slot per store per week was $69 for the three
months ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Poster frame network</I>. Advertising service revenue from our poster frame network, which we
commenced operating in January&nbsp;2006 following our acquisitions of Framedia and E-Times, was $6.1
million for the three months ended March&nbsp;31, 2006. During this period, the number of monthly frame
slots sold totaled 90,262 out of
</DIV>

<P align="center" style="font-size: 10pt">79
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">208,659 available monthly frame slots during this period for a poster frame network occupancy
rate of 43.3%. Average advertising revenue per monthly frame slot was $67 for the three months
ended March&nbsp;31, 2006.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Advertising equipment revenue</I>. Our advertising equipment revenue increased from $142,163 for
the three months ended March&nbsp;31, 2005 to $304,066 for the three months ended March&nbsp;31, 2006 due to
the increase in number of LCD displays we sold to our regional distributors. We expect advertising
equipment revenue to remain stable or decrease over time as we continue to acquire our existing
regional distributors and as the most desirable cities for the establishment of similar networks by
regional distributors become saturated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cost of Revenues</I></B>. Our cost of revenues increased significantly from $3.3&nbsp;million for the
three months ended March&nbsp;31, 2005 to $14.6&nbsp;million for the three months ended March&nbsp;31, 2006 due to
increases in our net advertising service cost for our commercial location and the incurrence of
service costs in connection with our in-store network, which was launched in April&nbsp;2005, and our
poster frame network, which we commenced operating in January&nbsp;2006.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising service cost &#151; commercial location network. Our net advertising
services cost for our commercial location network increased substantially from $3.2
million for the three months ended March&nbsp;31, 2005 to $8.0&nbsp;million for the three months
ended March&nbsp;31, 2006. This increase was due to (i)&nbsp;the substantial increase in our
advertising service business on our commercial location network between these two
periods including substantial increases in our location costs due to a substantial
increase in the number of commercial locations where we entered into display placement
agreements, (ii)&nbsp;an increase in flat-panel display depreciation costs as a result of an
increase in the number of flat-panel displays we own and operate directly from 16,025
as of March&nbsp;31, 2005 to 71,230 as of March&nbsp;31, 2006 and to our acquisition of four
regional distributors during this period and (iii)&nbsp;an increase in other direct costs
associated with maintaining the network.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising service cost &#151; in-store network. We began incurring net advertising
service cost relating to our in-store network in the first quarter of 2005 as we began
to install flat- panel displays in stores, although we did not commence commercial
operations of the network until April&nbsp;2005. We incurred $nil in net advertising service
cost for our in-store network for the three months ended March&nbsp;31, 2005 compared to
$4.0&nbsp;million for the three months ended March&nbsp;31, 2006, consisting of location costs
and depreciation costs relating to the installation and maintenance of our in-store
network.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising service cost &#151; poster frame network. We began incurring net
advertising service cost relating to our poster frame network in January&nbsp;2006 after
acquiring Framedia and E-Times. We incurred $2.4&nbsp;million in net advertising service
cost for our poster frame network for the three months ended March&nbsp;31, 2006, consisting
of location costs and depreciation costs relating to the installation and maintenance
of poster frames on our network.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising equipment cost. We incurred net advertising equipment costs of
$70,571 for the three months ended March&nbsp;31, 2005 compared to $231,814 for the three
months ended March&nbsp;31, 2006, which directly related to the number of displays we sold
to our regional distributors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Gross Profit</I></B>. As a result of the foregoing, our gross profit increased by 193.0% from $6.3
million for the three months ended March&nbsp;31, 2005 to $18.5&nbsp;million for the three months ended March
31, 2006 although our overall gross margin decreased during the same period from 66.0% to 55.8%.
The decrease in our gross margin was largely a result of increased rental payments, including fixed
initial payments, to stores and depreciation costs incurred as we launched our in-store network.
For the three months ended March&nbsp;31, 2006, our gross margins for our commercial location, in-store
and poster frame networks were 62.6%, 24.9% and 60.5%, respectively. In the future, our gross
margin may fluctuate depending on the respective financial performance and stage of development of
each of our networks as well as the relative contribution to our revenues and costs of each
network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Operating Expenses</I></B>. Our operating expenses increased significantly from $3.4&nbsp;million for the
three months ended March&nbsp;31, 2005 to $9.5&nbsp;million for the three months ended March&nbsp;31, 2006 but
decreased as a percentage of revenues over this period from 35.9% to 28.5%. The increase in
operating expenses was primarily due to increases in our business tax, our selling and marketing
expenses and in our general and administrative expenses associated
</DIV>

<P align="center" style="font-size: 10pt">80
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">with the growth of our business, and in share-based compensation expenses under SFAS 123-R and
intangible amortization mainly resulting from the acquisition of Target Media and Framedia.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>General and Administrative. General and administrative expenses increased
substantially from $1.9&nbsp;million for the three months ended March&nbsp;31, 2005 to $4.4
million for the three months ended March&nbsp;31, 2006 mainly due to an increase in the size
of our administrative staff and corresponding increases in expenses for salary and
benefits as our operations have grown, increases in share-based compensation expense
and increases in costs associated with being a publicly listed company.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Selling and Marketing. Selling and marketing expenses increased substantially from
$1.5&nbsp;million for the three months ended March&nbsp;31, 2005 to $4.1&nbsp;million for the three
months ended March&nbsp;31, 2006 due to increases in marketing and promotional expenses by
our sales force, and in salary and benefits associated with the expansion of our sales
force as well as share-based compensation expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Amortization of acquired intangibles. Amortization of acquired intangibles
increased substantially from $67,352 for the three months ended March&nbsp;31, 2005 to $1.0
million for the three months ended March&nbsp;31, 2006 due to several significant
acquisitions we completed during the first quarter of 2006, namely our acquisitions of
Framedia, Target Media and E-Times.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income from Operations</I></B>. As a result of the foregoing, we had income from operations of $9.0
million for the three months ended March&nbsp;31, 2006 compared to $2.9&nbsp;million for the three months
ended March&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income Before Income Taxes and Minority Interest</I></B>. Income before income taxes and minority
interest was $2.9&nbsp;million for the three months ended March&nbsp;31, 2005 compared to $10.0&nbsp;million for
the three months ended March&nbsp;31, 2006, which included interest income and other income (expenses).
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest Income. Interest income increased from $10,895 for the three months ended
March&nbsp;31, 2005 to $915,952 for the three months ended March&nbsp;31, 2006. This interest
income was the result of a significant increase in our cash and cash equivalents
balances resulting from our initial public offering and follow-on public offering.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income Taxes. Our income taxes were $248,801 for the three months ended March&nbsp;31,
2005 with an effective tax rate of 9.0% compared to $616,790 for the three months ended
March&nbsp;31, 2006 with an effective tax rate of 6.2%. The increase resulted from a change
in deferred tax assets.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net Income</I></B>. As a result of the foregoing, our net income increased 257% from $2.6&nbsp;million for
the three months ended March&nbsp;31, 2005 to $9.4&nbsp;million for the three months ended March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Year Ended December&nbsp;31, 2005 Compared to Year Ended December&nbsp;31, 2004</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Total Revenues</I></B>. Our total revenues increased substantially from $29.2&nbsp;million in 2004 to
$68.2&nbsp;million in 2005 due to an increase in our advertising service revenue which was partially
offset by a decrease in advertising equipment revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total advertising service revenue increased significantly from $26.3&nbsp;million in 2004 to
$66.9&nbsp;million in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Commercial location network</I>. Advertising service revenue from our commercial location network
increased significantly from $26.3&nbsp;million in 2004 to $61.4&nbsp;million, including $4.8&nbsp;million to
related parties in 2005. The increase in advertising service revenue for our commercial location
network is attributable to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an increase in the number of 30-second-equivalent advertising time slots we sold on
our commercial location network from 4,723 in 2004 to 13,943 in 2005 and partially
offset by a decrease in the average selling price per time slot sold from $5,573 in
2004 to $4,461 in 2005. Total network capacity, measured by number of available time
slots, also increased from 5,170 as of December&nbsp;31, 2004 to</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>9,028 as of December&nbsp;31, 2005. The increase in the number of 30-second-equivalent
advertising time slots sold between these two periods is due primarily to the following
factors:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our network reach increased from 34 cities as of December&nbsp;31, 2004, including 11
cities directly operated by our company and 23 cities operated by our regional
distributors, to 58 cities as of December&nbsp;31, 2005, including 26 cities directly
operated by our company and 32 cities operated by our regional distributors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We gained an additional seven minutes of advertising cycle time from each of our
regional distributors after we acquired them between January&nbsp;1, 2005 and December&nbsp;31,
2005; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On July&nbsp;1, 2005, we extended the cycle time in our directly operated Tier II cities
from nine minutes to twelve minutes.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The increase in the number of 30-second-equivalent advertising time slots sold on
our commercial location network was also attributable to increased acceptance of our
network among our advertising clients, which we believe is primarily due to the
increased coverage and effectiveness of our network that grew from 15,415 flat-panel
displays as of December&nbsp;31, 2004 to 48,226 displays as of December&nbsp;31, 2005, including
our regional distributors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The decrease in the average selling price was largely due to growth in sales of time
slots with lower selling prices in our Tier II cities, while the average selling price
of our advertising services in our Tier I cities increased between these two periods.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>In-store network</I>. Advertising service revenue from our in-store network, which commenced
operations in April&nbsp;2005, totaled $5.5&nbsp;million in 2005. We expect the contribution to our total
revenues from our in-store network to increase in the near future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising equipment revenue decreased from $2.9&nbsp;million in 2004 to $1.3&nbsp;million in 2005.
This decrease was primarily attributable to our acquisition of a number of our regional
distributors during 2004 and 2005 because, following each acquisition, we no longer sell flat-panel
displays to each former regional distributor. This decrease was also partially attributable to
decreased sales to our existing regional distributors, as the initial installation of the network
in their respective cities of operation was largely completed in 2004 and the first quarter of
2005. We expect advertising equipment revenue to remain stable or decrease over time as we continue
to acquire our existing regional distributors and as the most desirable cities for the
establishment of similar networks by regional distributors become saturated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cost of Revenues</I></B>. Our cost of revenues increased significantly from $8.7&nbsp;million in 2004 to
$26.3&nbsp;million in 2005 due to increases in our net advertising service cost for our commercial
location network and our in-store network and in our net advertising equipment cost.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising service cost &#151; commercial location network. Our net advertising
services cost for our commercial location network increased substantially from $6.7
million in 2004 to $17.9&nbsp;million in 2005. This increase was due to the substantial
increase in our advertising service business on our commercial location network between
these two periods. Our location costs increased substantially from $4.6&nbsp;million in 2004
to $11.3&nbsp;million in 2005 due to a substantial increase in the number of commercial
locations where we entered into display placement agreements. Our rental fees increased
as a percentage of total revenues between these two periods as a result of (1)&nbsp;a
significant increase in the number of locations in our commercial location network (2)
increased rental payments for the renewal of display placement agreements in the more
desirable locations on our commercial location network offset in part by lower rental
payments paid for new locations in our commercial location network because of a further
reduction in the number of available desirable locations that command more expensive
rental fees. Flat-panel display depreciation costs increased from $774,375 in 2004 to
$3.4&nbsp;million in 2005, as a result of an increase in the number of flat-panel displays
we own and operate directly from 12,786 as of December&nbsp;31, 2004 to 45,049 as of
December&nbsp;31, 2005 and to our</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquisition of 14 regional distributors during this period. Other cost of revenues
related to net advertising service cost increased from $1.4&nbsp;million in 2004 to $3.2
million in 2005 as a result of (1)&nbsp;an increase in the volume of CF cards we purchased
even as the per-unit cost of CF cards decreased and (2)&nbsp;an increase in salary and
benefit expenses for personnel responsible for location relations and display placement
agreements with landlords and property managers and for maintaining and monitoring our
network.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising service cost &#151; in-store network. We began incurring net advertising
service cost relating to our in-store network in April&nbsp;2005 when we launched our
in-store network. We incurred $7.4&nbsp;million in net advertising service cost for our
in-store network in 2005, consisting of location costs and depreciation costs relating
to the installation and maintenance of our in-store network.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net advertising equipment cost. We incurred net advertising equipment costs of $1.9
million in 2004 compared to $975,747 in 2005, which decrease reflects the fact that we
have acquired many of our fastest-growing regional distributors. We expect net
advertising equipment costs to continue to decrease.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Gross Profit</I></B>. As a result of the foregoing, our gross profit increased from $20.5&nbsp;million in
2004 to $41.9&nbsp;million in 2005 although our overall gross margin decreased during the same period
from 70.0% to 61.3%. The decrease in our gross margin was largely a result of increased rental
payments, including fixed initial payments, to stores and depreciation costs incurred as we
launched our in-store network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Operating Expenses</I></B>. Our operating expenses increased significantly from $7.6&nbsp;million in 2004
to $19.1&nbsp;million in 2005. This increase was primarily due to increases in our business tax, our
selling and marketing expenses and in our general and administrative expenses associated with the
growth of our business, such as salaries and costs associated with preparing to become a publicly
listed company.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>General and Administrative. General and administrative expenses increased
substantially from $4.0&nbsp;million in 2004 to $9.1&nbsp;million in 2005 mainly due to an
increase in the size of our administrative staff and corresponding increases in
expenses for salary and benefits as well as accounting and administrative costs
relating to being a public company. In addition, in connection with the options granted
to our directors, employees and consultants since July&nbsp;2004, we recorded stock based
compensation of $726,503 in 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Selling and Marketing. Selling and marketing expenses increased substantially from
$3.5&nbsp;million in 2004 to $9.5&nbsp;million in 2005 due to increases in marketing and
promotional expenses by our sales force, and in salary and benefits associated with the
expansion of our sales force.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income from Operations</I></B>. As a result of the foregoing, we had income from operations of $13.0
million in 2004 compared to $22.8&nbsp;million in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income Before Income Taxes and Minority Interest</I></B>. Income before income taxes and minority
interest was $1.3&nbsp;million in 2004 compared to $24.4&nbsp;million in 2005, which included interest income
and other income (expenses)&nbsp;and change in fair value of series B convertible redeemable preferred
shares in 2004.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest Income. Interest income increased from $9,739 in 2004 to $1.8&nbsp;million in
2005. This interest income was the result of a significant increase in our cash and
cash equivalents balances resulting from cash payments collected from our advertising
operations, sales of our preference shares and proceeds from our initial public
offering.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other Expense. We recorded other expense of $3,843 in 2004 compared to other
expense of $161,148 in 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Change in Fair Value of Series&nbsp;B Convertible Redeemable Preferred Shares. We
incurred a change in fair value of series B convertible redeemable preferred shares of
$11.7&nbsp;million in 2004. Upon the</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>occurrence of our initial public offering in July&nbsp;2005, all outstanding preference
shares were converted into ordinary shares, and accordingly we did not incur any change
in fair value of series B convertible redeemable preferred shares in 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income Taxes. Our income taxes were $907,550 in 2004 compared to $694,453 in 2005,
which decrease resulted from the fact that in 2005, we derived most of our revenue from
Focus Media Advertising Agency, which had no tax liability during this period, whereas
during 2004, we derived most of our revenues from Focus Media Advertisement, which had
tax liability.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Minority Interest. We had minority interest expense of $13,516 and $144,434 in 2004
and 2005, respectively, in connection with the pro rata income attributable to minority
shareholders of four of our subsidiaries.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net Income</I></B>. As a result of the foregoing, we recorded net income of $23.5&nbsp;million in 2005
compared to net income of $372,752 in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Year Ended December&nbsp;31, 2004 Compared to Year Ended December&nbsp;31, 2003</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Total Revenues</I></B>. Our total revenues increased substantially from $3.8&nbsp;million in 2003 to $29.2
million in 2004 due primarily to an increase in our advertising service revenue and partially to
sales of our flat-panel displays to our regional distributors which commenced in the fourth quarter
of 2003. For the periods prior to January&nbsp;1, 2005, our out-of-home advertising network consisted of
our commercial location network, and all discussion for these periods, including references to our
network, refers only to our commercial location network.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising service revenue increased significantly from $3.4&nbsp;million in 2003 to $26.3
million in 2004 (including $3.4&nbsp;million to related parties). This increase is attributable to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the fact that we commenced our advertising network operations in May&nbsp;2003 and
therefore derived no revenues from the sale of time slots on our advertising network
for the first five months of 2003;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an increase in the number of 30-second-equivalent advertising time slots we sold
from 415 in 2003 to 4,723 in 2004, which increase was slightly offset by a decrease in
the average selling price per time slot sold from $8,088 in 2003 to $5,573 in 2004. The
increase in the number of 30-second-equivalent advertising time slots sold between
these two periods is due primarily to the following factors:</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we expanded our network to include an additional 24 cities in 2004, including eleven
cities operated by our company and 23 cities operated by our regional distributors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we gained an additional seven minutes of advertising cycle time from each of our
regional distributors after we acquired them in 2004; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we extended the cycle time from nine minutes in 2003 to twelve minutes in 2004 in
our Tier I cities.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The increase in the number of 30-second-equivalent advertising time slots sold was also
attributable to an increase in our utilization rate from 25.0% in 2003 to 36.8% in 2004, which
reflects the increased acceptance of our network among our advertising clients, which we believe is
primarily due to the increased coverage and effectiveness of our network that grew from 923
commercial locations in 2003 to 8,977 commercial locations in 2004, and from 1,028 flat-panel
displays in 2003 to 15,415 displays in 2004, including our regional distributors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The decrease in the average selling price was largely due to growth in sales of time slots
with lower selling prices in our second-tier cities, while the average selling price of our
advertising services in our major four cities increased between 2003 and 2004. We commenced sales
of flat-panel displays to regional distributors in the fourth quarter of 2003 and generated
$389,282 in advertising equipment revenue in 2003 compared to $2.9&nbsp;million in 2004. Revenues
generated by the eleven companies we acquired in 2004 accounted for approximately 1% of our total
revenues in 2004.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cost of Revenues</I></B>. Our cost of revenues increased significantly from $1.8&nbsp;million in 2003 to
$8.7&nbsp;million in 2004 due to increases in both of our net advertising service cost and net
advertising equipment cost.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net Advertising Service Cost. Our net advertising services cost increased
substantially from $1.6&nbsp;million in 2003 to $6.7&nbsp;million in 2004. This increase was due
to the substantial increase in our advertising service business between these two
periods.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our location costs increased substantially from $1.2&nbsp;million in 2003 to $4.6&nbsp;million
in 2004 due to a substantial increase in the number of commercial locations where we
entered into display placement agreements from 754 in 2003 to 8,866 in 2004. Despite
the increase in our rental expense between these two periods, our rental fees decreased
as a percentage of total revenues in 2004 as a result of (i)&nbsp;the increase in our
advertising services revenue significantly outpacing the increase in rental payments
due to the increase in the number of display placement agreements we entered into and
(ii)&nbsp;lower rental payments paid for new locations because many of the most desirable
and expensive locations had been occupied either by us or our competitors.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Flat-panel display depreciation costs increased from $148,701 in 2003 to $774,375 in
2004, as a result of an increase in the number of flat-panel displays we own and
operate directly from 827 as of December&nbsp;31, 2003 to 12,786 as of December&nbsp;31, 2004.
This increase in our depreciation costs was also attributable to our acquisition of
eight regional distributors during this period. Flat-panel display depreciation costs
decreased as a percentage of total revenues, however, because the growth in our
advertising services revenue significantly outpaced our purchase of flat-panel displays
and corresponding depreciation costs.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other cost of revenues related to net advertising service cost increased
significantly from $257,574 in 2003 to $1.4&nbsp;million in 2004. This was primarily a
result of (i)&nbsp;an increase in the volume of DVDs we purchased even as the per-unit cost
of DVDs decreased and (ii)&nbsp;an increase in salary and benefit expenses for personnel
responsible for location relations and display placement agreements with landlords and
property managers and for maintaining and monitoring our network. Other cost of
revenues related to net advertising service cost decreased as a percentage of total
revenues between these two periods as a result of the increase in advertising service
revenue significantly outpacing the increase in other cost of revenues.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net Advertising Equipment Cost. We incurred net advertising equipment costs of
$275,360 in 2003 compared to $1.9&nbsp;million in 2004, reflecting our cost for flat-panel
displays we sold to our regional distributors. We did not commence our regional
distributor relationships until November&nbsp;2003 and, accordingly, we recorded
significantly lower costs related to such sales in 2003. We expect net advertising
equipment costs to decrease as our purchase of flat-panel displays for resale to
regional distributors decreases as a result of our ongoing acquisition of our regional
distributors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Gross Profit</I></B>. As a result of the foregoing, our gross profit increased from $1.9&nbsp;million in
2003 to $20.5&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Operating Expenses</I></B>. Our operating expenses increased significantly from $1.4&nbsp;million in 2003
to $7.6&nbsp;million in 2004. This increase was primarily due to increases in our selling and marketing
expenses and in our general and administrative expenses associated with the growth of our business
and to the share-based compensation expense we recognized in 2004.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>General and Administrative. General and administrative expenses increased
substantially from $1.0&nbsp;million in 2003 to $4.0&nbsp;million in 2004 due to an increase in
the size of our administrative staff and corresponding increases in expenses for salary
and benefits of $435,665 as our operations have grown, an increase in our office rental
payments of $292,078 as we established branch offices in a number of new cities, and
increases in public relations expenses, communications and travel expenses and fees for
professional services of $170,898. General and administrative expenses, however,
decreased as a percentage of total revenues from 26.2% to 13.7% due to (i)&nbsp;the overall
growth of our total revenues</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>which outpaced these expenses and (ii)&nbsp;our establishment of a dedicated sales force in
2004 and assignment of sales, maintenance and location relationship personnel previously
included within our administrative department, respectively, to our newly established
sales and location relationship and maintenance departments. Our general and
administrative expenses in 2004 include share-based compensation. We incurred
share-based compensation expense of $488,711 in 2004 relating to the issuance of options
to purchase 25,208,200 of our ordinary shares that were granted to certain directors,
officers, employees and individual consultants and advisers in July and August&nbsp;2004. We
did not incur share-based compensation expense in 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Selling and Marketing. Selling and marketing expenses increased substantially from
$406,634 in 2003 to $3.5&nbsp;million in 2004 due to increases in marketing and promotional
expenses by our sales force, and in salary and benefits associated with the creation
and expansion of our sales force. Marketing and promotional expenses, for which we
budget 10% of our advertising revenues, increased significantly from $355,398 in 2003
to $2.8&nbsp;million in 2004 as a result of increased sales and promotional activities
relating to the increase in our advertising services revenue between these two periods.
Salary expenses in connection with our sales force increased from $49,870 in 2003 to
$471,723 in 2004 because, prior to 2004, we did not have a dedicated sales force and
for prior periods all salary expenses of our employees were classified under general
and administrative expenses. Our salary expenses increased slightly as a percentage of
total revenues between these two periods because we hired additional sales staff to
meet the growth in our advertising business.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Goodwill Impairment Loss. We incurred a one-time goodwill impairment loss of
$58,397 in 2004 in connection with our acquisition of Perfect Media. This goodwill
impairment loss represents the difference between the amount we paid to acquire Perfect
Media on September&nbsp;22, 2004 and the fair market value of Perfect Media. In conducting
our annual impairment test, we undertook a valuation of Perfect Media using the
expected present value of cash flow and the income approach valuation methods, which
resulted in a goodwill impairment loss of $58,397 in 2004, indicating that the value of
Perfect Media was less than what we paid at the time we acquired it.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income from Operations</I></B>. As a result of the foregoing, we had income from operations of
$525,110 in 2003 compared to $13.0&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income Before Income Taxes and Minority Interest</I></B>. Income before income taxes and minority
interest was $516,751 in 2003 compared to income of $1.3&nbsp;million in 2004, which included taxes and
minority interest included interest income and other expenses and a one-time non-cash charge of
$11.7&nbsp;million for the change in fair value of derivative liability associated with Series&nbsp;B
convertible redeemable preference shares.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Interest Income. Interest income increased from $1,005 in 2003 to $9,739 in 2004.
This interest income was the result of a significant increase in our cash and cash
equivalents balances resulting from cash payments collected from our advertising
operations and sales of our preference shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Change in Fair Value of Derivative Liability Associated with Series&nbsp;B Convertible
Redeemable Preference Shares. We recorded a one-time non-cash charge to reflect the
change in fair value of derivative liability associated with Series&nbsp;B convertible
redeemable preference shares of $11.7&nbsp;million in 2004, which, under applicable
accounting rules required us to mark to market the conversion feature of our Series&nbsp;B
convertible redeemable preference shares because they may be net settled in cash upon
conversion. We will not incur any such charges commencing January&nbsp;1, 2005 as the
redemption feature of our Series&nbsp;B convertible redeemable preference shares was removed
prior to December&nbsp;31, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Other Income (Expense). We recorded other expense of $9,364 in 2003 compared to
other expense of $3,843 in 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Income Taxes. Our income taxes increased from $481,505 in 2003 to $907,550 in 2004
increased taxable income by certain of our consolidated entities that are subject to
PRC income tax.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">86
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Minority Interest. We had minority interest income of $8,360 and $13,516 in 2003
and 2004, respectively in connection with the pro rata loss attributable to four
affiliates in which we hold a minority interest.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Net Income</I></B>. As a result of the foregoing, we recorded net income of $372,752 in 2004 compared
to net income of $25,483 in 2003. Our net income of $372,752 in 2004 includes a one-time non-cash
charge of $11.7&nbsp;million reflecting the change in fair value of derivative liability associated with
our Series&nbsp;B convertible redeemable preference shares. We will not incur any such charges
commencing January&nbsp;1, 2005 as the redemption feature of our Series&nbsp;B convertible redeemable
preference shares was removed prior to December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Liquidity and Capital Resources</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Liquidity and Capital Resources</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Cash Flows and Working Capital</I></B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, we have financed our operations primarily through cash generated from operating
activities and sales of equity in private and public transactions. As of March&nbsp;31, 2006, we had
approximately $41.9&nbsp;million in cash and cash equivalents. As we have expanded our network, entered
into a large number of display placement agreements, increased our acquisition of regional
distributors and related businesses, and made strategic acquisitions, our cash needs for such
acquisitions, the purchase of flat-panel displays, payment of our location and maintenance costs
and employee costs increased significantly and accounted for the net cash used in investing
activities. Our cash and cash equivalents primarily consist of cash on hand, liquid investments
with original maturities of three months or less that are deposited with banks and other financial
institutions. We generally deposit our excess cash in interest bearing bank accounts. Although we
consolidate the results of Focus Media Advertisement and its subsidiaries in our consolidated
financial statements and we can utilize their cash and cash equivalents in our operations through
Focus Media Advertisement and its subsidiaries, we do not have direct access to the cash and cash
equivalents or future earnings of Focus Media Advertisement. However, these cash balances can be
utilized by us for our normal operations pursuant to our agreements with Focus Media Advertisement
and its subsidiaries that provide us with effective control over Focus Media Advertisement and its
subsidiaries. In addition, we have access to the cash flows of Focus Media Advertisement and its
subsidiaries through contractual arrangements with our subsidiaries Focus Media Technology and
Focus Media Digital, which provide technical and other services in exchange for fees. See &#147;Item&nbsp;7.B
Major Shareholders and Related Party Transactions &#151; Related Party Transactions &#151; Agreements Among
Us, Focus Media Technology, Focus Media Digital, New Focus Media Advertisement, Focus Media
Advertisement and Its Subsidiaries&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect to require cash in order to fund our ongoing business needs, particularly the
location costs connected with the placement of our television displays, to fund the ongoing
expansion of our network and for payments in connection with our acquisitions. Other possible cash
needs may include the upgrading of technology on our network as well as any payment of claims that
could be made against us. We have not encountered any difficulties in meeting our current cash
needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table shows our cash flows with respect to operating activities, investing
activities and financing activities in 2003, 2004, 2005 and for the three months ended March&nbsp;31,
2005 and 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>For the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) operating
activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">11,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(877</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,706</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,070</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(117,667</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,678</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(66,073</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing
activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,978</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66,091</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash and cash
equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,953</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,555</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,210</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">87
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>For the three months ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in thousands of U.S. dollars)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at beginning of
period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents at end of
period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">22,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">36,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,863</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had cash provided by operating activities of $4.8&nbsp;million for the three months ended
March&nbsp;31, 2006. This was primarily attributable to net income generated from the operation of our
advertising network, adjusted up $908,927, $2.5&nbsp;million, $1.7&nbsp;million and $551,714 to reflect
amounts due from related parties, accounts receivable, rental deposits and deferred tax assets,
respectively, and adjusted down $18.6&nbsp;million and $908,927 to reflect accrued expenses and other
current liabilities and amounts due from related parties, respectively. We had cash provided by
operating activities of $11.3&nbsp;million in 2005. This was primarily attributable to net income
generated from the operation of our advertising network, adjusted up $666,703, $5.0&nbsp;million,
$672,585 and $4.0&nbsp;million to reflect amounts due from related parties, accounts payable, income
taxes payable and accrued expenses and other current liabilities, respectively, and adjusted down
$15.8&nbsp;million and $2.3&nbsp;million to reflect accounts receivable and prepaid expenses and other
current assets, respectively. We had net cash provided by operating activities of $4.0&nbsp;million in
2004. This was primarily attributable to our net income from operation of our network, adjusted
down $4.5&nbsp;million, $2.5&nbsp;million, $1.6&nbsp;million and $1.7&nbsp;million to reflect our accounts receivable
from our advertising clients and regional distributors, a decrease in amounts due from related
parties, accounts payable from location and maintenance costs owed to third parties and prepaid
expenses and other current assets including location costs, respectively, and adjusted up $11.7
million, $4.2&nbsp;million and $0.8&nbsp;million to reflect the change in fair value of derivative liability,
accrued expenses from location costs and maintenance costs and other current liabilities and income
taxes payable, respectively. We had net cash provided by operating activities of $1.3&nbsp;million in
2003. This was primarily attributable to accounts payable for location costs and equipment, accrued
expenses and other current liabilities, amount due to related parties and income taxes payable,
which was partially offset by accounts receivable from our advertising clients and regional
distributors, prepaid expenses and other current assets, amount due from related parties and
inventory, which consists primarily of our television displays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had net cash used in investing activities of $66.1&nbsp;million for the three months ended March
31, 2006, primarily in connection with the acquisition of companies, including Target Media and
Focus Media Wireless, subsidiaries and regional distributors, purchase of equipment used to expand
our networks, and rental deposits paid for locations on our out-of-home television, poster frame
and outdoor LED networks. Our acquisition of Framedia involved our payment of $39.6&nbsp;million in cash
and issuance of $55.4&nbsp;million of our ordinary shares to the seller parties at a fixed value of
$2.456 per ordinary share. In addition, subject to Framedia&#146;s attainment of certain financial
performance goals in 2006, we may be obligated to issue up to $88&nbsp;million in additional Focus Media
ordinary shares, at a fixed value of $2.456 per ordinary share, to the selling parties in 2007.
Pursuant to the share purchase agreement we entered into with E-Times and Skyvantage, we paid the
seller parties $5.0&nbsp;million. We also paid $70&nbsp;million in cash and issued 77&nbsp;million ordinary shares
to the shareholders of Target Media. The issuance of such additional ordinary shares will also
result in lower earnings per share or per ADS when we calculate our earnings for 2007 than would
otherwise be the case were such additional shares not issued. See &#147;Item&nbsp;3.D Key Information &#151;Risk
Factors &#151; Risks Relating to this Offering &#151; The sale or availability for sale of substantial
amounts of our ADSs could adversely affect their market price&#148;, &#147;Item&nbsp;10.C Additional Information &#151;
Material Contracts &#151; Framedia&#148; and &#147;&#151; Target Media&#148;. We had net cash used in investing activities
of $117.7&nbsp;million for in 2005, primarily in connection with the acquisition of companies,
subsidiaries and regional distributors, purchase of equipment used to expand our commercial
location and in-store networks, and rental deposits paid for locations on both our commercial
location and in-store networks. We had net cash used in investing activities of $11.1&nbsp;million in
2004. This was primarily attributable to our purchase of property and equipment for the operation
of our network, rental deposits made in connection with our display placement agreements and our
acquisition of eleven businesses, eight of which were our former regional distributors. We had net
cash used in investing activities of $2.7&nbsp;million in 2003, largely as a result of purchases of
property and equipment and the acquisition of a business from a related party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$66.1&nbsp;million net cash was provided by financing activities for the three months ended March
31, 2006, primarily from the proceeds of our follow-on public offering in February&nbsp;2006. $119.2
million net cash was provided by financing activities in 2005, primarily from the proceeds of our
initial public offering in July&nbsp;2005. We had net cash provided by financing activities of $29.0
million in 2004. This was attributable to the proceeds from the
</DIV>


<P align="center" style="font-size: 10pt">88
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">issuance of our Series&nbsp;B and Series&nbsp;C-2 convertible redeemable preference shares, offset
slightly by the repayment of a short-term loan from one of our shareholders. We had net cash
provided by financing activities of a $2.1&nbsp;million in 2003. This was attributable to the proceeds
from the issuance of ordinary shares in May&nbsp;2003 and proceeds from a short-term loan from one of
our shareholders. We used this loan for our business operations and the loan was secured by our
ordinary shares. We repaid the loan when it came due in June&nbsp;2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our current cash and cash equivalents, cash flow from operations and the
proceeds from our recent public offering will be sufficient to meet our anticipated cash needs,
including for working capital and capital expenditures, for the foreseeable future. These
additional cash needs may include costs associated with the expansion of our network, such as the
purchase of flat-panel displays and LED digital billboards and increased location cost, including
in connection with our acquisition of Framedia, Target Media, E-Times and Focus Media Wireless, as
well as possible acquisitions of our regional distributors. We are also required under PRC law to
set aside 10% of our after-tax profits into a general reserve fund. We expect that revenues from
operation of our advertising network and the proceeds from this offering will be sufficient to
cover any such obligations and costs. We may, however, require additional cash resources due to
changed business conditions or other future developments. If these sources are insufficient to
satisfy our cash requirements, we may seek to sell debt securities or additional equity securities
or obtain a credit facility. The sale of convertible debt securities or additional equity
securities could result in additional dilution to our shareholders. The incurrence of indebtedness
would result in debt service obligations and could result in operating and financial covenants that
would restrict our operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we evaluate possible investments, acquisitions or divestments and may, if a
suitable opportunity arises, make an investment or acquisition or conduct a divestment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transactions with Related Parties</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our transactions with related parties have been conducted on arm&#146;s length terms. See &#147;Item&nbsp;7.
Major Shareholders and Related Party Transactions&#151;B. Related Party Transactions&#148; and Note 22 to
our audited consolidated financial statements included in this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Capital Expenditures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our historical capital expenditures for the periods indicated.
Actual future capital expenditures may differ from the amounts indicated below.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>For the three months ended March 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19"><B>(in thousands of U.S. dollars)</B></TD>
</TR>

<!-- End Table Head -->
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<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total capital
expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,373</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">36,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,354</TD>
    <TD>&nbsp;</TD>
</TR>
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</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital expenditures were made primarily to acquire flat-panel displays for our
advertising network. Our capital expenditures are primarily funded by net cash provided from
operating activities. We expect our capital expenditures in 2006, in an amount of approximately
$20.0&nbsp;million, to primarily consist of purchases of components for our flat-panel displays and new
poster frames as we continue to expand our commercial location network, in-store network and poster
frame network. We also intend to upgrade our financial, accounting systems and internal control
systems. As opportunities arise, we may make additional acquisitions of regional distributors and
other businesses that complement our operations. We believe that we will be able to fund these
upgrades and equipment purchases through the revenues we generate, and do not anticipate that these
obligations will have a material impact on our liquidity needs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Restricted Net Assets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Relevant PRC laws and regulations permit payments of dividends by our PRC subsidiaries only
out of their retained earnings, if any, as determined in accordance with PRC accounting standards
and regulations. In addition,
</DIV>

<P align="center" style="font-size: 10pt">89
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">PRC laws and regulations require that annual appropriations of 10% of after-tax income for our
general reserve fund should be set aside prior to payment of dividends. As a result of these PRC
laws and regulations, our PRC subsidiaries and our affiliated PRC entities are restricted in their
ability to transfer a portion of their net assets to us whether in the form of dividends, loans or
advances. As of December&nbsp;31, 2004 and 2005, the amount of our restricted net assets was
approximately $14.8&nbsp;million and $75.9&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Research, Development, Patents and Licenses, Etc.</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Research and Development</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue to develop a more advanced model of flat-panel display that uses mobile
communications and wireless technology to receive, store, configure and playback advertising
content. Whether we deploy this newer technology will depend on considerations of cost and network
security. We are also developing related software systems that will enable us to configure and run
the content on our advertising network in conjunction with mobile communications systems.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Patents and Trademarks</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the value of our advertising network derives from its effectiveness in
reaching a large number of consumers with higher-than-average disposable incomes in urban areas. To
a great extent, our business model does not rely on advanced or sophisticated technology or on
proprietary trade secrets because our flat-panel displays are assembled with components purchased
in off-the-shelf form from wholesale distributors. We endeavor to protect certain of the designs
and operating software we use in each generation of our flat-panel displays. We are currently
applying for design patents for our new model of flat-panel display and our software. As of March
31, 2006, we held one design patent for our flat-panel display technology. We have the right to use
several trademarks relating to the &#147;Focus Media&#148; brand name in China and in Singapore. We also have
the right to use several trademarks relating to the &#147;Framedia&#148; brand name in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Trend Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to &#147;&#151;Overview&#148; for a discussion of the most significant recent trends in our
production, sales, costs and selling prices. In addition, please refer to discussions included in
this Item for a discussion of known trends, uncertainties, demands, commitments or events that we
believe are reasonably likely to have a material effect on our net operating revenues, income from
continuing operations, profitability, liquidity or capital resources, or that would cause reported
financial information not necessarily to be indicative of future operating results or financial
condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Off-balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 shareholder&#146;s equity, or that are
not reflected in our consolidated 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
any 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Tabular Disclosure of Contractual Obligations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our contractual obligations and commitments with definitive
payment terms on a consolidated basis which will require significant cash outlays in the future as
of March&nbsp;31, 2006.
</DIV>

<P align="center" style="font-size: 10pt">90
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>Payments due March 31</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>TOTAL</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Thereafter</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23"><B>(in thousands of U.S. dollars)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Display and poster frame
placement agreement
obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">115,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">41,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">32,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,982</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office premise lease
obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">211</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term debt(1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,024</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" colspan="2" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total contractual
obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">126,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">51,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">33,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">21,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,209</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,193</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes interest.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than certain leasing arrangements relating to the placement of our flat-panel, as
of March&nbsp;31, 2006, we did not have any long-term debt obligations, operating lease obligations or
purchase obligations. However, pursuant to our option agreement with the owners of Focus Media
Advertisement, Focus Media Technology has an option, exercisable at such time as it becomes legally
permissible to acquire 100% of the equity interest in Focus Media Advertisement at a purchase price
equal to the registered capital of Focus Media Advertisement or such higher price as required by
PRC law on the date of such purchase. Under the share purchase agreement for the acquisition of
Target Media, we are required to make three cash payments. The first installment of $45&nbsp;million was
paid at closing on February&nbsp;28, 2006. The second installment of $25&nbsp;million was paid on April&nbsp;28,
2006. The final installment of $24&nbsp;million is to be paid on July&nbsp;31, 2006, and may be increased or
decreased based on a calculation of Target Media&#146;s net working capital as of the closing date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we held short-term debt securities in the amount of $34.8 million. As
of March&nbsp;31, 2006, we had no other indebtedness, material contingent liabilities, or material
mortgages or liens. We intend to meet our future funding needs primarily through net cash provided
from operating activities and the proceeds of this offering. Our objective is to maintain the
safety and liquidity of our cash. Therefore we intend to keep our cash and cash equivalents in
short-term bank deposits and short-term bonds.
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Directors and Senior Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information relating to our directors and executive
officers. The business address of each of our directors and executive officers is 28-30/F, Zhao
Feng World Trade Building, 369 Jiangsu Road, Shanghai 200050, People&#146;s Republic of China.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Position</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jason Nanchun Jiang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">33</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the Board of Directors and
Chief Executive Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">David Feng Yu(1)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">44</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Co-chairman of the Board of Directors and
President</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jimmy Wei Yu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">33</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fumin Zhuo(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">54</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Neil Nanpeng Shen(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">38</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Charles Chao(2)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">40</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Daqing Qi(3)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">43</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Daniel Mingdong Wu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">39</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Diana Congrong Chen
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">38</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Marketing Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">July Lilin Wang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">34</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Accounting Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cindy Yan Chan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">40</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Strategy Officer</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Ergo Xueyuan Liu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">35</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President &#151; Commercial Location Network</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Acer Jiawei Zhang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom">29</TD>
    <TD nowrap valign="bottom">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President &#151; In-store Network</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Yu was appointed as co-chairman of the board of directors and President of Focus
Media on February&nbsp;28, 2006 pursuant to the terms of the share purchase agreement between us and
Target Media in connection with our acquisition of Target Media.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Independent director and a member of our audit committee, compensation committee and
nomination committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Qi was appointed as an independent director on February&nbsp;28, 2006 by the seller parties
of Target Media pursuant to the terms of the share purchase agreement between us and Target Media
in connection with our acquisition of Target Media.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Jason Nanchun Jiang</I></B>, our founder, has served as the chairman of our board of directors
and our chief executive officer since May&nbsp;2003. From 1994 to 2003, Mr.&nbsp;Jiang was the chief
executive officer of Everease Advertising Corporation, which is one of the top 50 advertising
agencies in China. Starting in 2003, Mr.&nbsp;Jiang was general manager of Aiqi Advertising, an
advertising company founded by his immediate family members in 1997 which was renamed Focus Media
Advertisement in May&nbsp;2003 in connection with the establishment of our current business operations.
In December&nbsp;2003, Mr.&nbsp;Jiang was selected by China News Publisher&#146;s Media magazine as one of the
&#147;Media People of the Year&#148;. In September&nbsp;2003, Mr.&nbsp;Jiang was selected by the Television and
Newspaper Committees of the China Advertising Commission as one of its &#147;contemporary outstanding
advertising media personalities&#148;. Mr.&nbsp;Jiang received a Bachelor of Arts degree in Chinese language
and literature from Huadong Normal University in 1995.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>David Feng Yu </I></B>has served as co-chairman of our board of directors and as our president since
February&nbsp;28, 2006. From 2003 until February&nbsp;2006, Mr.&nbsp;Yu was chairman and chief executive Officer
of Target Media, which we acquired in February&nbsp;2006. From 2000 to 2003, Mr.&nbsp;Yu was chief executive
offer and the sole beneficial owner of Dian Yang, whose flat panel display advertising business was
transferred to Target Media in December&nbsp;2003. From 1999 to 2000, Mr.&nbsp;Yu was the general manager of
Shanghai Yuanye Info Tech Co., Ltd. In May&nbsp;2005, Mr.&nbsp;Yu was selected by the Advertising Newspaper
in China as one of the &#147;Most Influential Advertising People of the Year.&#148; In December&nbsp;2004, Mr.&nbsp;Yu
was selected by China Venture Capital Forum 2004 as one of the &#147;Top 10 Enterprisers of the Year.&#148;
Mr.&nbsp;Yu received an Executive M.B.A. degree from China Europe International Business School in 2001
and a Master of Arts degree in philosophy from Fudan University in 1991.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Jimmy Wei Yu </I></B>has served as our director since May&nbsp;2003. Mr.&nbsp;Yu is the chairman and chief
executive officer of United Capital Investment (China) limited, which is one of our principal
shareholders and the management company of United China Investment Limited and KTB/UCI China
Ventures I Limited and UCI China Venture II Limited. Mr.&nbsp;Yu is also the chairman of Shanghai
Multimedia Park Venture Capital, a position he has held since 2003. From 1995 to 1999, Mr.&nbsp;Yu
served in various capacities in several telecommunications companies, including as Chief
Representative of UTStarcom (Hong Kong) Ltd. He also has been the Chief Representative of Softbank
China Venture Capital, which is the management company of SB China Holdings Pte. Ltd., one of our
shareholders, since its incorporation in 1999.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fumin Zhuo </I></B>has served as our director since December&nbsp;2004 and has more than 27&nbsp;years of
experience in investment and corporate management. Mr.&nbsp;Zhuo has also served as a general partner in
SIG Capital Limited since July&nbsp;2005. Prior to this, Mr.&nbsp;Zhuo served as chairman and chief executive
officer of Vertex China Investment Company (VCI), a company concentrating in investments in the
Greater China region, since he joined the fund in July&nbsp;2002. From 1995 to July&nbsp;2002, Mr.&nbsp;Zhuo was
chief executive officer of Shanghai Industrial Holding Ltd. and chairman of SIIC Medical Science &#038;
Technology (Group). Prior to this, starting in 1987, Mr.&nbsp;Zhuo served as chief assistant officer of
the Shanghai Economic System Reform Committee. Mr.&nbsp;Zhuo has extensive experience in venture capital
fund formation, mergers and acquisitions, and investment management. Mr.&nbsp;Zhuo graduated from
Shanghai Jiaotong University&#146;s Electrical Engineering School with a degree in enterprise management
and also holds a Master&#146;s degree in economics from Fudan University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Neil Nanpeng Shen </I></B>has served as our director since December&nbsp;2004. Mr.&nbsp;Shen is the founding
managing partner of Sequoia Capital China, or Sequoia China, a China-focused venture capital fund
which was established in August&nbsp;2005. Prior to founding Sequoia China, Mr.&nbsp;Shen was president and
chief financial officer of Ctrip.com International Limited, or Ctrip, a Nasdaq-listed on-line
travel services company he co-founded and for which he continues to serve as a director. Prior to
founding Ctrip, Mr.&nbsp;Shen worked for more than eight years in the investment banking industry in New
York and Hong Kong. He was a director at Deutsche Bank Hong Kong where
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">he worked from 1996 to 1999. Prior to 1996, he worked at Chemical Bank, Lehman Brothers and
Citibank in various investment banking positions. Mr.&nbsp;Shen is also co-founder and co-chairman of
Home Inns &#038; Hotels Management (Hong Kong) Limited. Mr.&nbsp;Shen received his Master&#146;s degree from the
School of Management at Yale University and his Bachelor&#146;s degree from Shanghai Jiaotong
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Charles Chao </I></B>was appointed as our director in November&nbsp;2005 to replace Ted Tak Dee Sun who
passed away in September&nbsp;2005. Mr.&nbsp;Chao is president and chief executive officer of SINA
Corporation, an online media company listed on the Nasdaq National Market. Before he joined SINA
Corporation in September&nbsp;1999, Mr.&nbsp;Chao served as an experienced audit manager with
PricewaterhouseCoopers LLP, providing auditing and business consulting services for high tech
companies in Silicon Valley, California. Mr.&nbsp;Chao received his master of professional accounting
from University of Texas at Austin. He also holds an MA degree in journalism from University of
Oklahoma and a BA degree in Journalism from Fudan University in Shanghai, China. Mr.&nbsp;Chao is a
certified public accountant and a member of the American Institute of Certified Public Accountants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Daqing Qi </I></B>was appointed as our director in February&nbsp;28, 2006 upon the closing of our
acquisition of Target Media. Professor Qi is professor of accounting and associate dean of the
Cheong Kong Graduate School of Business, where he has taught since 2002. From 1996 until 2002,
Professor Qi was an associate professor in the School of Accountancy at the Chinese University of
Hong Kong. Professor Qi also has extensive experience in providing executive training and
consulting services in accounting and corporate finance to government departments and private
companies, including the Ministry of Information Industries of the People&#146;s Republic of China, the
Shanghai Municipal Government, China Mobile, China Unicom, China Telecom, China Netcom, Nokia and
Ericsson. Professor Qi also serves on the board of directors of Sohu.com, a Nasdaq-listed company
that provides online services in China. Professor Qi holds a B.S. degree in biophysics and a B.A.
degree in journalism from Fudan University, an MBA degree from the University of Hawaii Manoa with
a concentration in accounting and finance and a Ph.D. degree in accounting from the Eli Broad
Graduate School of Management of Michigan State University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Daniel Mingdong Wu </I></B>has served as our chief financial officer since February&nbsp;2005. Mr.&nbsp;Wu was
chief financial officer and a director of Harbour Networks Ltd. from January&nbsp;2004 until January
2005. Prior to that, Mr.&nbsp;Wu was a partner of Bridgecross Ltd. from 2001 until 2003 and acting chief
financial officer of Wi-Comm United Communications Inc. from May&nbsp;2003 until January&nbsp;2004. From 2000
until 2001, Mr.&nbsp;Wu was a vice president for technology investment banking at Merrill Lynch (Asia
Pacific) Ltd. From 1996 to 2000, Mr.&nbsp;Wu worked in the global communications group of Lehman
Brothers Inc. Mr.&nbsp;Wu holds a B.A. degree from the State University of New York at Buffalo and an
MBA degree from Columbia Business School.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Diana Congrong Chen </I></B>joined Focus Media as chief marketing officer in May&nbsp;2005. Before joining
Focus Media, Ms.&nbsp;Chen worked for Phoenix Satellite TV from 1998 to 2004, serving as general
manager, director of international advertising and president of East China region. While at Phoenix
Satellite TV, Ms.&nbsp;Chen successfully developed business in Zhejiang and East China region and was
awarded Best Sales Team for several years. In 2004, Ms.&nbsp;Chen was honored with a Most Outstanding
Employee Award by Phoenix Satellite TV. Prior to that, Ms.&nbsp;Chen was the vice president of sales for
Tucano Clothing China and office manager for China Animal By-product Import and Export Co. Ms.&nbsp;Chen
holds a B.A. degree in journalism from Zhejiang University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>July Lilin Wang </I></B>joined Focus Media as chief accounting officer in April&nbsp;2005. Prior to joining
Focus Media, Ms.&nbsp;Wang worked as a senior manager at Ernst &#038; Young&#146;s Shanghai office from April&nbsp;2004
to April&nbsp;2005. From November&nbsp;2002 to April&nbsp;2004, Ms.&nbsp;Wang was a senior supervisor at Ernst &#038;
Young&#146;s San Jose, California office. From 1994 to 2002, Ms.&nbsp;Wang worked as a senior manager at
Ernst &#038; Young&#146;s Shanghai office. Ms.&nbsp;Wang received a B.A. degree in economics from Shanghai
University of Economics and Finance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cindy Yan Chan </I></B>joined Focus Media in August&nbsp;2005 as chief strategy officer. Ms.&nbsp;Chan has over
10&nbsp;years of experience in the advertising industry in China. Before joining Focus Media, Ms.&nbsp;Chan
was deputy general manger for iMPACT, ZenithOptimedia&#146;s outdoor media department, an outdoor media
buyer in China, from 2000 to 2005. Ms.&nbsp;Chan is also among the most reputable media researchers in
China, and has published articles on the theory of outdoor media and China&#146;s outdoor media market,
which has been quoted in prominent publications such as Forbes magazine and Media magazine. Ms.
Chan holds a master&#146;s degree in economics from Nankai University.
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Ergo Xueyuan Liu </I></B>joined Focus Media as Vice President &#151; Commercial Location Network in June
2004. Prior to joining Focus Media, Mr.&nbsp;Liu worked for Everease as an account manager from March
2003 until June&nbsp;2004. From June&nbsp;2002 until February&nbsp;2003, Mr.&nbsp;Liu was general manager and a
director of Beijing Fanenchangmei Advertising Co., Ltd., prior to which he was general manager of
Manager magazine from January&nbsp;2001 until May&nbsp;2002. In 1999 and 2000, Mr.&nbsp;Liu worked in the
enterprise department of the Shenzhen Special Economic Zone Group Company and was assistant manager
of Yigao Electronics Co., Ltd. Mr.&nbsp;Liu received a B.A. degree in Chinese literature from Huazhong
College of Engineering (now Huazhong Science and Technology University) in 1992.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Acer Jiawei Zhang </I></B>joined Focus Media as Vice President &#151; In-store Network in March&nbsp;2005. Prior
to joining Focus Media, Mr.&nbsp;Zhang worked for Media Partners International Holdings Inc. from 2001
to 2004, serving as account director, business director of the Beijing branch office and director
of agency relations. While at Media Partners International, Mr.&nbsp;Zhang established a national &#147;key
account&#148; service system, improved consulting and client services, and managed the development of
its digital outdoor media project. From 1998 to 2001, Mr.&nbsp;Zhang was a sales director for Media
Century Holdings Inc. in the Wuhan, Chengdu and Beijing offices. At Media Century, Mr.&nbsp;Zhang
assisted with developing new markets and preparing for its domestic initial public offering and
assisted in the acquisition of one of its key competitors. Mr.&nbsp;Zhang received a B.A. degree in arts
design from Hubei Polytechnic Institute.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We increased our board of directors from five to seven members when we completed our
acquisition of Target Media, and assisted in the nomination and appointment of David Feng Yu, the
founder, chairman and chief executive officer of Target Media, and Daqing Qi to fill the additional
seats as of February&nbsp;28, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Duties Of Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith
with a view to our best interests. Our directors also have a duty to exercise the care, diligence
and skills that a reasonably prudent person would exercise in comparable circumstances. In
fulfilling their duty of care to us, our directors must ensure compliance with our amended and
restated memorandum and articles of association. A company has the right to seek damages if a duty
owed by our directors is breached.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The functions and powers of our board of directors include, among others:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>convening shareholders&#146; meetings and reporting its work to shareholders at such meetings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>implementing shareholders&#146; resolutions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>determining our business plans and investment proposals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>formulating our profit distribution plans and loss recovery plans;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>determining our debt and finance policies and proposals for the increase or decrease
in our registered capital and the issuance of debentures;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>formulating our major acquisition and disposition plans, and plans for merger,
division or dissolution;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>proposing amendments to our amended and restated memorandum and articles of
association; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>exercising any other powers conferred by the shareholders&#146; meetings or under our
amended and restated memorandum and articles of association.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Compensation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, we paid aggregate cash compensation of approximately $512,947 to our directors and
executive officers as a group. In 2004 and 2005 and for the three months ended March&nbsp;31, 2006, we
granted to selected
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">directors, officers and employees options to acquire an aggregate 20,643,400, 22,503,630 and
3,000,000 ordinary shares, respectively. We have no service contracts with any of our directors or
executive officers that provide benefits to them upon termination. We do not pay or set aside any
amounts for pension, retirement or other benefits for our officers and directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Share Option Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our 2003 Employee Share Option Scheme, or our 2003 Option Plan, was adopted by our board of
directors at a meeting on June&nbsp;1, 2003. Our members and board of directors adopted our 2005 Share
Option Plan, or our 2005 Option Plan, in May&nbsp;2005. Both of our option plans are intended to promote
our success and to increase shareholder value by providing an additional means to attract,
motivate, retain and reward selected directors, officers, employees and third-party consultants and
advisors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Originally, under our 2003 Option Plan, not more than 30% of our share capital was reserved
for grants of options. Prior to the adoption of our 2005 Option Plan, we issued options equivalent
to 10.87% of our issued share capital under our 2003 Option Plan. Under our 2005 Option Plan, the
amount of options we may issue has been reduced to an aggregate of 20% of our share capital,
including the 10.87% already granted under our 2003 Option Plan. In addition, during the three
years from the adoption of our 2005 Option Plan, we may issue no more than 5% of our share capital
for grants of options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our 2003 Option Plan:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July and August&nbsp;2004, we granted:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 12,181,600 shares, representing 3.7% of our pre-offering diluted
share capital, to certain members of our board of directors and our management group. Each of these
options has an exercise price of $0.24 per share. 8,460,800 of these options vest over three years
while the remaining 3,720,800 options vest over one year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 8,461,800 shares, representing 2.5% of our pre-offering
diluted share capital, to members of our staff. Each of these options has an
exercise price of $0.24 per share. 2,159,800 of these options vest over three years
while the remaining 6,302,000 options vest over one year.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 4,564,800 shares, representing 1.4% of our pre-offering
diluted share capital, to third-party consultants and advisors. Each of these
options have an</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>exercise price of $0.24 per share. 1,310,400 of these options vest over three
years while the remaining 3,254,400 options vest over one year.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our 2005 Option Plan:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In January&nbsp;2005, we granted additional options to
purchase 1,200,000 of our ordinary shares to some of our directors with an exercise price of $0.58 per share. All of these
options vest over three years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In February&nbsp;2005, we granted:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 2,000,000 and 2,100,000 of our ordinary shares with an
exercise price of $0.58 and $0.75, respectively, to certain of our executive
officers and options to purchase 720,000 of our ordinary shares with an exercise
price of $0.75 to certain of our employees. All of these options vest over three
years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 1,240,000 of our ordinary shares to third-party consultants
and advisors with an exercise price of $0.75. All of these options vest over three
years.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In July&nbsp;2005, we granted:</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">95
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 11,683,630 of our ordinary shares with an exercise price of
$1.70, to certain of our executive officers and employees. All of these options
vest over three years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 100,000 of our ordinary shares to a third-party consultant
with an exercise price of $1.70. All of these options vest over three years.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In November&nbsp;2005, we granted:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 800,000 of our ordinary shares with an exercise price of
$2.60, to certain of our executive officers and employees. All of these options
vest over three years.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="9%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>options to purchase 4,000,000 of our ordinary shares with an exercise price of
$2.70, to certain of our executive officers and employees. All of these options
vest over three years.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2006, we granted options to purchase 3,000,000 of our ordinary shares with
an exercise price of $5.09, to certain of our executive officers, employees and
directors. All of these options vest over three years.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options generally do not vest unless the grantee remains under our employment or in service
with us on the given vesting date. However, in circumstances where there is a death or disability
of the grantee, or, for certain option holders, a change in the control of our company, the vesting
of options will be accelerated to permit immediate exercise of all options granted to a grantee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee, which administers our option plans, has wide discretion to award
options. Subject to the provisions of our option plans and the above allocation targets, our
committee that administers our option plans determines who will be granted options, the type and
timing of options to be granted, vesting schedules and other terms and conditions of options,
including the exercise price. Any of our employees may be granted options. The number of options
awarded to a person, if any, is based on the person&#146;s potential ability to contribute to our
success, the person&#146;s position with us and other factors chosen by our board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally, to the extent an outstanding option granted under our option plans has not become
vested on the date the grantee&#146;s employment by or service with us terminates, the option will
terminate and become unexercisable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors may amend, alter, suspend, or terminate each of our option plan at any
time, provided, however, that in order to increase the limit of 20% of our share capital that may
be granted as options, our board of directors must first seek the approval of our shareholders and,
if such amendment, alteration, suspension or termination would adversely affect the rights of an
optionee under any option granted prior to that date, the approval of such optionee. Without
further action by our board of directors, our 2003 Option Plan and our 2005 Option Plan will
terminate in June&nbsp;2013 and May&nbsp;2015, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The table below sets forth the option grants made to our directors and executive officers
pursuant to our 2003 and 2005 Option Plan as of March&nbsp;31, 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of ordinary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares to be issued upon</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise price per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>exercise of options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>ordinary share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of grant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of expiration</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in U.S. dollars)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jason Nanchun Jiang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,882,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 25, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 24, 2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Feng Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 10, 2006</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 9, 2016</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jimmy Wei Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 5, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 4, 2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jimmy Wei Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 25, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 24, 2014</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jimmy Wei Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2015</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fuming Zhuo</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 10, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 9, 2014</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Neil Nanpeng Shen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">January 1, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December 31, 2014</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles Chao</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November 2, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November 1, 2015</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daqing Qi</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 10, 2006</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 9, 2016</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel Mingdong Wu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 2, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 1, 2015</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel Mingdong Wu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 2, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 1, 2015</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">96
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number of ordinary</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shares to be issued upon</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise price per</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>exercise of options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>ordinary share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of grant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of expiration</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11"><B>(in U.S. dollars)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel Mingdong Wu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2015</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July Lilin Wang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 2, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 1, 2015</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ergo Xueyuan Liu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 5, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 4, 2014</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acer Jiawei Zhang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 2, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 1, 2015</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diana Congrong Chen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2015</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cindy Yan Chan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 13, 2015</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Upon exercise of all options granted, would beneficially own less than 1% of our outstanding
ordinary shares, assuming all of our outstanding preference shares are converted into our
ordinary shares.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Board Practices</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of our directors holds office until a successor has been duly elected and qualified
unless the director was appointed by our board of directors, in which case such director holds
office until the next following annual meeting of shareholders at which time such director is
eligible for reelection. All of our executive officers are appointed by and serve at the discretion
of our board of directors. Neither we nor any of our subsidiaries has entered into a contract with
any of our directors by which our directors are expected to receive benefits upon termination of
their employment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Board Committees</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has established an audit committee, a compensation committee and a
nominations committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Audit Committee. </I></B>Our audit committee currently consists of Neil Nanpeng Shen, Charles Chao
and Fumin Zhuo. Mr.&nbsp;Shen is the chairman of our audit committee. Our board of directors has
determined that all of our audit committee members are &#147;independent directors&#148; within the meaning
of Nasdaq Marketplace Rule&nbsp;4200(a)(15) and meet the criteria for independence set forth in Section
10A(m)(3) of the U.S. Securities Exchange Act of 1934, or the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee is responsible for, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>recommending to our shareholders, if appropriate, the annual re-appointment of our
independent auditors and pre-approving all auditing and non-auditing services permitted
to be performed by the independent auditors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>annually reviewing an independent auditors&#146; report describing the auditing firm&#146;s
internal quality-control procedures, any material issues raised by the most recent
internal quality control review, or peer review, of the independent auditors and all
relationships between the independent auditors and our company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>setting clear hiring policies for employees or former employees of the independent
auditors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing with the independent auditors any audit problems or difficulties and
management&#146;s response;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and approving all proposed related-party transactions, as defined in Item
404 of Regulation&nbsp;S-K under the U.S. securities laws;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discussing the annual audited financial statements with management and the
independent auditors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discussing with management and the independent auditors major issues regarding
accounting principles and financial statement presentations;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">97
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing reports prepared by management or the independent auditors relating to
significant financial reporting issues and judgments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing with management and the independent auditors the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures on our financial
statements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>discussing policies with respect to risk assessment and risk management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing major issues as to the adequacy of our internal controls and any special
audit steps adopted in light of material control deficiencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>timely reviewing reports from the independent auditors regarding all critical
accounting policies and practices to be used by our company, all alternative treatments
of financial information within U.S. GAAP that have been discussed with management and
all other material written communications between the independent auditors and
management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>establishing procedures for the receipt, retention and treatment of complaints
received from our employees regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission by our employees of
concerns regarding questionable accounting or auditing matters;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>annually reviewing and reassessing the adequacy of our audit committee charter;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such other matters that are specifically delegated to our audit committee by our
board of directors from time to time;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>meeting separately, periodically, with management, the internal auditors and the
independent auditors; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reporting regularly to the full board of directors.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Compensation Committee. </I></B>Our current compensation committee consists of Neil Nanpeng Shen,
Charles Chao and Fumin Zhuo. Mr.&nbsp;Chao is the chairman of our compensation committee. Our board of
directors has determined that all of our compensation committee members are &#147;independent directors&#148;
within the meaning of Nasdaq Marketplace Rule&nbsp;4200(a)(15).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee is responsible for:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>determining and recommending the compensation of our chief executive officer;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and making recommendations to our board of directors regarding our
compensation policies and forms of compensation provided to our directors and officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and determining bonuses for our officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and determining share-based compensation for our directors and officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>administering our equity incentive plans in accordance with the terms thereof; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>such other matters that are specifically delegated to the compensation committee by
our board of directors from time to time.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Nominations Committee. </I></B>Our current nominations committee consists of Neil Nanpeng Shen,
Charles Chao and Fumin Zhuo. Mr.&nbsp;Zhuo is the chairman of our nominations committee. Our board of
directors has determined
</DIV>

<P align="center" style="font-size: 10pt">98
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">that all of our nominations committee members are &#147;independent directors&#148; within the meaning
of Nasdaq Marketplace Rule&nbsp;4200(a)(15).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our nominations committee is responsible for, among other things, selecting and recommending
the appointment of new directors to our board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of March&nbsp;31, 2006, we had a total of 3,250 full-time employees and no part-time employees.
The following table sets out the number of staff by business area as of March&nbsp;31, 2006:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>employees(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Percentage</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">23</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">58</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Management and administration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">19</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total number of employees</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>This excludes employees our regional distributors and agents who are not directly under our
employ.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As required by PRC regulations, we participate in various employee benefit plans that are
organized by municipal and provincial governments, including pension, work-related injury benefits,
maternity insurance, medical and unemployment benefit plans. We are required under PRC law to make
contributions to the employee benefit plans at specified percentages of the salaries, bonuses and
certain allowances of our employees, up to a maximum amount specified by the local government from
time to time. Members of the retirement plan are entitled to a pension equal to a fixed proportion
of the salary prevailing at the member&#146;s retirement date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Generally we enter into a three-year standard employment contract with our officers and
managers and a one-year standard employment contract with other employees. According to these
contracts, all of our employees are prohibited from engaging in any activities that compete with
our business during the period of their employment with us. Furthermore, the employment contracts
with officers or managers include a covenant that prohibits officers or managers from engaging in
any activities that compete with our business for two years after the period of their employment
with us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Share Ownership</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see Item&nbsp;6.B. and Item&nbsp;7.
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Major Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to the beneficial ownership, within
the meaning of Rule&nbsp;13d-3 under the Exchange Act, of our ordinary shares, as of June&nbsp;21, 2006 and
as adjusted to reflect the sale of the ADSs offered in this offering for:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each person known to us to own beneficially more than 5% of our ordinary shares and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each of our directors and executive officers who beneficially own our ordinary shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial ownership includes voting or investment power with respect to the securities.
Except as indicated below, and subject to applicable community property laws, the persons named in
the table have sole voting and investment power with respect to all ordinary shares shown as
beneficially owned by them. The number of our ordinary shares outstanding used in calculating the
percentage for each listed person includes our ordinary shares
</DIV>

<P align="center" style="font-size: 10pt">99
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">underlying
options held by such person that are exercisable within 60&nbsp;days
of June&nbsp;26, 2006,
but excludes ordinary shares underlying options held by any other person. Percentage of beneficial
ownership is based on 523,166,773 ordinary shares outstanding as of the date of this annual report.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="56%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Shares beneficially owned</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>NAME</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Percent</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Principal Shareholders</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">JJ Media Investment Holding Ltd./</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Jason
Nanchun
Jiang<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,635,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.63</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">David Feng Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,584,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.80</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Directors and Executive Officers<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">JJ Media Investment Holding Ltd./</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Jason Nanchun Jiang<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">87,635,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16.63</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Feng Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,584,287</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6.80</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jimmy Wei Yu<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,131,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Neil Nanpeng Shen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles Chao</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fumin Zhuo</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daqing Qi</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel Mingdong Wu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diana Congrong Chen</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July Lilin Wang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cindy Yan Chan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ergo Xueyuan Liu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acer Jiawei Zhang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Upon exercise of all options currently exercisable or vesting within 60&nbsp;days of the
date of this annual
report, would beneficially own less than 1% of our ordinary shares.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 83,959,509 ordinary shares owned by JJ Media Investment Holding Ltd. and
3,151,000 and 525,250 options to purchase our ordinary shares owned by Target Sales
International Limited and Target Management Group Limited. All of these entities are 100%
owned by Jason Nanchun Jiang, our founder, chairman and chief executive officer.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The address of our current directors and executive officers is c/o 28F, Zhao Feng World
Trade Building, 369 Jiangsu Road, Shanghai 200050, China.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>See note 1.</TD>
</TR>


<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents 56,250, 496,256, 306,925, 1,237,500 and 78,825 options to purchase our ordinary shares owned by Multimedia Park Venture Capital Ltd., United
Capital Investment Group Limited, Media Investment Consulting Limited, Universal Media
Consulting Limited and Union Enterprises Group Limited, respectively. These entities are
collectively referred to in this annual report as the UCI Entities.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>Jimmy Wei Yu, one of our directors, has the sole investment and voting power over the
shares owned by the UCI Entities, except with respect to the shares owned by KTB/UCI, for
which Jimmy Wei Yu shares the investment and voting power with Wonho Hong. The address of the
UCI Entities is TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands.
Jimmy Wei Yu disclaims beneficial ownership of the shares owned by the UCI Entities except to
the extent of his pecuniary interest therein.</TD>
</TR>


</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of our major shareholders have different voting rights from those of our other
shareholders. To the best of our knowledge, we are not directly or indirectly controlled by
another corporation, by any foreign government or by any other natural or legal person severally or
jointly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not aware of any arrangement that may, at a subsequent date, result in a change of
control of our company.
</DIV>

<P align="center" style="font-size: 10pt">100
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For information regarding our shares held or beneficially owned by persons in the United
States, see &#147;Item&nbsp;9. The Offer and Listing&#151;Market Price Information for Our American Depositary
Shares&#148; in this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a summary of the material provisions of these agreements. For more complete
information you should read these agreements in their entirety. Directions on how to obtain copies
of these agreements are provided in this annual report under
&#147;Item&nbsp;10.H Additional Information&nbsp;&#151; Documents on
Display&#148; and &#147;Item&nbsp;19. Exhibits&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Agreements among Us, Focus Media Technology, Focus Media Digital, New Focus Media Advertisement,
Focus Media Advertisement and its Subsidiaries</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into a series of contractual arrangements with Focus Media Advertisement and
its shareholders and subsidiaries, including contracts relating to the provision of services and
certain shareholder rights and corporate governance matters. Each of our contractual arrangements
with Focus Media Advertisement and its shareholders and subsidiaries may only be amended with the
approval of our audit committee or another independent body of our board of directors.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transfer of Ownership When Permitted By Law</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the call option agreement, dated as of March&nbsp;28, 2005, and subsequent
participation letters by new subsidiaries of Focus Media Advertisement, by and among Focus Media
Technology, Focus Media Advertisement and its subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu,
each of Jason Nanchun Jiang, as a shareholder of Focus Media Advertisement, Jimmy Wei Yu, as a
shareholder of Focus Media Advertisement and certain of its subsidiaries, and Focus Media
Advertisement, as a shareholder of its subsidiaries, has granted Focus Media Technology or its
designee an exclusive option to purchase all or part of their equity interests in Focus Media
Advertisement, and its subsidiaries, or all or part of the assets of Focus Media Advertisement, in
each case, at any time determined by Focus Media Technology and to the extent permitted by PRC law.
Pursuant to a separate letter of undertaking entered into by and among us, Focus Media Technology,
Jason Nanchun Jiang and Jimmy Wei Yu, dated as of March&nbsp;28, 2005, each of Jason Nanchun Jiang and
Jimmy Wei Yu agrees to pay to Focus Media Technology or us any excess of the purchase price paid
for the equity interests in, or assets of, Focus Media Advertisement or its subsidiaries over the
respective registered capital of Focus Media Advertisement or its subsidiaries in the event that
Focus Media Technology or its designee exercises such option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Voting Arrangement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the voting rights proxy agreement, dated as of March&nbsp;28, 2005, and subsequent
participation letters by new subsidiaries of Focus Media Advertisement, by and among Focus Media
Technology, Focus Media Advertisement and its subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu,
Jason Nanchun Jiang, Jimmy Wei Yu and Focus Media Advertisement have granted a PRC individual
designated by Focus Media Technology the right to appoint all of the directors and senior
management of Focus Media Advertisement and those subsidiaries that it jointly owns with Jimmy Wei
Yu and all of their other voting rights as shareholders of Focus Media Advertisement and its
subsidiaries, as the case may be, as provided under the articles of association of each such
entity. Under the voting rights proxy agreement, there are no restrictions on the number, to the
extent allowed under the respective articles of association of Focus Media Advertisement and its
subsidiaries, or identity of those persons we can appoint as directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity Pledge Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the equity pledge agreement dated as of March&nbsp;28, 2005, and subsequent
participation letters by new subsidiaries of Focus Media Advertisement, by and among Focus Media
Technology, Focus Media Digital, Focus Media Advertisement and its subsidiaries, Jason Nanchun
Jiang and Jimmy Wei Yu, each of Jason Nanchun Jiang, Jimmy Wei Yu and Focus Media Advertisement has
pledged his or its equity interest in Focus Media Advertisement and its subsidiaries, as the case
may be, to Focus Media Technology and Focus Media Digital to secure their obligations under the
relevant contractual control agreements to which each is a party, including but not
</DIV>

<P align="center" style="font-size: 10pt">101
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">limited to, the obligations of Focus Media Advertisement and its subsidiaries under the
technical services agreement and the trademark licence agreement and the obligation of each of
Jason Nanchun Jiang and Jimmy Wei Yu under the respective loan agreement dated March&nbsp;28, 2005,
entered into by Focus Media Technology and Jason Nanchun Jiang and Jimmy Wei Yu, pursuant to which
Jason Nanchun Jiang obtained a loan in the amount of RMB35.5&nbsp;million ($4.4&nbsp;million) from Focus
Media Technology for the sole purpose of increasing the registered capital of Focus Media
Advertisement and Jimmy Wei Yu received a series of loans from Focus Media Technology for purposes
of increasing the registered capital of Focus Media Advertisement, and acquiring certain of our
regional distributors, respectively. See &#147;&#151; Loans to Jason Nanchun Jiang and Jimmy Wei Yu&#148;. Under
this equity pledge agreement, Jason Nanchun Jiang, Jimmy Wei Yu and Focus Media Advertisement have
agreed not to transfer, assign, pledge or otherwise dispose of their interest in Focus Media
Advertisement or its subsidiaries, as the case may be, without the prior written consent of Focus
Media Technology and Focus Media Digital.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity Trust Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the equity trust agreement by and among Focus Media Advertisement and Focus Media
Technology dated as of March&nbsp;28, 2005, Focus Media Advertisement holds a 9% equity interest in
Focus Media Digital in trust for the benefit of Focus Media Technology. Under the equity trust
agreement, Focus Media Technology provides trust funds to Focus Media Advertisement to be used for
the purchase of a 9% equity interest in Focus Media Digital and Focus Media Technology agrees to be
the beneficiary of any profits or other benefit generated that is attributable to the management,
use or disposal of the trust funds. Through these arrangements, we have enabled our indirect
subsidiary, Focus Media Technology, to beneficially hold an additional 9% of the interest in Focus
Media Digital in addition to the 90% equity interest it holds in its own name.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Trademark License Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the trademark license agreement by and among Focus Media Technology, Focus Media
Advertisement and its subsidiaries dated as of March&nbsp;28, 2005, Focus Media Technology has agreed to
license the use of its trademarks to be registered in China to Focus Media Advertisement and its
subsidiaries in exchange for a monthly licensing fee of RMB10,000 ($1,247) for each affiliated
company using such trademarks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cooperation Agreements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the cooperation agreements by and among New Focus Media Advertisement, Focus Media
Advertisement and its subsidiaries, dated as of May&nbsp;22, 2006, New Focus Media Advertisement
entrusted Focus Media Advertisement and its subsidiaries to disseminate advertisements as required
by New Focus Media Advertisement in all locations rented by Focus Media Advertisement and its
subsidiaries, and to sell advertising time slots for those locations, and each of Focus Media
Advertisement and its subsidiaries ensures the allocation of advertising time slots on its
respective portion of the advertising network adequate for the dissemination of advertising content
as agreed upon between New Focus Media Advertisement and its advertising clients. New Focus Media
Advertisement pays a dissemination fee to Focus Media Advertisement and its relevant subsidiaries
for dissemination services on a cost-plus basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Asset Transfer Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the asset transfer agreement entered into by and between Focus Media Digital and
New Focus Media Advertisement, dated as of December&nbsp;31, 2005, Focus Media Digital transferred to
New Focus Media Advertisement all of its assets relating to its out-of-home LCD television
advertising business at fair market value.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Technology Transfer Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the technology and assets transfer agreement by and between Focus Media Digital
and New Focus Media Advertisement, dated as of May&nbsp;22, 2006, Focus Media Digital transferred to New
Focus Media Advertisement all of its technology at a fixed fee.
</DIV>

<P align="center" style="font-size: 10pt">102
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Advertisement Dissemination Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the advertisement dissemination agreement by and between New Focus Media
Advertisement and Focus Media Advertising Agency, dated as of May&nbsp;22, 2006, New Focus Media
Advertisement agrees to disseminate advertisements for Focus Media Advertising Agency pursuant to
the agreements by and among Focus Media Advertising Agency and its clients, and Focus Media
Advertising Agency agrees to pay a dissemination fee to New Focus Media Advertisement for the
dissemination services.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Agreements Among Focus Media Advertisement, Focus Media Advertising Agency, Framedia Investment,
Framedia Advertisement, Guangdong Framedia and New Structure Advertisement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our acquisition of Framedia, we entered into a series of contractual
arrangements with Focus Media Advertisement&#146;s subsidiaries relating to our poster frame network,
Framedia Advertisement, New Structure Advertisement, and Guangdong Framedia, each of which is a
subsidiary of Focus Media Advertisement, including contracts relating to the provision of services
and certain shareholder rights and corporate governance matters. Each of our contractual
arrangements with Framedia Advertisement, Guangdong Framedia, New Structure Advertisement and their
shareholders may only be amended in writing by all of its parties unless the provisions being
amended only involve certain parties&#146; interests in which case the amendment shall be made in
writing by such parties. Each of Framedia Advertisement, Guangdong Framedia and New Structure
Advertisement is 90%-owned by Focus Media Advertisement and 10%-owned by Focus Media Advertising
Agency, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transfer of Ownership When Permitted By Law</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the call option agreements by and among Framedia Investment, Framedia
Advertisement, Guangdong Framedia, New Structure Advertisement, Focus Media Advertisement and Focus
Media Advertising Agency dated as of January&nbsp;13, 2006 and May&nbsp;22, 2006, each of Focus Media
Advertisement and Focus Media Advertising Agency as the shareholders of Framedia Advertisement, New
Structure Advertisement and Guangdong Framedia, have granted Framedia Investment or its designee an
exclusive option to purchase all or part of their equity interests in Framedia Advertisement,
Guangdong Framedia and New Structure Advertisement, in each case, at any time determined by
Framedia Investment and to the extent permitted by PRC law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Voting Arrangement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the voting rights proxy agreements by and among Framedia Investment, Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement, Focus Media Advertisement and
Focus Media Advertising Agency, dated as of January&nbsp;13, 2006 and May&nbsp;22, 2006, Focus Media
Advertisement and Focus Media Advertising Agency have granted a PRC individual designated by
Framedia Investment the right to appoint all of the directors and senior management of Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement and all of their other voting
rights as shareholders of Framedia Advertisement, Guangdong Framedia and New Structure
Advertisement, as the case may be, as provided under the articles of association of each such
entity. Under the voting rights proxy agreement, there are no restrictions on the number, to the
extent allowed under the respective articles of association of Framedia Advertisement, Guangdong
Framedia and New Structure Advertisement, or identity of those persons we can appoint as directors
and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity Pledge Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the equity pledge agreements by and among Framedia Investment, Focus Media
Advertisement, Focus Media Advertising Agency, Framedia Advertisement, Guangdong Framedia and New
Structure Advertisement, dated as of January&nbsp;13, 2006 and May&nbsp;22, 2006, each of Focus Media
Advertisement and Focus Media Advertising Agency has pledged his or its equity interest in Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement, as the case may be, to Framedia
Investment to secure their obligations under the
</DIV>

<P align="center" style="font-size: 10pt">103
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">relevant contractual control agreements to which each is a party, including the obligations of
each of Focus Media Advertisement and Focus Media Advertising Agency under the call option
agreement and the voting rights proxy agreement with Framedia Investment. Under this equity pledge
agreement, Focus Media Advertisement and Focus Media Advertising Agency have agreed not to
transfer, assign, pledge or otherwise dispose of their interest in Framedia Advertisement,
Guangdong Framedia and New Structure Advertisement, as the case may be, without the prior written
consent of Framedia Investment.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Agreements Among Focus Media Advertisement, Focus Media Advertising Agency, Focus Media Wireless
and Dotad Technology</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our acquisition of Focus Media Wireless, we entered into a series of
contractual arrangements with Focus Media Wireless which is a subsidiary of Focus Media
Advertisement, including contracts relating to the provision of services and certain shareholder
rights and corporate governance matters. Each of our contractual arrangements with Focus Media
Wireless and their shareholders may only be amended in writing by all of its parties unless the
provisions being amended only involve certain parties&#146; interests in which case the amendment shall
be made in writing by such parties. Focus Media Wireless is 90%-owned by Focus Media Advertisement
and 10%-owned by Focus Media Advertising Agency.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transfer of Ownership When Permitted By Law</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the call option agreement by and among Dotad Technology, Focus Media Wireless,
Focus Media Advertisement and Focus Media Advertising Agency dated as of May&nbsp;22, 2006, each of
Focus Media Advertisement and Focus Media Advertising Agency as the shareholders of Focus Media
Wireless, have granted Dotad Technology or its designee an exclusive option to purchase all or part
of their equity interests in Focus Media Wireless, at any time determined by Dotad Technology and
to the extent permitted by PRC law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Voting Arrangement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the voting rights proxy agreement by and among Dotad Technology, Focus Media
Wireless, Focus Media Advertisement and Focus Media Advertising Agency, dated as of May&nbsp;22, 2006,
Focus Media Advertisement and Focus Media Advertising Agency have granted a PRC individual
designated by Dotad Technology the right to appoint all of the directors and senior management of
Focus Media Wireless and all of their other voting rights as shareholders of Focus Media Wireless,
as provided under its articles of association. Under the voting rights proxy agreement, there are
no restrictions on the number, to the extent allowed under the articles of association of Focus
Media Wireless, or identity of those persons we can appoint as directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Equity Pledge Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the equity pledge agreement by and among Dotad Technology, Focus Media
Advertisement, Focus Media Advertising Agency and Focus Media Wireless, dated as of May&nbsp;22, 2006,
each of Focus Media Advertisement and Focus Media Advertising Agency has pledged his or its equity
interest in Focus Media Wireless to Dotad Technology to secure their obligations under the relevant
contractual control agreements to which each is a party, including the obligations of each of Focus
Media Advertisement and Focus Media Advertising Agency under the call option agreement and the
voting rights proxy agreement with Dotad Technology. Under this equity pledge agreement, Focus
Media Advertisement and Focus Media Advertising Agency have agreed not to transfer, assign, pledge
or otherwise dispose of their interest in Focus Media Wireless without the prior written consent of
Dotad Technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Related Party Transactions</B>
</DIV>


<P align="center" style="font-size: 10pt">104
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Shareholders Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the terms of the shareholders agreement with all of our existing shareholders,
such shareholders are entitled to demand registration rights and piggyback registration rights. At
any time after six months following the closing of our initial public offering,
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our shareholders representing a majority of the ordinary shares converted
from the Series&nbsp;A convertible redeemable preference shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our shareholders representing a majority of the ordinary shares converted
from the Series&nbsp;B convertible redeemable preference shares; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our shareholders who are former Target Media shareholders representing 25% of
the ordinary shares issued to them as a group as consideration in connection with our
acquisition of Target Media;</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">may require us to effect the registration, on a form other than Form F-3, of the registrable
securities then held by such shareholder. In addition, at any time after six months following the
closing of our initial public offering, any of our shareholders representing 20% of the ordinary
shares converted from the Series&nbsp;C convertible redeemable preference shares may require
registration for registrable securities with reasonably anticipated aggregate price (net of selling
expenses) of at least US$20&nbsp;million. We are not obligated to take any action to effect any such
registration on more than two occasions each on behalf of each group of shareholders described
above or more than once in any six month period or within six months of any other public offering
we conduct in which they had the opportunity to participate without the exclusion of any shares
eligible for registration under the shareholders agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, holders of any of our registrable securities may require us to effect a
registration statement on Form F-3 (or any successor form or any comparable form for a registration
in a jurisdiction other than the United States) for a public offering of registrable securities so
long as the reasonably anticipated aggregate price to the public (net of selling expenses) would be
at least $1,000,000 and we are entitled to use Form F-3 (or a comparable form) for such offering.
Holders of registrable securities may demand a registration on Form F-3 on unlimited occasions,
although we are not obligated to effect more than once in any six month period if within six months
of any other public offering we conduct in which they had the opportunity to participate without
the exclusion of any shares eligible for registration under the shareholders agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registrable securities are ordinary shares not previously sold to the public and issued or
issuable to holders of our preference shares, including (i)&nbsp;ordinary shares issued upon conversion
of our preference shares, (ii)&nbsp;ordinary shares issued or issuable upon exercise of their options or
warrants to purchase ordinary shares, and (iii)&nbsp;ordinary shares issued pursuant to share splits,
share dividends and similar distributions to holders of our preference shares. Under certain
circumstances, such demand registration may also include ordinary shares other than registrable
securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of registrable securities also have &#147;piggyback&#148; registration rights, which may require
us to register all or any part of the registrable securities then held by such holders when we
register any of our ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of the offerings involves an underwriting, the managing underwriter of any such
offering has certain rights to limit the number of shares included in such registration. However,
the number of registrable securities included in an underwritten public offering subsequent to our
initial public offering pursuant to &#147;piggyback&#148; registration rights may not be reduced to less than
30% of the aggregate securities included in such offering without the consent of a majority of the
holders of registrable securities who have requested their shares to be included in the
registration and underwriting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are generally required to bear all of the registration expenses incurred in connection with
any registration pursuant to the shareholders agreement.
</DIV>

<P align="center" style="font-size: 10pt">105
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Loans to Jason Nanchun Jiang and Jimmy Wei Yu</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;10, 2003, we, Jason Nanchun Jiang and Jimmy Wei Yu and one of our employees, Yuanzhe
Fu, and two of our former employees, Yibing Zhou and Yiqing Hou, executed a loan agreement of
indefinite term, under which we agreed to extend to each of Jason Nanchun Jiang, Jimmy Wei Yu,
Yuanzhe Fu, Yibing Zhou and Yiqing Hou a loan in the aggregate amount of RMB10.0&nbsp;million ($1.2
million) for the sole purpose of establishing and operating Focus Media Advertisement. Each of the
above individuals also agreed to pledge to us his respective shares in us to secure each of their
respective obligations under the loan agreement. In November&nbsp;2004, Yuanzhe Fu, Yibing Zhou and
Yiqing Hou transferred their share in us to Jimmy Wei Yu and as a result, their respective rights
and obligations under the loan agreement were assumed by Jimmy Wei Yu. As of March&nbsp;31, 2006, the
full amount of the loan remained outstanding. We granted this loan without interest and it is
payable on demand with thirty days&#146; prior notice to Mr.&nbsp;Jiang and Mr.&nbsp;Yu. Pursuant to the loan
agreements entered into by Focus Media Technology and Jason Nanchun Jiang and Jimmy Wei Yu,
respectively, Jason Nanchun Jiang obtained a loan in the amount of RMB35.5&nbsp;million ($4.4&nbsp;million)
from Focus Media Technology for the sole purpose of increasing the registered capital of Focus
Media Advertisement and Jimmy Wei Yu received a series of loans totaling RMB5,085,000 ($628,394)
from Focus Media Technology for purposes of increasing the registered capital of Focus Media
Advertisement and acquiring certain of our regional distributors, respectively. As of March&nbsp;28,
2005, the full amounts of the loans to Messrs.&nbsp;Jiang and Yu remained outstanding. Focus Media
Technology granted these loans without interest. The loans have a term of ten years starting from
March&nbsp;28, 2005 and are payable in full at the end of such ten-year term or, with thirty-days&#146;
written notice from Focus Media Technology to Messrs.&nbsp;Jiang and Yu, on demand. These loan
arrangements have been acknowledged and confirmed by the relevant parties in the loan agreement
between Focus Media Technology and Jason Nanchun Jiang and in the loan agreement by and among Focus
Media Technology, Focus Media Advertisement and Jimmy Wei Yu, both dated March&nbsp;28, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Loan from Relative of Jason Nanchun Jiang</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, Weiqiang Jiang, the father of Jason Nanchun Jiang, provided a short-term loan
to us of RMB 20.0&nbsp;million ($2.5&nbsp;million) to relieve a temporary shortage of Renminbi we were
experiencing at that time. The loan is unsecured and was provided to us at no interest. As of March
31, 2006, the full amount of the loan remained outstanding. The loan will become due and payable in
full on June&nbsp;30, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transactions with Everease</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to establishing our business, Jason Nanchun Jiang, our founder, chairman and chief
executive officer, served as the chief executive officer of Everease from 1994 to 2003. Everease
and our company were considered to be under common control and any transaction we entered into with
Everease were treated as related party transactions. Starting in the first quarter of 2005,
Everease ceased to be our related party. Our previous related party transactions with Everease are
described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Asset and Business Purchase Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the asset and business purchase agreement entered into between Everease and Focus
Media Advertisement dated July&nbsp;2003, Focus Media Advertisement purchased equipment and assets from
Everease for a consideration of RMB10&nbsp;million ($1.2&nbsp;million). The equipment consisted primarily of
LCD flat-panel displays and the business and other assets consisted of contracts and other
operations in connection with Everease&#146;s operation of the flat-panel displays in commercial
locations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transfer Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the transfer arrangements among Everease, Jason Nanchun Jiang and Focus Media in
May&nbsp;2003, Everease and Jason Nanchun Jiang transferred certain know-how in connection with
flat-panel display synchronization technology to us for a fee of $750,000. The know-how consisted
primarily of technology and engineering concepts used in the synchronization of our network panels
that are placed in close proximity to one another as well as other related expertise and knowledge
provided by Mr.&nbsp;Jiang in his services to us.
</DIV>

<P align="center" style="font-size: 10pt">106
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Everease Non-Competition Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the Everease Non-competition Agreement between Everease and us, dated as of
November&nbsp;2004, Everease, its affiliates, or its directors, officers or employees have agreed not to
disclose any confidential information regarding Focus Media to any third-party without our written
consent. In addition, for so long as Jason Nanchun Jiang continues to hold any equity interest in
our company and for two years thereafter, none of Everease, its affiliates, or its directors,
officers or employees may (i)&nbsp;engage in, or lend its name to, any business that competes with our
business, (ii)&nbsp;deal in a competitive manner with any of our customers, (iii)&nbsp;solicit any of our
directors, officers, employees or agents to become directors, officers, employees or agents of
others entities, or (iv)&nbsp;engage in any business conducted under a name that is the same as, or
similar to, ours or any trade name used by us where the use of such name is reasonably likely be
confused for our name. Everease entered into the non-competition agreement in consideration of its
business relationship with us at the time, which relationship was subsequently terminated, and
received no cash or other monetary compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Cooperation and Transfer Agreements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Everease and Beijing Suodi Advertising Co., Ltd., or Suodi Advertising, entered into a series
of project cooperation agreements in February, April and June&nbsp;2003 under which Suodi Advertising
agreed to develop Everease&#146;s flat-panel television advertising network by entering into display
placement agreements, to sell advertising time slots on Everease&#146;s advertising network and to
maintain the flat-panel displays on the network. In August&nbsp;2003, Everease, Suodi Advertising and
Focus Media Advertisement entered into a transfer agreement under which Everease transferred to
Focus Media Advertisement all of its rights and obligations under its original project cooperation
agreements with Suodi Advertising.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Advertising Services Provided to Everease</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided our advertising services to Everease in the aggregate amounts of $978,058 and
$1.2&nbsp;million in 2003 and 2004, respectively. These advertising services were provided in the
ordinary course of business on terms substantially similar to those provided to our unrelated
advertising clients on an arm&#146;s-length basis. Starting in the first quarter of 2005, Everease
ceased to be our related party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transactions with Entities Affiliated with Jimmy Wei Yu</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided our advertising services to certain companies for which Jimmy Wei Yu, one of
our directors, also serves as a director. The advertising service revenue for these services
totalled in the aggregate $120,821, $2.2&nbsp;million, $5.0&nbsp;million and $2.7&nbsp;million in 2003, 2004 and
2005 and for the three months ended March&nbsp;31, 2006, respectively. As of March&nbsp;31, 2006, $2.9
million remained outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These advertising services were provided in the ordinary course of business on terms
substantially similar to those provided to our unrelated advertising clients on an arm&#146;s-length
basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Transactions with Ctrip.com International</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have provided our advertising services to Ctrip.com International, Limited, which is
affiliated with Neil Nanpeng Shen, one of our directors, in the aggregate amount of $nil, $43,662,
$264,120 and $40,719 in 2003, 2004 and 2005 and for the three months ended March&nbsp;31, 2006,
respectively. Amounts due from Ctrip International in connection with these advertising services
totalled $44,895 as of March&nbsp;31, 2006. These advertising services were provided in the ordinary
course of business on terms substantially similar to those provided to our unrelated advertising
clients on an arm&#146;s-length basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Interests of Experts and Counsel</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<P align="center" style="font-size: 10pt">107
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 8. FINANCIAL INFORMATION</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Consolidated Statements and Other Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please refer to Item&nbsp;18 for a list of our annual consolidated financial statements filed as
part of this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legal Proceedings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;16, 2006, Shanghai Xicheng Cultural Dissemination Co., Ltd., also referred to as
CGEN, brought a suit against us in &#091;Shanghai municipal court&#093; on the grounds of unfair competition.
CGEN, which is developing a network of flat-panel displays in hypermarkets and supermarkets,
claims to have established an exclusive business relationship with the Hymart chain of supermarkets
in Shanghai. Hymart notified us that it had requested in writing to terminate its relationship with
CGEN. In CGEN&#146;s pleadings, it alleges that Focus Media encouraged and supported Hymart to allegedly
violate its agreement with CGEN, resulting in losses to CGEN. In its pleadings, CGEN has requested
that the court order Focus Media to cease any alleged unfair competitive behavior, to undo the
effects of any alleged unfair competition and to pay RMB 13,570,920 (US$1.7&nbsp;million) to CGEN. We
intend to defend against CGEN&#146;s claims to the fullest extent of the law. However, there can be no
assurance that we will prevail in any such litigation. We believe the outcome of this suit, even
if adversely determined, will not have a material adverse effect on our business or results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as disclosed above, we are not currently a party to any material legal proceeding. From
time to time, we may be subject to various claims and legal actions arising in the ordinary course
of business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividend Policy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not previously declared any dividends. In 2004, we recorded deemed dividends of $8.3
million, $2.2&nbsp;million and $13.4&nbsp;million in connection with our Series&nbsp;A, Series&nbsp;B and Series&nbsp;C-1
and Series&nbsp;C-2 convertible redeemable preference shares, of which $4.9&nbsp;million of the deemed
dividend related to the difference between the fair value at that time of the Series&nbsp;C-1
convertible redeemable preference shares and ordinary shares in connection with a sale of 9,729,600
ordinary shares by Jason Nanchun Jiang, our chairman and CEO, to a third-party investor, which
shares were redesignated as Series&nbsp;C-1 convertible redeemable preference shares. These deemed
dividends were not cash dividends and upon conversion of our Series&nbsp;A, Series&nbsp;B and Series&nbsp;C-1 and
Series&nbsp;C-2 convertible redeemable preference shares into ordinary shares, we are no longer required
to record deemed dividends prospectively. We currently intend to retain all available funds and any
future earnings for use in the operation and expansion of our business and do not anticipate paying
any cash dividends on our ordinary shares, or indirectly on our ADSs, for the foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future cash dividends, if any, will be at the discretion of our board of directors and will
depend upon our future operations and earnings, capital requirements and surplus, general financial
condition, shareholders&#146; interests, contractual restrictions and other factors as our board of
directors may deem relevant. In addition, we can pay dividends only out of our profits or other
distributable reserves. Any dividend we declare will be paid to the holders of ADSs, subject to the
terms of the deposit agreement, to the same extent as holders of our ordinary shares, less the fees
and expenses payable under the deposit agreement. Other distributions, if any, will be paid by the
depositary to holders of our ADSs in any means it deems legal, fair and practical. Any dividend
will be distributed by the depositary, in the form of cash or additional ADSs, to the holders of
our ADSs. Cash dividends on our ADSs, if any, will be paid in U.S. dollars.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Significant Changes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the date of the audited financial statements included as a part of this annual report,
the following significant changes have occurred:
</DIV>


<P align="center" style="font-size: 10pt">108
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On January&nbsp;1, 2006, we completed our acquisition of Framedia, which operates a
network of Framedia. Under the terms of the transaction we acquired Framedia from the
seller parties for $39.6&nbsp;million in cash and 22,157,003 of our ordinary shares, subject
to an earnout payment and other adjustments.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On January&nbsp;1, 2006, we entered into a share purchase agreement with Shenzhen E-Times
Advertising Company and Skyvantage Group Limited, which owns and operates an
in-elevator poster frame advertising network placed in commercial and residential
buildings mainly in Shenzhen and Guangzhou, China. Shenzhen E-times&#146; poster frame
network will be combined with Framedia&#146;s existing poster frame networks.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On February&nbsp;28, 2006, we completed our acquisition of Target Media Holdings, its
affiliated PRC entity Shanghai Target Media and its subsidiary Target Multi-Media, by
purchasing 100% of the shares of Target Media Holdings from its shareholders.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In January and February&nbsp;2006, we and certain of our pre-IPO shareholders
successfully completed a secondary offering. In this offering, including the
over-allotment option exercised by the underwriters, we sold 1,500,000 ADSs and the
selling shareholders sold an additional 5,915,389 ADSs to the public.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In March&nbsp;2006, we acquired Dotad Mobile Holdings, which we subsequently renamed
Focus Media Wireless Co., Ltd., or Focus Media Wireless, which is a provider of mobile
phone advertising services delivered to mobile wireless phone users accessed through
wireless service providers in China.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In April&nbsp;2006, we commenced operation of our new outdoor LED network, which consists
of 5&#146; x 5&#146; LED digital billboards installed on the street-sides in major shopping
districts and other locations with high pedestrian traffic in Shanghai and which
displays commercials on a repeating six-minute cycle.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>On June&nbsp;21, 2006, we and certain of our pre-IPO shareholders successfully completed
a follow-on public offering. In this offering, including the over-allotment option
exercised by the underwriters, we sold 1,600,000 ADSs and the selling shareholders sold
an additional 6,100,000 ADSs to the public.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please see the section titled &#147;Material Contracts&#148; of Item&nbsp;10.C. &#147;Additional information&#148;.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 9. THE OFFER AND LISTING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Offer and Listing Details</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Market Price Information for Our American Depositary Shares</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ADSs, each representing ten of our ordinary shares, have been listed on the Nasdaq
National Market since July&nbsp;13, 2005. Our ADSs trade under the symbol &#147;FMCN&#148;. For the period from
July&nbsp;13, 2005 to June&nbsp;21, 2006 the trading price of our ADSs on Nasdaq has ranged from US$17.60 to
US$69.95 per ADS. The following table provides the high and low trading prices for our ADSs on the
Nasdaq National Market Inc. for each month since July&nbsp;2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>SALE PRICE</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>HIGH</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>LOW</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>MONTHLY HIGHS AND LOWS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2005 </B>(from July&nbsp;13)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">July (from July&nbsp;13 until July&nbsp;31)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">August</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">September</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">October</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">November</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31.94</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">December</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.70</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">109
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>SALE PRICE</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>HIGH</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>LOW</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2006</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">January</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34.51</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">February</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">March</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">April</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">May</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69.95</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">June (through June&nbsp;23)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.84</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of June&nbsp;21, 2006, a total of 29,765,452 ADSs were outstanding. As of June&nbsp;21, 2006,
297,654,520 shares were registered in the name of a nominee of Citibank, N.A., the depositary under
the deposit agreement. We have no further information as to shares held, or beneficially owned, by
U.S. persons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Plan of Distribution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Markets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ADSs, each representing ten of our ordinary shares, have been trading on the Nasdaq
National Market since July&nbsp;13, 2005 under the symbol &#147;FMCN.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Selling Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Dilution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Expenses of the Issue</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 10. ADDITIONAL INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A.
Share Capital</B></DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Memorandum and Articles of Association</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incorporate by reference into this annual report the description of our amended and
restated memorandum and articles of association contained in our F-1 registration statement (File
No.&nbsp;333-134714), as amended, first filed with the Commission on June&nbsp;2, 2006.
</DIV>


<P align="center" style="font-size: 10pt">110
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Material Contracts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not entered into any material contracts other than in the ordinary course of business
or other than those described below and elsewhere in this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>E-Times</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2006, for an aggregate purchase price of $5.0&nbsp;million, we acquired the assets of
Shenzhen E-Times Advertising Co., Ltd. and the equity of Skyvantage Group Limited, which operated a
local out-of-home poster frame advertising network placed in commercial and residential buildings.
We refer to these entities collectively as E-Times. Following our acquisition of E-Times and, as
described below, Framedia, we combined Framedia and E-Times&#146; networks, which were substantially
similar businesses, and now market our poster frame network under the brand name &#147;Framedia&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Framedia</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On January&nbsp;1, 2006, we completed the acquisition of Infoachieve, and its affiliate Framedia
Advertisement by purchasing 100% of the shares of Infoachieve from Total Team, through which
Infoachieve held their respective interests in Infoachieve. Framedia installs and deploys poster
frames mainly inside elevators and throughout the public areas of residential complexes in major
cities in China and sells frame space to advertising clients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Share Purchase Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;15, 2005, we entered into a share purchase agreement to acquire the business of
Infoachieve, its subsidiary and affiliated PRC entities, by purchasing 100% of the shares in
Infoachieve from Total Team. Infoachieve, Total Team and its shareholders are referred to as the
seller parties below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a brief summary of material provisions of the share purchase agreement. This
summary is qualified in its entirety by reference to the share purchase agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Structure</I></B>. We acquired 100% of the shares of Infoachieve, which controls its affiliates
Framedia Advertisement, New Structure Advertisement and Guangdong Framedia through contractual
relationships with Framedia Advertisement, New Structure Advertisement and Guangdong Framedia and
their shareholders. Under the share purchase agreement, we gain control of Framedia Advertisement,
New Structure Advertisement and Guangdong Framedia by gaining the right (i)&nbsp;to appoint their equity
holders and (ii)&nbsp;to take over the contractual arrangements among Infoachieve, Framedia
Advertisement, New Structure Advertisement and Guangdong Framedia and their equity holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Purchase Price</I></B>. On December&nbsp;15, 2005, we paid the shareholders of Infoachieve $39.6&nbsp;million
in cash. At the closing on January&nbsp;1, 2006, we also issued to the former shareholders of
Infoachieve 19,306,840 Focus Media ordinary shares. We also issued 2,850,163 of our ordinary shares
to Total Team in consideration for their cancellation of the share option plan of Infoachieve prior
to our acquisition of it. Depending on Framedia&#146;s achievement of an earnings target in 2006, we may
issue additional Focus Media ordinary shares to Total Team in an amount no greater than $88.0
million as an earnout payment plus 400,000 ordinary shares that we withheld from the initial share
consideration pending Framedia&#146;s attainment of certain benchmarks, so that the maximum aggregate
payment for our acquisition of Framedia will be $183.0&nbsp;million. All shares issued or issuable
to Total Team in connection with our acquisition of Framedia are valued at a fixed price of $2.456
per share and locked up for a specified period of time.
</DIV>

<P align="center" style="font-size: 10pt">111
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Representations and Warranties</I></B>. In the share purchase agreement, the seller parties made
customary representations and warranties to us, which representations and warranties survive for a
period of two years following the closing date, and we made customary representations and
warranties to the seller parties, which representations and warranties survive for a period of six
months following the closing date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Covenants</I></B>. During the period from the date of the share purchase agreement to the earnout
payment date, Infoachieve and the other seller parties have agreed to operate Framedia&#146;s business
in the ordinary course of business and to use commercially reasonable efforts to preserve its
business intact and preserve its relationships with customers, suppliers, employees and others
doing business with Framedia. In furtherance of these covenants, from the date of the share
purchase agreement until the closing date, Infoachieve and Framedia have agreed not to take actions
as specified in the share purchase agreement, without our prior written consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The share purchase agreement also includes customary covenants relating to, among other
things, notification of certain matters, access to information, public announcements,
non-competition of certain persons, treatment of related party accounts, agreement to pay back or
cancel all outstanding loans of Framedia, preparation of financial accounts; and to allow us to
appoint certain management members to Framedia prior to the closing date. The share purchase
agreement also contains covenants requiring us to enable the seller parties to operate Framedia as
an independent business unit in 2006, and to retain certain existing senior management of Framedia.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Voting Rights</I></B>. Under the terms of the share purchase agreement, after we issue shares to
Total Team on behalf of the seller parties, each of the shareholders of Total Team is required to
exercise their voting rights in Focus Media&#146;s shares independently of each other and Total Team&#146;s
authorized representative is required to solicit a proxy statement from each shareholder indicating
how the votes to which each shareholder is entitled should be voted. In the event a shareholder
does not provide a proxy from a shareholder, the shareholder will be deemed to have abstained and
Total Team will not be entitled to cast such votes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Indemnification</I></B>. The seller parties have agreed to indemnify us for damages resulting from
inaccuracies of their representations and warranties or failure to perform their obligations under
the share purchase agreement. The seller parties&#146; indemnification obligation is limited to the
total consideration we are to pay to them. If the seller parties indemnify us using our common
shares, the value of such shares shall be the value of the shares when any indemnified losses
become payable. If the seller parties&#146; lock-up agreements are still in effect at such time, they
may dispose of only those shares that cover the amount of the indemnified losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to indemnify the seller parties for damages resulting from inaccuracies of our
representations and warranties or failure to perform our obligations under the share purchase
agreement. Our indemnification obligation is limited to the total consideration (excluding any
earnout payment) to be paid to the seller parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Control Over Framedia</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into a series of agreements with Focus Media Advertisement, Focus Media
Advertising Agency, Framedia Investment, Framedia Advertisement, Guangdong Framedia and its current
shareholders and New Structure Advertisement that provide us with effective control over Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement while enabling the Framedia
business to be consolidated with Infoachieve. These agreements are substantially similar to the
control agreements we have entered into with Focus Media Technology, Focus Media Digital, Focus
Media Advertisement and its shareholders and subsidiaries. See &#147;Item&nbsp;4.C Information on Our
Company&#151;Organization Structure&#151; Our Corporate Structure and Contractual Arrangements&#148; and &#147; Item
7.B Major Shareholders and Related Party Transactions&#151;Related Party Transactions &#151; Agreements Among
Focus Media Advertisement, Focus Media Advertising Agency, Framedia Investment, Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Target Media</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On February&nbsp;28, 2006, we acquired Target Media Holdings, its affiliated PRC entity Shanghai
Target Media and its subsidiary Target Multi-Media, by purchasing 100% of the shares of Target
Media Holdings from its shareholders. Target Media and several of its principal shareholders,
including David Feng Yu, its chairman of the
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">board of directors and SII International Holding
Limited, are referred to as the seller parties. Collectively, Target Media&#146;s shareholders,
including The Carlyle Group, are referred to as the Target Media selling shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is a brief summary of material provisions of the share purchase agreement. This
summary is qualified in its entirety by reference to the share purchase agreement filed as an
exhibit to our registration statement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Purchase Price</I></B>. We have agreed to pay the shareholders of Target Media US$94&nbsp;million in cash,
subject to a working capital adjustment, and 77&nbsp;million Focus Media ordinary shares. The cash
portion of the purchase price will be paid in three installments. The first installment of $45
million was paid at closing on February&nbsp;28, 2006. The second installment of $25&nbsp;million was paid on
April&nbsp;28, 2006. The final installment of $24&nbsp;million is to be paid on July&nbsp;31, 2006, and may be
increased or decreased based on a calculation of Target Media&#146;s net working capital as of the
closing date. All of the Focus Media ordinary shares delivered at closing under the share purchase
agreement were newly issued shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Focus Media Options</I></B>. We have also granted options to purchase up to 3,000,000 Focus Media
ordinary shares to an agreed upon list of current employees of Target Media who entered into new
employment agreements with Focus Media.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Representations and Warranties</I></B>. In the share purchase agreement, the seller parties made
customary representations and warranties to us, which generally survive for a period of six months
following the closing date. However, a number of specified representations and warranties survive
for longer periods or indefinitely. In the definitive share purchase agreement, the Target Media
selling shareholders also made customary representations and warranties to us, which generally
survive for a period of six months following the closing date. However, a number of specified
representations and warranties survive for longer periods or indefinitely. In the definitive share
purchase agreement, we made customary representations and warranties to the Target Media selling
shareholders, which generally survive for a period of six months following the closing date.
However, a number of specified representations and warranties survive for longer periods or
indefinitely.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Covenants</I></B>. The definitive share purchase agreement includes customary covenants relating to,
among other things, notification of certain matters, public announcements, non-competition of
certain persons, treatment of related party accounts and preparation of financial accounts. The
share purchase agreement also contains covenants requiring us to enter into employment agreements
with key employees of Target Media.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We agreed under the definitive share purchase agreement and the employment agreement with Mr.
David Feng Yu to appoint him as co-chairman of the board of directors and president of Focus Media
upon the completion of the acquisition. He is in charge of developing our outdoor LED network. We
also agreed to increase our board of directors from five to seven members at closing, and to assist
in the nomination and appointment of David Feng Yu, the founder, chairman and chief executive
officer of Target Media, and a nominee of David Feng Yu to fill the additional seats at the first
annual meeting of our shareholders following the closing. The director nominated by David Feng Yu
will qualify as an independent director for the purpose of complying with NASDAQ listing standards
and Sarbanes-Oxley Act requirements so that a majority of our board of directors continues to be
independent. See &#147;Item&nbsp;6.A Directors, Senior Management and Employees&#151;Directors and Senior
Management&#148;. We have also agreed to permit The Carlyle Group to appoint an observer to our board of
directors for a limited period of time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Indemnification</I></B>. The seller parties have agreed to indemnify us for damages resulting from
inaccuracies of their representations and warranties or failure to perform their obligations under
the share purchase agreement; losses arising out of indebtedness of Target Media not reflected in
its financial statements; losses arising out of or pursuant to terms of the contracts of Target
Media that were not disclosed to us prior to the closing date due to their commercially sensitive
nature and those terms are not in the ordinary course of business of Target Media; and certain tax
liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Two Target Media selling shareholders that hold an approximately 49.7% equity interest in
Target Media, or collectively, the Controlling Target Media Selling Shareholders, have agreed to
indemnify us for damages resulting from inaccuracies of representations and warranties in relation
to Target Media and the Controlling Target Media Selling Shareholders, respectively, or failure of
Target Media or the Controlling Target Media Selling Shareholders
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">to perform their respective
obligations under the share purchase agreement. The Target Media selling shareholders other than
the Controlling Target Media Selling Shareholders and The Carlyle Group, or collectively, the
Non-Controlling Target Media Selling Shareholders, have agreed to indemnify us for damages
resulting from inaccuracies of representations and warranties in relation to Target Media and the
Non-Controlling Target Media Selling Shareholders, respectively, or failure of the Non-Controlling
Target Media Selling Shareholders to perform their obligations under the share purchase agreement.
The Carlyle Group has agreed to indemnify us for damages resulting from inaccuracies of
representations and warranties in relation to The Carlyle Group, or failure of The Carlyle Group to
perform its obligations under the share purchase agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indemnification obligations of all Target Media selling shareholders (excluding The
Carlyle Group) are limited to US$80&nbsp;million, provided that the Controlling Target Media Selling
Shareholders shall be responsible for indemnifying us up to $325&nbsp;million for additional losses
arising out of several specified claims, including such contracts not disclosed to us prior to the
closing of the acquisition, which contracts contain clauses that are out of ordinary course of
Target Media&#146;s business. The indemnification obligation of The Carlyle Group is limited to $16.3
million, except for a breach with respect to their ownership of the shares they are selling to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For so long as the shares received by Target Media selling shareholders in this acquisition
are restricted from sales in the open market by either the lock-up, or securities laws, the Target
Media selling shareholders have the right to settle any indemnification obligation by paying us in
kind with our ordinary shares, valued at one-tenth of the closing price of our ADSs (each of which
represents ten of our ordinary shares) on the business day prior to the payment of such shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have agreed to indemnify the seller shareholders for damages resulting from inaccuracies of
our representations and warranties or failure to perform our obligations under the share purchase
agreement. Certain of our indemnification obligations are capped at $39&nbsp;million, while several
specified indemnification obligations of our company are capped at the total consideration to be
paid to the selling shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Focus Media Wireless</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, Focus Media acquired Dotad Media Holdings Limited, or Dotad Holdings, and its
wholly-owned PRC subsidiary Dotad Technology and their affiliated PRC operating company, now called
Beijing Focus Media Wireless Co., Ltd., or Focus Media Wireless, which operate a WAP-based
advertisement delivery platform in China through China Mobile and China Unicom&#146;s mobile networks.
Following our acquisition of Dotad Holdings, we rebranded the company under the brand name Focus
Media Wireless. Under the terms of the transaction, Focus Media acquired 100% of the equity of
Dotad for a purchase price of $15.0&nbsp;million in cash. In addition under the terms of the agreement,
if Focus Media Wireless attains net income of at least $5&nbsp;million and $8&nbsp;million during the twelve
month periods ended March&nbsp;31, 2007 and March&nbsp;31, 2008, respectively, for each of these two net
earnings attainments, we will issue 1,500,000 of our ordinary shares to the seller parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Exchange Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating businesses are currently conducted in China and substantially all of our
revenues and expenses are denominated in Renminbi. The People&#146;s Bank of China, or PBOC, 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 PBOC also takes into account
other factors, such as the general conditions existing in the international foreign exchange
markets. Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong
dollars and U.S. dollars, has been based on rates set by the PBOC, which are set daily based on the
previous day&#146;s inter-bank foreign exchange market rates and current exchange rates in the world
financial markets. From 1994 to July&nbsp;20, 2005, the official exchange rate for the conversion of
Renminbi to U.S. dollars was generally stable. 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 securities, requires the approval of the State Administration for
Foreign Exchange and other relevant authorities. On July&nbsp;21, 2005, the PRC government
introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate
within a regulated band based on market supply and demand and by reference to a basket of
currencies. On the same day, the value of the Renminbi appreciated by 2.0% against the U.S. dollar.
Since then, the PRC government has made, and may in the future make,
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">further adjustments to the
exchange rate system. The PBOC announces the closing price of a foreign currency traded against the
Renminbi in the inter-bank foreign exchange market after the closing of the market on each working
day, and makes it the central parity for the trading against the Renminbi on the following working
day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January and April&nbsp;2005, the PRC State Administration of Foreign Exchange, or SAFE, issued
two rules that require PRC residents to register with and receive approvals from SAFE in connection
with their offshore investment activities. SAFE has announced that the purpose of these regulations
is to achieve the proper balance of foreign exchange and the standardization of the cross-border
flow of funds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;21, 2005, SAFE issued 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, or Notice 75, which became effective as of November&nbsp;1,
2005. Notice 75 replaced the two rules issued by SAFE in January and April&nbsp;2005 mentioned above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;According to Notice 75:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>prior to establishing or assuming control of an offshore company for the purpose of
financing that offshore company with assets or equity interests in an onshore
enterprise in the PRC, each PRC resident, whether a natural or legal person, must
complete the overseas investment foreign exchange registration procedures with the
relevant local SAFE branch;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an amendment to the registration with the local SAFE branch is required to be filed
by any PRC resident that directly or indirectly holds interests in that offshore
company upon either (1)&nbsp;the injection of equity interests or assets of an onshore
enterprise to the offshore company, or (2)&nbsp;the completion of any overseas fund raising
by such offshore company; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an amendment to the registration with the local SAFE branch is also required to be
filed by such PRC resident when there is any material change involving a change in the
capital of the offshore company, such as (1)&nbsp;an increase or decrease in its capital,
(2)&nbsp;a transfer or swap of shares, (3)&nbsp;a merger or division, (4)&nbsp;a long term equity or
debt investment, or (5)&nbsp;the creation of any security interests over the relevant assets
located in China.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, Notice 75 applies retroactively. As a result, PRC residents who have established or
acquired control of offshore companies that have made onshore investments in the PRC in the past
are required to complete the relevant overseas investment foreign exchange registration procedures
by March&nbsp;31, 2006. Under the relevant rules, failure to comply with the registration procedures set
forth in Notice 75 may result in restrictions being imposed on the foreign exchange activities of
the relevant onshore company, including the payment of dividends and other distributions to its
offshore parent or affiliate and the capital inflow from the offshore entity, and may also subject
relevant PRC residents to penalties under PRC foreign exchange administration regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a Cayman Islands company, and therefore a foreign entity, if Focus Media Holding purchases
the assets or equity interest of a PRC company owned by PRC residents in exchange for our equity
interests, such PRC residents will be subject to the registration procedures described in Notice
75. Moreover, PRC residents who are beneficial holders of our shares are required to register with
SAFE in connection with their investment in us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of the lack of implementing rules and other uncertainties relating to the
interpretation and implementation of Notice 75, we cannot predict how these regulations will affect
our business operations or strategies. For example, our present or future PRC subsidiaries&#146; ability
to conduct foreign exchange activities, such as remittance of dividends and foreign-currency-
denominated borrowings, may be subject to compliance with such SAFE registration requirements by
relevant PRC residents, over whom we have no control. In addition, we cannot assure you that any
such PRC residents will be able to complete the necessary approval and registration procedures
required by the SAFE regulations. We require all the shareholders in Focus Media Holding who
are PRC residents to comply with any SAFE registration requirements, but we have no control over
either our shareholders or the outcome of such registration procedures. Such uncertainties may
restrict our ability to implement our acquisition strategy and adversely affect our business and
prospects.
</DIV>

<P align="center" style="font-size: 10pt">115
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Taxation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cayman Islands Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion of the material Cayman Islands federal income tax consequences of an
investment in our 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, possibly with retroactive effect. This
discussion does not deal with all possible tax consequences relating to an investment in our ADSs,
such as the tax consequences under state, local and other tax laws. To the extent that the
discussion relates to matters of Cayman Islands tax law, it represents the opinion of Conyers, Dill
&#038; Pearman, our special Cayman Islands counsel.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Cayman Islands currently levies no 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 or withholding tax applicable to us or to any holder of ADS, or ordinary shares. There
are no other taxes likely to be material to us levied by the Government of the Cayman Islands
except for stamp duties which may be applicable on instruments executed in, or after execution
brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman
Islands on transfers of shares of Cayman Islands companies except those which hold interests in
land in the Cayman Islands. The Cayman Islands is not party to any double taxation treaties. There
are no exchange control regulations or currency restrictions in the Cayman Islands.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Section&nbsp;6 of the Tax Concessions Law (1999 Revision) of the Cayman Islands, we
have obtained an undertaking from the Governor-in-Council:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on
profits or income or gains or appreciation shall apply to us or our operations; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall
not be payable on the shares, debentures or other obligations of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undertaking for us is for a period of twenty years from May&nbsp;3, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>United States Federal Income Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion, to the extent that it states matters of law or legal conclusions and
subject to the qualifications herein, represents the opinion of Simpson Thacher &#038; Bartlett LLP, our
United States counsel, on the material United States federal income tax consequences of the
ownership of our ADSs as of the date hereof. Except where noted, it deals only with ADSs held as
capital assets. This discussion does not represent a detailed description of the United States
federal income tax consequences applicable to you if you are subject to special treatment under the
United States federal income tax laws, including if you are:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a bank;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a dealer in securities or currencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a financial institution;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a regulated investment company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a real estate investment trust;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an insurance company;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a tax-exempt organization;</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person holding our ADSs as part of a hedging, integrated or conversion
transaction, a constructive sale or a straddle;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trader in securities that has elected the mark-to-market method of accounting for your securities;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person liable for alternative minimum tax;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person who owns 10% or more of our voting stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a partnership or other pass through entity for United States federal income tax purposes; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a person whose &#147;functional currency&#148; is not the United States dollar.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the &#147;Code&#148;), and regulations, rulings and judicial decisions thereunder as of the
date hereof, and such authorities may be repealed, revoked or modified so as to result in United
States federal income tax consequences different from those discussed below. In addition, this
summary is based, in part, upon representations made by the depositary to us and assumes that the
deposit agreement, and all other related agreements, will be performed in accordance with their
terms. <B>IF YOU ARE CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR ADSS, YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO YOU
IN LIGHT OF YOUR PARTICULAR SITUATION AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used herein, the term &#147;United States Holder&#148; means a beneficial holder of an ADS that is:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an individual citizen or resident of the United States;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation (or other entity treated as a corporation for United States federal
income tax purposes) created or organized in or under the laws of the United States,
any state thereof or the District of Columbia;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate the income of which is subject to United States federal income taxation
regardless of its source; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust which either (1)&nbsp;is subject to the primary supervision of a court within the
United States and one or more United States persons have the authority to control all
substantial decisions of the trust or (2)&nbsp;has a valid election in effect under
applicable United States Treasury regulations to be treated as a United States person.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a partnership holds ADSs, the tax treatment of a partner will depend upon the status of the
partner and the activities of the partnership. If you are a partner of a partnership holding our
ADSs, you should consult your tax advisors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ADSs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you hold ADSs, for United States federal income tax purposes, you generally will be treated
as the owner of the underlying Shares that are represented by such ADSs. Accordingly, deposits or
withdrawals of Shares for ADSs will not be subject to United States federal income tax.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The United States Treasury has expressed concerns that parties to whom ADSs are pre-released
may be taking actions that are inconsistent with the claiming, by United States Holders of ADSs, of
foreign tax credits for United States federal income tax purposes. Such actions would also be
inconsistent with the claiming of the reduced rate of tax applicable to dividends received by
certain non-corporate United States Holders, as described below.
</DIV>

<P align="center" style="font-size: 10pt">117
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Accordingly, the availability of
the reduced tax rate for dividends received by certain non-corporate United States Holders could be
affected by future actions that may be taken by the United States Treasury.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Taxation of Dividends</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion below under &#147;Passive Foreign Investment Companies&#148;, the gross amount
of distributions on the ADSs will be taxable as dividends, to the extent paid out of our current or
accumulated earnings and profits, as determined under United States federal income tax principles.
Such income will be includable in your gross income as ordinary income on the day actually or
constructively received by the depositary. Such dividends will not be eligible for the dividends
received deduction allowed to corporations under the Code. With respect to non-corporate United
States investors, certain dividends received before January&nbsp;1, 2009 from a qualified foreign
corporation may be subject to reduced rates of taxation. A foreign corporation is treated as a
qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADSs
backed by such shares) that are readily tradable on an established securities market in the United
States. United States Treasury Department guidance indicates that our ADSs, which are listed on the
Nasdaq National Market, will be readily tradable on an established securities market in the United
States. Non-corporate holders that do not meet a minimum holding period requirement during which
they are not protected from the risk of loss or that elect to treat the dividend income as
&#147;investment income&#148; pursuant to section 163(d)(4) of the Code will not be eligible for the reduced
rates of taxation regardless of our status as a qualified foreign corporation. In addition, the
rate reduction will not apply to dividends if the recipient of a dividend is obligated to make
related payments with respect to positions in substantially similar or related property. This
disallowance applies even if the minimum holding period has been met. You should consult your own
tax advisors regarding the application of this legislation to your particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that the amount of any distribution exceeds our current and accumulated earnings
and profits for a taxable year, as determined under United States federal income tax principles,
the distribution will first be treated as a tax-free return of capital, causing a reduction in the
adjusted basis of the ADSs (thereby increasing the amount of gain, or decreasing the amount of
loss, to be recognized by you on a subsequent disposition of the ADSs), and the balance in excess
of adjusted basis will be taxed as capital gain recognized on a sale or exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions of ADSs, ordinary shares or rights to subscribe for ordinary shares that are
received as part of a pro rata distribution to all of our shareholders generally will not be
subject to United States federal income tax. The basis of the new ADSs, ordinary shares or rights
so received will be determined by allocating the your basis in the old ADSs between the old ADSs
and the new ADSs, ordinary shares or rights received, based on their relative fair market values on
the date of distribution. However, the basis of the rights will be zero if:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the fair market value of the rights is less than 15&nbsp;percent of the fair market value
of the old ADSs at the time of distribution, unless you elect to determine the basis of
the old ADSs and of the rights by allocating the adjusted basis of the old ADSs between
the old ADSs and the rights, or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the rights are not exercised and thus expire.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Passive Foreign Investment Companies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate an active advertising business in China and based on the past and projected
composition of our income and valuation of our assets, including goodwill, we believe we were not a
passive foreign investment company for 2005, we do not expect to be a passive foreign investment
company (&#147;PFIC&#148;), for 2006, and we do not expect to become one in the future, although there can be
no assurance in this regard. Because PFIC status is a factual determination, our United States
counsel expresses no opinion with respect to our PFIC status and also expresses no opinion with
respect to our expectations contained in this paragraph.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will be a PFIC for any taxable year in which:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least 75% of our gross income is passive income, or</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>at least 50% of the value (determined on a quarterly basis) of our assets is
attributable to assets that produce or are held for the production of passive income.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For this purpose, passive income includes dividends, interest, royalties and rents (other than
royalties and rents derived in the active conduct of a trade or business and not derived from a
related person). If we own at least 25% (by value) of the stock of another corporation, we will be
treated, for purposes of the PFIC tests, as owning our proportionate share of the other
corporation&#146;s assets and receiving our proportionate share of the other corporation&#146;s income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The determination of whether we are a PFIC is made annually for each taxable year of the
Company. Accordingly, it is possible that we may become a PFIC in the current or any future taxable
year due to changes in our asset or income composition. We could become a PFIC, for example though
a combination of factors, such as a failure to spend a sufficient amount of the net proceeds of the
offering (resulting in our holding cash, a passive asset) coupled with a decrease in the price of
our Shares (resulting in a decrease in the value of our goodwill, an active asset). Because of the
fact specific nature of the inquiry, we cannot predict at this time what portion of the net
proceeds we would need to spend in order to avoid PFIC status. If we are a PFIC for any taxable
year during which you hold our ADSs, you will be subject to special tax rules discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are a PFIC for any taxable year during which you hold our ADSs, you will be subject to
special tax rules with respect to any &#147;excess distribution&#148; received and any gain realized from a
sale or other disposition, including a pledge, of ADSs. Distributions received in a taxable year
that are greater than 125% of the average annual distributions received during the shorter of the
three preceding taxable years or your holding period for the ADSs will be treated as excess
distributions. Under these special tax rules:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the excess distribution or gain will be allocated ratably over your holding period
for the ADSs,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the amount allocated to the current taxable year, and any taxable year prior to the
first taxable year in which we were a PFIC, will be treated as ordinary income, and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the amount allocated to each other year will be subject to tax at the highest tax
rate in effect for that year and the interest charge applicable to underpayments of tax
will be imposed on the resulting tax attributable to each such year.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, non-corporate United States Holders will not be eligible for reduced rates of
taxation on any dividends received from us prior to January&nbsp;1, 2011, if we are a PFIC in the
taxable year in which such dividends are paid or in the preceding taxable year. You will be
required to file Internal Revenue Service Form&nbsp;8621 if you hold our ADSs in any year in which we
are classified as a PFIC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In certain circumstances, in lieu of being subject to the excess distribution rules discussed
above, you may make an election to include gain on the stock of a PFIC as ordinary income under a
mark-to-market method provided that such stock is regularly traded on a qualified exchange. Under
current law, the mark-to-market election may be available because the ADSs will be listed on the
Nasdaq National Market, which constitutes a qualified exchange as designated in the Internal
Revenue Code, although there can be no assurance that the ADSs will be &#147;regularly traded&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If you make an effective mark-to-market election, you will include in each year as ordinary
income the excess of the fair market value of your ADSs at the end of the year over your adjusted
tax basis in the ADSs. You will be entitled to deduct as an ordinary loss each year the excess of
your adjusted tax basis in the ADSs over their fair market value at the end of the year, but only
to the extent of the net amount previously included in income as a result of the mark-to-market
election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your adjusted tax basis in the ADSs will be increased by the amount of any income inclusion
and decreased by the amount of any deductions under the mark-to-market rules. If you make a
mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years
unless the ADSs are no longer regularly traded on a qualified exchange or the Internal Revenue
Service consents to the revocation of the
</DIV>

<P align="center" style="font-size: 10pt">119
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">election. You are urged to consult your tax advisor about
the availability of the mark-to-market election, and whether making the election would be advisable
in your particular circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Alternatively, you can sometimes avoid the rules described above by electing to treat us as a
&#147;qualified electing fund&#148; under section 1295 of the Code. This option is not available to you
because we do not intend to comply with the requirements necessary to permit you to make this
election.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You are urged to consult your tax advisors concerning the United States federal income tax
consequences of holding ADSs if we are considered a PFIC in any taxable year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Taxation of Capital Gains</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion above under &#147;Passive Foreign Investment Companies&#148;, for United
States federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange
of ADSs in an amount equal to the difference between the amount realized for the ADSs and your tax
basis in the ADSs. Such gain or loss will generally be capital gain or loss. Capital gains of
individuals derived with respect to capital assets held for more than one year are eligible for
reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain
or loss recognized by you will generally be treated as United States source gain or loss.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Information Reporting and Backup Withholding</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Information reporting will apply to dividends in respect of our ADSs and the proceeds from the
sale, exchange or redemption of our ADSs that are paid to you within the United States (and in
certain cases, outside the United States), unless you are an exempt recipient such as a
corporation. A backup withholding tax may apply to such payments if you fail to provide a taxpayer
identification number or certification of other exempt status or fail to report in full dividend
and interest income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against your United States federal income tax liability provided the required information is
furnished to the Internal Revenue Service.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PROSPECTIVE PURCHASERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF
THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY ADDITIONAL TAX
CONSEQUENCES RESULTING FROM PURCHASING, HOLDING OR DISPOSING OF ADSs, INCLUDING THE APPLICABILITY
AND EFFECT OF THE TAX LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION, INCLUDING ESTATE, GIFT, AND
INHERITANCE LAWS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Dividends and Paying Agents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>G. Statement by Experts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>H. Documents on Display</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have filed this annual report on Form 20-F, including exhibits, with the SEC. As allowed by
the SEC, in Item&nbsp;19 of this annual report, we incorporate by reference certain information we filed
with the SEC. This means that we can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated by reference is
considered to be part of this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have previously filed with the Commission our registration statements on Form F-1 and
prospectuses under the Securities Act of 1933, as amended, with respect to our ADSs.
</DIV>

<P align="center" style="font-size: 10pt">120
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The SEC also maintains a website that contains reports, proxy statements and other information
about issuers, such as us, who file electronically with the SEC. The address of that website is
<U>http://www.sec.gov</U>. The information on that website is not a part of this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will furnish to Citibank, N.A., as depositary of our ADSs, our annual reports. When the
depositary receives these reports, it will upon our request promptly provide them to all holders of
record of ADSs. We will also furnish the depositary with all notices of shareholders&#146; meetings and
other reports and communications in English that we make available to our shareholders. The
depositary will make these notices, reports and communications available to holders of ADSs and
will upon our request mail to all holders of record of ADSs the information contained in any notice
of a shareholders&#146; meeting it receives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to periodic reporting and other informational requirements of the Exchange Act,
as applicable to foreign private issuers. Accordingly, we are required to file reports, including
annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we
are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy
statements to shareholders under the federal proxy rules contained in Sections&nbsp;14(a), (b)&nbsp;and (c)
of the Exchange Act, and our executive officers, directors and principal shareholders are exempt
from the reporting and short-swing profit recovery provisions contained in Section&nbsp;16 of the
Exchange Act. The registration statements, reports and other information so filed can be inspected
and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. Subsidiary Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Interest Rate Risk</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to interest rate risk primarily relates to the interest income generated by
excess cash, which is mostly held in interest-bearing bank deposits. We have not used 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 market interests rates. However, our future interest income may fall short of
expectations due to changes in market interest rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Foreign Currency Risk</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all our revenues and expenses are denominated in Renminbi. We have not had any
material foreign exchange gains or losses. Although in general, our exposure to foreign exchange
risks should be limited, the value of your investment in our ADSs will be affected by the foreign
exchange rate between U.S. dollars relative to the Renminbi because the value of our business is
effectively denominated in Renminbi, while the ADSs will be traded in U.S. dollars. Furthermore, a
decline in the value of the Renminbi could reduce the U.S. dollar equivalent of the value of the
earnings from, and our investments in, our subsidiaries and PRC-incorporated affiliates in China.
In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar
would affect our reported financial results in U.S. dollar terms. See &#147;Item&nbsp;3.B. &#151; Risk Factors &#151;
Risks Relating to the People&#146;s Republic of China &#151; Fluctuations in exchange rates could result in
foreign currency exchange losses&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Inflation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In recent years, China has not experienced significant inflation, and thus inflation has not
had a significant effect on our business historically. According to the National Bureau of
Statistics of China, the change in the Consumer Price Index in China was 0.7%, (0.8)%, 1.2%, 3.9% and 1.8% in 2001, 2002, 2003, 2004
and 2005, respectively.
</DIV>

<P align="center" style="font-size: 10pt">121
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not applicable.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of these events occurred in any of fiscal 2003, 2004 and 2005.
</DIV>
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A.
Modifications of Rights</B></DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the closing of our acquisition of Target Media, we amended our shareholder&#146;s agreement to
grant the former shareholders of Target Media registration rights with regard to the Focus Media
ordinary shares we issued to such former Target Media shareholders. Such shareholders are now
entitled to demand registration rights and piggyback registration rights under our amended and
restated shareholders agreement. At any time after six months following the closing of our initial
public offering,
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our shareholders representing a majority of the ordinary shares converted
from the Series&nbsp;A convertible redeemable preference shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our shareholders representing a majority of the ordinary shares converted
from the Series&nbsp;B convertible redeemable preference shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>any of our shareholders representing 20% of the ordinary shares converted from the
Series&nbsp;C convertible redeemable preference shares; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>since the closing of our acquisition of Target Media, any of the former Target Media
shareholders representing 25% of the ordinary shares issued to them as a group as
consideration in connection with our acquisition of Target Media;</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">may require us to effect the registration, on a form other than Form F-3, of at least 25% of the
registrable securities then outstanding. We are not obligated to take any action to effect any such
registration on more than two occasions each on behalf of each group of shareholders described
above or more than once in any six month period or within six months of any other public offering
we conduct in which they had the opportunity to participate without the exclusion of any shares
eligible for registration under the shareholders agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, holders of any of our registrable securities may require us to effect a
registration statement on Form F-3 (or any successor form or any comparable form for a registration
in a jurisdiction other than the United States) for a public offering of registrable securities so
long as the reasonably anticipated aggregate price to the public (net of selling expenses) would be
at least $1,000,000 and we are entitled to use Form F-3 (or a comparable form) for such offering.
Holders of registrable securities may demand a registration on Form F-3 on unlimited occasions,
although we are not obligated to effect more than once in any six month period if within six months
of any other public offering we conduct in which they had the opportunity to participate without
the exclusion of any shares eligible for registration under the shareholders agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following &#147;Use of Proceeds&#148; information relates to
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the registration statement on Form F-1 (File No.&nbsp;333-125785) (the &#147;IPO Registration
Statement&#148;) for our initial public offering of 7,757,500 ADSs, for an aggregate
offering price of $131,877,500, which
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">122
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>IPO Registration Statement was declared effective
by the SEC on July&nbsp;12, 2005 and was terminated after all of the registered securities
were sold;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the registration statements on Form F-1 (File No.&nbsp;333-131065) (the &#147;Follow-on
Registration Statement&#148;) and on Form F-1MEF (File No.&nbsp;333-131312 (the &#147;462(b)
Registration Statement&#148;) for our follow-on public offering of 1,500,000 ADSs, for an
aggregate offering price of $65,250,000, which Follow-on Registration Statement was
declared effective by the SEC on January&nbsp;26, 2006 and which 462(b) Registration
Statement was effective upon filing on January&nbsp;27, 2006 and each of which was
terminated after all of the registered securities were sold; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the registration statement on Form F-1 (File No.&nbsp;333-134714) (the &#147;Second Follow-on
Registration Statement&#148;) and on Form F-1MEF (File No.&nbsp;333-135062) (the &#147;Second 462(b)
Registration Statement&#148;) for our second follow-on offering of 1,600,000 ADSs, for an
aggregate offering price of $86,400,000, which Second Follow-on Registration Statement
was declared effective by the SEC on June&nbsp;15, 2006 and which Second 462(b) Registration
Statement was effective on filing on June&nbsp;16, 2006, and each of which was terminated
after all of the securities were sold.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We received net proceeds of approximately $118.2&nbsp;million from our initial public offering and
net proceeds of approximately $61.8&nbsp;million from our follow-on public offering. None of the
transaction expenses for either offering included payments to directors or officers of our company
or their associates, persons owning more than 10% or more of our equity securities or our
affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We used the net proceeds received from our initial public offering as follows: approximately
$63.1&nbsp;million for acquisitions, approximately $19&nbsp;million for capital expenditures in connection
with the expansion of our commercial location and in-store networks, approximately $35&nbsp;million was
invested in available-for-sale government securities, approximately $1.1&nbsp;million for expenses
incurred in connection with strengthening internal controls and with being a public company, as
well as for general corporate purposes. As of May&nbsp;30, 2006, all of the net offering proceeds from
our initial public offering had been applied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goldman Sachs (Asia) L.L.C., Credit Suisse, CIBC World Markets and Piper Jaffray were the
underwriters for our initial public offering. December&nbsp;31, 2005, all of the net offering proceeds
from our initial public offering had been applied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We used the net proceeds received from our follow-on public offering as follows:
approximately $58.8&nbsp;million for acquisitions, approximately $3.0&nbsp;million for capital expenditures in
connection with the expansion of our commercial location and in-store networks, As of May&nbsp;30, 2006,
all of the proceeds of our first follow-on offering had been applied.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goldman Sachs (Asia) L.L.C., Credit Suisse, Citigroup Global Markets Inc., Morgan Stanley and
Piper Jaffray were the underwriters for our first follow-on public offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to use the net proceeds received from our follow-on public offering as follows:
approximately $24.0&nbsp;million for the final cash installment in connection with our acquisition of
Target Media, approximately $20.0&nbsp;million for capital expenditures in connection with the expansion
of our out-of-home television networks, approximately and the remainder for general corporate
purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit Suisse, Goldman Sachs (Asia) L.L.C., Merrill Lynch, Pierce, Fenner &#038; Smith
Incorporated, Citigroup Global Markets, Inc., Lehman Brothers Inc. and Piper Jaffray were the
underwriters for our follow-on public offering.
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the end of the period covered by this annual report, an evaluation has been carried out
under the supervision and with the participation of our management, including our chief executive
officer and our chief financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as such
</DIV>

<P align="center" style="font-size: 10pt">123
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">term is defined under Rules&nbsp;13a-14(c) and 15d-14(c)
promulgated under the Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;). Based on
that evaluation, our chief executive officer and chief financial officer have concluded that our
disclosure controls and procedures are effective in ensuring that material information required to
be disclosed in this annual report is recorded, processed, summarized and reported to them for
assessment, and required disclosure is made within the time period specified in the rules and forms
of the Securities and Exchange Commission. In addition, we established a Disclosure Committee in
mid-2006 to assist us in fulfilling our responsibility for oversight of the accuracy and timeliness
of our periodic reports filed with the Securities and Exchange Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There has been no change in our internal control over financial reporting that occurred during
the period covered by this annual report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Board of Directors has determined that Neil Nanpeng Shen and Charles Chao qualify as audit
committee financial expert as defined in Item&nbsp;16A of the instruction to Form 20-F.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16B. CODE OF ETHICS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors adopted a code of business conduct and ethics on April&nbsp;16, 2005, which
is applicable to our directors, officers and employees. Our code of business conduct and ethics is
publicly available on our website at:
http://nocache.corporate-ir.net/media_files/irol/19/190067/corp_gov/Conduct_and_Ethics.pdf.
</DIV>
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the aggregate fees by categories specified below in connection
with certain professional services rendered by Deloitte Touche Tohmatsu CPA Ltd., our independent
registered public accounting firm, for the years indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 0px solid #000000"><B>$</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(in thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit Fees <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">711,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Audit-related Fees <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax Fees <SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All Other Fees <SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>


<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">314,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">757,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Audit fees consist of fees associated with the annual audit, the reviews of our
quarterly financial statements and statutory audits required internationally. They also
include fees billed for those services that are normally provided by the independent
accountants in connection with statutory and regulatory filings.</TD>
</TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Audit-related fees consist of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of our financial
statements but not described in footnote (1)&nbsp;above. These services include consultations
concerning &#091;financial accounting and reporting standards and review of capitalization of
retained earnings, financial covenants in loan agreements, and our affiliates&#146; financial
information&#093;.
</TD>
</TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Tax fees include fees billed for professional services rendered by Deloitte Touche
Tohmatsu CPA Ltd., primarily in connection with our tax compliance activities.</TD>
</TR>

<TR valign="top">

<TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>All other fees comprise fees for all other services provided by Deloitte Touche
Tohmatsu CPA Ltd., other than those services covered in footnotes (1)&nbsp;to (3)&nbsp;above.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to forming an audit committee, our board of directors is responsible for the
oversight of our independent registered public accounting firm. The policy of our board of
directors is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu
CPA Ltd., including audit services, audit-related services, tax services and other services, as
described above.
</DIV>

<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>

<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">None.
</DIV>


<P align="center" style="font-size: 10pt">124
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Registrant has elected to provide the financial statements and related information specified in Item&nbsp;18.
</DIV>

<DIV align="left">
<A name="128"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 18. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>The following is a list of the audited financial statements and report of independent
registered public accounting firm included in this annual report beginning on page F-1.</I>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>

</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Financial Statements of Focus Media Holding Limited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Report of Independent Registered Public Accounting</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">F-2</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Consolidated Balance Sheets as of December&nbsp;31, 2004 and 2005 and as of March&nbsp;31, 2006 (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">F-3</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Consolidated Statements of Operations for each of the years ended December&nbsp;31, 2003, 2004 and
2005 and for the three month period ended March&nbsp;31, 2005 (unaudited)&nbsp;and 2006 (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">F-4</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Consolidated Statements of Changes in Shareholders&#146; Equity (Deficiency) and Comprehensive Income
(Loss) for the years ended December&nbsp;31, 2003, 2004 and 2005 and for the three month period ended
March&nbsp;31, 2006 (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">F-5</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2003, 2004 and 2005 and
for the three month period ended March&nbsp;31, 2005 (unaudited)&nbsp;and 2006 (unaudited)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">F-6</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes to the Consolidated Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">F-8</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">125
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="129"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 19. EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description of Exhibits</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">1.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Underwriting Agreement.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">3.1<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Memorandum and Articles of Association of Focus Media Holding Limited.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.1<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Specimen Ordinary Share Certificate.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.2<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Amended and Restated Shareholders Agreement of Focus Media Holding Limited, dated December&nbsp;2,
2004, among Focus Media Holding Limited, its subsidiaries, its ordinary shareholders, its
preferred shareholders and the investors named therein.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">4.3<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Deposit Agreement dated July&nbsp;18, 2005 among the Registrant, Citibank, N.A. and holders of the
American Depositary Receipts (incorporated by reference to the registration statement on Form&nbsp;F-6
(File No.&nbsp;333-126011) filed with the Securities and Exchange Commission with respect to American
Depositary Shares representing ordinary shares).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">5.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of opinion of Conyers, Dill &#038; Pearman, Cayman Islands special counsel to the registrant,
regarding the validity of the ordinary shares being registered.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">5.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of opinion of Global Law Office, counsel as to PRC law to the registrant, regarding the
validity of (i)&nbsp;the corporate structure of Focus Media Technology (Shanghai) Co., Ltd. and
Shanghai Focus Media Advertisement Co., Ltd. and contractual arrangements among Focus Media
Technology (Shanghai) Co., Ltd., Shanghai Focus Media Advertisement Co., Ltd. and its
subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu, (ii)&nbsp;the corporate structure of Framedia
Investment and Shanghai Framedia Advertisement Development Co., Ltd. and contractual arrangements
among Framedia Investment and Shanghai Framedia Advertisement Development Co., Ltd. and its
subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu and (iii)&nbsp;the corporate structure of Shanghai
Focus Media Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing
Dotad Technology Co., Ltd., Beijing Focus Media Wireless Technology Co., Ltd., Jason Nanchun Jiang
and Jimmy Wei Yu.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of opinion of Conyers, Dill &#038; Pearman, special Cayman Islands tax counsel to the registrant,
regarding tax matters.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">8.2*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of opinion of Simpson Thacher &#038; Bartlett LLP regarding United States federal taxation matters.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.1<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rules of the 2003 Employee Share Option Scheme and form of grant letter.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.2<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Technology License and Service Agreement, dated March&nbsp;28, 2005, by and among Focus Media Digital
Information Technology (Shanghai) Co., Ltd., Shanghai Focus Media Advertisements Co., Ltd. and the
subsidiaries of Shanghai Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.3<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Business Cooperation Agreement, dated March&nbsp;28, 2005, by and among Shanghai Focus Media
Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd. and the subsidiaries of
Shanghai Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.4<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equity Pledge Agreement, dated March&nbsp;28, 2005, by and among Jason Nanchun Jiang, Jimmy Wei Yu,
Shanghai Focus Media Advertisement Co., Ltd., Focus Media Technology (Shanghai) Co., Ltd., Focus
Media Digital Information Technology (Shanghai) Co., Ltd. and the subsidiaries of Shanghai Focus
Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.5<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Call Option Agreement, dated March&nbsp;28, 2005, among Jason Nanchun Jiang, Jimmy Wei Yu, Shanghai
Focus Media Advertisement Co., Ltd. and Focus Media Technology (Shanghai) Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.6<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shareholders&#146; Voting Rights Proxy Agreement, dated March&nbsp;28, 2005, among Jason Nanchun Jiang,
Jimmy Wei Yu, Shanghai Focus Media Advertisement Co., Ltd., Focus Media Technology (Shanghai) Co.,
Ltd. and the subsidiaries of Shanghai Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.7<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Trust Agreement, dated March&nbsp;28, 2005, by and between Shanghai Focus Media Advertisement Co., Ltd.
and Focus Media Technology (Shanghai) Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.8<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Trademark License Agreement, dated March&nbsp;28, 2005, by and among Focus Media Technology (Shanghai)
Co., Ltd., Shanghai Focus Media Advertisement Co., Ltd. and its subsidiaries.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.9<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan Agreement, dated June&nbsp;10, 2003, among Focus Media Holding Limited, Jason Nanchun Jiang, Jimmy
Wei Yu, Yuanzhe Fu, Yibing Zhou and Yiqing Hou.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.10<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan Agreement, dated March&nbsp;28, 2005, by and between Jason Nanchun Jiang and Focus Media
Technology (Shanghai) Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.11<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Loan Agreement, dated March&nbsp;28, 2005, by and among Jimmy Wei Yu, Focus Media Technology (Shanghai)
Co., Ltd. and Shanghai Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.12<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Form of Employment Agreement of Focus Media Technology (Shanghai) Co., Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">126
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description of Exhibits</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.13<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Manager Non-Competition Agreement entered into by Focus Media Holding Limited and Jason Nanchun
Jiang on November&nbsp;29, 2004.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.14<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Technology Transfer Agreement entered into by Jimmy Wei Yu and Focus Media Digital Information
(Shanghai) Co., Ltd., dated November&nbsp;1, 2004.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.15<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Asset and Business Acquisition Agreement between Shanghai Everease Communication Company and
Shanghai Focus Media Advertisement Co., Ltd. dated July&nbsp;1, 2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.16<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Everease Non-competition Agreement between Focus Media Holding Limited and Shanghai Everease
Communication Company, dated as of November&nbsp;2004.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.17<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Sales Contract between Shanghai Everease Communication Company and Shanghai Focus Media
Advertisement Co., Ltd., dated May&nbsp;2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.18<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Project Cooperation Framework Agreement between Shanghai Everease Communication Company and
Beijing Suodi Advertising Co., Ltd., dated February, April and June&nbsp;2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.19<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Transfer Agreement on Project Cooperation Framework Agreement between Shanghai Focus Media
Advertisement Co., Ltd. and Beijing Suodi Advertising Co., Ltd., dated August&nbsp;28, 2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.20<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Business Agency Agreement between Shanghai On-Target Advertising Co., Ltd. and Shanghai Focus
Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.21<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Agreement between Shanghai On-Target Advertising Co., Ltd., Jimmy Wei Yu, Shanghai Focus Media
Advertisement Co., Ltd., Union Enterprise Holding Co., Ltd. and Shenlong Lin, dated October&nbsp;15,
2003.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.22<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter entered into as of March&nbsp;28, 2005 by and among Shanghai Focus Media
Advertisement Co., Ltd., Focus Media Technology (Shanghai) Co., Ltd., Focus Media Digital
Information Technology (Shanghai) Co., Ltd. and subsidiaries of Shanghai Focus Media Advertisement
Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.23<SUP style="font-size: 85%; vertical-align: text-top">&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Share Option Plan 2005.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.24<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Fuzhou Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.25<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.26<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.27<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenyang Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.28<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.29<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.30<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Call Option Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Fuzhou Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.31<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Call Option Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.32<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Call Option Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.33<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Call Option Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenyang Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.34<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Call Option Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.35<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Call Option Agreement, dated January&nbsp;13, 2006, of
Shanghai Focus Media Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.36<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated
January&nbsp;13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Fuzhou Fukesi Advertisement
Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.37<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated
January&nbsp;13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Hefei Fukesi Advertisement
Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.38<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated
January&nbsp;13, 2006, of Shanghai Focus Media Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.39<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated
January&nbsp;13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Shenyang Focus Media
Advertisement Co., Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">127
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description of Exhibits</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.40<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated
January&nbsp;13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Shenzhen Bianjie Building
Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.41<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter for Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated
January&nbsp;13, 2006, of Shanghai Focus Media Co., Ltd. and Shenzhen Bianjie Building Advertisement
Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.42<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equity Pledge Agreement, dated January&nbsp;13, 2006, by and among Shanghai Focus Media Advertisement
Co., Ltd., Shanghai Focus Media Co., Ltd., Shanghai Framedia Investment Consultancy Co., Ltd. and
the Local Advertisement Companies named therein.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.43<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Call Option Agreement, dated January&nbsp;13, 2006, by and among Shanghai Focus Media Advertisement
Co., Ltd., Shanghai Focus Media Co., Ltd., Shanghai Framedia Investment Consultancy Co., Ltd. and
the Local Advertisement Companies named therein.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.44<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shareholders&#146; Voting Rights Proxy Agreement, dated January&nbsp;13, 2006, by and among Shanghai Focus
Media Advertisement Co., Ltd., Shanghai Focus Media Co., Ltd., Shanghai Framedia Investment
Consultancy Co., Ltd. and the Local Advertisement Companies named therein.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.45<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equity Pledge Agreement, dated January&nbsp;13, 2006, by and among Lei Liu, Yong Shi, Shanghai Framedia
Investment Consultancy Co., Ltd. and Guangdong Century Shenghuo Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.46<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Call Option Agreement, dated January&nbsp;13, 2006, by and among Lei Liu, Yong Shi, Shanghai Framedia
Investment Consultancy Co., Ltd. and Guangdong Century Shenghuo Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.47<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shareholders&#146; Voting Rights Proxy Agreement, dated January&nbsp;13, 2006, by and among Lei Liu, Yong
Shi, Shanghai Framedia Investment Consultancy Co., Ltd. and Guangdong Century Shenghuo
Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.48<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Share Purchase Agreement, dated October&nbsp;15, 2005, as amended and supplemented, among Focus Media
Holding Limited, Infoachieve Limited, Total Team Investments Limited and the other Infoachieve
parties named therein.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.49<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Share Purchase Agreement, dated as of January&nbsp;7, 2006, among Focus Media Holding Limited, Target
Media Holdings Limited and Its Shareholders.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.50<SUP style="font-size: 85%; vertical-align: text-top">&#134;&#134;</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Asset Transfer Agreement, dated December&nbsp;31, 2005, by and between Focus Media Digital Information
Technology (Shanghai) Co., Ltd. and Shanghai New Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.51*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Share Purchase Agreement, dated March&nbsp;7, 2006, by and among Focus Media Holding Limited and Dotad
Wireless Holdings Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.52*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equity Pledge Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing Dotad Technology Co., Ltd and
Beijing Focus Media Wireless Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.53*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Call Option Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing Dotad Technology Co., Ltd and
Beijing Focus Media Wireless Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.54*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shareholders&#146; Voting Rights Proxy Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media
Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing Dotad
Technology Co., Ltd and Beijing Focus Media Wireless Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.55*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Equity Pledge Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Shanghai Framedia Investment Consulting
Co., Ltd. and Guandong Shiji Shenghuo Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.56*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Call Option Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Shanghai Framedia Investment Consulting
Co., Ltd. and Guandong Shiji Shenghuo Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.57*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shareholders&#146; Voting Rights Proxy Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media
Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Shanghai Framedia
Investment Consulting Co., Ltd. and Guandong Shiji Shenghuo Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.58*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shanghai New Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.59*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shanghai
New Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.60*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai New Focus Media Advertisement Co., Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">128
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description of Exhibits</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.61*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shanghai New Focus Media Advertising Agency Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.62*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shanghai
New Focus Media Advertising Agency Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.63*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai New Focus Media Advertising Agency Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.64*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shanghai Target Media Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.65*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shanghai
Target Media Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.66*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai Target Media Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.67*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Dongguan Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.68*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Dongguan
Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.69*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Dongguan Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.70*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of Fuzhou
Fukesi Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.71*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Fuzhou
Fukesi Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.72*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Fuzhou Fukesi Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.73*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of Hefei
Fukesi Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.74*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Hefei
Fukesi Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.75*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Hefei Fukesi Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.76*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shanghai On-Target Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.77*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shanghai
On-Target Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.78*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai On-Target Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.79*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shanghai Jiefang Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.80*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shanghai
Jiefang Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.81*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai Jiefang Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.82*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shanghai Perfect Media Advertising Agency Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.83*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shanghai
Perfect Media Advertising Agency Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.84*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai Perfect Media Advertising Agency Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.85*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shenzhen E-Time Commercial Consulting Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.86*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shenzhen
E-Time Commercial Consulting Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.87*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shenzhen E-Time Commercial Consulting Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.88*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shenzhen Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">129
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="85%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center"><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Description of Exhibits</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.89*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shenzhen
Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.90*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shenzhen Bianjie Building Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.91*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May&nbsp;22, 2006, of
Shenyang Focus Media Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.92*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Call Option Agreement, dated May&nbsp;22, 2006, of Shenyang
Focus Media Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.93*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Acknowledgement Letter of Participation of Shareholders&#146; Voting Rights Proxy Agreement, dated May
22, 2006, of Shenyang Focus Media Advertising Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.94*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Cooperation Agreement, dated May&nbsp;22, 2006, by and among Shanghai Focus Media Advertisement Co.
Ltd. and its local advertising subsidiaries named therein and Shanghai New Focus Media
Advertisement Co. Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.95*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Technology Transfer Agreement, dated as of May&nbsp;22, 2006, by and between Focus Media Digital
Information Technology (Shanghai) Co., Ltd. and Shanghai New Focus Media Advertisement Co., Ltd.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">10.96*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Advertisement Dissemination Agreement, dated May&nbsp;22, 2006, by and between Shanghai Focus Media
Advertising Agency Co., Ltd. and Shanghai New Focus Media Advertisement Co., Ltd.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.1&nbsp;&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Chief Executive
Officer.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">12.2&nbsp;&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certificate of Chief Financial
Officer.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.1&nbsp;&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Periodic Financial
Report.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">13.2&nbsp;&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certification of Periodic Financial Report.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.1&nbsp;&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Conyers, Dill &#038; Pearman.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">15.2&nbsp;&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Global Law Office.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">21.1*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">List of Subsidiaries.</TD>
</TR>

<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">23.4*
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Consent of Simpson Thacher &#038; Bartlett LLP (included in Exhibit&nbsp;8.2).</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed with the Registrant&#146;s registration statement on Form F-1 (File No.&nbsp;333-134714).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed with the Registrant&#146;s registration statement on Form F-1 (File No.&nbsp;333-125785).</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&#134;&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>Previously filed with the Registrant&#146;s registration statement on Form F-1 (File No.&nbsp;333-131065).</TD>
</TR>

</TABLE>



<P align="center" style="font-size: 10pt">130
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
\
<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="130"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="50%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">Focus Media Holding Limited</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Jason Nanchun Jiang</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jason Nanchun Jiang</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman and Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Date: June&nbsp;28, 2006
</DIV>



<P align="center" style="font-size: 10pt">131
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='128'></A>
</DIV>

<!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>CONTENTS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Page</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#150'>Report of
    Independent Registered Public Accounting Firm</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#151'>Consolidated
    balance sheets as of December&nbsp;31, 2003, 2004 and 2005 and
    as of March&nbsp;31, 2006 (unaudited)</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#152'>Consolidated
    statements of operations for the years ended December&nbsp;31,
    2003, 2004 and 2005 and for the three months ended
    March&nbsp;31, 2005 (unaudited)&nbsp;and 2006 (unaudited)</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-4</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#153'>Consolidated
    statements of shareholders&#146; equity (deficiency)&nbsp;and
    comprehensive income (loss) for the years ended
    December&nbsp;31, 2003, 2004 and 2005 and for the three months
    ended March&nbsp;31, 2006 (unaudited)</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#154'>Consolidated
    statements of cash flows for the years ended December&nbsp;31,
    2003, 2004 and 2005 and for the three months ended
    March&nbsp;31, 2005 (unaudited)&nbsp;and 2006 (unaudited)</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#155'>Notes to the
    consolidated financial statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">F-8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-1
</FONT>
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<A name='150'></A>
</DIV>

<!-- link1 "REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
FOCUS MEDIA HOLDING LIMITED
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have audited the accompanying consolidated balance sheets of
Focus Media Holding Limited and its subsidiaries (the
&#147;Group&#148;) as of December&nbsp;31, 2003 and 2004 and
2005 and the related consolidated statements of operations,
shareholders&#146; equity (deficiency)&nbsp;and comprehensive
income (loss), and cash flows for the years ended
December&nbsp;31, 2003 and 2004 and 2005, and related financial
schedule included in Schedule&nbsp;1. These financial statements
and related financial statement schedule are the responsibility
of the Group&#146;s management. Our responsibility is to express
an opinion on these consolidated financial statements and
related financial statement schedule based on our audits.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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. The Group is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group&#146;s internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, 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.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of
Focus Media Holding Limited and its subsidiaries as of
December&nbsp;31, 2003 and 2004 and 2005 and the results of its
operations and its cash flows for the above stated years in
conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, the related
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly in all material respects, the information set
forth therein.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
/s/ Deloitte Touche Tohmatsu CPA Ltd.
</DIV>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff;">
<DIV style="width: 75%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Shanghai, China
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
June&nbsp;2, 2006
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='151'></A>
</DIV>

<!-- link1 "CONSOLIDATED BALANCE SHEETS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED BALANCE SHEETS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;Dollars, except share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="18" align="left" valign="top">
    <B><FONT face="helvetica,arial">Assets</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current assets:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">716,388</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,669,106</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,653,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,862,726</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Investment in available-for-sale
    securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,835,850</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,792,100</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net of
    allowance for doubtful accounts of $nil, $173,837, $396,657 and
    $782,210 in 2003, 2004, 2005 and as of March&nbsp;31, 2006
    (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,409,461</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,619,949</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,235,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,250,248</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90,950</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,243,140</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">479,529</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">605,290</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Prepaid expenses and other current
    assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">148,906</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,109,468</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,363,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,810,070</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts due from related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,576</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,740,032</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,073,329</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,982,256</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,618,281</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">35,381,695</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">141,641,129</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">125,302,690</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Rental deposits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">570,904</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,606,378</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,819,095</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,245,315</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equipment, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,978,399</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,197,143</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,694,888</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,993,193</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquired intangible assets, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">708,306</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,157,920</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,881,195</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,058,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,298,072</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">406,790,780</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,082</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,088</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,117,843</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other long term assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">220,553</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,769</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">450,963</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">742,914</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">193,506</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5,306,435</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">56,414,659</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">212,354,018</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">648,745,075</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="18">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="18" align="left" valign="top">
    <B><FONT face="helvetica,arial">Liabilities, mezzanine equity
    and shareholders&#146; equity (deficiency)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current liabilities:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term bank loans
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">991,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,247,349</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other short-term loans
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,776,335</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">436,244</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">607,091</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,847,530</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,279,605</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses and other current
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">561,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,591,435</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,746,902</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71,414,099</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts due to related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,013,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,496,212</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Short-term loan from a shareholder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">500,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">608,275</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,435,486</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,108,071</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,188,412</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total current
    liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">4,119,651</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">8,634,012</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">20,693,804</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">92,402,012</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Commitments (Note&nbsp;20)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,722</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,692</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">245,563</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">459,758</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Mezzanine equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;A convertible
    redeemable preference shares ($0.00005&nbsp;par value;
    41,967,400&nbsp;shares authorized and nil, 41,967,400, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March&nbsp;31, 2006 (unaudited), respectively)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,295,110</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;B convertible
    redeemable preference shares ($0.00005&nbsp;par value;
    48,191,600&nbsp;shares authorized and nil, 48,191,600, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March&nbsp;31, 2006 (unaudited), respectively)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,062,696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;C-1 convertible
    redeemable preference shares ($0.00005&nbsp;par value;
    34,054,000&nbsp;shares authorized and nil, 34,054,000, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March&nbsp;31, 2006 (unaudited) , respectively)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,500,350</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;C-2 convertible
    redeemable preference shares ($0.00005&nbsp;par value;
    34,053,400&nbsp;shares authorized and nil, 34,053,400, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March&nbsp;31, 2006 (unaudited), respectively)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,415,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Shareholders&#146; equity
    (deficiency)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ordinary shares ($0.00005&nbsp;par
    value; 1,000,000,000, 885,516,600 ,19,800,000,000 and
    19,800,000,000&nbsp;shares authorized in 2003, 2004, 2005 and as
    of March&nbsp;31, 2006 (unaudited); 200,000,000, 142,464,600,
    378,306,000 and 506,457,633&nbsp;shares issued and outstanding
    in 2003, 2004, 2005 and as of March&nbsp;31, 2006 (unaudited),
    respectively)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,124</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,916</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,324</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,188,817</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,981,154</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">177,419,761</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">530,088,836</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred share based compensation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(969,959</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(246,569</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings (accumulated
    deficit)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,550,414</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,997,237</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,430,006</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive
    income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(41,755</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(41,106</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,225,306</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,339,139</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total shareholders&#146; equity
    (deficiency)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,183,062</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,573,201</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">191,414,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">555,883,305</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total liabilities, mezzanine
    equity and shareholders&#146; equity (deficiency)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5,306,435</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">56,414,659</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">212,354,018</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">648,745,075</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-3
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='152'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF OPERATIONS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF OPERATIONS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 7.5pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">For the years ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;Dollars, except share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">&#151; Commercial
    Locations</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,368,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,321,179</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,434,760</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,431,521</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,472,376</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">&#151; In-store
    Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,468,919</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,293,091</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">&#151; Poster Frame
    Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,067,314</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Service Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,368,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,321,179</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,903,679</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,431,521</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,832,781</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Equipment Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">389,282</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,888,720</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,325,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">142,163</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,066</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total net revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,757,839</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">29,209,899</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">68,228,913</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,573,684</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">33,136,847</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cost of revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">&#151; Commercial
    locations</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,565,887</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,745,522</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,943,318</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,902,606</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,035,150</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">&#151; In-store
    network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,422,641</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">286,004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,973,244</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">&#151; Poster Frame
    Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,397,268</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Service Cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,565,887</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,745,522</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,365,959</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,188,610</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,405,662</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Equipment Cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">275,360</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,934,331</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">975,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,571</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">231,814</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total cost of revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,841,247</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">8,679,853</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">26,341,706</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,259,181</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">14,637,476</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Gross profit</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,916,592</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">20,530,046</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">41,887,207</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">6,314,503</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">18,499,371</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating expenses:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">984,848</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,987,496</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,119,846</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,881,111</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,395,342</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Selling and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">406,634</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,453,533</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,543,748</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,491,644</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,057,199</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortization of acquired intangible
    assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,443</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">437,837</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67,352</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">999,178</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill impairment loss
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,397</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total operating
    expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,391,482</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">7,576,869</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">19,101,431</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,440,107</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,451,719</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income from operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">525,110</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">12,953,177</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">22,785,776</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,874,396</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,047,652</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,739</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,761,909</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,985</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">915,952</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other income (expenses),&nbsp;net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,364</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,843</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(161,148</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,315</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,149</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Change in fair value of derivative
    liability associated with Series&nbsp;B convertible redeemable
    preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(11,692,287</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income before income taxes and
    minority interest</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">516,751</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,266,786</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,386,537</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,890,696</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">10,009,753</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">608,274</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">828,962</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">715,117</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">223,536</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,076</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(126,769</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,588</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(20,664</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,265</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">551,714</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">481,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">907,550</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">694,453</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,801</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">616,790</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income after income taxes
    before minority interest and equity loss of affiliates</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">35,246</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">359,236</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">23,692,084</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,641,895</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,392,963</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,360</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,516</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,433</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(598</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,806</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equity loss of affiliates
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(18,123</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">25,483</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">372,752</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">23,547,651</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,642,493</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,432,769</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,308,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,191,442</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;C-1
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,356,087</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Premium of Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,906,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income (loss) attributable to
    holders of ordinary shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">25,483</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(10,576,414</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">23,547,651</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,642,493</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,432,769</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) per share&nbsp;&#151;
    basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) per share&nbsp;&#151;
    diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating basic
    income (loss) per&nbsp;share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,657,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">160,998,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,128,545</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">142,464,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">438,232,094</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating diluted
    income (loss) per&nbsp;share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,657,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">160,998,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">365,938,094</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">315,212,608</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,895,318</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<!-- LANDSCAPE -->
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='153'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY (DEFICIENCY) AND COMPREHENSIVE INCOME (LOSS)" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY
(DEFICIENCY)&nbsp;AND COMPREHENSIVE INCOME (LOSS)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 7.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Retained</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Accumulated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Ordinary</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Additional</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Deferred share</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">earnings</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">other</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">shareholders&#146;</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">paid-in</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">based</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(accumulated</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">comprehensive</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">equity</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Comprehensive</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amount</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">capital</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">compensation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">deficit)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">income (loss)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(deficiency)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">income (loss)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="30" align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;dollars, except share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at January&nbsp;1,
    2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">125,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">517</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(4,183</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">121,334</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,615,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,625,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital distribution relating to
    Everease
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(551,183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(551,183</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(37,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(37,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(37,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,483</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">200,000,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">10,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,188,817</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">26,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(41,755</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,183,062</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(12,089</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,594,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">730</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,484,068</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,484,798</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification of ordinary shares
    to Series&nbsp;A convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(62,400,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,120</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,048,469</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,051,589</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification of ordinary shares
    to Series&nbsp;C-1 convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,729,600</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(486</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(101,932</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(102,418</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred share based compensation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,334,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,334,835</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortization of share-based
    compensation expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">123,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">364,876</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">488,711</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,308,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,308,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,191,442</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,191,442</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;C-1
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,356,087</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,356,087</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Premium of Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,906,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,906,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">649</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">649</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">649</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,752</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,752</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,752</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">142,464,600</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">7,124</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5,981,154</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(969,959</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(10,550,414</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(41,106</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(5,573,201</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">373,401</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;A convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,967,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,293,012</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,295,110</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;B convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,191,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,409</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,060,287</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,062,696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;C-1 convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,054,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,703</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,498,647</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,500,350</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;C-2 convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,053,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,703</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,413,297</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,415,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares upon
    initial public offering, net of issuance cost of $13,703,370
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,575,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,879</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118,170,251</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118,174,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred share based compensation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(264,751</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">264,751</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortization of share-based
    compensation expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">267,864</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">458,639</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">726,503</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unrealized loss on
    available-for-sale securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(164,150</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(164,150</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(164,150</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,430,562</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,430,562</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,430,562</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at December&nbsp;31,
    2005</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">378,306,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">18,916</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">177,419,761</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(246,569</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">12,997,237</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,225,306</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">191,414,651</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,814,063</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Adjustment for adoption of
    SFAS&nbsp;123&nbsp;- R (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(246,569</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">246,569</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares for
    acquisitions (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99,231,723</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,962</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">285,786,238</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">285,791,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares upon
    secondary offering, net of issuance cost of $3,466,700
    (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">750</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,782,550</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,783,300</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercise of employee stock options
    (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,919,910</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,880,316</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,881,012</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortization of share-based
    compensation expense (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,466,540</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,466,540</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,432,769</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,432,769</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,432,769</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unrealized loss on
    available-for-sale securities (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43,750</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43,750</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43,750</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative translation adjustments
    (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,157,583</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,157,583</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,157,583</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Balance at March&nbsp;31, 2006
    (unaudited)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">506,457,633</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">25,324</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">530,088,836</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">22,430,006</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,339,139</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">555,883,305</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">11,546,602</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='154'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF CASH FLOWS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">For the three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">For the year ended December&nbsp;31</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating activities:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) attributable to
    holders of ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,576,414</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,642,493</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,432,769</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,308,411</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,191,442</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;C-1
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,356,087</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Premium relating to Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,906,774</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,752</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,642,493</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,432,769</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Adjustments to reconcile net income
    to net cash provided by (used in) operating activities:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,360</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,516</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,433</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(598</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,806</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Bad debt provision
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">173,837</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">235,604</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,364</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">194,723</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Share based compensation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">488,711</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">726,503</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">333,960</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,466,540</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation and amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">143,876</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">923,163</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,927,016</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">622,175</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,605,818</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Loss on disposal of equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,470</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Investment loss on equity investment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,123</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Change in fair value of derivative
    liability
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,692,287</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill impairment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,397</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Changes in assets and liabilities,
    net of effects of acquisitions:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,331,107</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,525,148</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15,757,053</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,804,368</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,621,774</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(80,660</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,030,529</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(408,223</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(788,522</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(124,346</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Prepaid expenses and other current
    assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(121,304</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,740,427</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,347,426</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(77,708</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,918,858</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts due from related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(252,576</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,487,456</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">666,703</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,425,866</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(908,927</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Rental deposits
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(570,904</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,035,474</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,076,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,728,890</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,692,642</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred taxes assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(126,769</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,586</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(20,664</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,265</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">551,714</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">429,144</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,609,816</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,007,564</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,017,042</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(683,773</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses and other current
    liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">573,053</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,174,214</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,950,903</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,217,452</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(18,622,722</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amounts due to related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,013,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,322,276</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,496,212</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income tax payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">608,235</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">825,100</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">672,585</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">637,052</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">164,289</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net cash provided by (used in)
    operating activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,320,132</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">4,044,875</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">11,269,366</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(877,321</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">4,765,765</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Investing activities:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchase of equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,467,730</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,373,124</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(36,765,294</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,621,229</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,353,954</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition of assets from a
    related party
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,208,131</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchase of subsidiaries, net of
    cash acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,697,378</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,982,523</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,056,622</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(57,718,824</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deposit paid to acquire subsidiaries
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(40,919,530</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition of equity investment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(30,205</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Investment in available-for-sale
    securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(35,000,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net cash used in investing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(2,706,066</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(11,070,502</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(117,667,347</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(6,677,851</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(66,072,778</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Financing activities:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from short-term loan from
    a shareholder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">500,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of short-term loan from a
    shareholder
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(500,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from issuance of ordinary
    shares, net of issuance costs of $nil in 2003, $13,703,370 in
    2005, and $3,466,700 in 2006 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,625,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118,174,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,664,312</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">For the three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">For the year ended December&nbsp;31</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from issuance of
    Series&nbsp;B convertible redeemable preference shares (net of
    issuance costs of $437,304)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,062,696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from issuance of
    Series&nbsp;C-2 convertible redeemable preference shares (net of
    issuance costs of $85,000)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,415,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds from short-term bank loans
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">991,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,247,349</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of short-term bank loans
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(991,301</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Repayment of short short-term loans
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(78,802</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital injection from minority
    shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,089</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">249,470</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net cash provided by financing
    activities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,125,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">28,977,696</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">119,168,520</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">66,091,028</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Effect of exchange rate changes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(37,572</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">649</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,213,535</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">425,531</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net increase/ (decrease) in cash
    and cash equivalents</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">701,494</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">21,952,718</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">13,984,074</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(7,555,172</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5,209,546</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents,
    beginning of year/period
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,894</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">716,388</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,669,106</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,669,106</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,653,180</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash and cash equivalents, end of
    year /period
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">716,388</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,669,106</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,653,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,113,934</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,862,726</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Supplemental disclosure of cash
    flow information Income taxes paid
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">738</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,391</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest paid
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,581</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,651</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Supplemental disclosures of
    non-cash investing activity:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares in
    exchange for technical know-how
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">750,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquisition of subsidiaries:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Value of ordinary shares issued
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,484,798</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">285,791,199</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,423,515</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,137,252</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,079,091</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,782,978</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538,860</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,219,897</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assets acquired (including
    intangible assets and goodwill)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,447,173</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,137,252</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,079,091</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">441,794,074</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Non-cash financing activities:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification of ordinary shares
    to Series&nbsp;A convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,360,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification of Series&nbsp;A
    convertible redeemable preference shares to Series&nbsp;C-1
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,064,890</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Reclassification of Series&nbsp;B
    convertible redeemable preference shares to Series&nbsp;C-1
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">976,955</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-7
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<A name='155'></A>
</DIV>

<!-- link1 "NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B>Organization and Principal Activities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to May 2003, the Group operated through Shanghai Focus
Media Advertisement Co. Ltd. (&#147;Focus Media
Advertisement&#148;) (formerly Shanghai Aiqi Advertising Co.,
Ltd. (&#147;Aiqi&#148;)) which was established in September
1997. On April&nbsp;11, 2003, the majority shareholder of Focus
Media Advertisement, Jason Nanchun Jiang, incorporated Focus
Media Holding Limited (&#147;Focus Media Holding&#148;) with the
same shareholders of Focus Media Advertisement. Through
contractual arrangements described below, Focus Media Holding is
deemed the primary beneficiary of Focus Media Advertisement
resulting in Focus Media Advertisement being deemed a subsidiary
of Focus Media Holding under the requirements of FIN&nbsp;46
(Revised) &#147;Consolidation of Variable Interest
Entities&#148; (&#147;FIN&nbsp;46(R)&#148;) in substance, an
existing company, Focus Media Advertisement, has been
reorganized as a subsidiary of the new company Focus Media
Holding. Focus Media Holding has the same controlling
shareholder, the same non-controlling shareholders. Accordingly,
the Group&#146;s financial statements are prepared by including
the financial statements of Focus Media Advertisement through
May 2003 and thereafter is the consolidated financial statements
which includes Focus Media Holding and its subsidiaries and
Focus Media Advertisement and its subsidiaries. As of
March&nbsp;31, 2006, the subsidiaries of Focus Media Holding and
Focus Media Advertisement&#146;s subsidiaries include the
following entities:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Focus Media Holding Subsidiaries:</I></B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Date of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Date of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Place of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Subsidiary</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">acquisition</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">incorporation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">incorporation</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ownership</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media (China) Holding Ltd.
    (&#147;Focus Media Hong Kong&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">April&nbsp;23, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Hong Kong (&#147;HK&#148;)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media Technology (Shanghai)
    Co., Ltd. (&#147;Focus Media Technology&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">June&nbsp;19, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Perfect Media Holding Ltd.
    (&#147;Perfect Media&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;22, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">June&nbsp;4, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">British Virgin Islands
    (&#147;BVI&#148;)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media Qingdao Holding Ltd.
    (&#147;Focus Media Qingdao&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">March&nbsp;22, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media Dalian Holding Ltd.
    (&#147;Focus Media Dalian&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">March&nbsp;24, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media Changsha Holding Ltd.
    (&#147;Focus Media Changsha&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">March&nbsp;11, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media Digital Information
    Technology (Shanghai) Co., Ltd. (&#147;Focus Media Digital&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">October&nbsp;27, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">New Focus Media Technology
    (Shanghai) Co., Ltd. (&#147;New Focus Media Technology&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">September&nbsp;5, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sorfari Holdings Limited
    (&#147;Sorfari&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;22, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">June&nbsp;7, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Focus Media Tianjin Limited
    (&#147;Focus Media Tianjin&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">November&nbsp;19, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&nbsp;80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital Beyond Limited
    (&#147;CBL&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">November&nbsp;15, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai New Focus Media
    Advertisement Co (&#147;New Focus Media Advertisement&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">December&nbsp;20, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&nbsp;90</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Infoachieve Limited
    (&#147;Infoachieve&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">January&nbsp;1, 2006
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">July&nbsp;28, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Framedia Investment
    Consultation Co., Ltd. (&#147;Framedia Consultation&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">January&nbsp;1, 2006
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">June&nbsp;16, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Target Media Holdings Limited
    (&#147;Target Media Holding&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">February&nbsp;28, 2006
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">July, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">Cayman Islands
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Target Media Multi-Media Technology
    (Shanghai) Co., Ltd. (&#147;TMM&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">February&nbsp;28, 2006
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">August&nbsp;17, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dotad Holdings Limited
    (&#147;Dotad&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2006
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">February&nbsp;17, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <FONT face="helvetica,arial">BVI
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-8
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Focus Media Advertisement Subsidiaries:</I></B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Date of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Date of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Place of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Subsidiary</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">acquisition</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">incorporation</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">incorporation</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ownership</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sichuan Focus Media Advertising
    Co., Ltd. (&#147;Focus Media Sichuan&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;16, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Focus Media Advertising
    Agency Co., Ltd. (&#147;Focus Media Advertising Agency&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai On-Target Advertisement
    Co., Ltd. (&#147;On- Target&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">April&nbsp;23, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">April&nbsp;15, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Wuhan Ge Shi Focus Media
    Advertising Co., Ltd. (&#147;Focus Media Wuhan&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">April&nbsp;23, 2004 and
    March&nbsp;1, 2006
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">November&nbsp;13, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Yunnan Focus Media Advertising Co.,
    Ltd. (&#147;Focus Media Yunnan&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">July&nbsp;9, 2004 and
    November&nbsp;9, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;3, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">89.5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Nanjing Focus Media Advertising
    Co., Ltd. (&#147;Focus Media Nanjing&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">August&nbsp;10, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;18, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Zhejiang Rui Hong Focus Media
    Advertising Co., Ltd. (&#147;Focus Media Zhejiang&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;24, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Perfect Media Advertising
    Co., Ltd. (&#147;Shanghai Perfect Media&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;22, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">June&nbsp;4, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Qingdao Fukesi Advertisement Co.
    Ltd.(&#147;Qingdao Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;22, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dalian Focus Media Advertising Co.,
    Ltd. (&#147;Dalian Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;24, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Changsha Focus Media Shiji
    Advertisement Co., Ltd. (&#147;Changsha Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;11, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Chongqing Geyang Focus Media
    Culture Advertising&nbsp;&#38; Broadcasting Co. Ltd.
    (&#147;Chongqing Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;10, 1999
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Qianjian Advertising Co.,
    Ltd. (&#147;Qianjian Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;15, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">July&nbsp;3, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Xi&#146;an Focus Media
    Culture&nbsp;&#38; Information Communication Co., Ltd.
    (&#147;Xian Focus Media&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;16, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Xiamen Guomao Advertising Co., Ltd.
    (&#147;Xiamen Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;4, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;23, 1998
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Tianjin Tongsheng Modern Display
    and Advertisement Co., Ltd. (&#147;Tianjin Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">September&nbsp;3, 1998
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Zhuhai Focus Media Culture and
    Communication Co., Ltd. (&#147;Focus Media Zhuhai&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">June&nbsp;21, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Hebei Tianmaweiye Advertisement
    Co., Ltd. (&#147;Hebei Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;22, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">December&nbsp;6, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Guangdong Framedia Advertisement
    Co., Ltd. (&#147;Guangdong Framedia&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">December&nbsp;16, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shenzhen Bianjie Building
    Advertising Co., Ltd. (&#147;Shenzhen Bianjie&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">August&nbsp;15, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">December&nbsp;16, 2003
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Hefei Focus Advertising Co., Ltd.
    (&#147;Hefei Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;27, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fuzhou Focus Advertising Co., Ltd.
    (&#147;Fuzhou Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">December&nbsp;12, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">October&nbsp;21, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Jinan Focus Media Advertising Co.,
    Ltd. (Jinan Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">December&nbsp;6, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">June&nbsp;7, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shenyang Focus Media Advertising
    Co., Ltd. (&#147;Shenyang Advertising&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">November&nbsp;20, 2005
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">March&nbsp;12, 2004
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <BR>
    <FONT face="helvetica,arial">PRC
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-9
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="42%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Date of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Date of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Place of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Percentage of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Subsidiary</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">acquisition</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">incorporation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">incorporation</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ownership</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Framedia Advertisement Development
    (Shanghai) Co., Ltd. (&#147;Framedia Development&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">January&nbsp;1, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">April&nbsp;28, 2004</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">New Framedia Advertisement
    (Shanghai) Co., Ltd. (&#147;New Framedia&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">January&nbsp;1, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">November 21, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Guangdong Century Sparkle
    Advertisement Co., Ltd. (&#147;Sparkle&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">January&nbsp;1, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">March&nbsp;25, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Target Media Co., Ltd.
    (&#147;STM&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">February&nbsp;28, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">December&nbsp;16, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shenyang Target Media Ltd.
    (&#147;Shenyang TM&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">February&nbsp;28, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">June&nbsp;15, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fuzhou Heng Ding United Media Ltd.
    (&#147;Heng Ding&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">February&nbsp;28, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">December&nbsp;16, 2003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai New Target Media Co., Ltd.
    (&#147;New STM&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">February&nbsp;28, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">January&nbsp;22, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shenzhen E-times Consulting Co.,
    Ltd. (&#147;E-times Consulting&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">January&nbsp;1, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">December&nbsp;21, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Beijing Focus Media Wireless Co.,
    Ltd. (&#147;Focus Media Wireless&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">March&nbsp;21, 2006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">December&nbsp;8, 2005</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">PRC</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Focus Media Holding and all of its subsidiaries including Focus
Media Advertisement and its subsidiaries are collectively
referred to as the &#147;Group&#148;.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In May 2003, in connection with the establishment of Focus Media
Holding, the Group changed its business model from operating as
an advertising agency generating revenue from commissions for
selling advertisements to media companies on behalf of
advertising clients to selling
<FONT style="white-space: nowrap">out-of</FONT>-home television
advertising time slots on its network of flat-panel television
advertising displays located in high traffic areas in commercial
locations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
PRC regulations currently limit foreign ownership of companies
that provide advertising services, including
<FONT style="white-space: nowrap">out-of</FONT>-home television
advertising services. To comply with these regulations, the
Group conducts substantially all of its activities through Focus
Media Advertisement and its subsidiaries, a variable interest
entity which was renamed from Aiqi, and was established in
Shanghai China on September&nbsp;2, 1997. Focus Media
Advertisement entered into various agreements with the Group,
including a transfer of trademarks and exclusive services
agreement. Under these agreements, Focus Media Advertisement has
the right to use the trade name of the Group, and the Group,
through Focus Media Technology, is the provider of technical and
consulting services to Focus Media Advertisement. In return,
Focus Media Advertisement is required to pay the Group services
fees for the use of trade name and for the technical and
consulting services it receives. The technical and consulting
service fees are adjusted at the Group&#146;s sole discretion.
The Group is entitled to receive service fees in an amount up to
all of the net income of Focus Media Advertising. The Group has
also provided funds to Focus Media Advertisement in an amount up
to $732,536 as of March&nbsp;31, 2006 (unaudited), to finance
the development of its business.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the Group has been assigned all voting rights by
the direct and indirect owners of Focus Media Advertisement
through an agreement valid indefinitely that cannot be amended
or terminated except by written consent of all parties. Finally
the Group has the option to acquire the equity interests of
Focus Media Advertisement and its subsidiaries for a purchase
price equal to the respective registered capital of Focus Media
Advertisement and its subsidiaries or a proportionate amount
thereof, or such higher price as required under PRC laws at the
time of such purchase. Each of the shareholders of Focus Media
Advertisement has agreed to pay the Group any excess of the
purchase price paid for such equity interests in, or assets of,
Focus Media Advertisement or its
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-10
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
subsidiaries over the registered capital of Focus Media
Advertisement or its subsidiaries in the event that such option
is exercised.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group and its related parties hold all the variable
interests of Focus Media Advertisement and the Group has been
determined to be most closely associated with Focus Media
Advertisement. Therefore the Group is the primary beneficiary of
Focus Media Advertisement. The agreements described above
provided for effective control of Focus Media Advertisement to
be transferred to the Group at April&nbsp;11, 2003. Focus Media
Advertisement had operating activity prior to entering into
these agreements with the Group. As a result, the consolidated
financial statements reflect the consolidation of Focus Media
Advertisement starting from May 2003.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2003, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued Financial Interpretation
(&#147;FIN&#148;) No.&nbsp;46 &#147;Consolidation of Variable
Interest Entities&#148;, which requires certain variable
interest entitles to be consolidated by the primary beneficiary
of the entity if the ownership interest held by the equity
investors in the entity does not have characteristics of a
controlling financial interest or does not have sufficient
equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
FIN&nbsp;46 was effective for all new variable interest entities
created or acquired after January&nbsp;31, 2003. FASB issued
FIN&nbsp;46 (Revised) &#147;Consolidation of Variable Interest
Entities&#148;, which provides for the deferral of the
implementation date to the end of the first reporting period
after March&nbsp;15, 2004, unless the Group has a special
purpose entity, in which case the provisions must be applied for
fiscal years ended December&nbsp;31, 2003. However, the Group
has elected to retroactively apply FIN&nbsp;46 (Revised) and has
consolidated Focus Media Advertisement as its variable interest
entity since May 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Summary of Significant Accounting Policies</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(a)&nbsp;Basis of Presentation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated financial statements of the Group have been
prepared in accordance with the accounting principles generally
accepted in the United States of America (&#147;US GAAP&#148;).
The consolidated financial statements reflect consolidated
operations thereafter.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(b)&nbsp;Basis of Consolidation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The consolidated financial statements include the financial
statements of the Group, its majority owned subsidiaries and its
variable interest entity, Focus Media Advertisement and its
majority owned subsidiaries. All inter-company transactions and
balances have been eliminated upon consolidation. The affiliated
companies where the Group owns more than 20% of the investment
are accounted for using the equity method of accounting. The
Group&#146;s share of earnings of the equity investments are
included in the accompanying consolidated statements of
operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(c)&nbsp;Cash and Cash Equivalents</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 3&nbsp;months or less when
purchased.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(d)&nbsp;Use of Estimates</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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
</DIV>

</FONT>

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</FONT>

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
revenue and expenses in the financial statements and
accompanying notes. Significant accounting estimates reflected
in the Group&#146;s financial statements include allowance for
doubtful accounts, the useful lives of and impairment for
equipment and intangible assets, valuation allowance for
deferred tax assets and impairment of goodwill.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(e)&nbsp;Significant Risks and Uncertainties</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group participates in a young and dynamic industry and
believes that changes in any of the following areas could have a
material adverse effect on the Group&#146;s future financial
position, results of operations or cash flows: the Group&#146;s
limited operating history; advances and trends in new
technologies and industry standards; share market performance
and public interest in companies operating in China that are
listed on share market in the U.S.; competition from other
competitors; regulatory or other PRC related factors; and risks
associated with the Group&#146;s ability to attract and retain
employees necessary to support its growth, risks associated with
the Group&#146;s growth strategies; and general risks associated
with the advertising industry.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(f)&nbsp;Investment in Available-for-sale
Securities</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group classifies all of its short-term investments as
available-for-sale securities. Such short-term investments
consist primarily of debt instrument which are stated at fair
market value, with unrealized gains and losses recorded as
accumulated other comprehensive income (loss). Unrealized
losses, which are deemed other than temporary, are recorded in
the statement of operations as other expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(g)&nbsp;Inventory</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventory is stated at the lower of cost or market value.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(h)&nbsp;Equipment, Net</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equipment, net is carried at cost less accumulated depreciation
and amortization. Depreciation and amortization is calculated on
a straight-line basis over the following estimated useful lives:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Media display equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">5&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Computers and office equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">5&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Vehicles
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">5&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Leasehold Improvements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    <FONT face="helvetica,arial">lesser of the term of the lease or
    the estimated useful lives of the assets
    </FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group assembles certain of the media display equipment. In
addition to costs under assembly contracts, external costs
directly related to the assembly of such equipment, including
duty and tariff, equipment installation and shipping costs are
capitalized.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(i)&nbsp;Impairment of Long-Lived Assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group reviews its long-lived assets 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 Group 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 flow is less than
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-12
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
the carrying amount of the assets, the Group would recognize an
impairment loss based on the fair value of the assets.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(j)&nbsp;Goodwill</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Beginning in 2002, with the adoption of Statement of Financial
Accounting Standards (&#147;SFAS&#148;) 142, &#147;Goodwill and
Other Intangible Assets,&#148; goodwill is no longer amortized,
but instead tested for impairment upon first adoption and
annually thereafter, or more frequently if events or changes in
circumstances indicate that it might be impaired.
SFAS&nbsp;No.&nbsp;142 requires the Group to complete a two-step
goodwill impairment test. The first step compares the fair
values of each reporting unit 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. SFAS&nbsp;No.&nbsp;142
requires completion of this first step within the first six
months of initial adoption and annually thereafter. If the
carrying amount of a reporting unit exceeds its fair value, the
second step compares the implied fair value of goodwill to the
carrying value of a reporting unit&#146;s 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.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management performed the annual goodwill impairment test as of
December&nbsp;31, 2004 and an impairment loss of $58,397 was
recorded for the Perfect Media reporting unit. The fair value of
the Perfect Media reporting unit was estimated using a
combination of expected present value of future cash flow and
income approach valuation methodologies. The Group recorded an
impairment charge because the amount the Group paid for the
acquisition of Perfect Media exceeded its fair market value.
Management also performed an annual goodwill impairment test as
of December&nbsp;31, 2005, and no impairment loss was required.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-13
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The changes in the carrying amount of goodwill for the year
ended December&nbsp;31 2004, 2005 and three months ended
March&nbsp;31, 2006 (unaudited)&nbsp;are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">In-elevator</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">poster frame</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Out-of-home</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">network</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Mobile-phone</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">television</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">advertising</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">advertising</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">advertising</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Perfect Media</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">services</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">service</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">services</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of January&nbsp;1, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill acquired during the year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,783,749</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,717,785</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Tax benefits arising from acquired
    subsidiaries
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,527</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(345,524</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Impairment losses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(58,397</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of December&nbsp;31, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,685,825</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,372,261</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transfer to out-of-home advertising
    services
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,685,825</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,685,825</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill acquired during the year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,043,747</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Tax benefits arising from acquired
    subsidiaries
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(244,236</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Modification of original purchase
    price allocation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64,477</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Translation adjustments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">375,998</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of December&nbsp;31, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,298,072</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill acquired during the period
    (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91,842,602</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,320,374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">291,781,399</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Translation adjustments (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">695,404</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">852,929</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Balance as of March&nbsp;31, 2006
    (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">92,538,006</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,320,374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">301,246,575</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Commencing in 2005, the Group reorganized the financial
information reviewed by the chief decision maker, the CEO,
whereby the financial information of Perfect Media was prepared
and presented together with that of
<FONT style="white-space: nowrap">out-of</FONT>-home television
advertising services. Accordingly, the Group believes it has
only one operating segment which is the
<FONT style="white-space: nowrap">out-of</FONT>-home advertising
services as of December&nbsp;31, 2005. As a result, for the
purpose of SFAS&nbsp;No.&nbsp;142, goodwill was tested for
impairment at the consolidated level as of December&nbsp;31,
2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of the acquisition of Infoachieve and Dotad in the
period ended March&nbsp;31, 2006 (unaudited), the Group has two
new operating and reporting segments, including poster frame
network advertising services and mobile-phone advertising
service.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(k)&nbsp;Revenue Recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group&#146;s revenues are primarily derived from advertising
services and to a lesser extent, sales from advertising
equipment. Revenues from advertising services are recognized
ratably over the year in which the advertisement is displayed.
Revenues from advertising equipment are recognized once the
advertising equipment is delivered. Accordingly, revenue is
recognized when all four of the following criteria are met:
(i)&nbsp;pervasive evidence that an arrangement exists;
(ii)&nbsp;delivery of the products and/or services has occurred
and risks and rewards of ownership have passed to the
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-14
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
customer; (iii)&nbsp;the selling price is both fixed and
determinable; and (iv)&nbsp;collection of the resulting
receivable is reasonably assured.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prepayments for the advertising services are deferred and
recognized as revenue when the advertising services are rendered.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to May 2003, the Group operated as an advertising agency,
by which it acted as an advertising agency generating revenue
from commissions for selling advertisements to media companies
on behalf of advertising clients. The Group was responsible for
collecting the full charges and remitted flat amount, less
commissions to the media companies. The commission revenue
represented the negotiated percentage of the sales price. The
Group evaluates the criteria outlined in Emerging Issues Task
Force (&#147;EITF&#148;) No. 99-19, &#147;Reporting Revenue
Gross as Principal Versus Net as an Agent,&#148; in determining
whether it is appropriate to record the gross amount of revenues
and related costs or the net amount earned after deducting fees
remitted to media companies. Accordingly, the Group recorded the
net amount billed to its customers since the Group was the agent
in these transactions, and had little latitude in establishing
prices, and was not involved in the determination of the service
specifications.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-15
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group presents advertising service revenue, net of sales
taxes incurred, as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">For the years ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B><FONT face="helvetica,arial">(In U.S.&nbsp;dollars, except per share data)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Gross Advertising Service Revenue:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">Commercial Locations</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Unrelated parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,581,448</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,321,614</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,632,982</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,233,745</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,200,216</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,098,879</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,787,798</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,793,275</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,134,181</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,353,672</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total Commercial Locations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,680,327</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,109,412</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67,426,257</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,367,926</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,553,888</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">In-store Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Unrelated parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,475,192</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,215,360</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">517,998</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">602,088</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total in-store network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,993,190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,817,448</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">Poster Frame Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Unrelated parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,658,286</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Related parties
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total Poster Frame Network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,658,286</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Gross Advertising Services Revenue:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,680,327</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,109,412</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,419,447</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,367,926</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,029,622</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: Sales taxes:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">Commercial Locations</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">311,770</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,788,233</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,991,497</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">936,405</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,081,512</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">In-store Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">524,271</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">524,357</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I><FONT face="helvetica,arial">Poster Frame Network</FONT></I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">590,972</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total sales taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">311,770</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,788,233</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,515,768</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">936,405</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,196,841</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net Advertising Service Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,368,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,321,179</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,903,679</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,431,521</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,832,781</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Add: Advertising Equipment Revenue:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">389,282</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,888,720</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,325,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">142,163</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,066</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,757,839</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">29,209,899</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">68,228,913</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,573,684</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">33,136,847</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(l)&nbsp;Operating Leases</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 periods.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(m)&nbsp;Advertising Costs</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group expenses advertising costs as incurred. Total
advertising expenses were $17,919, $45,712, $76,428, $15,985,
and $271,700 for the years ended December&nbsp;31, 2003, 2004,
and 2005 and the three months ended March&nbsp;31, 2005
(unaudited)&nbsp;and 2006 (unaudited), respectively and have
been included as part of selling and marketing expenses.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-16
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(n)&nbsp;Foreign Currency Translation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The functional and reporting currency of Focus Media Holding is
the United&nbsp;States dollar (&#147;US&nbsp;dollar&#148;).
Monetary assets and liabilities denominated in currencies other
than the US&nbsp;dollar are translated into the US&nbsp;dollar
at the rates of exchange ruling at the balance sheet date.
Transactions in currencies other than the US&nbsp;dollar during
the year are converted into US&nbsp;dollar at the applicable
rates of exchange prevailing at the first day of the month
transactions occurred. Transaction gains and losses are
recognized in the statements of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The financial records of the Group&#146;s subsidiaries and its
variable interest entity are maintained in its local currency,
the Renminbi (&#147;RMB&#148;), which is the functional
currency. Assets and liabilities are translated at the exchange
rates at the balance sheet date, equity accounts 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 (loss) in the statement of
shareholders&#146; equity (deficiency).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(o)&nbsp;Income Taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Deferred income taxes are recognized for temporary differences
between the tax basis 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. Current income
taxes are provided for in accordance with the laws of the
relevant taxing authorities.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(p)&nbsp;Comprehensive Income (Loss)</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comprehensive income (loss) includes foreign currency
translation adjustments and unrealized gains (losses) on
marketable securities classified as available for sale.
Comprehensive income (loss) is reported in the statements of
shareholders&#146; equity (deficiency).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(q)&nbsp;Fair Value of Financial Instruments</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financial instruments include cash and cash equivalents,
investment in available-for-sale securities, short-term
borrowing and the Series&nbsp;A, Series&nbsp;B and Series&nbsp;C
convertible redeemable preference shares. The carrying values of
cash and cash equivalents, investment in available-for-sale
securities and short-term borrowing approximate their fair
values due to their short-term maturities. The Group utilized a
third party valuations firm to determine the fair value of the
mezzanine equity component and the embedded liability of the
Series&nbsp;A, Series&nbsp;B and Series&nbsp;C convertible
redeemable preference shares. The valuation report utilized
generally accepted valuation methodologies such as the current
value method and the market value approach, which incorporates
certain assumptions such as the Group&#146;s expected future
cash flows and discount rates.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(r)&nbsp;Share-based Compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective January&nbsp;1, 2006 the Group adopted SFAS
No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148;
(&#147;SFAS&nbsp;123-R&#148;) using the modified prospective
application transition method, which establishes accounting for
share-based awards exchanged for employee services. Accordingly,
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-17
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
share-based compensation cost is measured at grant date, based
on the fair value of the award, and recognized in expense over
the requisite service period. The Group previously applied
Accounting Principles Board Opinion No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees&#148;
(&#147;APB&nbsp;25&#148;), and related Interpretations and
provided the pro forma disclosures required by
SFAS&nbsp;No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation&#148; (&#147;SFAS&nbsp;123&#148;). APB&nbsp;25
required the Group to record a compensation charge for the
excess of the market value of the share at the grant date or any
other measurement date over the amount an employee must pay to
acquire the share. The compensation expense is recognized over
the service period which is the vesting period.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Periods prior to the adoption of SFAS&nbsp;123-R.
</I></B>Prior to the adoption of SFAS&nbsp;123-R, the Group
provided the disclosures required under SFAS&nbsp;123, as
amended by SFAS&nbsp;No.&nbsp;148, <I>&#147;Accounting for
Stock-Based Compensation&nbsp;&#151; Transition and
Disclosures&#148;</I> (&#147;SFAS&nbsp;148&#148;).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table illustrates the effect on net income and
income per share as if the Group had applied the fair value
recognition provisions of SFAS&nbsp;123 to options granted under
the Group&#146;s share-based compensation plans prior to the
adoption. For purposes of this pro forma disclosure the value of
the options was estimated using the Black-Scholes option-pricing
model and amortized using an accelerated method over the
respective vesting periods of the awards. Disclosures for the
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-18
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
three months ended March&nbsp;31, 2006 are not presented because
share-based payments were accounted for under
SFAS&nbsp;123-R&#146;s fair-value method during this period.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Years ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Three months</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ended March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income, as reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,752</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,642,493</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Add: Share based compensation as
    reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">488,711</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">726,503</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">333,960</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: Share based compensation
    determined using the fair value method
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(566,819</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,225,668</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(877,618</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">294,644</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,048,486</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,098,835</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,308,411</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,191,442</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;C-1
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,356,087</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Premium of Series&nbsp;B
    convertible redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,906,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma net income (loss)
    attributable to holders of ordinary shareholders
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,654,522</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,048,486</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,098,835</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Basic income (loss) per share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">As reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.08</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Diluted income (loss) per share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">As reported
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pro forma
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value of each employee, officer and director option
granted is estimated on the date of grant using the
Black-Scholes option-pricing model with the following
assumptions used for grants during the applicable period.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Option granted to employees:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average risk-free rate of return
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.97%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.10-4.43%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.38%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.74%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average expected option
    life
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1-3 years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2-3&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Volatility rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.49%-36.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dividend yield
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to 2004 the Group did not grant share options to
employees, directors or consultants or advisors or any members
of the Group.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-19
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Adoption of SFAS&nbsp;123-R. </I></B>Effective the quarter
ended March&nbsp;31, 2006, the Group recorded share-based
compensation cost totaling the amount that would have been
recognized had the fair value method been applied since the
effective date of SFAS&nbsp;123-R. Results for prior periods
have not been restated. The effect of recording share-based
compensation for the three month period ended March&nbsp;31,
2006 (unaudited)&nbsp;was that the Group recorded additional
share-based compensation of $1,389,563.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As required by SFAS&nbsp;123-R, management has made an estimate
of expected forfeitures and is recognizing compensation costs
only for those equity awards expected to vest. The cumulative
effect of initially adopting SFAS&nbsp;123-R was not significant.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(s)&nbsp;Income (loss) per Share</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic income (loss) per share is computed by dividing income
(loss) attributable to holders of ordinary shares by the
weighted average number of ordinary shares outstanding during
the year/period. Diluted 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. Ordinary share equivalents are excluded
from the computation in loss years as their effects would be
antidilutive.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(t)&nbsp;Recently Issued Accounting Standards</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In February 2006, the FASB issued SFAS&nbsp;No.&nbsp;155,
&#147;Accounting for Certain Hybrid Instruments-an amendment of
FASB Statements&nbsp;133 and 140&#148;, which is effective for
all financial instruments acquired or issued after the beginning
of an entity&#146;s first fiscal year that begins after
September&nbsp;15, 2006. The statement improves financial
reporting by eliminating the exemption from applying
SFAS&nbsp;No.&nbsp;133 to interests in securitized financial
assets so that similar instruments are accounted for similarly
regardless of the form of the instruments. The Statement also
improves financial reporting by allowing a preparer to elect
fair value measurement at acquisition, at issuance, or when a
previously recognized financial instrument is subject to a
re-measurement event, on an instrument-by-instrument basis, in
cases in which a derivative would otherwise have to bifurcated,
if the holder elects to account for the whole instrument on a
fair value basis. The Group is currently evaluating the impact,
if any, of this Statement on the consolidated combined financial
statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the Financial Accounting Standards Board
(&#147;FASB&#148;) issued SFAS
No.&nbsp;<FONT style="white-space: nowrap">123-R,</FONT> which
is a revision of SFAS&nbsp;123. SFAS&nbsp;123-R supersedes
APB&nbsp;25, &#147;Accounting for Stock Issued to
Employees.&#148; Generally, the approach in SFAS&nbsp;123-R is
similar to the approach described in SFAS&nbsp;123. However,
SFAS&nbsp;123-R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in
the income statement based on the grant-date fair values. Pro
forma disclosure previously permitted under SFAS&nbsp;123 is no
longer an alternative. Through 2005, the Group accounted for its
stock option plans using the intrinsic value method under
APB&nbsp;25. Effective the beginning of 2006, the Group adopted
SFAS&nbsp;123-R and elected to adopt the modified prospective
application method. SFAS&nbsp;123-R requires the Group to use a
fair-value based method to account for share-based compensation.
Accordingly, share-based compensation cost is measured at the
grant date, based on the fair value of the award, and is
recognized as expense over the employees&#146; requisite service
period. Total compensation cost for the Group&#146;s stock plan
in the first quarter of 2006 (unaudited)&nbsp;was $1,466,540.
The expected impact that the adoption of the standard will have
on the Group for 2006 (unaudited)&nbsp;is $6,061,212.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-20
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 2004, the FASB issued SFAS&nbsp;No.&nbsp;151,
&#147;Inventory Costs&nbsp;&#151; an amendment of ARB
No.&nbsp;43, Chapter&nbsp;4&#148; (&#147;SFAS&nbsp;151&#148;).
SFAS&nbsp;151 clarifies the accounting that requires abnormal
amounts of idle facility expenses, freight, handling costs, and
spoilage costs to be recognized as current-period charges. It
also requires that allocation of fixed production overheads to
the costs of conversion be based on the normal capacity of the
production facilities. SFAS&nbsp;151 will be effective for
inventory costs incurred on or after July&nbsp;1, 2005. The
adoption of this standard will not have a material effect on the
Group&#146;s financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, the FASB issued SFAS&nbsp;No.&nbsp;153,
&#147;Exchanges of Nonmonetary Assets&nbsp;&#151; an amendment
of APB Opinion No.&nbsp;29&#148; (&#147;SFAS&nbsp;153&#148;),
which amends Accounting Principles Board Opinion No.&nbsp;29,
&#147;Accounting for Nonmonetary Transactions&#148; to eliminate
the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance.
SFAS&nbsp;153 is effective for nonmonetary assets exchanges
occurring in fiscal periods beginning after June&nbsp;15, 2005.
The adoption of this statement will not have a material effect
on the Group&#146;s financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In May 2005, the FASB issued SFAS&nbsp;No.&nbsp;154,
&#147;Accounting Changes and Error Corrections&#148;
(&#147;SFAS&nbsp;154&#148;), which replaces Accounting
Principles Board Opinions No.&nbsp;20, &#147;Accounting
Changes&#148; and SFAS&nbsp;No.&nbsp;3, &#147;Reporting
Accounting Changes in Interim Financial Statements&nbsp;&#151;
An Amendment of APB Opinion No.&nbsp;28.&#148; SFAS&nbsp;154
provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes
retrospective application, or the latest practicable date, as
the required method for reporting a change in accounting
principle and the reporting of a correction of an error.
SFAS&nbsp;154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after
December&nbsp;15, 2005. The adoption of this statement will not
have a material effect on the Group&#146;s financial position or
results of operations.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(u)&nbsp;Reclassification</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain prior year amounts have been reclassified to conform
with the current period&#146;s presentation.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(v)&nbsp;Unaudited interim financial information</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The interim financial information as of March&nbsp;31, 2006 and
for the three months ended March&nbsp;31, 2005 and 2006 are
unaudited and have been prepared on the same basis as the
audited financial statements. In the opinion of management, such
unaudited financial information includes all adjustments
(consisting only of normal recurring adjustments) necessary for
a fair presentation of the interim information. Operating
results for the three months ended March&nbsp;31, 2006 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 2006.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-21
</FONT>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>Acquisitions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the years ended December&nbsp;31, 2004, 2005 and three
months ended March&nbsp;31, 2006, the Group made the following
acquisitions to continue to expand their networks in desirable
locations and to establish other stand alone networks that
provide effective channels for advertisers:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(1)</I>&nbsp;On April&nbsp;23, 2004, the Group increased its
existing ownership of On-Target from 30% to 60% by acquiring an
additional 30% of the outstanding ordinary shares of On-Target,
an advertising agency, in exchange for cash of $36,247. 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 purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">197,555</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">138,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,904</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,247</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(2)</I>&nbsp;On April&nbsp;23, 2004, the Group acquired 75%
of the outstanding ordinary shares of Focus Media Wuhan
(&#147;Focus Media Wuhan&#148;), an advertising service
provider, for zero cash consideration. Subsequently, on
March&nbsp;1, 2006, the Group acquired remaining 25% of the
outstanding ordinary shares of Focus Media Wuhan for share
consideration of 74,720 ordinary shares, valued at of
$5&nbsp;per ordinary share, which was determined based on
average market price of Focus Media Holding&#146;s common shares
traded over 3&nbsp;days before and after the acquisition were
agreed and announced. 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 purchase price was allocated as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">April&nbsp;23, 2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;1, 2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="9" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,667</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,269</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">373,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,602</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">373,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-22
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(3)</I>&nbsp;In July and November, 2004, the Group acquired
89.5% of the outstanding ordinary shares of Focus Media Yunnan,
an advertising service provider, in exchange for cash of
$273,062, of which $217,483 was paid as of December&nbsp;31,
2004 and the remainder was paid in 2005. 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
purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,181</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,103</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,050</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">233,728</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">273,062</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(4)</I>&nbsp;On August&nbsp;10, 2004, the Group acquired 90%
of the outstanding ordinary shares of Focus Media Nanjing, an
advertising service provider for zero consideration. 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 purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">270,230</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,810</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,321</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215,099</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(5)</I>&nbsp;On September&nbsp;15, 2004, the Group acquired
80% of the outstanding ordinary shares of Focus Media Zhejiang,
an advertising service provider, in exchange for cash of
$821,593 of which $410,797 was paid as of December&nbsp;31, 2004
and the remainder was paid in 2005. 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 purchase price was
allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">315,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,169</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,357</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">434,720</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">821,593</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-23
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(6)</I>&nbsp;On September&nbsp;22, 2004, the Group acquired
100% of the outstanding ordinary shares of Perfect Media which
includes its then variable interest entity Shanghai Perfect
Media, an advertising services provider, in exchange for cash of
$500,000 and 14,594,200 ordinary shares having a fair value of
$0.31&nbsp;per ordinary share which was determined by a
retrospective valuation performed by an unrelated party.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The valuation was based on the guideline companies approach
which incorporates the market performance of comparable listed
companies as well as the financial results and growth trends of
the Group to derive the total equity value of the Group. The
valuation model then allocated the equity value between the
ordinary shares and the preference shares and determined the
fair value of ordinary shares based on two scenarios: preference
shares that have a value in excess of their conversion price
were treated as if they had converted into ordinary shares; and
preference shares that have a value below their conversion price
were assigned a value that took into consideration their
liquidation preference. Ordinary shares were assigned a value
equal to their pro rata share of the residual amount (if any)
that remained after consideration of the liquidation preference
of preferred stock with a value below their conversion price.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Immediately following the acquisitions, Perfect Media became a
wholly owned subsidiary of Focus Media Holding and Shanghai
Perfect Media became a wholly owned subsidiary of Focus Media
Advertisement. 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 Group&#146;s primary reason for the
acquisition of Perfect Media was its complementary business
model and its strong relationships with landlords and property
managers of commercial building locations in which the Group
desired to locate its flat-panel displays. The acquisition of
Perfect Media resulted in a significant amount of goodwill
because the amount the Group paid for Perfect Media exceeded its
fair market value. The Group was willing to pay in excess of
Perfect Media&#146;s fair market value in order to maintain its
competitive advantage within the commercial buildings the Group
already occupied. The aggregate purchase price of $4,984,798
consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">500,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Value of the ordinary shares issued
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,484,798</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,984,798</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,086</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">185,947</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,016</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,783,749</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,984,798</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-24
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(7)</I>&nbsp;On October&nbsp;15, 2004, the Group acquired
100% of the outstanding ordinary shares of Focus Media Qingdao
including its then variable interest entity Qingdao Advertising,
an advertising services provider, in exchange for cash of
$989,496. Immediately following the acquisition Focus Media
Qingdao became a wholly owned subsidiary of Focus Media Holding
and Qingdao Advertising became a wholly owned subsidiary of
Focus Media Advertisement. 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 purchase price was allocated as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,642</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,733</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,183</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,000,222</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">989,496</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(8)</I>&nbsp;On October&nbsp;15, 2004, the Group acquired
100% of the outstanding ordinary shares of Focus Media Dalian
including its then variable interest entity Dalian Advertising,
an advertising services provider, in exchange for cash of
$989,584. Immediately following the acquisition Focus Media
Dalian became a wholly owned subsidiary of Focus Media Holding
and Dalian Advertising became a wholly owned subsidiary of Focus
Media Advertisement. 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 purchase price was allocated as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,044</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,653</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">992,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">989,584</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-25
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(9)</I>&nbsp;On October&nbsp;15, 2004, the Group acquired
100% of the outstanding ordinary shares of Focus Media Changsha
including its then variable interest entity Changsha
Advertising, an advertising services provider, in exchange for
cash of $989,484. Immediately following the acquisition Focus
Media Changsha became a wholly owned subsidiary of Focus Media
Holding and Changsha Advertising became a wholly owned
subsidiary of Focus Media Advertisement. 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
purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">76,098</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">81,194</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,316</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">979,072</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">989,484</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(10)</I>&nbsp;On October&nbsp;15, 2004, the Group acquired
100% of the outstanding ordinary shares of Qianjian Advertising,
an advertising services provider, in exchange for cash of
$338,307 of which $265,822 was paid as of December&nbsp;31, 2004
and the remainder was paid in 2005. 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 purchase price was
allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">125,599</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,818</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">174,890</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">338,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-26
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(11)</I>&nbsp;On March&nbsp;21, 2005, the Group increased its
existing ownership of Xian Focus Media Culture&nbsp;&#38;
Communication Co., Ltd, an advertising service provider, from
10% to 70% by acquiring an additional 60% of the outstanding
ordinary shares, in exchange for cash consideration of $84,577,
all of which was paid as of December&nbsp;31, 2005. 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 purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99,663</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,637</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,313</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">159,290</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,577</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(12)</I>&nbsp;On March&nbsp;4, 2005, the Group acquired 100%
of the outstanding ordinary shares of Xiamen Advertising, an
advertising services provider, in exchange for cash
consideration of $327,505, all of which was paid as of
December&nbsp;31, 2005. 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 purchase price was allocated as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,704</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,923</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,967</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">154,911</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">327,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-27
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(13)</I>&nbsp;On March&nbsp;21, 2005, the Group acquired 80%
of the outstanding ordinary shares of Focus Media Tianjin,
including its then variable interest entity Tianjin Advertising,
an advertising services provider, in exchange for cash
consideration of $797,439, all of which was paid as of
December&nbsp;31, 2005. Immediately following the acquisition,
Focus Media Tianjin became an 80% owned subsidiary of Focus
Media Holding and Tianjin Advertising became an 80% owned
subsidiary of Focus Media Advertisement. 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
purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,825</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,306</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">83,417</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">774,541</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">797,439</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(14)</I>&nbsp;On March&nbsp;21, 2005, the Group acquired 100%
of the outstanding ordinary shares of Focus Media Zhuhai, an
advertising services provider, in exchange for cash
consideration of $42,288, all of which was paid as of
December&nbsp;31, 2005. 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 purchase price was allocated as
follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,291</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,288</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-28
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(15)</I>&nbsp;On March&nbsp;21, 2005, the Group acquired 100%
of the outstanding ordinary shares of CBL, including its then
variable interest entity Guangdong Framedia, an advertising
services provider, in exchange for cash consideration of
$2,054,008, all of which was paid as of December&nbsp;31, 2005.
Immediately following the acquisition, CBL became a 100% owned
subsidiary of Focus Media Holding and Guangdong Framedia became
a 100% owned subsidiary of Focus Media Advertisement. 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 purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">337,252</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">471,818</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,633</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,234,305</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,054,008</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(16)</I>&nbsp;On March&nbsp;22, 2005, the Group acquired 100%
of the outstanding ordinary shares of Sorfari, including its
then variable interest entity Hebei Advertising, an advertising
services provider, in exchange for cash consideration of
$773,274, all of which was paid as of December&nbsp;31, 2005.
Immediately following the acquisition, Sorfari became a 100%
owned subsidiary of Focus Media Holding and Hebei Advertising
became a 100% owned subsidiary of Focus Media Advertisement. 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 purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,639</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,090</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">659,545</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">773,274</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(17)</I>&nbsp;On August&nbsp;15, 2005, the Group acquired
100% of the outstanding ordinary shares of Shenzhen Bianjie, in
exchange for cash consideration of $457,185. The acquisition was
recorded using the purchase method of accounting and,
accordingly, the acquired assets and liabilities were
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-29
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
recorded at their fair market value at the date of acquisition.
The purchase price was allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,166</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">2.34&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">485,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">457,185</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(18)</I>&nbsp;On November&nbsp;20, 2005, the Group acquired
100% of the outstanding ordinary shares of Shenyang Advertising,
an advertising services provider, in exchange for cash
consideration of $495,651, all of which was paid as of
December&nbsp;31, 2005. 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 purchase price was preliminarily
allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,949</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,460</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">1.8&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">454,242</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">495,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(19)</I>&nbsp;On December&nbsp;6, 2005, the Group acquired
100% of the outstanding ordinary shares of Jinan Advertising, an
advertising services provider, in exchange for cash
consideration of $61,956, all of which was paid as of
December&nbsp;31, 2005. 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 purchase price was preliminarily
allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">78,470</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,723</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">3.1&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">121,703</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,956</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(20)</I>&nbsp;On December&nbsp;12, 2005, the Group acquired
100% of the outstanding ordinary shares of Fuzhou Advertising,
an advertising services provider, in exchange for cash
consideration of $43,369, all of which was paid as of
December&nbsp;31, 2005. The acquisition was recorded using the
purchase
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-30
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
method of accounting and, accordingly, the acquired assets and
liabilities were recorded at their fair market value at the date
of acquisition. The purchase price was preliminarily allocated
as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,237</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,132</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">3.5&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,369</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Unaudited</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(21)</I>&nbsp;On January&nbsp;1, 2006, the Group acquired
100% of the outstanding ordinary shares of Infoachieve Limited
(&#147;Infoachieve&#148;), which includes its then variable
interest entity Shanghai Framedia Advertisement Development Ltd.
(&#147;Framedia&#148;), the largest poster frame advertising
network operator in China, in exchange for cash of $39,600,000,
all of which were paid as of December&nbsp;31, 2005, as well as
22,157,003 ordinary shares having a fair value of
$2.456&nbsp;per ordinary share which was determined based on
average market price of Focus Media Holding&#146;s common shares
traded over 3&nbsp;days before and after the acquisition were
agreed and announced. Additional payment of up to 35,830,619
ordinary shares may be made contingent upon Infoachieve
attaining certain earnings target in 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Immediately following the acquisitions, Infoachieve became a
wholly owned subsidiary of Focus Media Holding and Framedia
became a wholly owned subsidiary of Focus Media Advertisement.
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 aggregate purchase price of $94,328,709
consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="82%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,600,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other acquisition costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">311,110</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Value of the ordinary shares issued
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,417,599</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,328,709</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price was preliminarily allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities assumed
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,684,145</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,300,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">6&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,676,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Non-compete agreement
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">466,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">3&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademark
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">943,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">1&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Contract backlog
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">1&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">87,557,854</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,328,709</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-31
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(22)</I>&nbsp;On January&nbsp;1, 2006, the Group acquired the
signed lease agreements, frames and ongoing advertising
agreements of Shenzhen
<FONT style="white-space: nowrap">E-times</FONT> Advertising
Co., Ltd. (&#147;E-times&#148;) and Skyvantage Group Limited,
one of the major poster frame advertising network operators in
South China, in exchange for cash consideration of $5,000,000.
This is considered an acquisition of a business and accordingly
the purchase method of accounting has been applied. Accordingly,
the acquired assets and liabilities were recorded at their fair
market value at the date of acquisition. The aggregate purchase
price of $5,034,008 consisted of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other acquisition costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,008</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,034,008</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price was preliminarily allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">749,260</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">6&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,284,748</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,034,008</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(23)</I>&nbsp;On February&nbsp;28, 2006, the Group acquired
100% of the outstanding ordinary shares of Target Media Holdings
Limited (&#147;Target Media&#148;), its wholly-owned subsidiary,
Target Media Multi-Media technology (Shanghai) Co., Ltd.
(&#147;TMM&#148;), and a consolidated variable interest entity
Shanghai Target Media Co., Ltd. (&#147;STM&#148;), one of the
largest <FONT style="white-space: nowrap">out-of</FONT>-home
advertising network operator in China, in exchange for cash of
$94,000,000, of which $44,780,103 was paid as of March&nbsp;31,
2006 the remaining will be paid in 2006, as well as 77,000,000
ordinary shares having a fair value of $3&nbsp;per ordinary
share which was determined based on average market price of
Focus Media Holding&#146;s common shares were traded over
3&nbsp;days before and after the acquisition were agreed and
announced.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Immediately following the acquisitions, Target Media became a
wholly owned subsidiary of Focus Media Holding, and TTM became a
wholly owned subsidiary of Focus Media Advertisement, whereas
STM became a consolidated variable interest entity. 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 aggregate purchase price of $327,057,757 consisted of the
following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other acquisition costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,057,757</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Value of the ordinary shares issued
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">231,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">327,057,757</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-32
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price was preliminarily allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,822,958</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease Agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,509,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">10&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">449,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademark
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,720,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">10&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Contract backlog
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">149,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">1&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">291,407,799</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">327,057,757</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>(24)</I>&nbsp;On March&nbsp;21, 2006, the Group acquired 100%
of the outstanding ordinary shares of Dotad Media Holdings
Limited (&#147;Dotad&#148;&#146;). Dotad will be renamed as
Focus Media Wireless, a leading mobile-phone advertising service
provider in China, in exchange for cash consideration of
$15,000,000, all of which was paid as of March&nbsp;31, 2006.
Contingent upon Dotad&#146;s meeting certain earning targets in
2006 and 2007, additional share consideration will be paid up to
$15&nbsp;million in the form of Focus Media Holding&#146;s
ordinary shares (valued at $5&nbsp;per ordinary shares), for an
aggregate potential payment of up to $30&nbsp;million. 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.
Additional payment of up to 3,000,000 ordinary shares may be
made contingent upon Dotad&#146;s attaining certain earnings
targets in 2006 and 2007. The purchase price was allocated as
follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price was preliminarily allocated as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">82,270</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Intangible assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer base
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,999,751</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">7&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Completed technology
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,480,354</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">5&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">License
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,216</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">5&nbsp;years
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Partnership
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">101,035</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">5&nbsp;years
    </FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,320,374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">N/A
    </FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The purchase price allocation and intangible asset valuations
for each of the acquisitions described above were based on a
valuation report provided by a third party valuation firm. The
valuation report utilizes and considers generally accepted
valuation methodologies such as the income, market, cost and
actual transaction of Group shares approach. The Group has
incorporated certain assumptions which include projected cash
flows and replacement costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Pro forma</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following summarized unaudited pro forma results of
operations for the years ended December&nbsp;31, 2004, 2005 and
three months ended March&nbsp;31, 2006, assuming that all
acquisitions
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-33
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
during the year ended December&nbsp;31, 2005 and three months
ended March&nbsp;31, 2006 occurred as of January&nbsp;1, 2004,
2005 and January&nbsp;1, 2006. These pro forma results have been
prepared for comparative purposes only and do not purport to be
indications of the results of operations which actually would
have resulted had the significant acquisitions occurred as of
January&nbsp;1, 2004, 2005 and 2006.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">For the three months</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Year ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ended March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenues
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,799,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">113,750,432</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,205,136</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss) attributable to
    holders of ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(14,944,599</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,250,017</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,159,298</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) per share&nbsp;&#151;
    basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) per share&nbsp;&#151;
    diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.06</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>4.</B></TD>
    <TD>
    <B>Investment in Available-for-Sale Securities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a summary of short-term available-for-sale
securities:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Federal home loan cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Gross unrealized loss
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(164,150</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(207,900</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fair Value
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,835,850</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,792,100</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">All the securities are due within
    one year
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Accounts Receivable, net</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounts receivable, net consist of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Billed receivables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">858,649</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,782,521</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,587,026</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,218,690</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unbilled receivables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">550,812</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,837,428</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,648,382</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,031,558</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,409,461</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,619,949</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,235,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,250,248</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unbilled receivables represent amounts earned under advertising
contracts in progress but not billable at the respective balance
sheet dates. These amounts become billable according to the
contract term. The Group anticipates that substantially all of
such unbilled amounts will be billed and collected within twelve
months of balance sheet dates.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-34
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Inventories</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Inventories consist of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Finished goods
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,140</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,075,210</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">433,844</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">599,120</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Spare parts and consumables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,810</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">167,930</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,685</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,170</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90,950</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,243,140</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">479,529</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">605,290</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Prepaid Expenses and Other Current Assets</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prepaid expenses and other current assets consist of the
following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other receivables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,576</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">295,650</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">751,602</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,121,396</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other taxes refundable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">732,357</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advances to supplier
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,274,353</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,036,393</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Staff advances
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,330</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">239,136</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">964,555</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,129,394</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Prepaid expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">162,304</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">276,861</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">327,104</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest receivables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">417,369</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">374,789</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deposit for acquisitions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">362,472</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,919,530</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,063,690</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Note receivables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,288</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,947</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Loan to Infoachieve
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">759,563</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred offering costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,007,618</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">148,906</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,109,468</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,363,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,810,070</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>Acquired Intangible Assets, Net</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Acquired intangible assets, net consist of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Lease agreements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">529,676</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,278,059</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,876,822</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Customer bases
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">273,820</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">430,879</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,568,078</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Trademark
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,682,799</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Completed technology
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,480,354</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Contract backlog
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">219,533</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Non-compete agreement
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">466,883</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Partnership
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">101,035</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">License
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,216</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: accumulated amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(95,190</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(551,018</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,530,525</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">708,306</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,157,920</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30,881,195</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-35
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the year 2004, 2005 and the three months ended
March&nbsp;31, 2005 and 2006, the Group acquired certain lease
agreements and customer bases through various acquisitions (see
Note&nbsp;3). The Group also recorded amortization expense of
$nil, $77,443, $437,837 $67,352, and $999,178 for the years
ended December&nbsp;31, 2003, 2004 and 2005 and the three months
ended March&nbsp;31, 2005 (unaudited)&nbsp;and 2006 (unaudited),
respectively. The Group will record amortization expense of
$5,461,966, $4,561,595, $4,400,871, $4,154,231 and $4,145,868,
for 2006, 2007, 2008, 2009 and 2010, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B>Long-term Investments</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investment consists of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Xian Focus Media Advertising Co.
    Ltd. (&#147;Xian Focus
    Media&#148;)<SUP style="font-size: 85%; vertical-align: text-top">(a)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,082</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,088</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Xinna Media Co., Ltd.
    (&#147;Xinna&#148;)<SUP style="font-size: 85%; vertical-align: text-top">(b)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">911,033</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Tianjin Subway Media Service Co.,
    Ltd.<SUP style="font-size: 85%; vertical-align: text-top">(c)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,443</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Target Network Chengcheng Co.
    Ltd.<SUP style="font-size: 85%; vertical-align: text-top">(d)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,367</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,082</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,088</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,117,843</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    On September&nbsp;23, 2003, the Group acquired 10% of the
    outstanding ordinary shares of Xian Focus Media. The Group has
    accounted for its investment in Xian Focus Media using the cost
    method of accounting. Subsequently in March 2005, the Group
    acquired an additional 60% of the outstanding ordinary shares of
    Xian Focus Media. Accordingly, the Group commenced consolidating
    Xian Focus Media upon obtaining control of this subsidiary (See
    Note&nbsp;3(11)).</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    On January&nbsp;6, 2006, STM acquired 20% equity interest in
    Xinna for cash consideration of $911,033. The Group has
    accounted for its investment in Xinna using the equity method of
    accounting.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    On September&nbsp;22, 2005, STM, a subsidiary of Target Media,
    formed a 50% owned entity&nbsp;&#151; Tianjin Subway Media
    Service Co., Ltd. (&#147;Tianjin Subway Project&#148;) with a
    third party for a cash consideration of $144,443. The Group has
    accounted for its investment in Tianjin Subway Project using the
    equity method of accounting.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    In November 2005, STM, a subsidiary of Target Media, invested
    $62,367 in a 50% owned entity named Target Network Chengcheng
    Co. Ltd. (&#147;Chengcheng&#148;). The Group has accounted for
    its investment in Chengcheng using the equity method of
    accounting.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-36
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.</B></TD>
    <TD>
    <B>Equipment, Net</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equipment, net consists of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Media display equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,830,972</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,384,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40,191,968</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68,852,703</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Computers and office equipment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">292,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">675,053</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,267,696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,844,038</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Leasehold improvements
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,505</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">167,932</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">537,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">869,779</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Vehicles
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">83,834</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">349,575</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">445,639</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,137,677</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,311,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,346,369</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,012,159</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: accumulated depreciation and
    amortization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(159,278</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,142,742</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,975,119</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,505,458</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Assembly in progress
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28,804</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,323,638</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,486,492</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,978,399</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,197,143</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,694,888</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,993,193</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group wrote down certain LCD display equipment for the total
of $1,871,024 because the location were close down.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Assembly in process relates to the assembly of flat-panel
television screens. These assets will be placed in service in
late 2006.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.</B></TD>
    <TD>
    <B>Short-term Bank Loans</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group had $4,365,723 outstanding under credit arrangement
which consisted of lines of credit and revolving credit
agreement at March&nbsp;31, 2006 (unaudited). The amount
available to the Group for additional borrowings under the lines
of credit and resolving agreement was $3,118,374 at
March&nbsp;31, 2006 (unaudited). The agreement was subject to
interest rates of 10% discount of six-month loan interest rate
of The People&#146;s Bank of China. The interest expenses
incurred in 2005 and the three months ended March&nbsp;31, 2006
(unaudited)&nbsp;amounted to $46,005 and $13,297, respectively.
The bank loans bear interest at 4.698%&nbsp;per annum as of
December&nbsp;31, 2005 and March&nbsp;31, 2006 (unaudited),
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.</B></TD>
    <TD>
    <B>Other Short Term Loans</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other short term loans consist of:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other loan due to ex-shareholder of
    Target Media
    <SUP style="font-size: 85%; vertical-align: text-top">(a)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,742,048</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other loan due to ex-shareholder of
    Framedia<SUP style="font-size: 85%; vertical-align: text-top">(b)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,034,287</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,776,335</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    In December 2005, the ex-shareholder of Target Media and STM,
    Shanghai Investment Information Co., Ltd. (&#147;SII&#148;)
    provided a short term loan of $3,742,048 to STM. The loan bears
    interest at an annual rate of 4.698%. The interest expenses
    incurred in the three months ended March&nbsp;31, 2006
    (unaudited)&nbsp;amounted to $14,580.</TD>
</TR>

</TABLE>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-37
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV style="margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="1%"></TD>
    <TD width="1%"></TD>
    <TD width="98%"></TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    At March&nbsp;31, 2006 (unaudited), the short-term loans from
    ex-shareholders of Framedia are non-interest bearing, all of
    which was repayable within one year.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>13.</B></TD>
    <TD>
    <B>Accrued Expenses and Other Current Liabilities</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accrued expenses and other current liabilities consist of the
following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">119,840</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">759,817</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,161,133</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,146,963</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other taxes payables
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,288</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,728,850</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,037,443</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,679,253</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advance from customers
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,308</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,459,976</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,387,224</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,687,075</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued employee payroll and welfare
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,426</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">473,054</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,059,717</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,052,173</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued offering costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">767,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued merger and acquisition costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,100,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Payables related to acquisitions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538,860</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">99,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,027,231</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amount due to minority shareholders
    of subsidiary
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">426,858</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200,848</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">326,916</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Others
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,372</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">436,199</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">801,407</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,394,488</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">561,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,591,435</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,746,902</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71,414,099</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>14.</B></TD>
    <TD>
    <B>Share Option</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2003, the Group adopted the 2003 employee share option
scheme (the &#147;Option Plan&#148;) which allows the Group to
offer a variety of incentive awards to employees, directors or
consultants and advisors or any members of the Group. For 2004,
2005, and 3&nbsp;months ended March&nbsp;31, 2006 (unaudited),
options to purchase&nbsp;25,208,200, 23,843,630 and
3,000,000&nbsp;ordinary shares are authorized under the Option
Plan, respectively. Under the terms of the Option Plan, options
are generally granted at prices equal to the fair market value
as determined by the Board of Directors and expire 10&nbsp;years
from the date of grant and generally vest over 3&nbsp;years
while certain options granted vest over 1&nbsp;year. Subsequent
to the initial public offering, options will be granted at the
fair market value of the ordinary shares at the date of grant.
As of December&nbsp;31, 2004, 2005 and March&nbsp;31, 2006
(unaudited), options to purchase&nbsp;25,208,200 and 49,051,830
and 38,131,920 ordinary shares were granted and outstanding. Not
more than 30% of the Group&#146;s share capital is reserved for
issuance under the Option Plan.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Options to Employees</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July and August 2004, the Group granted 20,643,400&nbsp;share
options with an exercise price of $0.24 to purchase ordinary
shares to directors, officers and employees. The Group recorded
deferred share based compensation of $969,959 as of
December&nbsp;31, 2004 and compensation expense of $364,876 for
2004 related to the difference between the exercise price and
the deemed fair value of the ordinary shares. Prior to the
Group&#146;s initial public offering, the derived fair value of
the ordinary shares underlying the options was determined for
the July and August 2004 grants, based on a retrospective
third-party valuation conducted by a third party valuation firm
using a generally accepted valuation methodology, the guideline
companies approach, which incorporates certain assumptions
including the market performance of comparable listed companies
as well as
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-38
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
the financial results and growth trends of the Group, to derive
the total equity value of the Group. The valuation model
allocated the equity value between the ordinary shares and the
preference shares and determined the fair value of ordinary
shares based on two assumptions: where conversion into ordinary
shares would result in a higher economic value, preference
shares were treated as if they had converted into ordinary
shares; and preference shares that have a value higher than
their conversion price were assigned a value that took into
consideration their liquidation preference. Our ordinary shares
were assigned a value equal to their pro rata share of the
residual amount, if any, that remained after consideration of
the liquidation preference of preferred shares with a value
below their conversion price.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January and February 2005, the Group granted
6,020,000&nbsp;share options with exercise prices ranging from
$0.58 to $0.75 to purchase ordinary shares to directors,
officers and employees. In July 2005, the Group granted
11,683,630&nbsp;share options with exercise price of $1.7 to
purchases ordinary shares to directors, offers and employees. In
November 2005, the Group further granted 4,800,000&nbsp;share
options with exercise price ranging from $2.6 to $2.7 to
purchases ordinary shares to directors, officers and employees.
The Group recorded deferred share based compensation of $264,751
as of December&nbsp;31, 2005 and compensation expense of
$458,639 for 2005, related to the difference between the
exercise price and the deemed fair value of the ordinary shares.
The Group determined the fair value of ordinary shares for those
grants in January and February 2005 using the Series&nbsp;C
preference share price of $0.51 and the fair value of ordinary
shares for the grants in July and November 2005 using the fair
market value of the ordinary shares quoted in the Nasdaq Stock
Exchange.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2006, the Group granted 3,000,000&nbsp;share options
with exercise prices of $5.093 to purchase ordinary shares to
directors, officers and employees. Effective January&nbsp;1,
2006, the Group adopted SFAS&nbsp;123-R. The fair value of stock
options granted to employees is determined using the
Black-Scholes option pricing model. The determination of the
fair value of share-based compensation awards on the date of
grant using an option-pricing model is affected by the
Group&#146;s stock price as well as assumptions regarding a
number of complex and subjective variables, including the
expected volatility of the Group&#146;s stock price over the
term of the awards, actual and projected employee stock option
exercise behaviors, risk-free interest rate and expected
dividends. As a result, the Group recorded compensation expense
of $1,466,540 for three months ended March&nbsp;31, 2006
(unaudited).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Options to Non-employees</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, the Group also granted 4,564,800&nbsp;share options
with an exercise price of $0.24 to purchase ordinary shares to
its external consultants and advisors in exchange for past
services, which part of them vest over 1&nbsp;year and part of
them vest over 3&nbsp;years. In February 2005, the Group granted
1,240,000&nbsp;share options with an exercise price of $0.75 to
purchase ordinary shares to its external consultants and
advisors in exchange for services. In July 2005, the Group
granted 100,000&nbsp;share options with an exercise of $1.7 to
purchase ordinary shares to its external consultants and
advisors in exchange for services. No options were granted to
external consultants and advisors subsequent to July 2005. The
Group recorded compensation expense of approximately $123,835
and $267,864 and $26,710 for 2004, 2005 and three months ended
March&nbsp;31, 2006 (unaudited), respectively, estimated using
the Black-Scholes option pricing model as such method provides a
more accurate estimate of the fair value of services received by
the external consultants and advisors.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-39
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of share-based compensation recognized in the
consolidated statement of operations are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Years ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">461,183</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">683,186</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">320,273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,129,610</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Selling and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,528</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,317</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,687</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">336,910</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">488,711</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">726,503</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">333,960</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,466,540</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value of each employee, officer and director option
granted is estimated on the date of grant using the
Black-Scholes option-pricing model with the following
assumptions used for grants during the applicable period.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Year ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Option granted to employees:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Average risk-free rate of return
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.97%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.10-4.43%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.38%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.74%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average expected option
    life
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1-3&nbsp; years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2-3&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Volatility rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.49%-36.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.2%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Dividend yield
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0%</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to 2004 the Group did not grant share options to
employees, directors or consultants or advisors or any members
of the Group.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A summary of the share option activity is as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of&nbsp;option</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercise price</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Options outstanding at
    December&nbsp;31, 2003
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,208,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cancelled
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Options outstanding at
    December&nbsp;31, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,208,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,843,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.59</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cancelled
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Options outstanding at
    December&nbsp;31, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,051,830</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.89</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Granted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.09</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cancelled
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Exercised
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,919,910</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.29</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Options outstanding at
    March&nbsp;31, 2006 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,131,920</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.44</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-40
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The weighted average per share fair value of options as of their
respective grant dates was as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Years ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.23</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.16</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.37</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes information with respect to share
options outstanding at December&nbsp;31, 2005:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Options outstanding</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Option exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Aggregate</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">No. of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">remaining</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Intrinsic</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">outstanding</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">contractual life</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">value</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ordinary shares:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$0.24
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,208,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.62 yrs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,892,580</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">199,751</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$0.58
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.14 yrs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">800,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$0.75
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,060,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.17 yrs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,015,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47,234</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$1.70
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,783,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.58 yrs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,308</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$2.60-$2.70
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,800,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.92 yrs</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71,999</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,051,830</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,707,580</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">355,292</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes information with respect to share
options outstanding at March&nbsp;31, 2006 (unaudited):
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Options outstanding</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Options exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Weighted</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">average</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Aggregate</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number&nbsp;of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">remaining</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">intrinsic</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">outstanding</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">contractual life</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">exercisable</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">value</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ordinary shares:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$0.24
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,805,160</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.44&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,366,680</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">150,170</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$0.58
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,512,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.88&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">250,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$0.75
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,230,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.92&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">312,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,661</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$1.70
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,783,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.33&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,470</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$2.60&nbsp;- $2.70
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,800,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.67&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,015</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">$5.09
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,131,920</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,929,180</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">278,316</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2006 (unaudited), there was $9,924,890 of
total unrecognized compensation expense related to non-vested
share-based compensation arrangement granted under the Option
Plan. That cost is expected to be recognized over a
weighted-average period of 2.04&nbsp;years.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-41
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes information regarding options
issued within <FONT style="white-space: nowrap">12-month</FONT>
prior to March&nbsp;31, 2006:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Number of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Fair value of</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">options</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ordinary</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Exercise</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Intrinsic</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Type of</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Grant date</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">issued</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">shares</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">price</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">value</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">valuation</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">July&nbsp;5, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,391,800</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(a</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">August&nbsp;1, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">506,800</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.85</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(a</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">August&nbsp;10, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">504,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(a</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">August&nbsp;25, 2004
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,805,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.29</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(a</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">January&nbsp;1, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,200,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(b</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">February&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(b</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">February&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,060,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.75</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(b</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">July&nbsp;13, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,783,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(c</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">November&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">800,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.60</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(d</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">November&nbsp;2, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(d</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">March&nbsp;10, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(d</FONT></SUP></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">)</FONT></SUP></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52,051,830</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3.0pt;color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I><U>Type of Valuation</U></I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">

</DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="12%"></TD>
    <TD width="1%"></TD>
    <TD width="87%"></TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    The fair value was determined based on a retrospective unrelated
    party valuation.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    Based on Series&nbsp;C-2 convertible redeemable preference
    shares sold to third party members for cash proceeds
    (Note&nbsp;17(c))</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    The fair value was determined based on the initial public
    offering price on the grant date.</TD>
</TR>

<TR>
    <TD style="font-size: 3.0pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    The fair value was determined based on the closing quoted market
    price of the ordinary shares quoted in the Nasdaq Stock Exchange.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>15.</B></TD>
    <TD>
    <B>Income Taxes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Focus Media Holding and certain of its subsidiaries are
tax-exempted companies incorporated in the British Virgin
Islands.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Focus Media Hong Kong has not recorded a tax provision for Hong
Kong tax purposes as the Group does not have any assessable
profit in Hong Kong.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group&#146;s remaining subsidiaries, registered in the PRC
(with the exception of Focus Media Technology, New Focus Media
Technology, Framedia Consultation and TMM), are all domestically
owned and subject to PRC Enterprise Income Tax (&#147;EIT&#148;)
on the taxable income in accordance with the relevant PRC income
tax laws. Focus Media Technology is a Foreign Invested
Enterprise and subject to the Foreign Enterprise Income Tax
(&#147;FEIT&#148;) on the taxable income as calculated in
accordance with the relevant PRC income tax law. EIT and FEIT
rate for each Group member operating in the PRC is ranging from
15% to 33%.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-42
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The principal components of the Group&#146;s deferred income tax
assets are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March 31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred tax assets:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net operating loss carry forwards
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">215,308</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">276,673</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">545,208</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,891,620</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued expenses temporarily
    non-deductible
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,363</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,281</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,695</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">590,374</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Pre-operating expenses
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75,764</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,862</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">80,102</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,954</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Bad debt provision
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,044</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57,147</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">130,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">193,506</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total deferred tax assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">362,479</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">450,963</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">802,902</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,750,454</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Valuation allowance on deferred tax
    assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(235,710</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(59,988</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,556,948</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net deferred tax assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">126,769</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">450,963</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">742,914</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">193,506</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group did not have any timing differences relating to
deferred tax liabilities as of December&nbsp;31, 2003, 2004,
2005 and March&nbsp;31, 2006 (unaudited).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A significant portion of the deferred tax assets recognized
relate to net operating loss carry forwards. The Group operates
through multiple subsidiaries and the valuation allowance is
considered on each individual subsidiary basis. Where a
valuation allowance was not recorded, the Group believes that
there was sufficient positive evidence to support its conclusion
not to record a valuation allowance as it expects to generate
sufficient taxable income in the future.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The valuation allowance from 2003 to 2004 has decreased as the
Group has implemented a tax planning strategy which more likely
than not allow the Group to utilize its deferred tax assets. The
valuation allowance in 2004, 2005 and for the three months ended
March&nbsp;31, 2006 (unaudited)&nbsp;have been increased in
connection to the net operating losses which the Group believes
cannot generate future taxable income to recognize the income
tax benefit.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Reconciliation between total income tax expense and the amount
computed by applying the statutory income tax rate to income
before taxes is as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Years ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Statutory rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Permanent book-tax difference
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(30.3</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(24.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(61.7</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)%</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Change in valuation allowance
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Effective tax rate
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.9</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.0</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-43
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>16.</B></TD>
    <TD>
    <B>Net income (loss) per Share</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the computation of basic and
diluted income (loss) per share for the years/periods indicated:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Years Ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three Months Ended March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income (loss) attributable to
    holders of ordinary shareholders (numerator):
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,576,414</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,547,651</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,642,493</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,432,769</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares (denominator):
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average ordinary shares
    outstanding used in computing basic income (loss) per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,657,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">160,998,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,128,545</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">142,464,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">438,232,094</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Plus weighted average preference
    shares outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,119,675</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">158,266,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Plus incremental weighted average
    ordinary shares from assumed conversions of stock option using
    treasury stock method
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,689,874</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,481,608</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,663,224</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average ordinary shares
    outstanding used in computing diluted income (loss) per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,657,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">160,998,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">365,938,094</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">315,212,608</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,895,318</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss) per
    share&nbsp;&#151; basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income (loss) per
    share&nbsp;&#151; diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.07</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-44
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the above mentioned years/periods, the Group had securities
outstanding which could potentially dilute basic earnings per
share in the future, but which were excluded from the
computation of diluted net income (loss) per share in the
years/periods presented, as their effects would have been
antidilutive. Such outstanding securities consist of the
following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;A convertible
    redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,967,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41,967,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;B convertible
    redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,191,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,191,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;C-1 convertible
    redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,054,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,054,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Series&nbsp;C-2 convertible
    redeemable preference shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,053,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,053,400</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Outstanding options to purchase
    ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,208,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,051,830</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,468,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,131,920</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">183,474,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">49,051,830</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">190,734,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,131,920</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>17.</B></TD>
    <TD>
    <B>Convertible Redeemable Preference Shares</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each Series&nbsp;A, Series&nbsp;B, Series&nbsp;C-1 and
Series&nbsp;C-2 convertible redeemable preference shares was
automatically converted into ordinary shares at the then
effective conversion price upon the closing of a qualified
underwritten public offering of the ordinary shares of the
Group. Upon the completion of the Group&#146;s initial public
offering on July&nbsp;13, 2005, all of the issued and
outstanding Series&nbsp;A, Series&nbsp;B, Series&nbsp;C-1 and
Series&nbsp;C-2 convertible redeemable preference shares were
converted into ordinary shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>a) </I>In April 2004, the Group issued 52,083,400
Series&nbsp;B convertible redeemable preference shares to a
group of third party investors for cash proceeds of $12,062,696,
net of issuance costs of $437,304. The holders of Series&nbsp;B
redeemable convertible preference shares could have redeemed the
Series&nbsp;B convertible redeemable preference shares at any
time (i)&nbsp;before December&nbsp;31, 2005 if the Group
received a notice from the holders of a majority of
Series&nbsp;B convertible redeemable preference shares
indicating a material breach by the Group and its affiliates of
their representation, warranties or covenants under
Series&nbsp;B convertible redeemable preference shares, the
shareholders agreement or the Restructuring Documents (as
defined in the amended Series&nbsp;B Purchase Agreement), or
(ii)&nbsp;after April&nbsp;28, 2004 (&#147;Redemption&nbsp;Start
Date&#148;), at the option of a majority of the holders of the
Series&nbsp;B convertible redeemable preference shares then
outstanding. In the event of a redemption pursuant to this
right, the Group could have redeemed up to all of the
Series&nbsp;B convertible redeemable preference shares at a
redemption price per Series&nbsp;13 redeemable convertible
preference share equal to $0.24x(1+(0.15xN)) plus all declared
but unpaid dividends. N refers to a fraction the numerator of
which is the number of calendar days between April&nbsp;28, 2004
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-45
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
and the Redemption&nbsp;Start Date and the denominator of which
is 365. The Group recorded a deemed dividend of $2,191,442 in
2004, which resulted from the amortization of the 15% redemption
premium associated with Series&nbsp;B convertible redeemable
preference shares. According to the articles of association
amended on November&nbsp;29, 2004, the redemption price of
Series&nbsp;B preferred stock is $0.24.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>b) </I>In April 2004, 62,400,000 outstanding ordinary shares
were reclassified and re-designated into 62,400,000
Series&nbsp;A convertible redeemable preference shares. The
re-designation has resulted in a deemed dividend of $8,308,411
which represents the difference between the fair value of the
Series&nbsp;A convertible redeemable preference shares at the
date of re-designation of $0.15 and the initial issuance price
of the ordinary shares of $0.05 for 10,000,000&nbsp;shares and
approximately $0.01 for 52,400.000&nbsp;shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of Series&nbsp;A convertible redeemable preference
shares had the right to cause the Group to redeem such
preference shares, at any time commencing on a
Redemption&nbsp;Start Date, at the option of a majority of
holders of Series&nbsp;A redeemable convertible preference
shares at a redemption price per Series&nbsp;A convertible
redeemable preference share equal to $0.06 plus all declared but
unpaid dividends. Series&nbsp;A convertible redeemable
preference shares could not have been redeemed until the Group
had redeemed all of the Series&nbsp;B convertible redeemable
preference shares and paid the aggregate Series&nbsp;B
convertible redeemable preference shares redemption price in
full.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>c) </I>On November&nbsp;29, 2004, the Group issued 34,053,400
Series&nbsp;C-2 convertible redeemable preference shares to
group of third party investors for cash proceeds of $17,415,000,
net of issuance costs of $85,000. The holder of a
Series&nbsp;C-2 convertible redeemable preference share could
have redeemed Series&nbsp;C-2 convertible redeemable preference
shares at any time after the earlier of (i)&nbsp;such time as
the holders of a majority of the Series&nbsp;C-2 convertible
redeemable preference share delivered notice in writing to the
Group that the Group and/or its affiliates was in material
breach of any of its representations, warranties and covenants
under the Series&nbsp;C Purchase Agreement, the Shareholders
Agreement or the Ancillary Documents (as defined in the
Series&nbsp;C Purchase Agreement) so long as such notice was to
have been delivered before December&nbsp;31, 2006 and
(ii)&nbsp;anytime following the fourth anniversary of the
issuance of the Series&nbsp;C-2 convertible redeemable
preference share under the Series&nbsp;C Purchase Agreement. In
connection with the redemption of any Series&nbsp;C-2
convertible redeemable preference share, the Group was to pay a
redemption price equal to the Series&nbsp;C-2 convertible
redeemable preference share Issue Price of $0.51 plus all
declared but unpaid dividends on the Series&nbsp;C-2 convertible
redeemable preference share through to the date of redemption
thereof.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>d) </I>On November&nbsp;29, 2004, certain investors of
Series&nbsp;A and/or Series&nbsp;B convertible redeemable
preference shares sold 20,432,600 outstanding Series&nbsp;A
convertible redeemable preference shares and 3,891,800
outstanding Series&nbsp;B convertible redeemable preference
shares to Series&nbsp;C-1 convertible redeemable preference
shares investors at a price of US$0.51. These Series&nbsp;A
convertible redeemable preference shares and Series&nbsp;B
convertible redeemable preference shares were re-designated as
Series&nbsp;C-1 convertible redeemable preference shares. The
<FONT style="white-space: nowrap">re-designation</FONT> resulted
in a deemed dividend of $8,458,464 which represented the
difference between the fair value of the
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares of $0.51 and the
issuance price of Series&nbsp;A and Series&nbsp;B convertible
redeemable preference shares of $0.15 and $0.24, respectively.
</DIV>

</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>e) </I>In December 2004, an investor of ordinary shares sold
9,729,600 outstanding ordinary shares to third party investors
at a price of $0.51. These ordinary shares were
<FONT style="white-space: nowrap">re-designated</FONT> as
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares. The
<FONT style="white-space: nowrap">re-designation</FONT> resulted
in a deemed dividend of $4,897,623 which represented the
difference between the fair value of the
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares of $0.51 and the
issuance price of ordinary shares of $0.01.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the redemption or conversion of all
Series&nbsp;<FONT style="white-space: nowrap">C-2</FONT>
convertible redeemable preference shares issued by the Group,
any holder of
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares thereof could have, at
any time, required the Group to redeem such shares out of funds
legally available therefore in connection with the redemption of
any Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares under this Clause, the
Group would have paid a redemption price equal to the
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares Issue Price of $0.51
plus all declared but unpaid dividends on the
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares through to the date of
redemption thereof.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The significant terms of the Series&nbsp;A, Series&nbsp;B,
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT> and
Series&nbsp;<FONT style="white-space: nowrap">C-2</FONT>
convertible redeemable preference shares are as follows:
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Conversion</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each Series&nbsp;A and Series&nbsp;B convertible redeemable
preference share was automatically convertible into one ordinary
share at any time after the date of issuance of such shares,
subject to anti-dilution or performance adjustment based on an
initial conversion price of $0.15 and $0.24, respectively, upon
the consummation of a Series&nbsp;A/ B Qualified Public Offering
or obtaining the necessary written consent from the holders of
Series&nbsp;A and Series&nbsp;B convertible redeemable
preference shares. A Series&nbsp;A/B Qualified Public Offering
referred to the closing of an underwritten public offering of
the ordinary shares of the Group in the United States that was
registered under the Securities Act of 1933 representing at
least 25% of the fully-diluted share capital of the Group
immediately following the offering, at a price per share that
values the Group at no less than $200,000,000 immediately prior
to the offering.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
and Series&nbsp;<FONT style="white-space: nowrap">C-2</FONT>
convertible redeemable preference share was automatically
convertible into one ordinary share at any time after the date
of issuance of such shares, subject to anti-dilution or
performance adjustment based on an initial conversion price of
$0.51 and $0.51, respectively, upon the consummation of a
Series&nbsp;C Qualified Public Offering or obtaining the
necessary written consent from the holders of
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT> and
Series&nbsp;<FONT style="white-space: nowrap">C-2</FONT>
convertible redeemable preference shares. A Series&nbsp;C
Qualified Public Offering referred to the closing of an
underwritten public offering of the ordinary shares of the Group
in the United States that has been registered under the
Securities Act of 1933 which represents at least 25% of the
fully-diluted share capital of the Group immediately following
the offering, at a price per share that values the Group at no
less than $335,000,000 immediately prior to the offering.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The conversion price of Series&nbsp;A, Series&nbsp;B,
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT> and
Series&nbsp;<FONT style="white-space: nowrap">C-2</FONT>
convertible redeemable preference shares was subject to
adjustment for dilution, including but not limited to share
splits, share dividends and recapitalization.
</DIV>

</FONT>

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<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, the conversion price was to be adjusted for
dilution in the following circumstances:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    1)&nbsp;In the event that the Group issued additional ordinary
    shares at a price per share less than the then prevailing
    Series&nbsp;A, Series&nbsp;B and Series&nbsp;C convertible
    redeemable preference shares&#146; respective conversion price,
    the Series&nbsp;A, Series&nbsp;B and Series&nbsp;C convertible
    redeemable preference shares&#146; respective conversion price
    was to be reduced, concurrently with such issuance, to a price
    (calculated to the nearest cent) equal to the price per share at
    which such additional shares were to be issued.</TD>
</TR>

<TR>
    <TD style="font-size: 6.0pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    2)&nbsp;If the Group&#146;s financial results of 2004 and 2005
    did not meet specified targets. Under the terms of the amended
    and restated memorandum and articles of association in April
    2005, the performance-based adjustment was not triggered in 2004.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Voting Rights</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each Series&nbsp;A, Series&nbsp;B, Series&nbsp;C-1 and
Series&nbsp;C-2 redeemable convertible preference share had
voting rights equivalent to the number of shares of ordinary
shares into which it was convertible.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Dividends</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The holders of Series&nbsp;A, Series&nbsp;B, Series&nbsp;C-1 and
Series&nbsp;C-2 redeemable convertible preference shares were to
be entitled to receive out of any funds legally available
therefore, when and if declared by the Board of Directors of the
Group, dividends at the rate or in the amount as the Board of
Directors considers appropriate.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Liquidation Preference</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of any liquidation, dissolution or winding up of
the Group, as defined, the holders of Series&nbsp;A,
Series&nbsp;B, Series&nbsp;C-1 and Series&nbsp;C-2 convertible
redeemable preference shares were to receive $0.06&nbsp;per
share, $0.24&nbsp;per share, $0.51&nbsp;per share and
$0.51&nbsp;per share, respectively, plus all declared but unpaid
dividends. Such amounts were to be adjusted for any share
splits, share dividends and recapitalization.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the event of any liquidation, dissolution or winding up of
the Group caused by a &#147;Trade Sale&#148;, which is defined
as any sales of shares, merger, consolidation or other similar
transaction involving the Group in which its shareholders do not
retain a majority of the voting power in the surviving entity,
or a sale of all or substantially all the Group&#146;s assets,
the holder of Series&nbsp;B redeemable convertible preference
shares were to receive the higher of (i)&nbsp;200% of the
original purchase price of the Series&nbsp;B preference shares,
for each Series&nbsp;B redeemable convertible preference share
outstanding or (ii)&nbsp;the amount the holder would have
received if all of the Series&nbsp;B redeemable convertible
preference shares held by such holder were to be converted to
ordinary shares immediately prior to such liquidation,
dissolution or winding up of the Group. According to the
articles of association amended on November&nbsp;29, 2004 (the
&#147;Modification Date&#148;), the net settlement feature of
the Series&nbsp;B convertible redeemable preference shares under
trade sale was removed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The embedded conversion option of Series&nbsp;B convertible
redeemable preference shares has been recorded at its fair value
of $1,179,689 and accounted for separately as an embedded
conversion option. The Group has accounted for the derivative
liability relating to the conversion option by adjusting the
liability its estimated fair value at each subsequent balance
sheet date up to the Modification Date, with adjustments
recorded as other income or expenses. In 2004, the Group
</DIV>

</FONT>

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</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
adjusted the derivative liability to fair market value and
recorded a change in fair value of the derivative liability of
$11,692,287 in the consolidated statements of operations. The
Group recorded a deemed dividend of $1,179,689 in 2004, which
resulted from the accretion of the discount of Series&nbsp;B
convertible redeemable preference shares. On the Modification
Date, the Group has re-combined the fair value of the derivative
liability of $12,871,976 with Series&nbsp;B convertible
redeemable preference shares and subsequently recorded an
accretion of premium of $12,906,774, which represented the
difference of the carrying balance of Series&nbsp;B convertible
redeemable preference shares at the Modification Date and its
initial issuance date.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>18.</B></TD>
    <TD>
    <B>Ordinary Shares</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)&nbsp;In April 2003 the Group issued 2,000,000 ordinary
shares for cash proceeds of $1,625,000.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;In May 2003, the Board of Directors approved a share
split of 100:1 of the ordinary shares which has been
retroactively reflected in the Group&#146;s financial statements.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(c)&nbsp;In April 2004, 62,400,000 outstanding ordinary shares
were reclassified and redesignated into 62,400,000 Series&nbsp;A
convertible redeemable preference shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;In September 2004, the Group issued 14,594,200 ordinary
shares as partial consideration of the acquisition of all the
outstanding ordinary shares of Perfect Media (Note&nbsp;3 (6)).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(e)&nbsp;In December 2004, 9,729,600 outstanding ordinary shares
were sold and redesignated in 9,729,600
Series&nbsp;<FONT style="white-space: nowrap">C-1</FONT>
convertible redeemable preference shares.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(f)&nbsp;On May&nbsp;31, 2005, shareholders of the Group
approved a <FONT style="white-space: nowrap">200-for-1</FONT>
split of the Company&#146;s shares, with immediate effect. The
200-for-l share split of the Company&#146;s shares has been
retroactively applied to all periods presented.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(g)&nbsp;Upon initial public offering, the Group issued
77,575,000 ordinary shares, for US$1.7&nbsp;per ordinary share,
for total proceeds of US$118,174,130, net of offering expenses.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(h)&nbsp;On January&nbsp;1, 2006, the Group issues 22,157,003
ordinary shares, for US$2.46 per share, as partial consideration
of the acquisition of all the outstanding ordinary shares of
Infoachieve (Note&nbsp;3 (21)).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;In January 2006 upon the secondary offering, the Group
issued 15,000,000 ordinary shares, for US$4.35&nbsp;per ordinary
share, for total proceeds of US$61,783,300, net of offering
expenses of US$3,466,700.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(j)&nbsp;On February&nbsp;28, 2006, the Group issues 77,000,000
ordinary shares, for US$3.00 per share, as partial consideration
of the acquisition of all the outstanding ordinary shares of
Target Media (Note&nbsp;3 (23)).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(k)&nbsp;On March&nbsp;1, 2006, the Group issues 74,720 ordinary
shares, for US$5.00 per share, as full consideration of the
acquisition of the remaining 25%&nbsp;outstanding ordinary
shares of in Focus Media Wuhan (Note&nbsp;3 (2))
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>19.</B></TD>
    <TD>
    <B>Mainland China Contribution Plan and Profit Appropriation</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Full time employees of the Group in the PRC participate in a
government-mandated multiemployer defined contribution plan
pursuant to which certain pension benefits, medical care,
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-49
</FONT>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
unemployment insurance, employee housing fund and other welfare
benefits are provided to employees. PRC labor regulations
require the Group to accrue for these benefits based on certain
percentages of the employees&#146; salaries. The total
contribution for such employee benefits were $60,609, $338,923,
$619,831 and $440,349 for the years ended December&nbsp;31,
2003, 2004, 2005 and three months ended March&nbsp;31, 2006
(unaudited), respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to laws applicable to entities incorporated in the PRC,
the Group subsidiaries in the PRC must make appropriations from
after-tax profit to non-distributable reserve funds. These
reserve funds include one or more of the following: (i)&nbsp;a
general reserve, (ii)&nbsp;an enterprise expansion fund and
(iii)&nbsp;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
accounting principles generally accepted in the PRC at each
year-end) until such cumulative appropriation reaches 50% of the
registered capital; the other fund appropriations are at the
company&#146;s discretion. These reserve funds can only be used
for specific purposes of enterprise expansion and staff bonus
and welfare and are not distributable as cash dividends. In
2003, 2004, 2005, the Group made total appropriations of $nil,
$1,488,000, $98,729, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>20.</B></TD>
    <TD>
    <B>Commitments</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>(a)&nbsp;Leases</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group has entered into certain leasing arrangements relating
to the placement of the flat-panel television screens and poster
frames in various locations where the Group operates the
networks and in connection with the lease of the Group&#146;s
office premises. Rental expense under operating leases for 2003,
2004, 2005 and three months ended March&nbsp;31, 2006
(unaudited)&nbsp;were $803,079, $3,648,829 and $15,481,200 and
$2,910,231, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Future minimum lease payments under non-cancelable operating
lease agreements were as follows (unaudited):
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43,346,190</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2008
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,031,315</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2009
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,849,103</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2010
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,209,352</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2011
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,508,331</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">2012 and thereafter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,684,262</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118,628,553</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>21.</B></TD>
    <TD>
    <B>Segment and Geographic Information</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group is engaged in operating
<FONT style="white-space: nowrap">out-of</FONT>-home advertising
network in China using audiovisual television displays, based on
the number of locations and number of flat-panel television
displays in our network.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group&#146;s chief operating decision maker has been
identified as the Chief Executive Officer, who reviews
consolidated results when making decisions about allocating
resources and assessing performance of the Group. Based on this
assessment, the Group has determined that it has three operating
and reporting segments as of March&nbsp;31, 2006 (unaudited),
which are poster frame network
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-50
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
advertising services, mobile-phone advertising services and
out-of-home television advertising services. The out-of-home
television advertising service is still the most significant
segment as of March&nbsp;31, 2006 (unaudited). The Group has not
provided 2003, 2004 or 2005 segment disclosure for the poster
frame network advertising service or the mobile phone
advertising services because they did not exist prior to 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table presents selected financial information
relating to the Group&#146;s segments for the three months ended
March 31, 2005 (unaudited) and 2006 (unaudited):
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Poster frame</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">network</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Mobile phone</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Out-of-home</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">advertising</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">advertising</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">advertising</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">services</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">services</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">services</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2005 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,431,521</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2006 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,067,314</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,765,467</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2005 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,188,610</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2006 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,397,268</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,008,394</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2005 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,642,493</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2006 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,626,783</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,805,986</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2005 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60,839,516</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">For the three months ended
    March&nbsp;31, 2006 (unaudited)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,980,760</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">630,764,315</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B><I>Geographic Information</I></B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Group operates in the PRC and all of the Group&#146;s long
lived assets are located in the PRC.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2003, 2004, 2005, there were no
customers which accounted for 10% or more of the Group&#146;s
net revenues and accounts receivable. As of March&nbsp;31, 2006
(unaudited), one of our customers, Portland Outdoor Advertising
Co., Ltd., accounted for 6.11% of the Group&#146;s net revenue
and 11.69% of net accounts receivable. As of December 31, 2003,
2004 and 2005, Portland Outdoor Advertising&nbsp;Co.,&nbsp;Ltd.,
accounted for nil, nil and 6.52% of the Group&#146;s net revenue
and nil, nil and 10.92% of net accounts receivable, respectively.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although the Group operates through multiple cities in China
which include Beijing, Shanghai, Guangzhou and Shenzhen, it
believes it operates in one segment as all cities provide
selling <FONT style="white-space: nowrap">out-of</FONT>-home
television advertising time slots on their network of flat-panel
television advertising displays. Accordingly all financial
segment information can be found in the consolidated financial
statements.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>22.</B></TD>
    <TD>
    <B>Related Party Transactions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003, Jason Nanchun Jiang, a major shareholder of the Group,
contributed technical know-how which valued at historical cost
of $nil.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-51
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003, the Group purchased equipment from a company under
common control for cash proceeds of $1,208,131.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Details of gross advertising service revenue from related
parties for the years ended December&nbsp;31, 2003, 2004, 2005
and three months ended March&nbsp;31, 2005 (unaudited)&nbsp;and
2006 (unaudited)&nbsp;are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">Three months ended</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">Year ended December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name of related parties</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Director interested</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Everease Advertising&nbsp;&#38;
    Communication Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jason Nanchun Jiang</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">978,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,367,351</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">307,387</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Multimedia Park Venture Capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">120,821</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,227,267</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,330,945</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">660,417</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,636,076</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Jobwell Business
    Consulting Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">411,034</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,050,258</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,637</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">474,754</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Wealove Wedding Service
    Co., Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">372,488</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">757,850</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,817</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">410,158</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Hetong Network Technology
    Co., Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">361,371</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">908,100</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,865</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">390,089</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ctrip Travel Information Technology
    (Shanghai) Co., Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Neil Nanpeng Shen</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,287</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">264,120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">123,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44,683</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,098,879</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,787,798</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,311,273</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,134,181</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,955,760</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-52
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOCUS MEDIA HOLDING LIMITED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>FOR THE YEARS ENDED DECEMBER&nbsp;31, 2003, 2004 AND 2005 AND
FOR THE</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>THREE MONTHS ENDED MARCH&nbsp;31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S. dollars except share data and unless otherwise
stated)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Details of amounts due from related parties as of
December&nbsp;31, 2003, 2004, 2005 and March&nbsp;31, 2006
(unaudited)&nbsp;are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name of related parties</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Director interested</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Everease
    Advertising&nbsp;&#38; Communication Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jason Nanchun Jiang</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,576</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,259,138</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Multimedia Park Venture Capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">690,212</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">330,700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,656,268</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Jobwell Business
    Consulting Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">275,971</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">546,207</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">477,022</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Wealove Wedding Service
    Co., Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">251,556</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">662,953</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">412,118</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Hetong Network Technology
    Co., Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">263,155</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">533,469</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">391,953</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Ctrip Travel Information Technology
    (Shanghai) Co., Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44,895</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,576</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,740,032</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,073,329</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,982,256</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Details of amounts due to related parties as of
December&nbsp;31, 2003, 2004, 2005 and March&nbsp;31, 2006
(unaudited)&nbsp;are as follows:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Name of related parties</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Director interested</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shanghai Everease
    Advertising&nbsp;&#38; Communication Ltd.&nbsp;</FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jason Nanchun Jiang</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,386,124</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weiqiang Jiang (direct family
    member)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jason Nanchun Jiang</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,496,212</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Multimedia Park Venture Capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">Jimmy Wei Yu</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">627,774</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,013,898</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,496,212</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2006, Weiqiang Jiang, the father of Jason Nanchun
Jiang, provided a short-term loan to the Group of approximately
$2.5&nbsp;million to relieve a temporary shortage of Renminbi
the Group experienced at that time. The loan is unsecured and
was provided to us at no interest. The loan will become due and
payable in full on June&nbsp;30, 2006.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>22.</B></TD>
    <TD>
    <B>Restricted Net Assets</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Relevant PRC statutory laws and regulations permit payments of
dividends by the Group&#146;s PRC subsidiaries only out of their
retained earnings, if any, as determined in accordance with PRC
accounting standards and regulations. In addition, PRC laws and
regulations require that annual appropriations of 10% of
after-tax income should be set aside prior to payment of
dividends as general reserve fund. As a result of these PRC laws
and regulations, the Group&#146;s PRC subsidiaries and PRC
affiliates are restricted in their ability to transfer a portion
of their net assets to either in the form of dividends, loans or
advances, which restricted portion amounted to approximately
$14,792,000 and $75,911,158 as of December&nbsp;31, 2004 and
2005, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10.0pt;color: #000000; background: #ffffff;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>23.</B></TD>
    <TD>
    <B>Subsequent Event (Unaudited)</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<FONT face="helvetica,arial">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;21, 2006, the Group and
certain of the Group&#146;s pre-IPO shareholders successfully completed a
follow-on public offering. In this offering, including the
over-allotment option exercised by the underwriters, the Group sold
1,600,000 ADSs and the selling shareholders sold an additional
6,100,000 ADSs to the public.

</FONT>
</DIV>

<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">F-53
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>INFORMATION</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Page</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Introduction to Unaudited Pro Forma
    Condensed Consolidated Financial Information
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">P-2</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unaudited Pro Forma Condensed
    Consolidated Statement of Operations for the year ended
    December&nbsp;31, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">P-3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Unaudited Pro Forma Condensed
    Consolidated Statement of Operations for the three&nbsp;months
    ended March&nbsp;31, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">P-4</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes to the Unaudited Pro Forma
    Condensed Consolidated Financial Information
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">P-5</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">P-1
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>(in U.S. dollars)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>Introduction to Unaudited Pro Forma Condensed Consolidated
Financial Information</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following unaudited pro forma condensed consolidated
financial information is derived from the historical financial
statements of Focus Media Holding Limited, appearing elsewhere
in this annual report, after giving effects to the pro forma
adjustments described in the notes thereto. Financial
information with respect to the acquisitions are derived from
the historical financial statements of Capital Beyond Limited,
Infoachieve Limited and Target Media Holdings Limited
(&#147;Target Media&#148;) available in Focus Media Holding Limited's
registration statement on Form&nbsp;F-1 (File No.&nbsp;333-134714).
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preparation of the unaudited pro forma condensed
consolidated statements of operations appearing below is based
on financial statements prepared in accordance with the
accounting principles generally accepted in the United States of
America (&#147;US GAAP&#148;). These principles require the use
of estimates that affect the reported amounts of revenues and
expenses. Actual results could differ from those estimates. The
objective of the unaudited pro forma condensed consolidated
statements of operations is to provide information on the impact
of the acquisitions of Capital Beyond Limited, Infoachieve
Limited and Target Media (the &#147;Acquired Businesses&#148;).
These Acquired Businesses permitted Focus Media Holding Limited
to expand its network including the growth and further
segmentation of its commercial location and in-store networks,
and the addition of its poster frame advertising network.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited pro forma condensed consolidated statement of
operations for the year ended December&nbsp;31, 2005 presents
adjustments as if the acquisitions of Acquired Businesses had
been consummated on January&nbsp;1, 2005. The unaudited pro
forma condensed consolidated statement of operations for the
three months ended March&nbsp;31, 2006 presents adjustments as
if the acquisitions of Target Media had been consummated on
January&nbsp;1, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following unaudited pro forma condensed consolidated
statements of operations should be read in conjunction with the
historical consolidated financial statements, unaudited pro
forma condensed consolidated statements of operations and
&#147;Item&nbsp;5. Operating and Financial Review and Prospects&#148; included elsewhere in
this annual report.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The unaudited pro forma condensed consolidated financial
information presented in this annual report includes all the
adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the operating results in
the historical periods. However, because such adjustments are
based on estimates such as the estimated amortization period for
the acquired intangible assets for Framedia and Target Media, it
is not intended to show how the consolidated companies would
have actually performed if the events described above had in
fact occurred on the dates assumed or to project the results of
operations or financial position for any future date or period.
In addition, the financial information of Target Media for the
two&nbsp;month period ended February&nbsp;28, 2006 has not been
audited or reviewed by an independent registered public
accounting firm but is derived from management accounts.
Accordingly, the financial information of Target Media for that
period, including the statement of operations relating to Target
Media, that has been used to calculate the pro forma financial
information as of and for the three&nbsp;month period ended
March&nbsp;31, 2006 may differ significantly from any actual
consolidated statement of operations financial information had
it been audited or reviewed by an independent registered public
accounting firm. See &#147;Item&nbsp;3.D Key Information&nbsp;&#151; Risk Factors&nbsp;&#151; The
unaudited pro forma condensed consolidated financial information
included in this annual report contains financial information that
has not been audited or reviewed by an independent certified
public accounting firm, and that is derived in part by
estimates, and accordingly the pro forma financial information
may differ significantly from the actual consolidated financial
information&#148;.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">P-2
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>STATEMENT OF OPERATIONS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOR THE YEAR ENDED DECEMBER&nbsp;31, 2005</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S.&nbsp;Dollars, except share data)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 7.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Infoachieve</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Target Media</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Focus Media</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Capital Beyond</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Limited for</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Limited for</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Holding Limited</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Limited for the</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">the year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">the year</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">for the year ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">three months</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December 31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ended March</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December 31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro forma</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">31, 2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">31, 2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Note</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(a)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net Revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Commercial locations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61,434,760</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,693,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">95,127,760</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;In-store network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,468,919</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,468,919</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Poster Frame Network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,828,519</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,828,519</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Service Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,903,679</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,828,519</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33,693,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,425,198</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Equipment Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,325,234</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,325,234</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total net revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">68,228,913</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">11,828,519</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">33,693,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">113,750,432</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cost of Revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Commercial locations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,943,318</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">122,038</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,321,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(55,934</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(4)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,330,422</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;In-store network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,422,641</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,422,641</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Poster Frame Network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,233,043</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,233,043</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Service Cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,365,959</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">122,038</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,233,043</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,321,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(55,934</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48,986,106</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Equipment Cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">975,747</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">&#151;
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">975,747</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total cost of revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">26,341,706</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">122,038</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">7,233,043</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">16,321,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(55,934</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">49,961,853</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Gross profit (loss)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">41,887,207</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(122,038</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">4,595,476</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">17,372,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">55,934</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">63,788,579</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating expenses:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,119,846</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">607</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,428,018</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,945,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(307,672</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(4)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,185,799</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Selling and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,543,748</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,363,704</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,584,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(88,468</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(4)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,402,984</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortization of acquired intangibles
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">437,837</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,201,715</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(1)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,639,552</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total operating
    expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">19,101,431</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">607</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">8,791,722</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">10,529,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,805,575</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">42,228,335</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income (loss)&nbsp;from
    operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">22,785,776</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(122,645</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(4,196,246</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">6,843,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(3,749,641</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">21,560,244</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income/(expenses)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,761,909</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(170,557</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,659,400</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other income (expenses), net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(161,148</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(29</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,857</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(94,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(259,034</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income (loss)&nbsp;before income
    taxes and minority interests</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">24,386,537</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(122,626</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(4,370,660</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">6,817,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(3,749,641</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">22,960,610</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">715,117</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,941</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">717,058</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(20,664</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(20,664</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">694,453</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,941</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(6)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">696,394</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income (loss)&nbsp;after
    income taxes before minority interests</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">23,692,084</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(122,626</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(4,372,601</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">6,817,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(3,749,641</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">22,264,216</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interests
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">144,433</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(22,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">122,433</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income (loss)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">23,547,651</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(122,626</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(4,372,601</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">6,839,000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(3,749,641</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">22,141,783</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2"><FONT style="font-size: 7pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on ordinary shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15,187,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(15,187,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A-1
    convertible redeemable preference shares&nbsp;&#151;
    Redesignation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,136,700</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,136,700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(3)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A-1
    convertible redeemable preference shares&nbsp;&#151; Accretion
    of redemption premium
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(378,985</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">378,985</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(3)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A-2
    convertible redeemable preference shares&nbsp;&#151;
    Redesignation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(623,700</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,700</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(3)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deemed dividend on Series&nbsp;A-2
    convertible redeemable preference shares&nbsp;&#151; Accretion
    of redemption premium
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(207,820</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">207,820</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(3)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion to Series&nbsp;A
    redeemable convertible preferred shares redemption value
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,288,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,288,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(3)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accretion to Series&nbsp;B
    redeemable convertible preferred shares redemption value
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(960,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">960,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(3)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Beneficial conversion of
    Series&nbsp;A redeemable convertible preferred shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,021,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,021,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Beneficial conversion of
    Series&nbsp;B redeemable convertible preferred shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(806,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(806,000</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income
    (loss)&nbsp;attributable to holders of ordinary shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">23,547,651</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(122,626</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(21,907,006</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(1,236,000</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,845,564</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,127,583</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income per share&nbsp;&#151; basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating basic
    income per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,128,545</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(5)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">351,285,548</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income per share&nbsp;&#151; diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.06</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.01</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating diluted
    income per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">365,938,094</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">
    <FONT face="helvetica,arial">(5)
    </FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,095,097</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Note(a) The translations of amounts from RMB into United States
dollars (&#147;US$&#148;) as of and for the year ended
December&nbsp;31, 2005, are solely for the convenience of the
reader and were calculated at the rate of US$1.00&nbsp;=
RMB8.0702, on December&nbsp;31, 2005, representing the noon
buying rate in the City of New York for cable transfers of RMB,
as certified for customs purposes by the Federal Reserve Bank of
New York. No representation is intended to imply that the RMB
amounts could have been, or could be, converted, realized or
settled into US$ at that rate on December&nbsp;31, 2005, or at
any other rate.
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these unaudited
pro forma
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
condensed consolidated financial statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">P-3
</FONT>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>UNAUDITED PRO FORMA CONDENSED CONSOLIDATED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>STATEMENT OF OPERATIONS</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>FOR THE THREE MONTHS ENDED MARCH&nbsp;31, 2006</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>(In U.S.&nbsp;Dollars, except share data)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 7.5pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Focus Media Holding</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Target Media Limited</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Limited for the three</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">for the two months</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">months ended</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">ended February&nbsp;28,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro forma</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Note</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7.0pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(b)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net Revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Commercial locations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,472,376</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,068,289</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,540,665</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;In-store network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,293,091</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,293,091</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Poster Frame Network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,067,314</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,067,314</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Service Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,832,781</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,068,289</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,901,070</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Equipment Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,066</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">304,066</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total net revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">33,136,847</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,068,289</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">36,205,136</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cost of Revenues:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Commercial locations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,035,150</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,792,503</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,827,653</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;In-store network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,973,244</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,973,244</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&#151;&nbsp;Poster Frame Network
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,397,268</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,397,268</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Service Cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,405,662</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,792,503</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,198,165</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Advertising Equipment Cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">231,814</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">231,814</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total cost of revenues</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">14,637,476</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">3,792,503</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">18,429,979</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Gross profit (loss)</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">18,499,371</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(724,214</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">&#151;</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">17,775,157</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating expenses:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">General and administrative
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,395,342</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,541,194</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,936,536</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Selling and marketing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,057,199</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,114,507</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,171,706</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Amortization of acquired intangibles
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">999,178</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">205,350</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,204,528</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Total operating
    expenses</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,451,719</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">5,655,701</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">205,350</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">15,312,770</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income (loss)&nbsp;from
    operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,047,652</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(6,379,915</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(205,350</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">2,462,387</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest income/(expenses)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">915,952</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,177</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,775</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other income (expenses), net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,149</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,755,019</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,708,870</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Income (loss)&nbsp;before income
    taxes and minority interests</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">10,009,753</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(8,158,111</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(205,350</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,646,292</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,076</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(59,402</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,674</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">551,714</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">551,714</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">616,790</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(59,402</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">557,388</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income (loss)&nbsp;after
    income taxes before minority interests</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,392,963</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(8,098,709</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(205,350</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,088,904</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interests
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,806</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(30,588</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(70,394</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Net income
    (loss)&nbsp;attributable to holders of ordinary shares</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">9,432,769</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(8,068,121</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">(205,350</FONT></B></TD>
    <TD align="left" valign="bottom" nowrap><B><FONT face="helvetica,arial">)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><B><FONT face="helvetica,arial">$</FONT></B></TD>
    <TD align="right" valign="bottom" nowrap><B><FONT face="helvetica,arial">1,159,298</FONT></B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income per share&nbsp;&#151; basic
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating basic
    income per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">438,232,094</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">488,709,872</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income per share&nbsp;&#151; diluted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating diluted
    income per share
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,895,318</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">516,373,096</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 8.0pt;color: #000000; background: #ffffff; margin-top: 10pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
Note(b) Translations of amounts from Renminbi (&#147;RMB&#148;)
into United States dollars (&#147;US$&#148;) are solely for the
convenience of the reader and were calculated at the rate of
US$1.00=RMB8.0415, on February&nbsp;28, 2006, representing the
noon buying rate in the City of New York for cable transfers of
RMB, as certified for customs purposes by the Federal Reserve
Bank of New York. No representation is intended to imply that
the RMB amounts could have been, or could be, converted,
realized or settled into US$ at that rate on February&nbsp;28,
2006, or at any other date.
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
The accompanying notes are an integral part of these unaudited
pro forma
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
condensed consolidated financial statements.
</DIV>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">P-4
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">
<B>NOTES TO THE UNAUDITED PRO FORMA CONDENSED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following pro forma adjustment has been made to the
unaudited pro forma condensed consolidated financial information.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(1)&nbsp;Reflects amortization for the acquired intangible
assets recorded as a result of our acquisitions of Capital
Beyond Limited in March 2005, Infoachieve Limited in January
2006 and Target Media in February 2006 to reflect amortization
for the year ended December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The aggregate purchase price of $94.3&nbsp;million of
Infoachieve Limited is comprised of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,600</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other acquisition costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">311</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fair Value of ordinary shares issued
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,418</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,329</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value of the ordinary shares issued for purchase price
allocation purposes was estimated using the closing market price
for a reasonable period before and after the date of the
announcement of the acquisition.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Preliminary purchase price allocation:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible liabilities acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,684</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquired intangible assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">87,558</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,329</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preliminary purchase price allocation and preliminary
intangible asset valuations for each of the acquisitions
described above were based on a valuation report provided by a
third party valuation firm. The valuation report utilizes and
considers generally accepted valuation methodologies such as the
income, market, cost and actual transaction of shares approach.
We have incorporated certain assumptions which include projected
cash flows and replacement costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amortization expense for Infoachieve Limited and Target
Media of $2,879,074 and $1,211,073, respectively, for the year
ended December&nbsp;31, 2005 have been estimated based on a
valuation report provided by a third-party valuation firm.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(2)&nbsp;Reflects amortization for the intangible assets
recorded as a result of our acquisition of Target Media which
occurred on February&nbsp;28, 2006 to reflect amortization from
January&nbsp;1, 2006 to February&nbsp;28, 2006.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
The aggregate purchase price of $327.1&nbsp;million of Target
Media is comprised of the following:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cash consideration
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other acquisition costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,058</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fair Value of ordinary shares issued
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">231,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">327,058</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">P-5
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>NOTES TO THE UNAUDITED PRO FORMA CONDENSED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED FINANCIAL
INFORMATION&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The cash portion of the purchase price will be paid in three
installments. The first installment of $45&nbsp;million was paid
at closing. The second installment is to be paid on
April&nbsp;28, 2006. The final installment of $24&nbsp;million
is to be paid on July&nbsp;31, 2006. The fair value of the
ordinary shares issued for purchase price allocation purposes
was estimated using the closing market price for a reasonable
period before and after the date of the announcement of the
acquisition.
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">(in thousands</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">Amortization</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">of U.S.&nbsp;dollars)</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">period</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Net tangible assets acquired
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,823</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Acquired intangible assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,827</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7&nbsp;years</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">291,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">327,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The preliminary purchase price allocation and preliminary
intangible asset valuations for each of the acquisitions
described above were based on a valuation report provided by a
third party valuation firm. The valuation report utilizes and
considers generally accepted valuation methodologies such as the
income, market, cost and actual transaction of Group shares
approach. The Group has incorporated certain assumptions which
include projected cash flows and replacement costs.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amortization expense for Target Media of $205,350, for the
period ended March&nbsp;31, 2006 have been estimated based on a
valuation report provided by a third party valuation firm.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(3)&nbsp;Assumes the conversion upon completion of the
acquisitions of all convertible redeemable convertible
preference shares of Infoachieve Limited and Target Media.
Accordingly, the deemed dividends and redemption value accretion
relating to these shares have been reversed.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(4)&nbsp;Reflects the adjustment relating to the conformity in
accounting policy of Target Media for employee stock options
from FAS&nbsp;123(R) to APB&nbsp;25 which is the accounting
policy adopted by Focus Media Holding Limited.
</DIV>

<DIV align="left" style="font-size: 10.0pt;color: #000000; background: #ffffff; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; ">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(5)&nbsp;The following table sets forth the shares used in
computing pro forma per share amounts for the periods indicated:
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating basic
    income per share on a pro forma basis:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average ordinary shares
    outstanding used in computing basic income per share for Focus
    Media Holding Limited
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">252,128,545</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">438,232,094</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares for the
    acquisition of Infoachieve Limited
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,157,003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares for the
    acquisition of Target Media
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,477,778</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">351,285,548</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">488,709,872</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>
</FONT>

</FONT>

<FONT face="helvetica,arial">
<P align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">P-6
</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>NOTES TO THE UNAUDITED PRO FORMA CONDENSED</B>
</DIV>

<DIV align="center" style="font-size: 10.0pt;color: #000000; background: #ffffff;">
<B>CONSOLIDATED FINANCIAL
INFORMATION&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10.0pt; margin-top: 21pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">December&nbsp;31,</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD><TD></TD>
</TR>

<TR style="font-size: 8.0pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B><FONT face="helvetica,arial">2006</FONT></B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Shares used in calculating diluted
    income per share on a pro forma basis:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Weighted average ordinary shares
    outstanding used in computing diluted income per share for Focus
    Media Holding Limited
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">365,938,094</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,895,318</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares for the
    acquisition of Infoachieve Limited
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,157,003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Issuance of ordinary shares for the
    acquisition of Target Media
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">77,000,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50,477,778</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">465,095,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">516,373,096</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
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(6)&nbsp;There have been no pro forma tax adjustments recorded
because none of the pro forma adjustments discussed above has
any tax impact.
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Focus Media Holding Limited
Table of Contents
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
o
Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934
or
þ
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2005.
or
o
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
o
Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Commission file number 001-
Focus Media Holding Limited
(Exact Name of Registrant as Specified in Its Charter)
Cayman Islands
(Jurisdiction of Incorporation or Organization)
28-30/F, Zhao Feng World Trade Building
369 Jiangsu Road, Shanghai 200050, PRC
(Address of Principal Executive Offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Ordinary Shares, par value US$0.00005 per share
Nasdaq National Market Inc.
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.
523,166,773 Ordinary Shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act.
Yes
o
No
þ
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
o
No
þ
Note — Checking the box above will not relieve any registrant required to file
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their
obligations under those Sections.
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 registration was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
þ
No
o
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
o
Accelerated filer
o
Non-accelerated filer
þ
Indicate by check mark which financial statement item the registrant has elected to follow.
o
Item 17               
Item 18
þ
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
o
No
þ
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
YEARS.)
Indicate by check mark whether the registrant has filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes
o
No
o
FOCUS MEDIA HOLDING LIMITED
FORM 20-F ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 2005
Table of Contents
Page
SUPPLEMENTAL INFORMATION
3
FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT MAY NOT BE REALIZED
3
PART I
5
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
5
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
5
ITEM 3. KEY INFORMATION
5
ITEM 4. INFORMATION ON THE COMPANY
37
ITEM 4A. UNRESOLVED STAFF COMMENTS
63
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
63
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
91
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
99
ITEM 8. FINANCIAL INFORMATION
108
ITEM 9. THE OFFER AND LISTING
109
ITEM 10. ADDITIONAL INFORMATION
110
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
121
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
122
PART II
122
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
122
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
122
ITEM 15. CONTROLS AND PROCEDURES
123
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
124
ITEM 16B. CODE OF ETHICS
124
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
124
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
124
ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
124
PART III
125
ITEM 17. FINANCIAL STATEMENTS
125
ITEM 18. FINANCIAL STATEMENTS
125
ITEM 19. EXHIBITS
126
EX-12.1 Certificate Of Our Chief Executive Officer
EX-12.2 Certificate Of Our Chief Financial Officer
EX-13.1 Certification of Periodic Financial Report
EX-13.2 Certification of Periodic Financial Report
EX-15.1 CONSENT OF CONYERS DILL & PEARMAN
EX-15.2 CONSENT OF GLOBAL LAW OFFICE
i
Table of Contents
SUPPLEMENTAL INFORMATION
In this annual report, unless otherwise indicated:
•
the terms "we," "us," "our company," "our" and "Focus Media" refer to Focus Media
Holding Limited, its predecessor entities and subsidiaries, and, in the context of
describing our operations, also include our affiliated Chinese entities;
•
"shares" and "ordinary shares" refer to our ordinary shares, par value $0.00005,
"ADSs" refers to our American depositary shares, each of which represents ten ordinary shares, and "ADRs" refers to the American depositary receipts which evidence our ADSs;
•
"China" and "PRC" refer to the People's Republic of China, excluding Taiwan, Hong
Kong and Macau;
•
all references to "RMB" are to the legal currency of China and all references to
"U.S. dollars," "US$," "dollars" and "$" are to the legal currency of the United
States. Any discrepancies in any table between the amounts identified as total amounts
and the sum of the amounts listed therein are due to rounding;
•
"Framedia" refers to Infoachieve and its consolidated subsidiaries and affiliates,
which we acquired in January 2006;
•
"Target Media" refers to Target Media Holdings Limited and its consolidated
subsidiaries and affiliates, which we acquired in February 2006;
•
"Focus Media Wireless" refers to Dotad Media Holdings, and its consolidated
subsidiary and affiliate, which we acquired in March 2006 and renamed Focus Media
Wireless; and
•
references to our network, our commercial location network and our superstore
network include the network of Focus Media and the network formerly owned and operated
by Target Media, whose flat-panel displays were incorporated into our network as of
March 1, 2006.
This annual report on Form 20-F includes our audited consolidated financial statements for the
years ended December 31, 2003, 2004 and 2005, and as of December 31, 2004 and 2005 and our
unaudited consolidated financial statements for and as of the three months ended March 31, 2005 and
2006.
We and certain selling shareholders of our company completed an initial public offering of
11,615,000 ADSs on July 19, 2005. On July 13, 2005, we listed our ADSs on the Nasdaq National
Market, or Nasdaq, under the symbol "FMCN." We and certain selling shareholders of our company
completed a public offering and sale of an additional 7,415,389 ADSs
on January 27, 2006. On June 21, 2006, we and certain selling shareholders of our company completed an additional public offering
of 7,700,000 ADSs.
FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT
MAY NOT BE REALIZED
This annual report on Form 20-F contains forward-looking statements that are based on our
current expectations, assumptions, estimates and projections about us and our industry. All
statements other than statements of historical fact in this annual report are forward-looking
statements. These forward-looking statements can be identified by words or phrases such as "may",
"will", "expect", "anticipate", "estimate", "plan", "believe", "is/are likely to" or other similar
expressions. The forward-looking statements included in this annual report relate to, among others:
•
our goals and strategies;
•
our future business development, financial condition and results of operations;
3
Table of Contents
•
projected revenues, profits, earnings and other estimated financial information;
•
our ability to complete acquisitions we have entered into and costs related to and
potential liabilities resulting from completing such acquisitions and integrating the
acquired companies into our business;
•
achieving anticipated or potential synergies with companies we acquire, including
Framedia, Target Media and Focus Media Wireless;
•
our plans to expand our advertising network into new cities and regions in China and
diversify into new networks and advertising channels such as airports, hospitals and
other possible commercial locations;
•
the growth or acceptance of our in-store network, our outdoor LED network and
Framedia's poster frame network;
•
our plan to develop our business into a multi-platform out-of-home advertising
network, including through operation of Focus Media Wireless's mobile phone network
advertising services;
•
our plan to identify and create additional advertising channels that target specific
consumer demographics, which could allow us to increase our advertising revenue;
•
competition in the PRC advertising industry;
•
the expected growth in the urban population, consumer spending, average income
levels and advertising spending levels;
•
PRC governmental policies and regulations relating to the advertising industry and
regulations and policies promulgated by the State Administration of Foreign Exchange;
•
other risks outlined in our filings with the Securities and Exchange Commission,
including our registration statements on Form F-1, as amended; and
•
those other risks identified in "Item 3. Key Information—D. Risk Factors" of this
annual report.
These forward-looking statements involve various risks and uncertainties. Although we believe
that our expectations expressed in these forward-looking statements are reasonable, we cannot
assure you that our expectations will turn out to be correct. Our actual results could be
materially different from or worse than our expectations.
The forward-looking statements made in this annual report relate only to events or information
as of the date on which the statements are made in this annual report. We undertake no obligation
to update any forward-looking statements to reflect events or circumstances after the date on which
the statements are made or to reflect the occurrence of unanticipated events.
4
Table of Contents
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
A. Selected Financial Data
The following selected consolidated financial information has been derived from our
consolidated financial statements. Our consolidated financial statements are prepared by including
the financial statements of Focus Media Advertisement, formerly Aiqi Advertising, through May 2003
and our consolidated financials, which include the consolidation of Focus Media Advertisement as a
variable interest entity, thereafter and presented in accordance with U.S. GAAP. Our statements of
operations for 2002, 2003, 2004 and 2005 and our balance sheets as of December 31, 2002, 2003, 2004
and 2005 have been audited by Deloitte Touche Tohmatsu CPA Ltd., an independent registered public
accounting firm. The report of Deloitte Touche Tohmatsu CPA Ltd. on those financial statements is
included elsewhere in this annual report. Our statement of operations for each of the three months
ended March 31, 2005 and 2006 and balance sheet data as of March 31, 2005 and 2006 has been derived
from our unaudited consolidated financial data which has been included elsewhere in this annual
report.
Our selected consolidated financial information for the years ended December 31, 2001 have
been derived from Focus Media Advertisement unaudited consolidated financial statements, which are
not included in this annual report. Our statement of operations for each of the three months ended
March 31, 2005 and 2006 and balance sheet data as of March 31, 2005 and 2006 has been derived from
our unaudited consolidated financial data which has been included elsewhere in this annual report. We
have prepared the unaudited consolidated financial data on the same basis as the audited
consolidated financial statements and have included, in our opinion, all adjustments, consisting
only of normal and recurring adjustments, that we consider necessary for a fair presentation of the
financial information set forth in those statements. Our historical results for any prior or
interim period are not necessarily indicative of results to be expected for a full fiscal year or
for any future period. The selected consolidated financial information for the periods and as of
the dates indicated should be read in conjunction with our financial statements and the
accompanying notes and "Item 5. Operating and Financial Review and Prospects".
Prior to May 2003, we operated as an advertising agency, the operations and services of which
differ markedly from our current business. As an advertising agency, we assisted media companies in
selling their advertising time or space to companies seeking to advertise in exchange for a
commission. In May 2003, we ceased acting as an advertising agency and commenced our current
business as an operator of an out-of-home advertising network, consisting first of our commercial
location network. In April 2005, we commenced commercial operations of our in-store network and
through our acquisition of Framedia, we commenced operation of our poster frame network on January
1, 2006. In February 2006, we acquired Target Media and in March 2006, we acquired Focus Media
Wireless.
For the year ended
For the three months
December 31,
ended March 31,
2001
2002
2003
2004
2005
2005
2006
(in thousands of U.S. dollars)
Selected Consolidated Statements of
Operations Data:
Net revenues:
Commercial location network(1)
—
—
$
3,369
$
26,321
$
61,435
$
9,432
$
21,472
In-store network(1)
—
—
—
—
5,469
—
5,293
Poster frame network(1)
—
—
—
—
—
—
6,067
Advertising service revenue(1)
—
—
3,369
26,321
66,904
9,432
32,832
Advertising equipment revenue
—
—
389
2,889
1,325
142
304
5
Table of Contents
For the year ended
For the three months
December 31,
ended March 31,
2001
2002
2003
2004
2005
2005
2006
(in thousands of U.S. dollars)
Total net revenues
30
24
3,758
29,210
68,229
9,574
33,136
Cost of revenues:
Net advertising service cost:
Commercial location network
—
—
1,566
6,746
17,943
2,903
8,035
In-store network
—
—
—
—
7,423
286
3,973
Poster frame network
—
—
—
—
—
—
2,397
Advertising service cost
—
—
1,566
6,746
25,366
3,189
14,405
Advertising equipment cost
—
—
275
1,934
976
71
232
Total cost of revenues
—
—
1,841
8,680
26,342
3,260
14,637
Gross profit
30
24
1,917
20,530
41,887
6,314
18,499
Operating expenses:
General and administrative
28
21
985
3,988
9,120
1,881
4,395
Selling and marketing
2
3
407
3,454
9,544
1,492
4,057
Amortization of acquired intangibles
—
—
—
77
437
67
999
Goodwill impairment loss
—
—
—
58
—
—
—
Total operating expenses
30
24
1,392
7,577
19,101
3,440
9,451
Income from operations
—
—
525
12,953
22,786
2,874
9,048
Interest income
—
—
1
10
1,762
11
916
Other income (expense), net
—
—
(9
)
(4
)
(161
)
5
46
Change in fair value of derivative
liability
associated with Series B
convertible redeemable
preference shares
—
—
—
(11,692
)
—
—
—
Income before income taxes and
minority interest
—
—
517
1,267
24,387
2,890
10,010
Total income taxes
—
—
482
908
694
248
617
Minority interest
—
—
(8
)
(13
)
145
0
(40
)
Equity loss of affiliates
—
—
(18
)
—
—
—
—
Net income
—
—
$
25
$
372
$
23,548
$
2,642
$
9,433
For the year ended
For the three months ended
December 31,
March 31,
2001
2002
2003
2004
2005
2005
2006
(in thousands of U.S. dollars, except share and per share data)
Earnings per share
data:
Deemed dividend on
Series A convertible
redeemable preference
shares(2)
—
—
—
(8,308
)
—
—
—
Deemed dividend on
Series B convertible
redeemable preference
shares(2)
—
—
—
(2,191
)
—
—
—
Deemed dividend on
Series C-1 convertible
redeemable preference
shares(2)
—
—
—
(13,356
)
—
—
—
Premium of Series B
convertible redeemable
preference shares
—
—
—
12,906
—
—
—
Income (loss)
attributable to
holders of ordinary
shares
$
—
$
—
$
25
$
(10,577
)
$
23,548
$
2,642
$
9,433
Income (loss) per share
— basic
$
—
$
—
$
0.00
$
(0.07
)
$
0.09
$
0.02
$
0.02
Income (loss) per share
— diluted
$
—
$
—
$
0.00
$
(0.07
)
$
0.06
$
0.01
$
0.02
Shares used in
calculating basic
income per share
—
—
144,657,600
160,998,600
252,128,545
142,464,600
438,232,094
Shares used in
calculating diluted
income per share
—
—
144,657,600
160,998,600
365,938,094
315,212,608
465,895,318
6
Table of Contents
As of December 31,
As of March 31,
2001
2002
2003
2004
2005
2006
(in thousands of U.S.
dollars, except share data)
Consolidated Balance Sheet Data:
Cash and cash equivalents
$
12
$
15
$
716
$
22,669
$
36,653
$
41,863
Other current assets(3)
120
106
1,902
12,713
104,988
83,440
Non-current assets(4)
12
8
2,688
21,033
70,713
523,442
Total assets
144
129
5,306
56,415
212,354
648,745
Total current liabilities
22
7
4,119
8,634
20,694
92,403
Minority interest
—
—
4
81
245
460
Mezzanine equity
—
—
—
53,273
—
—
Ordinary
shares (nil, nil, 200,000,000, 142,464,600, 378,306,000 and
506,457,633 shares issued and outstanding in 2001, 2002, 2003, 2004,
2005, and as of March 31, 2006, respectively)
—
—
10
7
19
25
Other
shareholders' equity (deficiency)
122
122
1,173
(5,580
)
191,396
555,857
Total shareholders' equity (deficiency)
$
122
$
122
$
1,183
$
(5,573
)
$
191,415
$
555,882
As of December 31,
As of March 31,
2003
2004
2005
2006
Selected Operating Data:
Number of displays in our commercial location network:
Our direct cities
827
12,786
45,049
71,230
Our regional distributors(5)
201
2,629
3,177
3,779
Total
1,028
15,415
48,226
75,009
Number of displays in our in-store network
—
—
27,849
33,765
Number of stores in our in-store network
—
—
4,130
5,218
Number of installed frames in our poster frame network(6)
—
—
—
74,353
For and as of the three months ended
March 31,
June 30,
September 30,
December 31,
March 31,
2005
2005
2005
2005
2006
Commercial Location Network(7):
Number of time slots available for sale(8)
6,010
6,737
8,346
9,028
10,717
Number of time slots sold(9)
1,998
3,057
4,240
4,648
3,904
Average utilization rate(10)
33.2
%
45.4
%
50.8
%
51.5
%
36.4
%
Average quarterly advertising service revenue
per time slot sold (US$)
$
4,721
$
4,573
$
4,077
$
4,461
$
4,882
In-store Network(11):
Number of time slots available for sale(8)
—
—
—
—
245,314
Number of time slots sold(9)
—
—
—
—
76,498
Average utilization rate(10)
—
—
—
—
31.2
%
Average quarterly advertising service revenue
per time slot sold (US$)
—
—
—
—
$
69
Poster Frame Network(12):
Number of frame slots available for sale(13)
—
—
—
—
208,659
Number of frame slots sold(14)
—
—
—
—
90,262
Occupancy rate(15)
—
—
—
—
43.3
%
Average advertising service revenue per frame
slot (US$) (ASP)
—
—
—
—
$
67
(1)
Advertising service revenue is presented net of business tax. Business tax on
advertising service revenue from our commercial location network amounted to $311,770,
$2,788,233, $5,991,497, $936,405 and $2,081,512 in 2003, 2004 and 2005 and for the three
months ended March 31, 2005 and 2006, respectively. Business tax on advertising service
revenue for our in-store network amounted to $524,271, $nil and $524,357 in 2005 and for the
three months ended March 31, 2005 and 2006. Business tax on advertising service revenue for
our poster frame network amounted to $590,972 for the three months ended March 31, 2006.
Business tax includes business tax of 5.55% and cultural industries tax of 4.0% of our gross
advertising service revenue.
(2)
We are no longer required to record deemed dividends prospectively following conversion at
the closing of our initial public offering of our Series A, Series B, Series C-1 and Series
C-2 convertible redeemable preference shares into ordinary shares.
(3)
Other current assets is equal to total current assets less cash and cash equivalents.
(4)
Non-current assets is equal to total assets less total current assets.
7
Table of Contents
(5)
Data that has been provided by our regional distributors is based on the results of surveys
we requested them to provide to us and it is possible such data is not entirely accurate or
exact.
(6)
Number of installed frames includes frames we currently market and frames that have been
installed, for instance, in buildings that are still under construction and which we have not
yet begun to market.
(7)
Starting January 1, 2006, time slot data presented for our commercial location network
includes only data related to our premier office building A channel. For the three months
ended March 31, 2006, advertising services revenues from our premier office building A channel
accounted for 91.2% of advertising service revenue for our commercial location network.
(8)
For our commercial location network, includes the time slots for our directly operated cities
and the time slots we are entitled to sell on the portion of our network operated by our
regional distributors. Number of time slots available refers to the number of 30-second
equivalent time slots available on our network during the period presented and is calculated
by taking the total advertising time available on our network during the period presented,
calculated in aggregate seconds, which we then divide by 30 to determine the number of
30-second equivalent time slots available. For our commercial location network, the number of
advertising time slots available for sale is determined by the number of cities in which we
directly operate, the two-ninths portion of time slots on our regional distributors' networks
which we have the right to sell and the length of the advertising cycle, which is currently
twelve minutes in all of our directly operated cities. For our in- store network, the number
of advertising time slots available for sale is determined by the number of stores in which we
operate.
(9)
Number of time slots sold refers to the number of 30-second equivalent time slots sold during
the period presented and is calculated by taking the total advertising time we sold during the
period presented, calculated in aggregate seconds, which we then divide by 30 to determine the
number of 30-second equivalent time slots sold.
(10)
Utilization rate refers to total time slots sold as a percentage of total time slots
available during the relevant period.
(11)
We commenced operation of our in-store network in April 2005.
(12)
We commenced operation of our poster frame network in January 2006.
(13)
Includes the number of frame slots available on a monthly basis within each three month
period.
(14)
Includes the number of frame slots sold on a monthly basis within each three month period.
(15)
Occupancy rate refers to the total number of frame slots sold as a percentage of total frame
slots available during the relevant period.
Consolidated Pro Forma Financial Data of Focus Media, Framedia, Target Media Holdings and
Other Acquired Entities
The following unaudited pro forma condensed consolidated financial information is derived from
the historical financial statements of Focus Media Holding Limited, appearing elsewhere in this
annual report, after giving effects to the pro forma adjustments described in the notes to such pro
forma financial statements. Financial information with respect to the acquisitions are derived from
the historical financial statements of Capital Beyond Limited, or Capital Beyond, Infoachieve
Limited, or Framedia, and Target Media Holdings Limited or Target Media, appearing in our
registration statement on Form F-1 (File No. 333-134714).
The preparation of the unaudited pro forma condensed consolidated statements of operations
appearing below is based on financial statements prepared in accordance with U.S. GAAP. These
principles require the use of estimates that affect the reported amounts of revenues and expenses.
Actual results could differ from those estimates. The objective of the unaudited pro forma
condensed consolidated statements of operations is to provide information on the impact of the
acquisitions of Capital Beyond, Framedia and Target Media. We refer to these businesses
collectively as the acquired businesses. The acquired businesses have permitted us to expand our
network, including the growth and further specialized targeting of consumers of our commercial
location and in-store networks, and the addition of our poster frame advertising network.
The unaudited pro forma condensed consolidated statement of operations for the year ended
December 31, 2005 presents adjustments as if the acquisitions of Capital Beyond, Framedia and
Target Media had been consummated on January 1, 2005. The unaudited pro forma condensed
consolidated statement of operations for the three months ended March 31, 2006 presents adjustments
as if the acquisition of Target Media had been consummated on January 1, 2005.
The following unaudited pro forma condensed consolidated statements of operations should be
read in conjunction with the historical consolidated financial statements, unaudited pro forma
condensed consolidated statements of operations and "Item 5. Operating and Financial Review and
Prospects" included elsewhere in this annual report.
8
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The unaudited pro forma condensed consolidated financial information presented in this annual
report includes all the adjustments, consisting of normal recurring adjustments, necessary for a
fair presentation of the operating results in the historical periods. However, because such
adjustments are based on estimates such as the estimated amortization period for the acquired
intangible assets for Framedia and Target Media, it is not intended to show how the consolidated
companies would have actually performed if the events described above had in fact occurred on the
dates assumed or to project the results of operations or financial position for any future date or
period. In addition, the financial information of Target Media for the two month period ended
February 28, 2006 has not been audited or reviewed by an independent registered public accounting
firm but is derived from management accounts. Accordingly, the financial information of Target
Media for that period, including the statement of operations relating to Target Media, that has
been used to calculate the pro forma financial information as of and for the three month period
ended March 31, 2006 may differ significantly from any actual consolidated statement of operations
financial information had it been audited or reviewed by an independent registered public
accounting firm. See "Item 3.D Key Information—Risk Factors — The unaudited pro forma condensed
consolidated financial information included in this annual report contains financial information that
has not been audited or reviewed by an independent certified public accounting firm and that is
derived in part by estimates, and accordingly the pro forma financial information may differ
significantly from the actual consolidated financial information".
Focus Media
Framedia for
Target Media
Holding for the
Capital Beyond
the year
for the year
year ended
for the three
ended
ended
December 31,
months ended
December 31,
December
Pro forma
2005
March 31, 2005
2005
31, 2005
(1)
Adjustments
Note
Pro Forma
(in thousands of U.S. dollars, except share and per share data)
Unaudited Pro Forma Condensed Consolidated
Statement of Operations
Net revenues:
— Commercial locations
$
61,435
$
—
$
—
$
33,693
$
—
$
95,128
— In-store network
5,469
—
—
—
—
5,469
— Poster frame network
—
—
11,828
—
—
11,828
Advertising Service Revenue
6,904
—
11,828
33,693
—
112,425
Advertising Equipment Revenue
1,325
—
—
—
—
1,325
Total net revenues
68,229
—
11,828
33,693
—
113,750
Cost of revenues:
— Commercial locations
17,943
122
—
16,321
(56
)
(6
)
34,330
— In-store network
7,423
—
—
—
—
7,423
— Poster frame network
—
—
7,233
—
—
7,233
Advertising Service Cost
25,366
122
7,233
16,321
(56
)
48,986
Advertising Equipment Cost
976
976
Total cost of revenues
26,342
122
7,233
16,321
(56
)
49,962
Gross profit (loss)
41,887
(122
)
4,595
17,372
56
63,788
Operating expenses:
General and administrative
9,120
1
5,428
1,945
(308
)
(6
)
16,186
Selling and marketing
9,544
—
3,363
8,584
(88
)
(6
)
21,403
Amortization of acquired intangibles
437
—
—
—
4,202
(3
)
4,639
Total operating expenses
19,101
1
8,791
10,529
3,806
42,228
Income (loss) from operations
22,786
(123
)
(4,196
)
6,843
(3,750
)
21,560
Interest income/(expenses)
1,762
0
(171
)
68
—
1,659
Other income (expenses), net
(161
)
(0
)
(4
)
(94
)
—
(259
)
Income (loss) before income taxes and
minority interests
24,387
(123
)
(4,371
)
6,817
(3,750
)
22,960
Income taxes:
Current
715
—
2
—
—
717
Deferred
(21
)
—
—
—
—
(21
)
Total income taxes
694
—
2
—
—
(8
)
696
Net income (loss) after income taxes before
minority interests
23,693
(123
)
(4,373
)
6,817
(3,750
)
22,264
Minority interests
145
—
—
(22
)
—
123
Net income (loss)
23,548
(123
)
(4,373
)
6,839
(3,750
)
22,141
Deemed dividend on ordinary shares
—
—
(15,187
)
—
—
(15,187
)
Deemed dividend on Series A-1 convertible
redeemable preference shares — Redesignation
—
—
(1,136
)
—
1,136
(5
)
—
Deemed dividend on Series A-1 convertible
redeemable preference shares — Accretion of
redemption premium
—
—
(379
)
—
379
(5
)
—
Deemed dividend on Series A-2 convertible
redeemable preference shares — Redesignation
—
—
(624
)
—
624
(5
)
—
Deemed dividend on Series A-2 convertible
redeemable preference shares — Accretion
of redemption premium
—
—
(208
)
—
208
(5
)
—
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Focus Media
Framedia for
Target Media
Holding for the
Capital Beyond
the year
for the year
year ended
for the three
ended
ended
December 31,
months ended
December 31,
December
Pro forma
2005
March 31, 2005
2005
31, 2005
(1)
Adjustments
Note
Pro Forma
(in thousands of U.S. dollars, except share and per share data)
Accretion to Series A redeemable convertible
preferred shares redemption value
—
—
—
(3,288
)
3,288
(5
)
Accretion to Series B redeemable convertible
preferred shares redemption value
—
—
—
(960
)
960
(5
)
Beneficial conversion of Series A redeemable
convertible preferred shares
—
—
—
(3,021
)
—
(3,021
)
Beneficial conversion of Series B redeemable
convertible preferred shares
—
—
—
(806
)
—
(806
)
Net income (loss) attributable to holders of
ordinary shares
$
23,548
$
(123
)
$
(21,907
)
$
(1,236
)
$
2,846
$
3,127
Income per share — basic
$
0.09
$
0.01
Shares used in calculating basic income per
share
252,128,545
(7
)
351,285,548
Income per share — diluted
$
0.06
$
0.01
Shares used in calculating diluted income per
share
365,938,094
(7
)
465,095,097
Focus Media Holding
Target Media for the
for the three months
two months ended
Pro forma
ended March 31, 2006
February 28, 2006
(2)
Adjustments
Note
Pro Forma
(in thousand of U.S. dollars, except share and per share data)
Unaudited Pro Forma Condensed Consolidated Statement of
Operations
Net Revenues:
— Commercial locations
$
21,472
$
3,068
$
—
$
24,540
— In-store network
5,293
—
—
5,293
— Poster frame network
6,067
—
—
6,067
Advertising Service Revenue
32,832
3,068
—
35,900
Advertising Equipment Revenue
304
—
—
304
Total net revenues
33,136
3,068
—
36,205
Cost of Revenues:
— Commercial locations
8,035
3,793
—
11,828
— In-store network
3,973
—
—
3,973
— Poster frame network
2,397
—
—
2,397
Advertising Service Cost
14,405
3,793
—
18,198
Advertising Equipment Cost
232
—
—
232
Total cost of revenues
14,637
3,793
—
18,430
Gross profit (loss)
18,499
(725
)
—
17,774
Operating expenses:
General and administrative
4,395
2,541
—
6,936
Selling and marketing
4,057
3,115
—
7,172
Amortization of acquired intangibles
999
—
205
(4
)
1,204
Total operating expenses
9,451
5,656
205
15,312
Income (loss) from operations
9,048
(6,380
)
(205
)
2,463
Interest income/(expenses)
916
(23
)
—
893
Other income (expenses), net
46
(1,755
)
—
(1,709
)
Income (loss) before income taxes and minority interests
10,010
(8,158
)
(205
)
1,647
Income taxes:
Current
65
(59
)
—
6
Deferred
552
—
—
552
Total income taxes
617
(59
)
—
(8
)
558
Net income (loss) after income taxes before minority
interests
9,393
(8,099
)
(205
)
1,089
Minority interests
(40
)
(31
)
(70
)
Net income (loss) attributable to holders of ordinary
shares
$
9,433
(8,068
)
(205
)
1,159
Income per share — basic
$
0.02
$
0.00
Shares used in calculating basic income per share
438,232,094
(7
)
488,709,872
Income per share — diluted
$
0.02
$
0.00
Shares used in calculating diluted income per share
465,895,318
(7
)
516,373,096
(1)
The translations of amounts from RMB into United States dollars as of and for the
year ended December 31, 2005, are solely for the convenience of the reader and were calculated at
the rate of US$1.00 = RMB8.0702, on December 31, 2005, representing the noon buying rate in the
City of New York for cable transfers of RMB, as certified for customs purposes by the Federal
Reserve Bank of New York.
10
Table of Contents
is intended to imply that the RMB amounts could have been, or could be, converted, realized or
settled into US$ at that rate on December 31, 2005, or at any other rate.
(2) Translations of amounts from RMB into United States dollars are solely for the convenience
of the reader and were calculated at the rate of US$1.00 = RMB8.0415, on February 28, 2006,
representing the noon buying rate in the City of New York for cable transfers of RMB, as certified
for customs purposes by the Federal Reserve Bank of New York. No representation is intended to
imply that the RMB amounts could have been, or could be, converted, realized or settled into US$ at
that rate on February 28, 2006, or at any other date.
(3) Reflects amortization for the acquired intangible assets recorded as a result of our
acquisitions of Capital Beyond in March 2005, Framedia in January 2006 and Target Media in February
2006 to reflect amortization for the year ended December 31, 2005.
The aggregate purchase price of $94.3 million of Framedia is comprised of the following:
(in thousands
of U.S. dollars)
Cash consideration
$
39,600
Other acquisition costs
311
Fair Value of ordinary shares issued
54,418
$
94,329
The fair value of the ordinary shares issued for purchase price allocation purposes
was estimated using the closing market price for a reasonable period before and after the date of
the announcement of the acquisition.
Preliminary purchase price allocation:
(in thousands
Amortization
of U.S. dollars)
period
Net tangible liabilities acquired
5,684
Acquired intangible assets
12,455
7 years
Goodwill
87,558
Total
$
94,329
The preliminary purchase price allocation and preliminary intangible asset
valuations for each of the acquisitions described above were based on a valuation report provided
by a third party valuation firm. The valuation report utilizes and considers generally accepted
valuation methodologies such as the income, market, cost and actual transaction of shares approach.
We have incorporated certain assumptions which include projected cash flows and replacement costs.
The amortization expense for Framedia and Target Media of $2.9 million and $1.2 million,
respectively, for the year ended December 31, 2005 have been estimated based on a valuation report
provided by a third-party valuation firm.
(4) Reflects amortization for the intangible assets recorded as a result of our acquisition of
Target Media which occurred on February 26, 2006 to reflect amortization from January 1, 2006 to
February 28, 2006.
The aggregate purchase price of $327.1 million of Target Media is comprised of the following:
(in thousands
of
U.S. dollars)
Cash consideration
$
94,000
Other acquisition costs
2,058
Fair Value of ordinary shares
issued
231,000
$
327,058
The cash portion of the purchase price will be paid in three installments. The first
installment of $45 million was paid at closing. The second installment of $25 million was paid on
April 28, 2006. The final installment of $24 million is to be paid on July 31, 2006. The fair value
of the ordinary shares issued for purchase price allocation purposes was estimated using the
closing market price for a reasonable period before and after the date of the announcement of the
acquisition.
(in thousands
Amortization
of U.S. dollars)
period
Net tangible assets acquired
24,823
Acquired intangible assets
10,827
7 year
Goodwill
291,408
Total
$
327,058
The preliminary purchase price allocation and preliminary intangible asset
valuations for each of the acquisitions described above were based on a valuation report provided
by a third-party valuation firm. The valuation report utilizes and considers generally accepted
valuation methodologies such as the income, market, cost and actual transaction of shares approach.
We have incorporated certain assumptions which include projected cash flows and replacement costs.
11
Table of Contents
The amortization expense for Target Media of $205,350, for the period ended March 31, 2006
have been estimated based on a valuation report provided by a third party valuation firm.
(5) Assumes the conversion upon completion of the acquisitions of all convertible redeemable
convertible preference shares of Framedia and Target Media. Accordingly, the deemed dividends and
redemption value accretion relating to these shares have been reversed.
(6) Reflects the adjustment relating to the conformity in accounting policy of Target Media
for employee stock options from FAS 123(R) to APB 25 which is the accounting policy adopted by us.
(7) The following table sets forth the shares used in computing pro forma per share amounts
for the periods indicated:
December 31,
2005
March 31, 2006
Shares used in calculating basic income per share on a pro forma basis:
Weighted average ordinary shares outstanding used in computing basic income
per share for Focus Media Holding Limited
252,128,545
438,232,094
Issuance of ordinary shares for the acquisition of Infoachieve Limited
22,157,003
—
Issuance of ordinary shares for the acquisition of Target Media
77,000,000
50,477,778
351,285,548
488,709,872
December 31,
2005
March 31, 2006
Shares used in calculating diluted income per share on a pro forma basis:
Weighted average ordinary shares outstanding used in computing diluted
income per share for Focus Media Holding Limited
365,938,094
465,895,318
Issuance of ordinary shares for the acquisition of Infoachieve Limited
22,157,003
—
Issuance of ordinary shares for the acquisition of Target Media
77,000,000
50,477,778
465,095,097
516,373,096
(8) There have been no pro forma tax adjustments recorded because none of the pro
forma adjustments discussed above has any tax impact.
Currency Translations and Exchange Rates
Our operating businesses are currently conducted in China and substantially all of our
revenues and expenses are denominated in Renminbi. The People's Bank of China, or PBOC, 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 PBOC also takes into account other factors, such as the general conditions
existing in the international foreign exchange markets. Since 1994, the conversion of Renminbi into
foreign currencies, including Hong Kong dollars and U.S. dollars, has been based on rates set by
the PBOC, which are set daily based on the previous day's inter-bank foreign exchange market rates
and current exchange rates in the world financial markets. From 1994 to July 20, 2005, the official
exchange rate for the conversion of Renminbi to U.S. dollars was generally stable. 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 securities, requires the
approval of the State Administration for Foreign Exchange and other relevant authorities. On July
21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value
of the Renminbi to fluctuate within a regulated band based on market supply and demand and by
reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by 2.0%
against the U.S. dollar. Since then, the PRC government has made, and may in the future make,
further adjustments to the exchange rate system. The PBOC announces the closing price of a foreign
currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of
the market on each working day, and makes it the central parity for the trading against the
Renminbi on the following working day.
The conversion of Renminbi into U.S. dollars in this annual report is based on the noon buying
rate in The City of New York for cable transfers of Renminbi as certified for customs purposes by
the Federal Reserve Bank of New
York. For your convenience, this annual report contains translations of Renminbi at $1.00 to
RMB8.0167, which was the prevailing rate on March 31, 2006. The
prevailing rate at June 23, 2006 was
$1.00 to RMB7.9997. We make no representation that any Renminbi or U.S. dollar amounts could have
been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular
rate, the rates stated below, or at all. The PRC government imposes controls over its foreign
currency reserves in part through direct regulation of the conversion of Renminbi into foreign
exchange and through restrictions on foreign trade.
12
Table of Contents
The following table sets forth information concerning exchange rates between the Renminbi and
the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and
are not necessarily the exchange rates that we used in this annual report or will use in the
preparation of our periodic reports or any other information to be provided to you.
RENMINBI PER U.S. DOLLAR NOON BUYING RATE
AVERAGE
HIGH
LOW
PERIOD-END
2000
8.2784
8.2799
8.2768
8.2774
2001
8.2770
8.2786
8.2676
8.2766
2002
8.2770
8.2800
8.2669
8.2800
2003
8.2770
8.2800
8.2272
8.2769
2004
8.2768
8.2774
8.2764
8.2765
2005
8.1940
8.2765
8.0702
8.0702
2006
January
8.0654
8.0702
8.0596
8.0608
February
8.0512
8.0616
8.0415
8.0415
March
8.0350
8.0505
8.0167
8.0167
April
8.0143
8.0240
8.0050
8.0140
May
8.0140
8.0300
8.0025
8.0215
June (through June 23)
8.0063
8.0225
7.9963
7.9997
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
Our business and operations are subject to various risks, many of which are beyond our
control. If any of the risks described below actually occurs, our business, financial condition or
results of operations could be seriously harmed.
Risks Relating to Our Business and Industry
We have a limited operating history, which may make it difficult for you to evaluate our business
and prospects.
We began operations of our commercial location network in May 2003. In addition, we have
operated our in-store network since April 2005 and acquired and began to operate our poster frame
network from January 2006 under the brand name "Framedia". In March and April 2006, respectively,
we added a WAP-based mobile phone advertising network and outdoor LED digital billboard advertising
network to our business. Accordingly, we have a very limited operating history for our current
operations upon which you can evaluate the viability and sustainability of our business and its
acceptance by advertisers and consumers. It is also difficult to evaluate the viability of our use
of audiovisual advertising displays in commercial buildings, hypermarkets, supermarkets and
convenience stores and other out-of-home commercial locations and our use of advertising poster
frames in residential complexes and
WAP-based mobile handset advertising as a business model because we do not have sufficient
experience to address the risks frequently encountered by early stage companies using new forms of
advertising media and entering new and rapidly evolving markets. These circumstances may make it
difficult for you to evaluate our business and prospects.
13
Table of Contents
We derive a substantial majority of our revenues from the provision of advertising services,
and advertising is particularly sensitive to changes in economic conditions and advertising trends.
Demand for advertising time slots and advertising frame space on our networks, and the
resulting advertising spending by our clients, is particularly sensitive to changes in general
economic conditions and advertising spending typically decreases during periods of economic
downturn. Advertisers may reduce the money they spend to advertise on our networks for a number of
reasons, including:
•
a general decline in economic conditions;
•
a decline in economic conditions in the particular cities where we conduct business;
•
a decision to shift advertising expenditures to other available advertising media; or
•
a decline in advertising spending in general.
A decrease in demand for advertising media in general and for our advertising services in
particular would materially and adversely affect our ability to generate revenue from our
advertising services, and our financial condition and results of operations.
A substantial majority of our revenues is currently concentrated in four of China's major cities.
If any of these major cities experiences an event negatively affecting its advertising industry,
our advertising network, and our ability to generate adequate cash flow would be materially and
adversely affected.
A substantial majority of our revenues are currently concentrated in Beijing, Shanghai,
Guangzhou and Shenzhen, four of China's major cities. For example, for the three months ended March
31, 2006, more than 55% of advertising service revenue from the premier office building A channel
of our commercial location network was derived from these four cities. We expect these four cities
to continue to constitute important sources of our revenues, and as a result of our acquisitions of
Framedia and Target Media, this percentage may increase, as a substantial majority of Framedia's
revenues are derived from these four cities, and a majority of Target Media's network, before its
business and operations were merged into ours, was also located in these four cities. If any of
these major cities experiences an event negatively affecting its advertising industry, such as a
serious economic downturn, a construction moratorium that would have the effect of materially
limiting the supply of new buildings in which we can place our flat-panel displays or advertising
poster frames or similar changes in government policy, or a natural disaster, our advertising
network and our ability to generate adequate cash flow would be materially and adversely affected.
Our quarterly operating results are difficult to predict and may fluctuate significantly from
period to period in the future.
Our quarterly operating results are difficult to predict and may fluctuate significantly from
period to period based on the seasonality of consumer spending and corresponding advertising trends
in China. In addition, advertising spending generally tends to decrease during January and February
each year due to the Chinese Lunar New Year holiday. We also experience a slight decrease in
revenues during the hot summer months of July and August each year, when there is a relative
slowdown in overall commercial activity in urban areas in China. As a result, you may not be able
to rely on period to period comparisons of our operating results as an indication of our future
performance. Factors that are likely to cause our operating results to fluctuate, such as the
seasonality of advertising spending in China, a deterioration of economic conditions in China and
potential changes to the regulation of the advertising industry in China, are discussed elsewhere
in this annual report. If our revenues for a particular quarter are lower than we expect, we may be
unable to reduce our operating expenses for that quarter by a corresponding amount, which would
harm our operating results for that quarter relative to our operating results from other quarters.
The unaudited pro forma condensed consolidated financial information included in this annual report
contains financial information that has not been audited or reviewed by an independent registered
public accounting
14
Table of Contents
firm and that is derived in part by estimates, and accordingly the pro forma financial information
may differ significantly from the actual consolidated financial information.
The unaudited pro forma condensed consolidated financial information presented in this
annual report includes all the adjustments, consisting of normal recurring adjustments, necessary for
a fair presentation of the operating results in the historical periods. However, because such
adjustments are based on estimates such as the estimated amortization period for the acquired
intangible assets for Framedia and Target Media, it is not intended to show how the consolidated
companies would have actually performed if the events described above had in fact occurred on the
dates assumed or to project the results of operations or financial position for any future date or
period.
The U.S. dollar convenience translation used to present the statement of operations of Target
Media for 2005 contained in the unaudited pro forma condensed consolidated financial information
may not be the same had U.S. dollars been used as the reporting currency for Target Media's audited
statement of operations for 2005.
In addition, the financial information of Target Media for the two month period ended February
28, 2006 has not been audited or reviewed by an independent registered public accounting firm but
is derived from management accounts. Accordingly, the financial information of Target Media for
that period, including the statement of operations relating to Target Media, that has been used to
calculate the pro forma financial information as of and for the three month period ended March 31,
2006 may differ significantly from any actual consolidated statement of operations financial
information had it been audited or reviewed by an independent registered public accounting firm.
See "Item 3.A Key Information — Selected
Financial Data — Consolidated Pro Forma Financial Data of Focus Media, Framedia, Target Media Holdings and
Other Acquired Entities".
Our failure to maintain existing relationships or obtain new relationships with businesses that
allow us to place our flat-panel displays and advertising poster frames in their buildings and
other commercial locations and to lease outdoor LED digital billboards placed in desirable
locations would harm our business and prospects.
Our ability to generate revenues from advertising sales depends largely upon our ability to
provide large networks of flat-panel displays placed in desirable building, commercial and store
locations, of advertising poster frames placed in residential complexes, and as of April 2006, to
secure desirable locations of large outdoor LED digital billboards, throughout major urban areas in
China. We also depend on the ability of our third-party location provider to secure desirable LED
digital billboard locations for our outdoor LED network. This, in turn, requires that we develop
and maintain business relationships with real estate developers, landlords, property managers,
hypermarkets, retailers and other businesses and locations in which we rent space for our displays
and digital billboards. As of March 31, 2006, with regard to our commercial location network, we
had entered into separate display placement agreements with landlords and property managers to
operate 71,230 flat-panel displays in 50 cities in China, and our regional distributors had entered
into their own separate display placement agreements with landlords and property managers to
operate approximately 3,780 flat-panel displays in 36 other cities in China. In addition, as of
March 31, 2006, with regard to our in-store network, we had entered into separate display placement
agreements with hypermarkets, supermarkets and convenience stores to operate 33,765 flat-panel
displays in 5,218 stores throughout China. As of April 2006, we sell advertising time slots on
approximately 75 outdoor LED billboards in locations throughout Shanghai leased through an
agreement with a third-party location provider. Although a majority of our display placement
agreements and advertising frame placement agreements have terms ranging from three to five years
and two to three years, respectively, and upon expiration give us the right to renew the agreement
on terms no less favorable than those offered by competing bidders, we may not be able to maintain
our relationships with them on satisfactory terms, or at all. If we fail to maintain our
relationships with landlords and property managers, or if a significant number of our existing
display or advertising frame placement agreements are terminated or not renewed or if we fail to
maintain our relationship with our location provider of LED billboard space, advertisers may find
advertising on our networks unattractive and may not wish to purchase advertising time slots or
advertising frame space on our networks, which would cause our revenues to decline and our business
and prospects to deteriorate.
Under some of our display placement agreements in Guangzhou, Shenzhen, Dalian and Chongqing,
the property manager has the right to terminate the agreement if landlords or tenants in the
building lodge complaints about our flat-panel displays. In addition, some of our display placement
agreements in other cities allow the
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property manager to terminate the agreement if we fail to keep each flat-panel display
operational for a minimum amount of time each year. If these tenants complain about our displays,
or if the property manager claims we have failed to keep the flat-panel displays operational for
the stipulated number of days each year, we may be required to remove our panels from these
commercial locations.
In accordance with PRC real estate laws and regulations, prior consent of landlords and
property managers is required for any commercial use of the public areas or facilities of
residential properties. With regard to our network of advertising poster frames and some of our
flat-panel displays placed in the elevators and public areas of residential complexes, we have
entered into frame or display placement agreements with property managers and landlords. For those
frame or display placement agreements entered into with property managers, we intend to obtain or
urge property managers to obtain consents from landlords. However, if the landlords of a
residential complex object to our placing advertising poster frames or flat-panel displays in the
elevators and public areas of the complex, we may be required to remove our advertising poster
frames or flat-panel displays from the complex and may be subject to fines. We may not be able to
successfully expand our out-of-home advertising network into new regions or diversify our network
into new advertising networks or media platforms, which could harm or reverse our growth potential
and our ability to increase our revenues.
We are pursuing a strategy to expand our network into new regions, new advertising channels,
such as our travel, fashion, elite and health-care channels, as well as into residential complexes.
We are also expanding our network into new advertising media, such as advertising poster frames,
mobile-phone WAP-based advertising, and outdoor LED billboard advertising. For example:
•
in January 2006, we acquired Framedia and E-Times, providing us with our poster
frame network located primarily in residential complexes;
•
we recently began marketing separate channels of our commercial location network,
such as our travel, fashion, elite and health-care channels, to enable advertisers to
focus on more specifically targeted consumer audiences;
•
in March 2006, we acquired Focus Media Wireless, which operates a mobile-phone
WAP-based advertising service in China through China Mobile and China Unicom's mobile
phone networks; and
•
in April 2006, we commenced operation of an outdoor LED network consisting of
approximately 75 leased 5' x 5' LED digital billboards installed on the street-sides in
major shopping districts and other locations with high pedestrian traffic in Shanghai.
Because portions of our existing network are rapidly reaching saturation, in order to
successfully expand our networks, we must expand our networks to include new regions and new
advertising channels. In order to expand our networks into new regions, we must enter into new
display or frame placement agreements in new cities. In the case of our commercial location
network, we generally expand our networks into new cities by means of establishing new operations
through entering into contractual relationships with regional distributors. If these regional
distributors are not successful in expanding our commercial location network in other cities, our
ability to grow our commercial location network in other regions may be hampered. We may also
expand our outdoor LED network into cities other than Shanghai in the future. The process of
diversifying our networks into new advertising channels is also time consuming and requires us to
expend time and resources in educating landlords and property managers about the benefits of
separate advertising channels that are dedicated to specific demographics characteristics. If we
are unable to grow our in-store network, poster frame network or outdoor LED network or to
successfully diversify into other new advertising channels, our advertising network may not be as
attractive as those of our competitors, which could harm or reverse our growth potential and our
ability to increase our revenues, or even result in a decrease in revenues.
If we are unable to obtain or retain desirable placement locations for our flat-panel displays,
advertising poster frames and outdoor LED billboards on commercially advantageous terms or if the
supply of desirable locations diminishes or ceases to expand, we could have difficulty in
maintaining or expanding our network,
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our operating margins and earnings could decrease and our results of operations could be materially
and adversely affected.
Our location costs, which include lease payments to landlords and property managers under our
display placement agreements, maintenance and monitoring fees and other associated costs, comprise
a significant portion of our cost of revenues. In 2005, our location costs accounted for 61.7% of
our cost of revenues and 24.0% of our total revenues, respectively. For the three months ended
March 31, 2006, our location costs accounted for 66.4% of our cost of revenues and 28.9% of our
total revenues, respectively. In the future, we may need to increase our expenditures on our
display and frame placement agreements to obtain new and desirable locations, to renew existing
locations, and to secure favorable exclusivity and renewal terms. In addition, lessors of space for
our flat-panel displays, advertising poster frames and LED billboards may charge increasingly
higher display location lease fees, or demand other compensation arrangements, such as profit
sharing. If we are unable to pass increased location costs on to our advertising clients through
rate increases, our operating margins and earnings could decrease and our results of operations
could be materially and adversely affected.
In addition, in more developed cities, it may be difficult to increase the number of desirable
locations in our network because most such locations have already been occupied either by us or by
our competitors, or in the case of outdoor LED billboards, because the placement of outdoor
installments may be limited by municipal zoning and planning policies. In recently developing
cities, the supply of desirable locations may be small and the pace of economic development and
construction levels may not provide a steadily increasing supply of desirable commercial and
residential locations. If, as a result of these possibilities, we are unable to increase the
placement of our out-of-home television and poster frame advertising networks into commercial and
residential locations that advertisers find desirable, we may be unable to expand our client base,
sell advertising time slots and poster frame space on our network or increase the rates we charge
for time slots and poster frame space, which could decrease the value of our network to
advertisers.
When our out-of-home television advertising networks reach saturation in the cities where we
operate, we may be unable to grow our revenue base or to satisfy all of our advertisers' needs,
which could hamper our ability to generate higher levels of revenues over time.
Our commercial location and in-store networks currently operate primarily with a repeating
twelve-minute cycle of advertisements per week broadcast repeatedly approximately 60 times per day
consisting of 24 30-second time slots per week, with a limited number of our regional distributors
using a nine-minute cycle, and our outdoor LED network using a repeating six-minute cycle. Where
demand for time slots by advertisers is high, such as in our Tier I cities, our out-of-home
television networks may reach saturation, meaning we cannot sell additional advertising time slots
for that week's cycle without further increasing the length of the cycle and correspondingly
reducing the number of broadcasts per day of each advertisement. If our commercial location,
in-store and outdoor LED networks reach saturation in any particular city, we will be forced to
lengthen our advertising cycle to accommodate additional advertisers, as we have done in all of our
directly operated cities, or increase our advertising rates to increase our revenues in our
existing cities of operation. However, advertisers may be unwilling to accept rate increases or the
placement of their advertisement on a longer time cycle that gives their advertisement less
exposure each day. If we are unable to increase the duration of our advertising cycle in cities
that reach saturation, or if we are unable to pass through rate increases to our advertising
clients in those cities, we may be unable to grow our revenue base or to satisfy all of our
advertisers' needs, which could hamper our ability to generate higher levels of revenues over time.
If we are unable to attract advertisers to advertise on our networks, we will be unable to maintain
or increase our advertising fees and the demand for time on our networks, which could negatively
affect our ability to grow revenues.
The amounts of fees we can charge advertisers for time slots on our out-of-home television
networks depend on the size and quality of our out-of-home television networks and the demand by
advertisers for advertising time on our out-of-home television networks. Advertisers choose to
advertise on our out-of-home television networks in part based on the size of the networks and the
desirability of the locations where we have placed our flat-panel displays and where we lease LED
digital billboards as well as the quality of the services we offer. If we fail to maintain or
increase the number of locations, displays and billboards in our networks, diversify advertising
channels in our
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networks, or solidify our brand name and reputation as a quality provider of advertising
services, advertisers may be unwilling to purchase time on our networks or to pay the levels of
advertising fees we require to remain profitable.
In addition, the fees we can charge advertisers for frame space on our poster frame network
depends on the quality of the locations in which we place advertising poster frames, demand by
advertisers for frame space and the quality of our service. If we are unable to continue to secure
the most desirable residential locations for deployment of our advertising poster frames, we may be
unable to attract advertisers to purchase frame space on our poster frame network.
Our failure to attract advertisers to purchase time slots and frame space on our networks will
reduce demand for time slots and frame space on our networks and the number of time slots and
amount of frame space we are able to sell, which could necessitate lowering the fees we charge for
advertising time on our network and could negatively affect our ability to increase revenues in the
future.
We may be unable to maintain the growth of our network of flat-panel displays into hypermarkets,
supermarkets, convenience stores and other types of businesses that have control over many stores,
and our failure to maintain such growth could materially reduce the attractiveness of our network
and harm our business, reputation and results of operations.
Our strategy includes expanding our in-store network into hypermarkets and other types of
businesses that have control over many store locations such as supermarkets and convenience stores.
We commenced operation of our in-store network in April 2005. As of March 31, 2006, we had placed
33,765 flat-panel displays in 5,218 hypermarkets, supermarkets and convenience stores. As a
relatively new and untested portion of our business, it is difficult to evaluate whether our
in-store network will continue to attract advertisers, and there exists the risk that it may not
succeed at all. In 2005 and for the three months ended March 31, 2006 revenues from our in-store
network accounted for 9.0% and 16.1% of our advertising service revenue, respectively.
Many of our arrangements with such businesses are and will continue to be handled through a
single or small number of display placement agreements designed to cover a chain's entire network
of stores, either nationwide or throughout an entire city. We may, therefore, increase our
dependence on one or a small number of retail store chains in terms of our coverage. If our network
becomes more concentrated in major chains, any dispute we have with any single chain, or any
failure to renew our display placement agreements or maintain our exclusivity terms with any single
chain, could materially reduce the attractiveness of our in-store network and harm our business,
reputation and results of operations.
Our acquisitions of Framedia, Target Media, Focus Media Wireless and any future acquisitions may
expose us to potential risks and have an adverse effect on our ability to manage our business.
Selective acquisitions, such as our recent acquisitions of Framedia, Target Media and Focus
Media Wireless, form part of our strategy to further expand our business. If we are presented with
appropriate opportunities, we may acquire additional businesses, services or products that are
complementary to our core business. Our integration of the acquired entities into our business may
not be successful and may not enable us to expand into new advertising platforms as well as we
expect. This would significantly affect the expected benefits of these acquisitions. Moreover, the
integration of Framedia, Target Media and Focus Media Wireless into our operations have required,
and will continue to require, significant attention from our management. Future acquisitions will
also likely present similar challenges.
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. In
addition, we may face challenges trying to integrate new operations, services and personnel with
our existing operations. Our recent acquisitions and possible future acquisitions may also expose
us to other potential risks, including risks associated with unforeseen or hidden liabilities, the
diversion of resources from our existing businesses and technologies, our inability to generate
sufficient revenue to offset the costs, expenses of acquisitions and potential loss of, or harm to,
relationships with employees and advertising clients as a result of our integration of new
businesses and new regulations governing cross-border investment by PRC residents. In addition, we
cannot assure you that we will be able to realize the benefits we anticipate from acquiring
Framedia, Target Media, Focus Media Wireless and other companies, or that
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we will not incur costs, including those relating to intangibles or goodwill, in excess of our
projected costs for these transactions. The occurrence of any of these events could have a material
and adverse effect on our ability to manage our business, our financial condition and our results
of operations.
There may be unknown risks inherent in our acquisitions of Framedia and Target Media.
Although we have conducted due diligence with respect to Framedia and Target Media, we may not
be aware of all of the risks associated with Framedia or Target Media. Any discovery of adverse
information concerning Framedia or Target Media since we acquired these entities could have a
material adverse effect on our business, financial condition and results of operations. While we
are entitled to seek indemnification in certain circumstances, successfully asserting
indemnification or enforcing such indemnification could be costly and time consuming or may not be
successful at all.
Our recent entry into mobile handset advertising through our acquisition of Focus Media Wireless
may expose us to risks associated with operating in the telecommunications industry in China which
could materially affect our financial condition or results of operation.
In March 2006, we completed our acquisition of Focus Media Wireless, which operates a mobile
handset WAP-based advertising service over China Mobile's and China Unicom's mobile
telecommunications networks. As a result, we now operate a portion of our advertising network on
mobile telecommunications networks and are subject to risks associated with operations in the
telecommunications sector in China. These potential risks include:
•
loss or deterioration of our relationship with China Mobile or China Unicom, the two
primary mobile telecommunications operators in China that currently provide wireless
value-added services to mobile phone users;
•
loss or deterioration of our relationship with Internet service providers who use
our WAP-based advertisement platform;
•
failure to reach traditional advertisers and to take advantage of marketing networks
through our existing business;
•
changes in operating policies or guidelines by mobile telecommunications operators
applicable to all wireless value-added service providers using their platforms or which
restrict content supplied by others to us;
•
regulation of the telecommunications sector in China that could impose burdensome
approval or licensing requirements on value-added service providers such as advertising
companies that sell advertising time on mobile telecommunications networks;
•
a decision by either or both China Mobile and China Unicom to directly enter into
the WAP-based advertising business; or
•
consumer dissatisfaction with, or any related regulations restricting, the use or
"pushing" of unsolicited advertisements, commonly known as "spam".
As a result of any such change or event, the operation of our advertising network using the
mobile telecommunications networks of the mobile telecommunications operators in China may be
disrupted, which could in turn lower our advertising revenues or result in higher operating costs
to us, and we cannot assure you that our financial condition and results of operation would not be
materially adversely affected.
In addition, under PRC law, the services offered by Focus Media Wireless may be deemed
value-added telecommunication services, which requires an operation permit that has a valid period
of five years. Focus Media Wireless has applied for the operation permit for its wireless
advertising operations. If Focus Media Wireless is deemed by the PRC regulatory authorities to be
providing value-added telecommunication services but an operation
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permit is not issued or, once issued, if it were revoked or if we are unable to renew its
operation permit upon expiration, we will be required to suspend our services relating to our
mobile handset advertising network, and our advertising service revenue derived from this portion
of our network would be adversely affected.
We currently rely on a single third-party location provider to secure sites for our outdoor LED
billboard network, and any disruption in its business operations or in our relationship with it
would materially and adversely impact the operation of our outdoor LED network, resulting in the
loss of a portion of our revenue.
To secure locations in Shanghai for our new outdoor LED network, we have entered into a
four-year exclusive agreement with Shanghai Yihukuan Media Co., Ltd., or Yihukuan, which leases all
of its current, and any future developed, LED digital billboard space in Shanghai to us for an
annual fee. Our reliance on a single third-party location provider for the billboard space on our
outdoor LED network exposes us to a number of risks in connection with this part of our advertising
network. In order to place LED digital billboards in public areas, Yihukuan must apply for and
receive approval from relevant authorities of the Shanghai municipal government and continue to
comply with relevant outdoor advertising laws and regulations. If the approvals that have been
granted to Yihukuan are revoked for any reason, including any failure by Yihukuan to comply with
relevant outdoor advertising laws and regulations, or if Yihukuan fails to receive approvals to
place additional LED billboards, the outdoor LED network could become unavailable to us, be reduced
in size or fail to grow, which may make it less attractive to advertising customers. Moreover,
because we pay the annual fee to Yihukuan in advance, we may be unable to recover any deposits and
rental fees we pay to it in the event that its network becomes inoperable or is suspended, reduced
in size or fails to attract advertisers. In addition, because we rely on Yihukuan for digital
billboard space on our outdoor LED network, any loss or deterioration of our relationship with
Yihukuan, including any failure to renew our contract with them, may result in disruption to our
outdoor LED network operations and the loss of a portion of our revenue.
One or more of our regional distributors could engage in activities that are harmful to our
reputation in the industry and to our business.
As of March 31, 2006, we covered 36 out of the 86 cities where we provide our commercial
location network through contractual arrangements with regional distributors. Under these
arrangements, we provide our business model and operating expertise to local advertising companies
in exchange for their acting as regional distributors of our advertising services. We also sell our
flat-panel displays to our regional distributors, who are responsible for developing and
maintaining an advertising network in office buildings and other commercial locations in the city
where they operate. We also grant our regional distributors the right to use our "Focus Media"
brand name and logo. However, our contractual arrangements with our regional distributors do not
provide us with control or oversight over their everyday business activities, and one or more of
our regional distributors may engage in activities that violate PRC laws and regulations governing
the advertising industry and advertising content, or other PRC laws and regulations generally. Some
of our regional distributors may not possess all the licenses required to operate an advertising
business, or may fail to maintain the licenses they currently hold, which could result in local
regulators suspending the operations of the network in those cities. In addition, we do not
independently review the advertising content that our regional distributors display on the portion
of our commercial location network that they operate independently, and our regional distributors
may include advertising content on their part of the commercial location network and violate PRC
advertising laws or regulations or expose them and us to lawsuits or result in the revocation of
their business license. If any of these events occurs, it could harm our reputation in the
industry.
Suodi Advertising, our network development and maintenance agent in Beijing, may have a claim
against us under the non-competition clause of our contract with it, and if Suodi Advertising were
successful in bringing a claim against us, our financial condition and results of operations may be
materially and adversely affected.
We entered into an agency agreement with Beijing Suodi Advertising Co., Ltd., or Suodi
Advertising, that contains a non-competition clause which restricts us from developing new network
locations in commercial buildings in Beijing without the assistance of Suodi Advertising through
2008. We have entered into display and frame placement agreements with landlords and property
managers of commercial buildings in Beijing without the assistance of Suodi Advertising. We believe
that Suodi Advertising does not have the right to require us to terminate or otherwise void the
display placement agreements we have entered into without its assistance, although it can pursue
claims against us for monetary damages. Although Suodi Advertising has not pursued any claim
against us in
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connection with our having entered into such display and frame placement agreements, we cannot
assure you that Suodi will not do so in the future. If Suodi Advertising successfully pursues a
claim against us, we could be liable for monetary damages we may have caused to Suodi Advertising.
If we are found to have violated our contract with Suodi Advertising, our payment obligations over
the five year term of the contract can be accelerated, and we estimate our liability under the
agreement could reach as much as $730,000, excluding possible consequential damages, which could
materially and adversely affect our financial condition and results of operations.
Failure to manage our growth could strain our management, operational and other resources and we
may not be able to achieve anticipated levels of growth in the new networks and media platforms we
are beginning to operate, either of which could materially and adversely affect our business and
growth potential.
We have been rapidly expanding, and plan to continue to rapidly expand, our operations in
China. We must continue to expand our operations to meet the demands of advertisers for larger and
more diverse network coverage and the demands of current and future landlords and property managers
for installing and configuring flat-panel displays, advertising poster frames and outdoor LED
billboards in our existing and future commercial, store, residential and curbside locations. This
expansion has resulted, and will continue to result, in substantial demands on our management
resources. It has also increased our need for a reliable supply of equipment, particularly
flat-panel displays and large LED digital billboards for our out-of-home television networks which
are manufactured by a few third-party contract assemblers according to our specifications. To
manage our growth, we must develop and improve our existing administrative and operational systems
and, our financial and management controls and further expand, train and manage our work force. We
have also commenced providing advertising services to mobile phone users through our recent
acquisition of Focus Media Wireless. As we continue this effort, we may incur substantial costs and
expend substantial resources in connection with any such expansion due to, among other things,
different technology standards, legal considerations and cultural differences. We may not be able
to manage our current or future international operations effectively and efficiently or compete
effectively in such markets. We cannot assure you that we will be able to efficiently or
effectively manage the growth of our operations, recruit top talent and train our personnel. Any
failure to efficiently manage our expansion may materially and adversely affect our business and
future growth.
As we continue to expand into new networks and new media platforms, we expect the percentage
of revenues derived from our commercial location network to decline. However, the new advertising
networks and media platforms we pursue may not present the same opportunities for growth that we
have experienced with our commercial location network and, accordingly, we cannot assure you that
the level of growth of our networks will not decline over time. Moreover, we expect the level of
growth of our commercial location network to decrease as many of the more desirable locations have
already been leased by us or our competitors.
If advertisers or the viewing public do not accept, or lose interest in, our out-of-home
advertising network, our revenues may be negatively affected and our business may not expand or be
successful.
The market for out-of-home advertising networks in China is relatively new and its potential
is uncertain. We compete for advertising spending with many forms of more established advertising
media. Our success depends on the acceptance of our out-of-home advertising network by advertisers
and their continuing interest in these mediums as components of their advertising strategies. Our
success also depends on the viewing public continuing to be receptive towards our advertising
network. Advertisers may elect not to use our services if they believe that consumers are not
receptive to our networks or that our networks do not provide sufficient value as effective
advertising mediums. Likewise, if consumers find some element of our networks, such as the audio
feature of our commercial location, in-store and outdoor LED networks, to be disruptive or
intrusive, commercial locations and stores may decide not to place our flat-panel displays in their
properties and advertisers may view our advertising network as a less attractive advertising medium
compared to other alternatives. In that event, advertisers may determine to reduce their spending
on our advertising network. If a substantial number of advertisers lose interest in advertising on
our advertising network for these or other reasons, we will be unable to generate sufficient
revenues and cash flow to operate our business, and our advertising service revenue, liquidity and
results of operations could be negatively affected.
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We depend on the leadership and services of Jason Nanchun Jiang, who is our founder, chairman,
chief executive officer and our largest shareholder, and our business and growth prospects may be
severely disrupted if we lose his services.
Our future success is dependent upon the continued service of Jason Nanchun Jiang, our
founder, chairman and chief executive officer and our largest shareholder. We rely on his industry
expertise and experience in our business operations, and in particular, his business vision,
management skills, and working relationships with our employees, our other major shareholders, many
of our clients and landlords and property managers of the locations in our network. We do not
maintain key-man life insurance for Mr. Jiang. If he was unable or unwilling to continue in his
present position, or if he joined a competitor or formed a competing company in violation of his
employment agreement and noncompetition agreement, we may not be able to replace him easily or at
all. As a result, our business and growth prospects may be severely disrupted if we lose his
services.
We may need additional capital and we may not be able to obtain it, which could adversely affect
our liquidity and financial position.
We believe that our current cash and cash equivalents, cash flow from operations and the
proceeds from this offering will be sufficient to meet our anticipated cash needs including for
working capital and capital expenditures, for the foreseeable future. We may, however, require
additional cash resources due to changed business conditions or other future developments. If these
sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or
debt securities or obtain a credit facility. The sale of convertible debt securities or additional
equity securities, including from this offering, could result in additional dilution to our
shareholders. The incurrence of indebtedness would result in increased debt service obligations and
could result in operating and financing covenants that would restrict our operations and liquidity.
Our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:
•
investors' perception of, and demand for, securities of alternative advertising media companies;
•
conditions of the U.S. and other capital markets in which we may seek to raise funds
•
our future results of operations, financial condition and cash flows;
•
PRC governmental regulation of foreign investment in advertising services companies in China;
•
economic, political and other conditions in China; and
•
PRC governmental policies relating to foreign currency borrowings.
We cannot assure you that financing will be available in amounts or on terms acceptable to us,
if at all. Any failure by us to raise additional funds on terms favorable to us could have a
material adverse effect on our liquidity and financial condition.
If we are unable to adapt to changing advertising trends and the technology needs of advertisers
and consumers, we will not be able to compete effectively and we will be unable to increase or
maintain our revenues which may materially and adversely affect our business prospects and
revenues.
The market for out-of-home advertising requires us to continuously identify new advertising
trends and the technology needs of advertisers and consumers, which may require us to develop new
features and enhancements for our advertising network. The majority of our displays use 17-inch
liquid crystal displays screens. We also have a growing number of displays that use larger LCD and
plasma screens as well as large size LED digital billboards. We currently broadcast advertisements
on our commercial location network and in-store network primarily through compact flash, or CF,
cards that are manually installed in our flat-panel displays each week. Through our recent
acquisition of Focus Media Wireless, we now also provide advertising services to mobile phone users
over the mobile phone networks of China Mobile and China Unicom. In the future, subject to relevant
PRC laws and
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regulations, we may use other technology, such as cable or broadband networking, advanced
audio technologies and high-definition panel technology. We may be required to incur development
and acquisition costs in order to keep pace with new technology needs but we may not have the
financial resources necessary to fund and implement future technological innovations or to replace
obsolete technology. Furthermore, we may fail to respond to these changing technology needs. For
example, if the use of wireless or broadband networking capabilities on our advertising network
becomes a commercially viable alternative and meets all applicable PRC legal and regulatory
requirements, and we fail to implement such changes on our commercial location network and in-store
network or fail to do so in a timely manner, our competitors or future entrants into the market who
do take advantage of such initiatives could gain a competitive advantage over us. If we cannot
succeed in developing and introducing new features on a timely and cost-effective basis, advertiser
demand for our advertising networks may decrease and we may not be able to compete effectively or
attract advertising clients, which would have a material and adverse effect on our business
prospects and revenues.
We may be subject to, and may expend significant resources in defending against, government actions
and civil suits based on the content and services we provide through our out-of-home television
advertising networks, poster frame network or mobile handset advertising network.
PRC advertising laws and regulations require advertisers, advertising operators and
advertising distributors, including businesses such as ours, to ensure that the content of the
advertisements they prepare or distribute are fair and accurate and are in full compliance with
applicable law. Violation of these laws or regulations may result in penalties, including fines,
confiscation of advertising fees, orders to cease dissemination of the advertisements and orders to
publish an advertisement correcting the misleading information. In circumstances involving serious
violations, the PRC government may revoke a violator's license for advertising business operations.
As an out-of-home advertising service provider, we are obligated under PRC laws and
regulations to monitor the advertising content that is shown on our out-of-home advertising
networks for compliance with applicable law. In addition, each of our regional distributors is
obligated under PRC laws and regulations to monitor the advertising content shown on the portion of
our out-of-home television advertising network each of them operates. In general, the
advertisements shown on our out-of-home television advertising network and the portion of our
advertising network operated by our regional distributors have previously been broadcast over
public television networks and have been subjected to internal review and verification of such
networks. We and our regional distributors are still separately required to independently review
and verify these advertisements for content compliance before displaying the advertisements. In
addition, where a special government review is required for specific product advertisements before
broadcasting, we and our regional distributors are separately obligated to confirm that such review
has been performed and approval has been obtained. We employ, and our regional distributors are
required under the terms of our agreements with them to employ, qualified advertising inspectors
who are trained to review advertising content for compliance with relevant PRC laws and
regulations. In addition, for advertising content related to specific types of products and
services, such as alcohol, cosmetics, pharmaceuticals and medical procedures, we and our
distributors are required to confirm that the advertisers have obtained requisite government
approvals including the advertiser's operating qualifications, proof of quality inspection of the
advertised products, government pre-approval of the contents of the advertisement and filing with
the local authorities. We endeavor to comply, and encourage our regional distributors to take
measures to comply, with such requirements, including by requesting relevant documents from the
advertisers. Starting in January 2006, we began to operate a network of advertising poster frames
placed primarily in elevators and public areas of residential complexes. The advertisements shown
on our poster frame network are defined as print advertisements under PRC laws and regulations and
are also subject to the same legal requirements as advertisements shown on our out-of-home
television advertising networks. Outdoor advertisements must be registered with the local SAIC
before dissemination, and advertising distributors are required to submit a registration
application form and the content of the advertisement to the local SAIC and receive an advertising
registration certificate from the local SAIC. Our reputation will be tarnished and our results of
operations may be adversely affected if advertisement shown on our out-of-home television
advertising networks, poster frame network or outdoor LED network is provided to us by our
advertising clients in violation of relevant PRC advertising laws and regulations or that the
supporting documentation and government approvals provided to us by our advertising clients in
connection with such advertising content are not complete or that the advertisements that our
regional distributors have procured for broadcasting on our network have not received required
approval from the relevant local supervisory bodies or are not content compliant.
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In addition, we commenced operation of our outdoor LED digital billboard network in April
2006. The placement and installation of LED billboards are subject to municipal zoning requirements
and governmental approvals, including application for an outdoor advertising registration
certificate for each LED billboard subject to a term of use of no more than six years for each LED
billboard. If the existing LED billboards placed by our LED location provider or us are required to
be removed, the attractiveness of this portion of our advertising network will be diminished.
Moreover, failure by an owner of LED billboards to maintain outdoor advertising registration
certificates would result in the inability to lease or market such space for the placement of
advertisements.
China has also enacted regulations governing telecommunication service providers and the
distribution of news and other information. In the past, the Chinese government has stopped the
distribution of information over the Internet and telecommunications networks that it believes to
violate Chinese law, including content that is pornographic or obscene, incites violence, endangers
national security, is contrary to the national interest or is defamatory. China Unicom and China
Mobile also have their own policies regarding the distribution of inappropriate content by wireless
value-added service providers and have punished certain providers for distributing inappropriate
content, including the imposition of fines and service suspensions. Focus Media Wireless undertakes
to the telecommunication operators which grant us access to their mobile phone networks that we
will not distribute any advertisements with illegal content. We require the Internet service
providers which use our WAP-based advertising platform to provide us the same undertaking, but we
cannot completely control the content of their advertisements. If any of the content that we
deliver through our mobile handset advertising network is found to violate Chinese laws and
regulations or the policies of China Mobile and China Unicom, we could be subject to fines or
suspensions.
Moreover, civil claims may be filed against us for fraud, defamation, subversion, negligence,
copyright or trademark infringement or other violations due to the nature and content of the
information displayed on our advertising network. If consumers find the content displayed on our
advertising network to be offensive, landlords, property managers, other location providers or
telecommunication network operators may seek to hold us responsible for any consumer claims or may
terminate their relationships with us.
In addition, if the security of our content management system is breached through the
placement of unauthorized CF cards in our flat-panel displays and unauthorized images, text or
audio sounds are displayed on our advertising network, viewers or the PRC government may find these
images, text or audio sounds to be offensive, which may subject us to civil liability or government
censure despite our efforts to ensure the security of our content management system. Any such event
may also damage our reputation. If our advertising viewers do not believe our content is reliable
or accurate, our business model may become less appealing to viewers in China and our advertising
clients may be less willing to place advertisements on our advertising network.
We may be subject to intellectual property infringement claims, which may force us to incur
substantial legal expenses and, if determined adversely against us, may materially disrupt our
business.
We cannot be certain that our advertising displays or other aspects of our business do not or
will not infringe upon patents, copyrights or other intellectual property rights held by third
parties. Although we are not aware of any such claims, we may become subject to legal proceedings
and claims from time to time relating to the intellectual property of others in the ordinary course
of our business. If we are found to have violated the 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 alternatives. In addition, we may incur substantial expenses in defending against these
third party infringement claims, regardless of their merit. Successful infringement or licensing
claims against us may result in substantial monetary liabilities, which may materially and
adversely disrupt our business.
We face significant competition, and if we do not compete successfully against new and existing
competitors, we may lose our market share, and our profitability may be adversely affected.
We compete with other advertising companies in China. We compete for advertising clients
primarily on the basis of network size and coverage, location, price, the range of services that we
offer and our brand name. We also face competition from other out-of-home television advertising
network operators for access to the most desirable locations in cities in China. Individual
buildings, hotels, restaurants and other commercial locations and hypermarket, supermarket and
convenience store chains may also decide to independently, or through third-party
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technology providers, install and operate their own flat-panel television advertising screens.
We also compete for overall advertising spending with other alternative advertising media
companies, such as Internet, street furniture, billboard, frame and public transport advertising
companies, and with traditional advertising media, such as newspapers, television, magazines and
radio.
In the future, we may also face competition from new entrants into the out-of-home television
advertising sector. Our sector is characterized by relatively low fixed costs and, as is customary
in the advertising industry, we do not have exclusive arrangements with our advertising clients.
These two factors present potential entrants to our sector of the advertising industry with
relatively low entry barriers. In addition, since December 10, 2005, wholly foreign-owned
advertising companies are allowed to operate in China, which may expose us to increased competition
from international advertising media companies attracted to opportunities in China.
Increased competition could reduce our operating margins and profitability and result in a
loss of market share. Some of our existing and potential competitors may have competitive
advantages, such as significantly greater financial, marketing or other resources, or exclusive
arrangements with desirable locations, and others may successfully mimic and adopt our business
model. Moreover, increased competition will provide advertisers with a wider range of media and
advertising service alternatives, which could lead to lower prices and decreased revenues, gross
margins and profits. We cannot assure you that we will be able to successfully compete against new
or existing competitors.
Our senior management and employees have worked together for a short period of time, which may make
it difficult for you to evaluate their effectiveness and ability to address challenges.
Due to our limited operating history and recent additions to our management team, some of our
senior management and employees have worked together at our company for only a relatively short
period of time. For example, following our acquisition of Framedia in January 2006, Tan Zhi, the
former chairman and chief executive officer of Framedia, continues to be involved in the operation
of our poster frame network. In addition, David Yu, the former chairman and chief executive officer
of Target Media, has joined Focus Media as a co-chairman of our board of directors and president as
of March 2006. As a result, it may be difficult for you to evaluate the effectiveness of our senior
management and other key employees and their ability to address future challenges to our business.
We do not maintain any business liability disruption or litigation insurance coverage for our
operations, and any business liability, disruption or litigation we experience might result in our
incurring substantial costs and the diversion of resources.
The insurance industry in China is still at an early stage of development. Insurance companies
in China offer limited business insurance products and do not, to our knowledge, offer business
liability insurance. While business disruption insurance is available to a limited extent in China,
we have determined that the risks of disruption, cost of such insurance and the difficulties
associated with acquiring such insurance on commercially reasonable terms make it impractical for
us to have such insurance. As a result, we do not have any business liability, disruption or
litigation insurance coverage for our operations in China. Any business disruption or litigation
may result in our incurring substantial costs and the diversion of resources.
For example, on March 16, 2006, Shanghai Xicheng Cultural Dissemination Co., Ltd., also
referred to as CGEN, brought a suit against us in the Shanghai No. 1 Intermediate People's Court on
the grounds of unfair competition. CGEN, which is developing a network of flat-panel displays in
hypermarkets and supermarkets, claims to have established an exclusive business relationship with
the Hymart chain of supermarkets in Shanghai. Hymart notified us that it had requested in writing
to terminate its relationship with CGEN. In CGEN's pleadings, it alleges that Focus Media
encouraged and supported Hymart to allegedly violate its agreement with CGEN, resulting in losses
to CGEN. In its pleadings, CGEN has requested that the court order Focus Media to cease any alleged
unfair competitive behavior, to undo the effects of any alleged unfair competition and to pay RMB
13,570,920 (US$1.7 million) to CGEN. We intend to defend against CGEN's claims to the fullest
extent of the law. However, there can be no assurance that we will prevail in any such litigation.
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We may become a passive foreign investment company, or PFIC, which could result in adverse U.S. tax
consequences to U.S. investors.
Based upon the past and projected composition of our income and valuation of our assets,
including goodwill, we believe we were not a passive foreign investment company for 2005, we do not
expect to be a passive foreign investment company for 2006, and we do not expect to become one in
the future, although there can be no assurance in this regard. If, however, we were a passive
foreign investment company, such characterization could result in adverse U.S. tax consequences to
you if you are a U.S. investor. For example, if we are a PFIC, our U.S. investors will become
subject to increased tax liabilities under U.S. tax laws and regulations and will become subject to
burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an
annual basis and will depend on the composition of our income and assets from time to time.
Specifically, we will be classified as a PFIC for U.S. tax purposes if either: (i) 75% or more of
our gross income in a taxable year is passive income, or (ii) the average percentage of our assets
by value in a taxable year which produce or are held for the production of passive income (which
includes cash) is at least 50%. The calculation of the value of our assets will be based, in part,
on the then market value of our ADSs, which is subject to change. In addition, the composition of
our income and assets will be affected by how, and how quickly, we spend the cash we raise in this
offering. We cannot assure you that we will not be a PFIC for 2006 or any future taxable year. For
more information on PFICs, see "Item 10.E Additional Information Taxation — United States Federal
Income Taxation".
Investor confidence and market price of our ADSs may be adversely impacted if we or our independent
registered public accountants are unable to attest to the adequacy of the internal controls over
our financial reporting for the fiscal year ending December 31, 2007, as required by Section 404 of
the U.S. Sarbanes-Oxley Act.
We are subject to the reporting requirements of the U.S. Securities and Exchange Commission,
or SEC. The SEC, as directed by Section 404 of the U.S. Sarbanes-Oxley Act of 2002, adopted rules
requiring public companies, including us, to include a report of management of their internal
control structure and procedures for financial reporting in their annual reports on Form 10-K or
Form 20-F, as the case may be, that contain an assessment by management of the effectiveness of
their internal controls over financial reporting. In addition, independent registered public
accountants of these public companies must attest to and report on management's assessment of the
effectiveness of their internal controls over financial reporting. These requirements will first
apply to our annual report on Form 20-F for the fiscal year ending on December 31, 2007. Our
management may not conclude that our internal controls over financial reporting are effective.
Moreover, even if our management does conclude that our internal controls over financial reporting
are effective, if our independent registered public accountants are not satisfied with our internal
control structure and procedures, the level at which our internal controls are documented,
designed, operated or reviewed, or if the independent registered public accountants interpret the
requirements, rules or regulations differently from us, they may decline to attest to our
management's assessment or may issue a report that is qualified. For example, when our auditors
audited our financial statements as of and for the period ended December 31, 2004, they identified
one "reportable condition", as that term is defined under standards established by the American
Institute of Certified Public Accountants, in our internal accounting controls. This reportable
condition was cured at the time our auditors audited our financial statements for the period ended
December 31, 2005. We cannot assure you that additional internal control and procedure problems
will not occur in the future. 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 financial
statements, which could negatively impact the market price of our ADSs.
Risks Relating to Regulation of Our Business and to Our Structure
If the PRC government finds that the agreements that establish the structure for operating our
China business do not comply with PRC governmental restrictions on foreign investment in the
advertising industry, we could be subject to severe penalties.
Substantially all of our operations are or will be conducted through Focus Media Technology
(Shanghai) Co., Ltd., or Focus Media Technology, Framedia Investment and Beijing Dotad Technology
Co., Ltd., or Dotad Technology, our indirectly wholly-owned operating subsidiaries in China, and
Focus Media Digital Information Technology (Shanghai) Co., Ltd., or Focus Media Digital, a
90%-owned subsidiary of Focus Media Technology,
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which we collectively refer to as our PRC operating subsidiaries, and through our contractual
arrangements with several of our consolidated affiliated entities in China. PRC regulations require
any foreign entities that invest in the advertising services industry to have at least two years of
direct operations in the advertising industry outside of China. Since December 10, 2005, foreign
investors have been allowed to own directly 100% of PRC companies operating an advertising business
if the foreign entity has at least three years of direct operations in the advertising business
outside of China or less than 100% if the foreign investor has at least two years of direct
operations in the advertising industry outside of China. We do not currently directly operate an
advertising business outside of China and cannot qualify under PRC regulations any earlier than two
or three years after we commence any such operations outside of China or until we acquire a company
that has directly operated an advertising business outside of China for the required period of
time. Accordingly, our PRC operating subsidiaries are currently ineligible to apply for the
required licenses for providing advertising services in China. Substantially all of our advertising
business is currently provided through our contractual arrangements with our PRC operating
subsidiaries' consolidated affiliated entities in China, including Focus Media Advertisement and
its subsidiaries with regard to our out-of-home television networks, Framedia Advertisement,
Guangdong Framedia and New Structure Advertisement with regard to our poster frame network, and
Focus Media Wireless with regard to our mobile handset advertising network, which we collectively
refer to as our PRC operating affiliates. Our PRC operating affiliates are currently owned in each
case either (i) by two PRC citizens designated by us or (ii) by two PRC entities owned by our
subsidiaries or by our designated appointees. Our PRC operating affiliates, certain of their
respective subsidiaries, and New Focus Media Advertisement hold the requisite licenses to provide
advertising services in China. Our PRC operating affiliates and their respective subsidiaries
directly operate our advertising network. We have been and are expected to continue to be dependent
on these PRC operating affiliates and their subsidiaries to operate our advertising business for
the foreseeable future. We have entered into contractual arrangements with PRC operating affiliates
and their respective subsidiaries, pursuant to which we, through our PRC operating subsidiaries,
provide technical support and consulting services to our PRC operating affiliates and their
subsidiaries. In addition, we have entered into agreements with our PRC operating affiliates and
each of their shareholders which provide us with the substantial ability to control these
affiliates and their existing and future subsidiaries.
If we, our existing or future PRC operating subsidiaries and affiliates are found to be in
violation of any existing or future PRC laws or regulations or fail to obtain or maintain any of
the required permits or approvals, the relevant PRC regulatory authorities, including the State
Administration for Industry and Commerce, or SAIC, which regulates advertising companies, would
have broad discretion in dealing with such violations, including:
•
revoking the business and operating licenses of our PRC subsidiaries and affiliates;
•
discontinuing or restricting our PRC subsidiaries' and affiliates' operations;
•
imposing conditions or requirements with which we or our PRC subsidiaries and
affiliates may not be able to comply;
•
requiring us or our PRC subsidiaries and affiliates to restructure the relevant
ownership structure or operations; or
•
restricting or prohibiting our use of the proceeds of this offering to finance our
business and operations in China.
The imposition of any of these penalties would result in a material and adverse effect on our
ability to conduct our business.
We rely on contractual arrangements with our PRC operating affiliates and their subsidiaries and
shareholders for our China operations, which may not be as effective in providing operational
control as direct ownership.
We have in the past relied, and to a lesser but significant extent will continue in the future
to rely, on contractual arrangements with our PRC operating affiliates and their respective
subsidiaries and shareholders to operate our advertising business. For a description of these
contractual arrangements, see the sections titled "Organizational
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Structure"
"Business Overview — Recent Developments" in Item 4. "Information on the Company"
and "Item 7. — Major Shareholders and Related Party Transactions". These contractual arrangements
may not be as effective in providing us with control over Focus Media Advertisement and its
subsidiaries as direct ownership. If we had direct ownership of our PRC operating affiliates and
their respective subsidiaries, we would be able to exercise our rights as a shareholder to effect
changes in the board of directors of those companies, which in turn could effect changes, subject
to any applicable fiduciary obligations, at the management level. However, under the current
contractual arrangements, as a legal matter, if our PRC operating affiliates or any of their
subsidiaries and shareholders fails to perform its or his respective obligations under these
contractual arrangements, we may have to incur substantial costs and resources to enforce such
arrangements, and rely on legal remedies under PRC law, including seeking specific performance or
injunctive relief, and claiming damages, which we cannot assure you to be effective. For example,
if Jason Nanchun Jiang were to refuse to transfer his equity interest in Focus Media Advertisement
to us or our designee when we exercise the purchase option pursuant to these contractual
arrangements, or if Mr. Jiang were otherwise to act in bad faith toward us, then we may have to
take legal action to compel him to fulfill his contractual obligations. In addition, Focus Media
Advertisement, which holds certain of the business licenses required to operate our advertising
network in China, is jointly owned and effectively managed by Mr. Jiang and Mr. Yu. Accordingly, it
may be difficult for us to change our corporate structure or to bring claims against Focus Media
Advertisement if Focus Media Advertisement does not perform its obligations under its contracts
with us or Mr. Jiang and Mr. Yu do not cooperate with any such actions.
Many of these contractual arrangements are governed by PRC law and provide for the resolution
of disputes through either arbitration or litigation in the PRC. Accordingly, these contracts would
be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC
legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions,
such as the United States. As a result, uncertainties in the PRC legal system could limit our
ability to enforce these contractual arrangements. In the event we are unable to enforce these
contractual arrangements, we may not be able to exert effective control over our operating
entities, and our ability to conduct our business may be negatively affected.
Contractual arrangements we have entered into among our subsidiaries and affiliated entities may be
subject to scrutiny by the PRC tax authorities and a finding that we owe additional taxes or are
ineligible for our tax exemption, or both, could substantially increase our taxes owed, and reduce
our net income and the value of your investment.
Under PRC law, arrangements and transactions among related parties may be subject to audit or
challenge by the PRC tax authorities. If any of the transactions we have entered into among our
subsidiaries and affiliated entities are found not to be on an arm's-length basis, or to result in
an unreasonable reduction in tax under PRC law, the PRC tax authorities have the authority to
disallow our tax savings, adjust the profits and losses of our respective PRC entities and assess
late payment interest and penalties. See "Item 5. Operating and Financial Review and Prospects —
Taxation" for a discussion of the transactions referred to above. A finding by the PRC tax
authorities that we are ineligible for the tax savings we achieved in 2004, or that Focus Media
Digital, Shanghai Focus Media Advertising Agency Co., Ltd., or Focus Media Advertising Agency, New
Focus Media Advertisement or New Structure Advertisement are ineligible for their tax exemptions,
would substantially increase our taxes owed and reduce our net income and the value of your
investment. As a result of this risk, you should evaluate our results of operations and financial
condition without regard to these tax savings.
We rely principally on dividends and other distributions on equity paid by our wholly-owned
operating subsidiaries to fund any cash and financing requirements we may have, and any limitation
on the ability of our operating subsidiary to pay dividends to us could have a material adverse
effect on our ability to conduct our business.
We are a holding company, and we rely principally on dividends and other distributions on
equity paid by our PRC operating subsidiaries for our cash requirements, including the funds
necessary to service any debt we may incur. If any of our PRC operating subsidiaries incurs debt on
its own behalf in the future, the instruments governing the debt may restrict their ability to pay
dividends or make other distributions to us. In addition, the PRC tax authorities may require us to
adjust our taxable income under the contractual arrangements our PRC operating subsidiaries
currently have in place with our PRC operating affiliates and their respective subsidiaries in a
manner that would materially and adversely affect our PRC operating subsidiaries' ability to pay
dividends and other
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distributions to us. Furthermore, relevant PRC laws and regulations permit payments of
dividends by our PRC operating subsidiaries only out of their retained earnings, if any, determined
in accordance with PRC accounting standards and regulations. Under PRC laws and regulations, each
of our PRC operating subsidiaries is also required to set aside a portion of its net income each
year to fund specific reserve funds. These reserves are not distributable as cash dividends. In
addition, subject to certain cumulative limits, the statutory general reserve fund requires annual
appropriations of 10% of after-tax income to be set aside prior to payment of dividends. As a
result of these PRC laws and regulations, our PRC operating subsidiaries and our PRC operating
affiliates are restricted in their ability to transfer a portion of their net assets to us whether
in the form of dividends, loans or advances. As of December 31, 2005, the amount of these
restricted portions was approximately $75,911,158. Any limitation on the ability of our PRC
operating subsidiaries to pay dividends to us could materially and adversely limit our ability to
grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends,
or otherwise fund and conduct our business.
Some of our PRC operating affiliates previously engaged in activities outside the authorized scope
of their business licenses. This could subject those companies to fines and other penalties, which
could have a material adverse effect on our business.
Under PRC law, the business license of a company sets forth the authorized scope of business
it may legally undertake, and in order to engage in activities outside its authorized scope of
business, it must apply for and receive approval to expand its scope of business. Three of our PRC
operating affiliates, Focus Media Advertisement, Focus Media Technology and Shanghai On-Target
Advertisement Co., Ltd., and, prior to our acquisition of them, four of our additional operating
affiliates, Zhejiang Ruihong Focus Media Advertising Co., Ltd., Xiamen Advertising Co., Ltd.,
Shanghai Qianjian Advertising Co., Ltd. and Shanghai Perfect Media Advertising Co., Ltd.,
historically engaged in business activities that were not within the authorized scope of their
respective business licenses. Each of these companies subsequently ceased such conduct or expanded
the business scope of their respective business licenses to include such activities; and in the
case of the four entities who exceeded their authorized business scope prior to our acquisition of
them, we required such companies to cease such conduct or expand their business scope during the
process of our acquiring them. While these companies all currently operate within their authorized
scope of business, the relevant PRC authorities have the authority to impose fines or other
penalties. In rare instances, these authorities may require the disgorgement of profits or
revocation of the business license, but as a matter of practice, the authorities will typically
only impose such an extreme penalty after repeated warnings where a violation is blatant and
continuing. While we do not believe these past violations will have a material effect on our
business, operations or financial condition, due to the discretionary nature of regulatory
enforcements in the PRC, we cannot assure you that those of our PRC operating companies that
exceeded the scope of their business licenses in the past will not be subject to such fines or
penalties, including the disgorgement of profits or revocation of the business license of one or
more of these companies, or that such fines or penalties will not have a material adverse effect on
our business.
Our business operations may be affected by legislative or regulatory changes.
There are no existing PRC laws or regulations that specifically define or regulate out-of-home
television or mobile handset advertising. It has been reported that the relevant PRC government
authorities are currently considering adopting new regulations governing out-of-home television
advertising. We cannot predict the timing and effects of such new regulations. Changes in laws and
regulations or the enactment of new laws and regulations governing placement or content of
out-of-home advertising or distribution of mobile handset advertising, our business licenses or
otherwise affecting our business in China may materially and adversely affect our business
prospects and results of operations. For example, the PRC government has promulgated regulations
allowing foreign companies to hold a 100%-interest in PRC advertising companies starting from
December 10, 2005. We are not certain how the PRC government will implement this regulation or how
it could affect our ability to compete in the advertising industry in China.
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PRC regulation of loans and direct investment by offshore holding companies to PRC entities may
delay or prevent us from using the proceeds of this offering to make loans or additional capital
contributions to our PRC operating subsidiaries and affiliates.
In utilizing the proceeds of this offering, as an offshore holding company of our PRC
operating subsidiaries and affiliates, we may make loans to our PRC subsidiaries and consolidated
PRC affiliated entities, or we may make additional capital contributions to our PRC subsidiaries.
Any loans to our PRC subsidiaries or consolidated PRC affiliated entities are subject to PRC
regulations and approvals. For example:
•
loans by us to Focus Media Technology or to Framedia Investment, each a foreign
invested enterprise, to finance its activities cannot exceed statutory limits and must
be registered with the PRC State Administration of Foreign Exchange or its local
counterpart; and
•
loans by us to Focus Media Advertisement or its subsidiaries, which are domestic PRC
enterprises, must be approved by the relevant government authorities and must also be
registered with the PRC State Administration of Foreign Exchange or its local
counterpart.
We may also determine to finance Focus Media Technology, Focus Media Digital and New Focus
Media Advertisement through Focus Media Technology or Framedia Investment, by means of capital
contributions. These capital contributions to Focus Media Technology and Framedia Investment must
be approved by the PRC Ministry of Commerce or its local counterpart. Because Focus Media
Advertisement and its subsidiaries are domestic PRC enterprises, we are not likely to finance their
activities by means of capital contributions due to regulatory issues relating to foreign
investment in domestic PRC enterprises, as well as the licensing and other regulatory issues
discussed in "Business Overview – Regulatory Matters" of Item 4. "Information on the Company" of
this annual report. We cannot assure you that we can obtain these government registrations or
approvals on a timely basis, if at all, with respect to future loans or capital contributions by us
to Focus Media Technology, Focus Media Digital, New Focus Media Advertisement, Framedia Investment,
Focus Media Advertisement or any of their respective subsidiaries, including Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement. If we fail to receive such
registrations or approvals, our ability to use the proceeds of this offering and to capitalize our
PRC operations would be negatively affected which would adversely and materially affect our
liquidity and our ability to expand our business.
Risks Relating to the People's Republic Of China
Substantially all of our assets are located in China and substantially all of our revenues are
derived from our operations in China. Accordingly, our business, financial condition, results of
operations and prospects are subject, to a significant extent, to economic, political and legal
developments in China.
The PRC's economic, political and social conditions, as well as governmental policies, could affect
the financial markets in China and our liquidity and access to capital and our ability to operate
our business.
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. While the PRC economy has experienced significant
growth over the past, growth has been uneven, both geographically and among various sectors of the
economy. The PRC government has implemented various measures to encourage economic growth and guide
the allocation of resources. Some of these measures benefit the overall PRC economy, but may also
have a negative effect on us. For example, under current PRC regulations, starting December 10,
2005, foreign entities are allowed to directly own 100% of a PRC advertising business if the
foreign entity has at least three years of direct operations of an advertising business outside of
China, or to directly own less than 100% of a PRC advertising business if the foreign entity has at
least two years of direct operations of an advertising business outside of China. This may
encourage foreign advertising companies with more experience, greater technological know-how and
larger financial resources than we have to compete against us and limit the potential for our
growth. Moreover, 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.
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The PRC economy has been transitioning from a planned economy to a more market-oriented
economy. Although the PRC government has implemented measures since the late 1970s emphasizing the
utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of improved corporate governance in business enterprises, a
substantial portion of productive assets in China 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. The PRC government also exercises significant control
over China's economic growth through the allocation of resources, controlling payment of foreign
currency- denominated obligations, setting monetary policy and providing preferential treatment to
particular industries or companies. Since late 2003, the PRC government implemented a number of
measures, such as raising bank reserves against deposit rates to place additional limitations on
the ability of commercial banks to make loans and raise interest rates, in order to slow down
specific segments of China's economy which it believed to be overheating. These actions, as well as
future actions and policies of the PRC government, could materially affect our liquidity and access
to capital and our ability to operate our business.
The PRC legal system embodies uncertainties which 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. In 1979, the
PRC government began to promulgate a comprehensive system of laws and regulations governing
economic matters in general. The overall effect of legislation over the past 26 years has
significantly enhanced the protections afforded to various forms of foreign investment in China.
Each of our PRC operating subsidiaries and affiliates is subject to PRC laws and regulations.
However, these laws, regulations and legal requirements change frequently, and their interpretation
and enforcement involve uncertainties. For example, we may have to resort to administrative and
court proceedings to enforce the legal protection that we enjoy either by law or contract. However,
since PRC administrative and court authorities have significant discretion in interpreting and
implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of
administrative and court proceedings and the level of legal protection we enjoy than in more
developed legal systems. For example, these uncertainties may impede our ability to enforce the
contracts we have entered into with Focus Media Advertisement and its subsidiaries. In addition,
such uncertainties, including the inability to enforce our contracts, could materially and
adversely affect our business and operation. In addition, intellectual property rights and
confidentiality protections in China may not be as effective as in the United States or other
countries. Accordingly, we cannot predict the effect of future developments in the PRC legal
system, particularly with regard to the advertising industry, including the promulgation of new
laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of
local regulations by national laws. These uncertainties could limit the legal protections available
to us, including our ability to enforce our agreements with Focus Media Advertisement and its
subsidiaries, and other foreign investors, including you.
Recent PRC regulations relating to offshore investment activities by PRC residents may increase our
administrative burden and restrict our overseas and cross-border investment activity. If our
shareholders who are PRC residents fail to make any required applications and filings under such
regulations, we may be unable to distribute profits and may become subject to liability under PRC
laws.
The PRC National Development and Reform Commission, or NDRC, and SAFE recently 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 apply to our shareholders who are PRC residents
and may apply to any offshore acquisitions that we make in the future.
Under the SAFE regulations, PRC residents who make, or have previously made, direct or
indirect investments in offshore companies will be required to register those investments. In
addition, any PRC resident who is a direct or indirect shareholder of an offshore company is
required to file with the local branch of SAFE, with respect to that offshore company, any material
change involving capital variation, such as an increase or decrease in capital, transfer or swap of
shares, merger, division, long term equity or debt investment or creation of any security interest
over the assets located in China. If any PRC shareholder fails to make the required SAFE
registration, the PRC subsidiaries of that offshore parent company may be prohibited from
distributing their profits and the proceeds from any reduction in capital, share transfer or
liquidation, to their offshore parent company, and the offshore parent company may also be
prohibited from injecting additional capital into their PRC subsidiaries. Moreover, failure to
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comply with the various SAFE registration requirements described above could result in
liability under PRC laws for evasion of applicable foreign exchange restrictions.
We cannot assure you that all of our shareholders who are PRC residents will comply with our
request to make or obtain any registrations or approvals required under these regulations or other
related legislation. Furthermore, as the regulations are relatively new, the PRC government has yet
to publish implementing rules, and much uncertainty remains concerning the reconciliation of the
new regulations with other approval requirements. It is unclear how these regulations, and any
future legislation concerning offshore or cross-border transactions, will be interpreted, amended
and implemented by the relevant government authorities. The failure or inability of our PRC
resident shareholders to comply with these regulations may subject us to fines and legal sanctions,
restrict our overseas or cross-border investment activities, limit our ability to inject additional
capital into our PRC subsidiaries and the ability of Focus Media Technology, Focus Media Digital,
New Focus Media Advertisement or Framedia Investment, our PRC subsidiaries, to make distributions
or pay dividends, or materially and adversely affect our ownership structure. If any of the
foregoing events occur, our acquisition strategy and business operations and our ability to
distribute profits to you could be materially and adversely affected. See "Exchange Controls" in
Item 10. "Additional Information" in this annual report.
The PRC tax authorities may require us to pay additional taxes in connection with our acquisitions
of offshore entities that conducted their PRC operations through their affiliates in China.
Our operations and transactions are subject to review by the PRC tax authorities pursuant to
relevant PRC laws and regulations. However, these laws, regulations and legal requirements change
frequently, and their interpretation and enforcement involve uncertainties. For example, in the
case of some of our acquisitions of offshore entities that conducted their PRC operations through
their affiliates in China, we cannot assure you that the PRC tax authorities will not require us to
pay additional taxes in relation to such acquisitions, in particular where the PRC tax authorities
take the view that the previous taxable income of the PRC affiliates of the acquired offshore
entities needs to be adjusted and additional taxes be paid. In the event that the sellers failed to
pay any taxes required under PRC law in connection with these transactions, the PRC tax authorities
might require us to pay the tax, together with late-payment interest and penalties. See "Item 5.
Operating and Financial Review and Prospects — Acquisitions".
If any of our PRC affiliates becomes the subject of a bankruptcy or liquidation proceeding, we may
lose the ability to use and enjoy those assets, which could reduce the size of our advertising
network and materially and adversely affect our business, ability to generate revenue and the
market price of our ADSs.
To comply with PRC laws and regulations relating to foreign ownership restrictions in the
advertising business, we currently conduct our operations in China through contractual arrangements
with Focus Media Advertisement, its shareholders and subsidiaries. As part of these arrangements,
Focus Media Advertisement and its subsidiaries hold some of the assets that are important to the
operation of our business. If any of these entities goes bankrupt and all or part of their assets
become subject to liens or rights of third-party creditors, we may be unable to continue some or
all of our business activities, which could materially and adversely affect our business, financial
condition and results of operations. If any of Focus Media Advertisement and its subsidiaries
undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated
third-party creditors may claim rights to some or all of these assets, thereby hindering our
ability to operate our business, which could materially and adversely affect our business, our
ability to generate revenue and the market price of our ADSs.
Restrictions on currency exchange may limit our ability to utilize our revenues effectively.
Substantially all of our revenues and operating expenses are denominated in Renminbi. The
Renminbi is currently convertible under the "current account", which includes dividends, trade and
service-related foreign exchange transactions, but not under the "capital account", which includes
foreign direct investment and loans. Currently, each of Focus Media Technology and Framedia
Investment may purchase foreign exchange for settlement of "current account transactions",
including payment of dividends to us, without the approval of SAFE. However, we cannot assure you
that the relevant PRC governmental authorities will not further limit or eliminate our ability to
purchase foreign currencies in the future. Since a significant amount of our future revenues will
be denominated in Renminbi, any existing and future restrictions on currency exchange may limit our
ability to utilize revenues generated in Renminbi to fund our business activities outside China, if
any, or expenditures denominated
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in foreign currencies. Foreign exchange transactions under the capital account are still
subject to limitations and require approvals from, or registration with, the State Administration
of Foreign Exchange and other relevant PRC governmental authorities. This could affect the ability
of each of Focus Media Technology and Framedia Investment to obtain foreign exchange through debt
or equity financing, including by means of loans or capital contributions from us.
Fluctuations in exchange rates could result in foreign currency exchange losses.
Because our earnings and cash and cash equivalent assets are denominated in Renminbi and the
net proceeds from this offering will be denominated in U.S. dollars, fluctuations in exchange rates
between U.S. dollars and Renminbi will affect the relative purchasing power of these proceeds and
our balance sheet and earnings per share in U.S. dollars following this offering. In addition,
appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar would affect
our financial results reported in U.S. dollar terms without giving effect to any underlying change
in our business or results of operations. Since July 2005 the Renminbi is no longer pegged solely
to the U.S. dollar. Instead, it is reported to be pegged against a basket of currencies, determined
by the People's Bank of China, against which it can rise or fall by as much as 0.3% each day. For
example, on June 23, 2006 the Renminbi was revalued against the U.S. dollar to approximately
RMB7.9997 to the U.S. dollar. The Renminbi may appreciate or depreciate significantly in value against
the U.S. dollar in the long term, depending on the fluctuation of the basket of currencies against
which it is currently valued or it may be permitted to enter into a full float, which may also
result in a significant appreciation or depreciation of the Renminbi against the U.S. dollar.
Fluctuations in the exchange rate will also affect the relative value of any dividend we issue in
the future which will be exchanged into U.S. dollars and earnings from and the value of any U.S.
dollar-denominated investments we make in the future.
Very limited hedging transactions are available in China to reduce our exposure to exchange
rate fluctuations. To date, we have not entered into any hedging transactions in an effort to
reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging
transactions in the future, the availability and effectiveness of these hedges may be limited and
we may not be able to successfully hedge our exposure at all. In addition, our currency exchange
losses may be magnified by PRC exchange control regulations that restrict our ability to convert
Renminbi into foreign currency.
Any future outbreak of severe acute respiratory syndrome or avian flu in China, or similar adverse
public health developments, may severely disrupt our business and operations.
From December 2002 to June 2003, China and other countries experienced an outbreak of a new
and highly contagious form of atypical pneumonia now known as severe acute respiratory syndrome, or
SARS. On July 5, 2003, the World Health Organization declared that the SARS outbreak had been
contained. Since September 2003, however, a number of isolated new cases of SARS have been
reported, most recently in central China in April 2004. During May and June of 2003, many
businesses in China were closed by the PRC government to prevent transmission of SARS. In addition,
many countries, including China, have encountered incidents of the H5N1 strain of bird flu, or
avian flu. This disease, which is spread through poultry populations, is capable in some
circumstances of being transmitted to humans and is often fatal. A new outbreak of SARS or an
outbreak of avian flu may result in health or other government authorities requiring the closure of
our offices or other businesses, including office buildings, retail stores and other commercial
venues, which comprise the primary locations where we provide our advertising services. Any
recurrence of the SARS outbreak, an outbreak of avian flu or a development of a similar health
hazard in China, may deter people from congregating in public places, including a range of
commercial locations such as office buildings and retail stores. Such occurrences would severely
impact the value of our out-of-home advertising network to advertisers, significantly reduce the
advertising time purchased by advertisers and severely disrupt our business and operations.
Risks Relating to Our ADSs and Our Trading Markets
The price of our ADSs has been volatile and may continue to be volatile, which may make it
difficult for holders to resell the ADSs when desired or at attractive prices.
The trading price of our ADSs has been and may continue to be subject to wide fluctuations.
Since July 13, 2005, the closing prices of our ADSs on the Nasdaq National Market has ranged from
$17.60 to $69.95 per ADS
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and the
last reported sale price on June 23, 2006 was
$64.36. Our ADS price may fluctuate in
response to a number of events and factors. The financial markets in general, and the market prices
for many PRC companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of such companies.
In addition to market and industry factors, the price and trading volume for our ADSs may be
highly volatile for specific business reasons. Factors such as variations in our revenues, earnings
and cash flow, announcements of new investments, cooperation arrangements or acquisitions, and
fluctuations in market prices for our advertising network could cause the market price for our ADSs
to change substantially. Any of these factors may result in large and sudden changes in the volume
and price at which our ADSs will trade. We cannot give any assurance that these factors will not
occur in the future.
The sale or availability for sale of substantial amounts of our ADSs could adversely affect their
market price.
Sales of substantial amounts of our ADSs in the public market, or the perception that these
sales could occur, could adversely affect the market price of our ADSs and could materially impair
our future ability to raise capital through offerings of our ADSs. For example, we issued
22,157,003 new ordinary shares in connection with our acquisition of Framedia and in 2007 we may be
required to issue additional new ordinary shares based on a fixed ordinary share price of $2.456
per ordinary share up to $88.0 million to the former shareholders of Framedia if Framedia meets
agreed upon earnings and operating targets in 2006. In addition, upon completion of our acquisition
of Target Media in February 2006, we issued 77.0 million of our ordinary shares to the current
shareholders of Target Media Holdings. We may also be required to issue up to 3.0 million of our
ordinary shares to the former shareholders of Focus Media Wireless based on certain earnings
targets for 2006 and 2007. See "Item 10.C Additional Information—Material Contracts".
There
are 523,166,773 ordinary shares (equivalent to 52,316,677 ADSs) outstanding as of the
date of this annual report. In addition, as of June 13, 2006, there were outstanding options to
purchase 36,102,420 ordinary shares, 6,555,580 of which are exercisable as of that date.
291,715,933 of our ordinary shares outstanding as of the date of this annual report are "restricted
securities" as defined in Rule 144 and may not be sold in the absence of registration other than in
accordance with Rule 144 under the Securities Act or another exemption from registration
thereunder.
A significant percentage of our outstanding ordinary shares is beneficially owned by Jason Nanchun
Jiang, our founder, chairman and chief executive officer, and as a result, he may have
significantly greater influence on us and our corporate actions by nature of the size of his
shareholdings relative to our public shareholders.
Jason Nanchun Jiang beneficially owns, through his 100% ownership of JJ Media Investment
Holding Ltd., approximately 16.63% of our outstanding ordinary shares. Jason Nanchun Jiang is
currently and is expected to remain an affiliate within the meaning of the Securities Act after the
offering, due to the size of his respective shareholdings in us after the offering. Accordingly,
Jason Nanchun Jiang has significant influence in determining the outcome of any corporate
transaction or other matter submitted to the shareholders for approval, including mergers,
consolidations and the sale of all or substantially all of our assets, election of directors and
other significant corporate actions. Further, Jason Nanchun Jiang is also an 85% shareholder of our
affiliated PRC entity, Focus Media Advertisement, with which we have contractual arrangements that
are essential to our business. The continuing cooperation of Focus Media Advertisement, and its
shareholders, branches and subsidiaries, is important to our business. Without Jason Nanchun
Jiang's consent, we could be prevented from entering into transactions or conducting business that
could be beneficial to us. Accordingly, Mr. Jiang's control of Focus Media Advertisement could
hinder any change in control of our business, particularly where such change of control would
benefit shareholders other than Mr. Jiang. It would be difficult for us to change our corporate
structure if any disputes arise between us and Mr. Jiang or if he fails to carry out his
contractual and fiduciary obligations to us. Thus, Jason Nanchun Jiang's interests as an officer
and employee may differ from his interests as a shareholder or from the interests of our other
shareholders, including you.
Anti-takeover provisions in our charter documents may discourage our acquisition by a third party,
which could limit our shareholders' opportunity to sell their shares at a premium.
Our amended and restated memorandum and articles of association include provisions that could
limit the ability of others to acquire control of us, modify our structure or cause us to engage in
change-of-control
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transactions. These provisions could have the effect of depriving our shareholders of an
opportunity to sell their shares at a premium over prevailing market prices by discouraging third
parties from seeking to obtain control of us in a tender offer or similar transaction.
For example, our board of directors will have the authority, without further action by our
shareholders, to issue preference shares in one or more series and to fix the powers and rights of
these shares, including dividend rights, conversion rights, voting rights, terms of redemption and
liquidation preferences, any or all of which may be greater than the rights associated with our
ordinary shares. Preference shares could thus be issued quickly with terms calculated to delay or
prevent a change in control or make removal of management more difficult. In addition, if the Board
of Directors issues preference shares, the market price of our ordinary shares may fall and the
voting and other rights of the holders of our ordinary shares may be adversely affected.
In addition, some actions require the approval of a supermajority of at least two thirds of
our board of directors which, among other things, would allow our non-independent directors to
block a variety of actions or transactions, such as a merger, asset sale or other change of
control, even if all of our independent directors unanimously voted in favor of such action,
further depriving our shareholders of an opportunity to sell their shares at a premium. In
addition, our directors serve terms of three years each, which terms are not staggered. The length
of these terms could present an additional obstacle against the taking of action, such as a merger
or other change of control, that could be in the interest of our shareholders.
We are a Cayman Islands company and, because judicial precedent regarding the rights of
shareholders is more limited under Cayman Islands law than under U.S. law, you may have less
protection of your shareholder rights than you would under U.S. law.
Our corporate affairs are governed by our amended and restated memorandum and articles of
association, the Cayman Islands Companies Law and the common law of the Cayman Islands. The rights
of shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived
in part from comparatively limited judicial precedent in the Cayman Islands as well as from English
common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The
rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands
law are not as clearly established as they would be under statutes or judicial precedent in some
jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of
securities laws than the United States. In addition, some U.S. states, such as Delaware, have more
fully developed and judicially interpreted bodies of corporate law than the Cayman Islands.
As a result of all of the above, public shareholders may have more difficulty in protecting
their interests in the face of actions taken by management, members of the board of directors or
controlling shareholders than they would as public shareholders of a U.S. company.
Judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands company and substantially all of our assets are located outside of the
United States. All of our current operations are conducted in the PRC. In addition, most of our
directors and officers are nationals and residents of countries other than the United States. A
substantial portion of the assets of these persons are located outside the United States. As a
result, it may be difficult for you to effect service of process within the United States upon
these persons. It may also be difficult for you to enforce in U.S. courts judgments obtained in
U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us
and our officers and directors, most of whom are not resident in the United States and the
substantial majority of whose assets are located outside of the United States. In addition, there
is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce
judgments of United States courts against us or such persons predicated upon the civil liability
provisions of the securities laws of the United States or any state. In addition, there is
uncertainty as to whether such Cayman Islands or PRC courts would be competent to hear original
actions brought in the Cayman Islands or the PRC against us or such persons predicated upon the
securities laws of the United States or any state.
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The voting rights of holders of ADSs are limited by the terms of the deposit agreement.
Holders of our ADSs may only exercise their voting rights with respect to the underlying
ordinary shares in accordance with the provisions of the deposit agreement. Upon receipt of voting
instructions from a holder of ADSs in the manner set forth in the deposit agreement, the depositary
will endeavor to vote the underlying ordinary shares in accordance with these instructions. Under
our amended and restated memorandum and articles of association and Cayman Islands law, the minimum
notice period required for convening a general meeting is ten days. When a general meeting is
convened, you may not receive sufficient notice of a shareholders' meeting to permit you to
withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter at
the meeting. In addition, the depositary and its agents may not be able to send voting instructions
to you or carry out your voting instructions in a timely manner. We will make all reasonable
efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot
assure you that you will receive the voting materials in time to ensure that you can instruct the
depositary to vote your shares. Furthermore, the depositary and its agents will not be responsible
for any failure to carry out any instructions to vote, for the manner in which any vote is cast or
for the effect of any such vote. As a result, you may not be able to exercise your right to vote
and you may lack recourse if your ordinary shares are not voted as you requested.
The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares
underlying your ADSs if you do not vote at shareholders' meetings, except in limited circumstances,
which could adversely affect your interests.
Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to
vote our ordinary shares underlying your ADSs at shareholders' meetings if you do not vote, unless:
•
we have failed to timely provide the depositary with our notice of meeting and
related voting materials;
•
we have instructed the depositary that we do not wish a discretionary proxy to be
given;
•
we have informed the depositary that there is substantial opposition as to a matter
to be voted on at the meeting;
•
a matter to be voted on at the meeting would have a material adverse impact on shareholders; or
•
voting at the meeting is made on a show of hands.
The effect of this discretionary proxy is that you cannot prevent our ordinary shares
underlying your ADSs from being voted, absent the situations described above, and it may make it
more difficult for shareholders to influence the management of our company. Holders of our ordinary
shares are not subject to this discretionary proxy.
You may not receive distributions on our ordinary shares or any value for them if it is illegal or
impractical to make them available to you.
The depositary of our ADSs has agreed to pay you the cash dividends or other distributions it
or the custodian for our ADSs receives on our ordinary shares or other deposited securities after
deducting its fees and expenses. You will receive these distributions in proportion to the number
of our ordinary shares your ADSs represent. However, the depositary is not responsible if it is
unlawful or impractical to make a distribution available to any holders of ADSs. For example, it
would be unlawful to make a distribution to a holder of ADSs if it consists of securities that
require registration under the Securities Act but that are not properly registered or distributed
pursuant to an applicable exemption from registration. The depositary is not responsible for making
a distribution available to any holders of ADSs if any government approval or registration required
for such distribution cannot be obtained after reasonable efforts made by the depositary. We have
no obligation to take any other action to permit the distribution of our ADSs, ordinary shares,
rights or anything else to holders of our ADSs. This means that you may not receive the
distributions we make on our ordinary shares or any value for them if it is illegal or impractical
for us to make them available to you. These restrictions may have a material and adverse effect on
the value of your ADSs.
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You may be subject to limitations on transfer of your ADSs.
Your ADSs represented by American Depositary Receipts are transferable on the books of the
depositary. However, the depositary may close its books at any time or from time to time when it
deems expedient in connection with the performance of its duties. The depositary may close its
books from time to time for a number of reasons, including in connection with corporate events such
as a rights offering, during which time the depositary needs to maintain an exact number of ADS
holders on its books for a specified period. The depositary may also close its books in
emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or
register transfers of our ADSs generally when our books or the books of the depositary are closed,
or at any time if we or the depositary thinks it is advisable to do so because of any requirement
of law or any government or governmental body, or under any provision of the deposit agreement, or
for any other reason.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
Our legal and commercial name is Focus Media Holding Limited. Our principal executive offices
are located at 28-30/F, Zhao Feng World Trade Building, 369 Jiangsu Road, Shanghai 200050 PRC, and
our telephone number is 86-21-3212-4661. Our Internet website address
is
www.focusmedia.cn
. Our
predecessor company, Shanghai Aiqi Advertisement Co., Ltd., or Aiqi Advertisement, was established
by immediate family members of Jason Nanchun Jiang in September 1997 and operated as an advertising
agency. In May 2003, Aiqi Advertisement discontinued its advertising agency business, was renamed
Shanghai Focus Media Advertisement Co., Ltd., commenced operation of our out-of-home television
advertising network in China and reorganized its shareholdings. At the same time, we entered into
arrangements with Focus Media Advertisement that resulted in the consolidation of Focus Media
Advertisement. Following this reorganization Jason Nanchun Jiang continued to hold a controlling
interest in Focus Media Advertisement.
In conjunction with the change in our business model in May 2003 and to facilitate foreign
investment in our company, we established our offshore holding company, Focus Media Holding Limited
as a company registered in the British Virgin Islands. On April 1, 2005, we completed the process
of changing Focus Media Holding Limited's corporate domicile to the Cayman Islands and we are now a
Cayman Islands company. On July 13, 2005, our ADSs were listed for quotation on the Nasdaq National
Market and on July 19, we and certain of our shareholders completed an initial public offering and
sale of 11,615,000 ADSs.
In January 2006, we acquired Framedia, which operates a network of advertising poster frames
placed primarily in elevators and public areas of residential complexes in China.
In January 2006, we and certain of our shareholders completed a public offering and sale of
7,415,389 ADSs.
In January 2006, we acquired Skyvantage Group Limited, or Skyvantage, which operate a local
out-of-home poster frame advertising network placed in commercial and residential buildings for a
purchase price of $5,000,000.
In February 2006, we acquired Target Media. Target Media operates an out-of-home advertising
network using flat-panel displays placed in elevator lobbies and other public areas in commercial
buildings, hospitals, hotels, banks, residential buildings, convenience stores and other locations
in cities in China. Since the completion of the acquisition of Target Media, the legal entities of
Target Media and its affiliates and subsidiaries have been dissolved and their operations have been
integrated with our operations.
In March 2006, we acquired Dotad Media Holdings, which operates a mobile-phone advertising
service in China through China Mobile and China Unicom's mobile phone networks. Following the
acquisition of Dotad Media Holdings, we renamed the acquired company Focus Media Wireless Co.,
Ltd., which is also referred to as Focus Media Wireless in this annual report.
On June 21, 2006, we and certain of our shareholders completed a public offering and sale of
7,700,000 ADSs.
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For a description of our principal capital expenditures and divestitures, see "Acquisitions"
and "Capital Expenditure" in "Item 5. Operating and Financial Review and Prospects—Acquisitions"
and "—B. Liquidity and Capital Resources—Capital Expenditures".
B. Business Overview
We operate the largest out-of-home advertising network in China using audiovisual television
displays, based on the number of locations and number of flat-panel television displays in our
network. It is our goal to create the largest multi-platform out-of-home advertising network in
China, reaching urban consumers at strategic locations over a number of media formats, including
audiovisual television displays in buildings and stores, advertising poster frames and other new
and innovative media, such as outdoor LED digital billboard and mobile handset advertising
networks. To date, our out-of-home advertising network consists of the following:
•
our commercial location network
, which refers to our network of flat-panel
television displays placed in high-traffic areas of commercial buildings, such as in
lobbies and near elevators, as well as in beauty parlors, karaoke parlors, golf country
clubs, auto shops, banks, pharmacies, hotels, airports, airport shuttle buses and
in-air flights. Our commercial location network is also marketed to advertisers as six
separate channels targeting different types of consumers: our premier A and B office
building channels, our travel channel, our fashion channel, our elite channel and our
healthcare channel;
•
our in-store network
, which refers to our network of flat-panel television displays
placed in specific product areas such as the personal care and food and beverage
sections and other store locations with high-traffic concentration such as the main
aisles and check-out lines in large-scale chain retail stores, which are referred to in
China as hypermarkets, as well as inside selected supermarkets and convenience stores;
•
our poster frame network
, which refers to our network of advertising poster frames
placed mainly in the elevators and public areas of residential complexes which we
market under the brand name Framedia;
•
our mobile handset advertising network
, which refers to our mobile handset
advertising services offered on the mobile telecommunications networks of China Mobile
Communications Corporation, or China Mobile, and China United Telecommunications
Corporation, or China Unicom; and
•
our outdoor LED network
, which refers to our network of leased 5' x 5' LED digital
billboards installed on the street-sides in major shopping districts and other
locations with high pedestrian traffic in Shanghai.
We derive revenue principally by:
•
selling advertising time slots on our commercial location, in-store and outdoor LED networks;
•
selling frame space on our poster frame network; and
•
selling advertisements on our WAP-based mobile handset advertising network.
A majority of the content displayed on our commercial location and in-store networks consists
of advertisements which are broadcast repeatedly approximately 60 times per day in twelve minute
cycles. Some of our regional distributors use a nine-minute cycle. Advertisements on our outdoor
LED network are broadcast repeatedly using a six-minute cycle. Our poster frame network consists of
advertising poster frames placed in elevators and public areas in residential complexes and
commercial locations. For advertising poster frames placed in elevators, generally two or three
advertising poster frames can be placed in each elevator. Advertisements on our mobile handset
advertising network are WAP-based advertisements that are sent to mobile handset users over China
Mobile's and China Unicom's networks.
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As of March 31, 2006, approximately 1,800 advertisers purchased advertising time slots on our
out-of-home television advertising networks. Our five largest advertising clients in terms of
revenue, which include leading international and domestic brand name advertisers, were Dong Feng
Auto (including joint venture brands with Toyota and Peugeot), China Mobile, Samsung, NEC and
Motorola, which together accounted for approximately 18.4% of our revenue in 2005. In addition,
over 340 advertisers have bought frame space from Framedia since 1999.
Our network has the following key features:
•
Substantially all of the content we broadcast on our flat-panel displays and place
on our advertising poster frames consists of advertisements.
•
The advertising cycle on our out-of-home television advertising networks consists of
twelve minutes of advertising content broadcast repeatedly 60 times per day, or six
minutes broadcast repeatedly in the case of our outdoor LED network, and is sold to
advertising clients in 30-, 15- or five-second time slots.
•
The advertising cycle of our out-of-home television advertising networks is
broadcast repeatedly, for approximately twelve-hours per day.
•
The majority of our flat-panel displays contain a 17-inch LCD screen, while the
remainder contain larger size plasma or LCD screens.
•
Over 74,000 450 mm x 600 mm plastic advertising poster frames have been installed in
elevators on our poster frame network.
•
Approximately 75 5' x 5' LED digital billboards that we lease from a third party and
that are installed on the street-sides in major shopping districts and other locations
with high pedestrian traffic.
•
A WAP-based advertising platform that delivers approximately eight million messages
per day with a customer base of over 100 wireless value-added service providers in
China and a database of over 70 million mobile handset users with WAP capability.
Since we commenced our current business operations in May 2003, we have experienced
significant growth in our network and in our financial results. As of March 31, 2006, we operated
our commercial location network directly in a total of 50 cities throughout China, comprising (i)
Beijing, Shanghai, Guangzhou and Shenzhen, which we refer to as our Tier I cities, and (ii) 46
other directly operated cities. As of March 31, 2006, we covered an additional 36 cities through
contractual arrangements with regional distributors that, together with the other 46 directly
operated cities, we refer to as our Tier II cities. Between January 1, 2005 and March 31, 2006, the
number of displays in our commercial location network increased from 15,415 to 71,230. As of March
31, 2006, our commercial location network operated by our regional distributors consisted of
approximately 3,780 flat-panel displays. We commenced commercial operations of our in-store network
in April 2005. As of March 31, 2006, our in-store network consisted of 33,765 flat-panel displays
placed in 5,218 store locations in our directly operated cities, including 809 hypermarkets, 1,126
supermarkets and 3,283 convenience stores. As of March 31, 2006, we had installed over 74,000
advertising poster frames in our poster frame network primarily in six cities throughout China,
including our Tier I cities. As of April 2006, our outdoor LED network consisted of approximately
75 leased 5' x 5' digital billboards placed along curbsides in high-pedestrian traffic areas in
Shanghai. As of May 2006, our mobile handset advertising network consisted of a WAP-based
advertising platform that delivers approximately eight million messages per day to mobile handset
users with WAP capability in China.
The following table sets forth operating data related to our network for the periods
indicated:
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For and as of the three months ended
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
2004
2004
2004
2005
2005
2005
2005
2006
Commercial location
network:
Number of displays:
Our direct cities
3,128
7,476
12,786
16,025
20,267
34,079
45,049
71,230
Our regional
distributors(1)
1,040
2,318
2,629
1,847
2,664
3,273
3,177
3,779
Total
4,168
9,794
15,415
17,872
22,931
37,352
48,226
75,009
Time slot data:(2)
Number of time slots
available for sale
2,347
3,542
5,170
6,010
6,737
8,346
9,028
10,717
Number of time slots sold
832
1,280
2,209
1,998
3,057
4,240
4,648
3,904
Utilization rate(3)
35.4
%
36.1
%
42.7
%
33.2
%
45.4
%
50.8
%
51.5
%
36.4
%
Average advertising service
revenue per time slot
(ASP) (US$)
$
6,607
$
5,506
$
5,018
$
4,721
$
4,573
$
4,077
$
4,461
$
4,882
In-store network:
Number of displays in our in-
store network
—
—
—
3,149
12,779
20,061
27,849
33,765
Number of stores in our
in-store network
—
—
—
423
1,835
2,702
4,130
5,218
Time slot data:
Number of time slots
available for sale
—
—
—
—
—
—
—
245,314
Number of time slots sold
—
—
—
—
—
—
—
76,498
Utilization rate(3)
—
—
—
—
—
—
—
31.2
%
Average advertising service
revenue per time slot
(ASP) (US$)
—
—
—
—
—
—
—
$
69
Poster Frame Network:
Number of frames installed in
our poster frame network
—
—
—
—
—
—
—
74,353
Frame slot data:
Number of frame slots
available for sale
—
—
—
—
—
—
—
208,659
Number of frame slots
sold
—
—
—
—
—
—
—
90,262
Occupancy rate(4)
—
—
—
—
—
—
—
43.3
%
Average advertising service
revenue per frame (US$)
(ASP)
—
—
—
—
—
—
—
$
67
(1)
Data that has been provided by our regional distributors is based on the results of surveys
we requested them to provide to us and it is possible such data is not entirely accurate or
exact.
(2)
Starting January 1, 2006, time slot data presented for our commercial location network
includes only data related to our premier office building A channel. For the three months
ended March 31, 2006, advertising services revenues from our premier office building A channel
accounted for 91.2% of advertising service revenue for our commercial location network.
(3)
Utilization rate refers to total time slots sold as a percentage of total time slots
available during the relevant period.
(4)
Occupancy rate refers to the total frame space sold as a percentage of total frame space
available during the relevant period.
Our Competitive Strengths
We believe we have the following competitive strengths:
Effective and Focused Advertising Network Accepted by Both Advertisers and Consumers.
Since commencing our current business operations in May 2003, we have created an advertising
network that:
•
Targets Segmented Consumer Groups. Our flat-panel displays and frames are primarily
placed in venues that have a high concentration of consumers with higher-than-average
disposable incomes or that have a high concentration of consumers who are likely to be
interested in particular types of products and services. As a result, our network
enables advertisers to target consumers with demographic profiles attractive to them.
Moreover, our network allows advertisers to further segment these consumers through
separate specified advertising channels, such as our premier A and B office building
channels, our travel channel, our fashion channel, our elite channel and our healthcare
channel, which are marketed as stand-alone channels of our commercial location network.
Because our network is able to target specific consumer groups, it allows advertisers
to more cost-effectively reach consumers with demographic profiles desirable to them.
•
Reaches Captive Viewers in Low Distraction Environments. Our flat-panel displays
are placed in lobbies, near elevator banks and in other environments where there are
few broadcast or display media competing for viewers' attention, which we believe
increases the effectiveness of our network. In
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addition, the advertising poster frames on our poster frame network are placed primarily
in elevators of residential complexes presenting advertisements to viewers in what we
believe is a relatively captive and low-distraction environment.
We believe these characteristics and advantages of our business model have made us an
effective and well-accepted alternative advertising medium with a strong market position that
enables us to compete successfully in China's advertising market.
The Largest Out-of-home Television Advertising Network in China with Nation-wide Coverage
We believe we operate the largest out-of-home television advertising network in China based on
the number of locations and the number of flat-panel displays in our network. As of March 31, 2006,
we operated:
•
71,230 flat-panel displays installed in 50 cities in China, and through our regional
distributors, we also operated approximately 3,780 flat-panel displays in 36 cities in
China; and
•
33,765 flat-panel displays installed in 809 hypermarkets, 1,126 supermarkets and
3,283 convenience stores in cities in China.
Out-of-home Advertising Network with Multiple Media Platforms Provides Advertisers with
Complementary and Reinforcing Methods of Reaching Targeted Consumers
Our network provides advertisers with multiple advertising media to reach their target
audience. Our network currently enables advertisers to reach (1) consumers with higher than average
incomes through our commercial location network, (2) consumers at the point-of-purchase through our
in-store network, (3) consumers as they leave and return home through our poster frame network, (4)
mobile handsets users throughout the day via our WAP-based advertising push campaigns and (5) urban
consumers throughout the day via our strategically placed outdoor LED billboards in shopping and
high pedestrian traffic areas in Shanghai. By offering advertisers a range of advertising media
that can reach consumers during different times of the day in a wide variety of locations, we
believe our network has enhanced appeal to advertisers over competitors who offer limited
advertising media or channels to advertisers. We believe that by offering multiple advertising
media platforms, we enable advertisers to reach a wide range of consumers with complementary and
mutually reinforcing advertising campaigns and are better able to attract advertisers who want to
reach targeted consumer groups through a number of different advertising media in different venues
and at different times of the day.
Sustainable Competitive Advantages through the Size of Our Network and Our Exclusive, Renewable
Agreements.
We believe the following factors provide us with a sustainable business advantage over
existing and prospective competitors:
•
Early Market Presence and Coverage in Many of the Most Desirable Locations. We were
one of the first companies to establish a large-scale out-of-home television
advertising network in commercial buildings and other commercial locations in China. By
recognizing this market opportunity and entering this sector early, we have occupied
many of the most desirable locations and have grown the size of our network, which we
believe has created high barriers to entry for potential competitors. We believe that
we have secured a high percentage of the most desirable locations in many of China's
major urban centers, and that this early market presence advantage is important because
landlords and building managers typically permit only one out-of-home television
advertising network operation in each building. We believe that, through our
acquisition of Target Media, we have enhanced these advantages. Through our acquisition
of Framedia, we also gain a strong market presence in the poster frame advertising
market in residential complexes. We also believe we have established the first outdoor
LED digital billboard advertising network in China, currently comprising approximately
75 5' x 5' LED digital billboards placed in high pedestrian traffic outdoor locations
in Shanghai that we lease from a third-party location provider.
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•
Large-scale Network that Attracts Advertising Clients. Our multi-platform
out-of-home advertising network includes flat-panel displays located in a wide range of
commercial, retail locations and in-store locations in over 80 cities in China, poster
frames placed in residential complexes in cities in China, LED digital billboards
placed in high pedestrian curbside locations in Shanghai, and advertising services
provided to mobile handset users. We believe the extent of our network coverage makes
us more attractive to advertising clients than competing networks. Through the number
of advertising media platforms we operate and the national scope of our network, we
enable advertising clients to reach a wide audience in urban consumer markets across
China. We believe the size and scope of our network has attained a scale that draws
advertising clients to our network and gives us a competitive edge over competing
networks as well as over many traditional advertising media.
•
Exclusive and Renewable Display Placement Agreements. As of March 31, 2006, the
majority of our display placement agreements on our out-of-home television advertising
networks give us the exclusive right to place our flat-panel displays in the elevator
and lobby areas of the locations in which we operate and, in the cities we operate
directly, give us the right to renew the contract under terms that are no less
favorable than those offered by competing bidders, enabling us to maintain exclusive
coverage of many of the most desirable locations in our network for significant lengths
of time.
We believe our high market share of desirable locations in key cities in China, the wide
extent of our network coverage and the exclusivity and renewal terms contained in the majority of
our display placement agreements with landlords and property managers create higher barriers to
entry for potential competitors than other out-of-home and outdoor advertising business models,
such as billboards.
Our Brand Name And Reputation Have Attracted A Large Base Of Leading Advertising Clients.
We believe we are building a respected brand name in the advertising industry in China by
developing a reputation for innovative and effective delivery of large-scale yet focused
high-quality television advertising to consumers with desirable demographic profiles. This has
enabled us to develop a strong client base consisting of major international and brand name
advertisers such as Dong Feng Auto (including joint venture brands with Toyota and Peugeot), China
Mobile, Samsung, NEC and Motorola which were our five largest customers and together accounted for
approximately 18.4% of our revenue in 2005. All of our top ten advertisers based on total
advertising contracts in 2005 had entered into advertising contracts with us in 2004. Moreover, the
total contract amount accounted for by these advertisers increased by approximately 150% from 2004
to 2005. In addition, as of March 31, 2006, more than 1,800 advertisers purchased advertising time
on our out-of-home television networks. The strength and depth of our client base enhance our
reputation in the industry and position us to further expand our advertising network.
We believe our acquisitions of Framedia, E-Times and Focus Media Wireless have further
enhanced our brand name in China by adding a large out-of-home poster frame advertising network and
a WAP-based mobile handset advertising network in China to our network. Over 340 advertisers have
bought frame space on Framedia's advertising network since 1999.
Strong Management and Sales Team with Extensive Industry Experience.
We have assembled a management and sales team with extensive experience in China's advertising
industry. Jason Nanchun Jiang, our founder, chairman, chief executive officer and a major
shareholder, has 10 years of experience in China's advertising industry, including his previous
experience until 2003 as chief executive officer of Shanghai Everease Advertising Corporation, or
Everease, one of China's top 50 advertising agencies. Daniel Mingdong Wu, our chief financial
officer, has over six years of experience in investment banking, including for Merrill Lynch and
Lehman Brothers, and served as chief financial officer of Harbour Networks, a telecommunications
equipment provider in China. In August 2005, we hired our chief strategy officer Cindy Yan Chan,
who was deputy general manager for iMPACT, ZenithOptimedia's outdoor media department and the
largest outdoor media buyer in China. With our acquisition of Framedia, Zhi Tan, chairman and chief
executive officer of Framedia, continues to be involved in the operation of our poster frame
network. Following our acquisition of Target Media, David Yu, the founder and former chairman and
chief executive officer of Target Media, has joined
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us as co-chairman and president. In addition, we employ experienced and knowledgeable managers
to run operations in each of the cities we operate directly. Our marketing managers have an average
of eight years' experience in the advertising industry in China and have worked for a number of
major domestic and international advertising firms in China. We believe the strength and experience
of our management and sales teams have enabled us to expand our advertising network, enhance our
reputation in our industry and build up a strong client base.
Our Strategies
Our objective is to become the leading multi-platform advertising media brand in China's
advertising industry. We intend to achieve this objective by implementing the following strategies:
Enhance Our Market Position and Revenues by Expanding Our Networks.
We intend to aggressively expand our flat-panel display and frame networks in order to erect
barriers to expansion and entry by current and prospective competitors, enhance critical mass
appeal to our advertisers, and increase our fee rates and revenues. To achieve this goal, we intend
to:
•
Increase the Number of Locations and Flat-Panel and Poster Frame Displays in Our
Network. We intend to aggressively enter into new display and poster frame placement
agreements to increase the number of locations in which we install our flat-panel
displays and poster frames in order to enhance our current position in many of the most
desirable locations in key urban areas in China.
•
Expand into New Cities including through Strategic Acquisitions of Important
Regional Distributors. We expect to continue to acquire certain of our regional
distributors as a means to expand the size and scope of our network. Pursuant to our
arrangements with our regional distributors, they are licensed to use our technology,
and bear all of the revenues, profits or losses of their operations. This method
enables us to evaluate the potential profitability of executing our business model in a
specific city and expanding the size of the network before we incur the expense of
operating in the city directly. As of March 31, 2006, we have successfully acquired 17
of our regional distributors. We will continue to pursue this strategy as a means of
expanding our national coverage and offering advertising clients wider distribution of
their advertising content.
Identify And Create New Networks and Advertising Channels that Target Specific Consumer
Demographics and Expands Network Capacity.
In-store Network
. We commenced commercial operations of our in-store network in April 2005,
enabling our advertising clients to target consumers at the time and place where consumers are
likely to purchase a range of consumer and household products. As of March 31, 2006, we had placed
33,765 flat-panel displays in 5,218 locations on our in-store network. We intend to expand this
network and will continue to strengthen efforts to enter into long-term and exclusive relationships
with hypermarkets, supermarkets and convenience stores and to market this service to advertisers.
For example, we recently increased the size of our in-store network by adding the convenience
stores from Target Media's former network to our in-store network.
Targeted Advertising Channels
. We have placed flat-panel displays in office buildings,
shopping malls, restaurants, beauty parlors, golf country clubs, automobile repair shops, banks,
pharmacies, airports, hospitals and other commercial locations. As many of these venues are
suitable for targeting specific consumer groups, we have begun to separate some of them into
distinct stand-alone networks and to market them to specific advertising clients who wish to
advertise their products and services to targeted consumer groups. Currently, our premier A and B
office building channels, travel channel, fashion channel, elite channel and healthcare channel are
marketed as independent channels of our commercial location network, as we believe these channels
are attractive to a diverse range of advertisers who wish to target consumers likely to frequent
these venues. We believe our ability to identify and create focused advertising networks
distinguishes us from our competitors and attracts additional advertising clients who will use our
services to reach their target consumers in a more effective manner.
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Complementary Advertising Media Platforms
. We intend to continue expanding the scope of our
advertising activities and type of media platforms we employ by entering into new types of
advertising media businesses, such as large-size outdoor LED digital billboards. We believe by
expanding our business into complementary media businesses that focus on venues and at periods of
the day less comprehensively covered by traditional advertising media, we will enhance the value of
our advertising services to advertisers and provide us with a marketing advantage over existing and
potential competitors. We intend to continue expanding into new and complementary advertising media
platforms, such as direct marketing advertising, which will enable us to provide advertisers with
additional out-of-home advertising platforms to reach targeted consumers.
Promote Our Brand Name and Augment Our Service Offerings to Attract a Wider Client Base and
Increase Revenues.
Enhancing our brand name in the industry will allow us to solidify and broaden our client base
by enhancing market awareness of our services and our ability to target discrete consumer groups
more effectively than mass media. We believe the low cost of reaching consumers with
higher-than-average disposable incomes through our network and our development of additional
advertising media platforms and channels within our network we plan to develop in the future can
enable advertisers to reach that goal. As we increase our advertising client base and increase
sales, demand for and sale of time slots and frame space on our network will grow. As demand for
time slots and frame space on our network increases, we believe we will be able to increase our
rates and thereby improve our results of operations.
Continue to Explore New Digital Media Opportunities to Target Segmented Consumer Groups.
Consumer acceptance of technology-driven advertising and entertainment media, including the
Internet and advanced mobile communications systems, is a feature of the advertising industry in
China. We intend to identify and take advantage of new opportunities in the PRC advertising market
in order to enhance our ability to target segmented consumer groups through innovative advertising
techniques and media. As new opportunities that fit our brand image and business model present
themselves, we expect to expand our operations and continue to pursue innovative advertising
techniques and media that provide effective solutions to advertising clients and target consumers
with desirable demographic profiles.
Our Network
Our network includes:
•
commercial locations, which consists of our premier A and B office building, travel,
fashion, elite and healthcare channels, each of which can be marketed separately to
advertisers;
•
supermarkets, convenience stores and large-scale chain retail stores, which we refer
to as hypermarkets, comprising our in-store network;
•
our poster frame network of advertising poster frames placed primarily in elevators
and public areas of residential complexes and marketed under the brand name Framedia;
•
as of March 2006, our mobile handset advertising network offered on China Mobile's
and China Unicom's mobile telecommunications networks; and
•
as of April 2006, approximately 75 leased LED digital billboards installed on the
street-sides in major shopping districts and other locations with high pedestrian
traffic in Shanghai.
Our commercial locations network and in-store network use audiovisual flat-panel LCD and
plasma displays, while Framedia's poster frame network consists of advertising poster frames. Our
mobile handset advertising services consist of the sale of short message advertisements that are
delivered to mobile handset users through the mobile telecommunication networks of China's mobile
telecommunications operators using a WAP-based
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advertisement delivery platform. Our outdoor LED network uses large 5' x 5' LED digital
billboards that we lease from a third-party location provider.
Commercial Location Network
The majority of displays on our commercial location network are currently placed in
high-traffic areas of commercial office buildings. The locations in our commercial location network
also include shopping malls, banks and hotels as well as more specialized locations such as
hospitals, beauty parlors and golf country clubs. We market our commercial location network to
advertisers of consumer products and services, such as home electronics, mobile communications
devices and services, cosmetics, health products and financial services. As of March 31, 2006, our
commercial location network, including the portions of our commercial location network operated by
our regional distributors, was comprised of approximately 75,000 flat-panel displays placed in 86
cities throughout China. We operate our commercial location network directly in 50 cities and
indirectly through contractual arrangements with regional distributors in an additional 36 cities.
We have established joint ventures in several cities outside of China, including Hong Kong, Taipei
and Singapore through contracts with local operators which operate local commercial locations
networks and which license our brand name. None of these arrangements outside of China currently
constitutes a material part of our business.
As we expand the number of venues in our commercial location network, we continue to separate
certain types of venues into distinct stand-alone channels of this network. As of March 31, 2006,
we had established six such stand-alone channels that are marketed as separate focused channels of
our commercial location network: our premier office building A and B, travel, fashion, elite and
healthcare channels. We believe that by increasingly offering new advertising channels on our
out-of-home television networks, we will be able to offer advertisers more targeted and effective
audience reach, thereby enabling us to increase our advertising rates.
Our Direct Operations
. As of March 31, 2006, we operated our commercial location network
directly in 50 cities throughout China, including Beijing, Shanghai, Guangzhou and Shenzhen, or our
Tier I cities. We believe that many of the other cities in which we operate directly will
contribute to our future revenue growth as the populations and income levels in these cities
continue to grow. Following our acquisition of Target Media on February 28, 2006, we incorporated
Target Media's advertising network, which included a network substantially similar to our
commercial location network with a focus on office buildings as well as on convenience stores, into
our pre-existing commercial location and in-store networks.
Our Regional Distributors
. As of March 31, 2006, we entered into distribution agreements with
36 regional distributors who currently operate in 36 of the 86 cities covered by our commercial
locations network. Under the terms of our contractual relationships with our regional distributors:
•
We provide training, operational and logistical instructions to our regional
distributors and allow them to use our brand name, all at no cost.
•
We also sell our flat-panel displays to our regional distributors.
•
Each regional distributor is responsible for signing display placement agreements
with commercial locations to establish and grow a network presence in the city in which
they operate.
•
Each regional distributor is responsible for selling advertising time slots to
advertisers and for maintenance, monitoring and other client services.
•
Our regional distributors have the right to sell seven-ninths of the cycle time,
while we retain the right to sell two-ninths of the cycle time on the portion of the
network for which they are responsible. This gives us the flexibility to sell those
time slots directly to advertisers or to sell the time to the regional distributor.
•
We do not share any of the revenues, profits or losses of our regional distributors.
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Expanding our network through regional distributors enables us to provide our advertisers with
broader nationwide coverage and to test, develop and evaluate these regional advertising markets
without our having to incur start-up and ongoing expenses at the early stages of their development.
We also seek to acquire our regional distributors when we believe it is more likely for us to
benefit economically from the full integration of their operations into our network. We do not have
the contractual right to purchase our regional distributors, and any such acquisition must be
negotiated with each regional distributor separately.
Each of our regional distributors operates independently from us and is responsible for
independently complying with all relevant PRC laws and regulations including those related to
advertising. We periodically monitor our regional distributors to ensure they have obtained all
required licenses and are complying with regulations relating to advertising content. See "Item 3.D
Risk Factors — Risks Relating to Our Business and Industry — One or more of our regional
distributors could engage in activities that are harmful to our reputation in the industry and to
our business".
In-store Network
As part of our growth strategy, we commenced operations of our in-store network in April 2005.
As of March 31, 2006, we had placed 33,765 flat-panel displays in 809 hypermarkets, 1,126
supermarkets and 3,283 convenience stores throughout China. We believe the rapid expansion of
hypermarkets and other chain retail stores in China provides opportunities and incentives for
advertisers to take advantage of in-store television advertising networks such as our in-store
network. Our in-store network primarily attracts advertisers of food and beverage products,
household, kitchen and bathroom products, and household appliances. We increased the size of our
in-store network by adding the convenience stores from Target Media's former network to our
in-store network.
Poster Frame Network
We own and operate a network of advertising poster frames deployed primarily in the elevators
and public areas of residential complexes under the brand name "Framedia". We place two or three
advertising frames in each elevator in which we lease space and sell frame space to advertising
clients on a per frame per month basis. As of March 31, 2006, we had installed approximately 74,000
frames in cities throughout China.
Mobile Handset Advertising Network
Through Focus Media Wireless, we operate a WAP-based advertising delivery platform on the
mobile telecommunications networks of China Mobile and China Unicom. Focus Media Wireless delivers
WAP-based advertisements to mobile handset users accessed through service providers in China. Focus
Media Wireless receives a fee from WAP service providers for delivering advertisements and pays
mobile service providers a fee for accessing their networks. It also sells WAP-based advertising to
other WAP service providers and to traditional advertisers. Our WAP-based advertising platform
currently delivers approximately eight million WAP messages per day. Focus Media Wireless's
customer base includes over 100 wireless value-added service providers in China. Focus Media
Wireless has accumulated a database of over 70 million mobile handset users with WAP capability to
whom it can deliver advertisements. Focus Media Wireless is able to deliver advertisements tailored
to the users' consumer preferences based on information in the database such as a user's historical
purchases, handset model and other indicative data.
Outdoor LED Network
In April 2006, we commenced operations of an outdoor LED network consisting of 5' x 5' LED
digital billboards that we lease from a third-party location provider and that are installed on the
street-sides in major shopping districts and other locations with high pedestrian traffic in
Shanghai. Full-color audiovisual commercials are displayed on the digital billboards in a repeating
six-minute cycle. The commercials displayed on the LED displays are highly visible even during
bright daylight. As of May 1, 2006, our outdoor LED network
consisted of approximately 75 leased 5'
x 5' LED digital billboards.
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Advertising Clients, Sales and Marketing
Our Advertising Clients
. The quality and coverage of our network has attracted a broad base
of international and domestic advertising clients. As of March 31, 2006, more than 1,800
advertisers purchased advertising time slots on our out-of-home television networks. Our
advertising clients include leading international and domestic brand name advertisers such as Dong
Feng Auto (including joint venture brands with Toyota and Peugeot), China Mobile, Samsung, NEC and
Motorola, which were our five largest customers and together accounted for 18.4% of our total
revenues in 2005. Our top ten customers in 2005 accounted for 28.5% of our total revenues in that
year. In addition, over 340 advertisers have bought frame space on Framedia's poster frame network
since 1999.
Advertisers purchase advertising time slots on our advertising network either directly from us
or through their advertising agencies which purchase advertising time on our network on behalf of
their domestic and international clients.
Our top thirty advertising clients accounted for 46.6%, 39.0% and 44.9% of our revenues in
2003, 2004 and 2005, respectively. No single advertising client accounted for more than 7% of our
revenues in 2003, 2004 or 2005. We believe the appeal and effectiveness of our advertising network
is largely evidenced by the number of advertising clients who place multiple advertising campaigns
on our network, which is reflected in the percentage increase of advertising fees we receive from
clients over time.
Sales
. We employ an experienced advertising sales force in each city in which we operate. Our
marketing managers have an average of eight years' experience in the advertising industry in China.
We provide in-house education and training to our sales force to ensure they provide our current
and prospective clients with comprehensive information about our services, the advantages of using
our out-of-home television advertising network as a marketing channel, and relevant information
regarding the advertising industry. Our sales team is organized by city, industry and client
accounts. We also market our advertising services from time to time by placing advertisements on
third-party media, including primarily magazines and Internet websites. We maintain separate
devoted sales teams for our commercial locations network, including our outdoor LED network, and
our in-store network. We maintain separate sales teams for our poster frame network and our mobile
handset advertising network. We have begun engaging in cross-selling initiatives to enable existing
and potential advertising clients to take advantage of our multi-platform advertising network.
Advertising Contracts
. We offer advertisers five-, fifteen- or thirty-second time slots on
our out-of-home television advertising networks, including our commercial location, in-store and
outdoor LED networks. For our commercial location network, our standard advertising package
includes a time slot on our entire network or a particular channel in each city in which the
advertiser wishes to display the advertisement. Our sales are made pursuant to written contracts
with commitments ranging from one week to several months. Our advertising rates vary by city and by
the number of cities in which the advertisement is placed, as well as by the length of the time
slot purchased and the duration of the advertising campaign.
Our standard advertising contract provides that up to 10% of the specific locations at which
an advertisement will be displayed for an advertiser may vary from the list of sites provided under
the relevant contract. If the number of locations and/or the actual sites where advertisements are
displayed vary from the sites prescribed under the contract by more than 10%, we will arrange to
extend the duration of the advertising campaign or display such advertisements at additional sites,
although to date, we have never needed to do so. This provision gives us flexibility to account for
any potential technical problems, advertiser conflicts or turnover in the composition of our
physical network location.
We generally require our clients to submit advertising content at least seven days prior to
the campaign start date. We also reserve the right to refuse to disseminate advertisements that are
not in compliance with content requirements under PRC laws and regulations.
Advertising contracts for our in-store network and outdoor LED network are substantially
similar to those used for our commercial location network. Advertising clients generally purchase
time slots on our in-store network on a store-by-store basis, while time slots on the outdoor LED
network cover the entire network.
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For our poster frame network, advertising clients purchase frame space on a per-frame basis
for terms of one month or more. For our mobile handset advertising network, our contracts agree to
reach the WAP users from among our list of WAP service providers.
Network Monitoring and Evaluation
. We provide a number of services in connection with each
client's advertising campaign following the sales process. Our network operations team monitors the
displays in our network on a daily basis. They are also responsible for compiling reports that are
supplied under some of our agreements to clients as evidence of the broadcast of their
advertisements on our network. The report generally includes a list of buildings the advertisements
of clients were broadcast as well as photographs of representative television displays showing
their advertisements being displayed. The advertising campaign reports are provided to our clients
for information purposes and do not constitute a customer acceptance provision. The reports we
provide to our clients may also contain portions prepared by independent third-party research
companies that verify the proper functioning of our flat-panel displays and the proper
dissemination of the advertisement, by conducting on-site evaluations and polls to analyze the
effectiveness of and public reaction to the advertisement.
Aside from third-party verification services, we and our regional distributors conduct
substantially all client services using our own employees or the employees of the relevant regional
distributor. In Beijing and Guangzhou, we contract some of these services to third-party agents.
These agents provide us with network development, installation, maintenance, monitoring and
reporting services.
Market Research
. We believe our advertising clients derive substantial value from our ability
to provide advertising services targeted at specific segments of consumer markets. Market research
is an important part of evaluating the effectiveness and value of our business to advertisers. We
conduct market research, consumer surveys, demographic analysis and other advertising industry
research for internal use to evaluate new and existing advertising channels. We also purchase or
commission studies containing relevant market study data from reputable third-party market research
firms, such as Nielsen Media Research, CTR Market Research and Sinomonitor. We typically consult
such studies to assist us in evaluating the effectiveness of our network to our advertisers. A
number of these studies contains research on the numbers and socio-economic and demographic
profiles of the people who visit the locations of our network.
Programming
Substantially all of the content on our out-of-home television advertising networks consists
of audiovisual television advertising provided to us by our advertising clients. We also provide a
limited amount of time for landlords and property managers to display location-specific
information, building announcements and related promotional material on our network. We do not
produce or create any of the advertising content shown on our network, except our own marketing
content. All of the advertising content displayed on the portion of the network we operate directly
is reviewed by qualified members of our staff to ensure compliance with PRC laws and regulations,
while our agreements with our regional distributors require each of them to review the contents
shown on the portion of the network they operate for compliance with PRC laws and regulations. See
"Item 4.B Information on the Company—Business Overview—Regulatory Matters — Regulation of
Advertising Services — Advertising Content".
Each flat-panel display contains a pre-recorded CF card containing a twelve-minute cycle of
advertising content and other information, such as building-specific promotional information. We
change the CF cards to update the advertising content in each flat-panel display in our network on
a weekly basis. We and each regional distributor compile each twelve-minute cycle from
advertisements of five, 15 or 30 seconds in length provided by advertisers to us and our regional
distributors. Each of our flat-panel displays plays the advertising content on the CF card
repeatedly throughout the day so that the twelve-minute cycle is broadcast in each building within
our network a total of approximately 60 times per day, respectively. See "— Technology and
Suppliers". Some of our regional distributors use a nine-minute cycle, while our outdoor LED
network uses a six-minute cycle.
Advertisements on our poster frame network consist of full-color glossy advertising posters
designed and provided by our advertising clients. Advertisements on Focus Media Wireless's
WAP-based advertisement delivery platform consist of WAP-based messages sent to individual mobile
handset users.
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Pricing
Commercial Location Network
We generate revenues through the sale of advertising time slots on our commercial location
network. Our revenues are directly affected by:
•
the number of advertising time slots that we have available to sell, which is
determined by the number of cities in which we directly operate, our expansion into
additional cities, the two- ninths portion of cycle time available on our regional
distributors' networks and the length of the advertising cycle, which is currently
twelve minutes except in some cities operated by our regional distributors that use a
nine minute cycle. We calculate the number of time slots available by taking the total
advertising time available on our network during a particular period, calculated in
aggregate seconds, which we then divide by 30 to determine the number of 30-second
equivalent time slots available. We can increase the number of advertising time slots
that we have available to sell by expanding into additional cities or acquiring our
regional distributors, which provides us with the remaining seven-ninths of the time
slots per cycle operated by the regional distributor. The length of our advertising
cycle can potentially be extended to longer durations depending on demand in each city.
The twelve-minute advertising cycle amounts to the equivalent of 24 30-second time
slots per week. In cities where our regional distributors use a nine-minute advertising
cycle, the cycle amounts to the equivalent of 18 30-second time slots per week; and
•
the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered.
In-store Network
Our advertising service revenue derived from our in-store network is directly affected by:
•
the number of advertising time slots that we have available to sell, which is
determined by the number of stores in which we operate, our expansion into additional
stores, and the length of the advertising cycle, which is currently twelve minutes, or
24 30-second equivalent time slots. As with our commercial location network, for our
in-store network we calculate the number of time slots according to the number of
30-second equivalent time slots available. The length of our advertising cycle can
potentially be extended to longer durations depending on demand in each city; and
•
the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered.
Poster Frame Network
Our advertising service revenue derived from our poster frame network is directly affected by:
•
the number of frames in our poster frame network. We sell frame space on our poster
frame network on a per frame basis. Increasing the number of residential and other
locations on our poster frame network allows us to increase the number of frames on our
network, thereby increases the available frame space for sale to advertisers. We
currently place up to three advertising poster frames in each elevator where we deploy
frames; and
•
the average price we charge for frame space on a per frame basis, after taking into
account any discount offered.
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Mobile Handset Advertising Network
Our advertising service revenue derived from our mobile handset advertising network is
directly affected by:
•
the number of messages we deliver to WAP users. We agree to send WAP message
advertisements to WAP users from approximately 100 WAP service providers, and we charge
fees based on the number of successfully delivered messages; and
•
the average price we charge per message.
Prices for time slots on our commercial location and in-store networks and for frame space on
our poster frame network also vary significantly from city to city as income levels, standards of
living and general economic conditions vary significantly from region to region in China, which in
turn affect the advertising rates we are able to charge for time slots and frame space.
Relationships with Location Providers
We install our flat-panel displays in selected spaces we lease in office buildings and other
commercial locations, hypermarkets, supermarkets and convenience stores. We install our advertising
poster frames in elevators and other public areas in residential complexes. Establishing and
maintaining long-term relationships with landlords and property managers is a critical aspect of
our business. We employ a team of location relationship personnel in each city in which we operate
directly who are responsible for identifying desirable locations, negotiating display and frame
placement agreements and engaging in ongoing site placement relations.
In addition to helping us expand our network, our location relationship personnel ensure that
the needs and concerns of landlords and property managers are being met and addressed effectively
and on a timely basis. These concerns generally include ensuring that the flat-panel displays are
properly installed and are in proper working condition. We undertake to landlords and property
managers in our network to maintain the proper operation of our flat-panel displays. We generally
rely on our own employees to install, maintain, monitor and repair our flat-panel displays and
advertising poster frames. Each of our flat-panel displays is inspected at least once daily.
We enter into display placement agreements with individual landlords, property managers,
hotels, shopping malls and chain store companies under which we generally pay a fixed annual rent
in exchange for the right to display advertising and commercial media in lobby and elevator areas
in the case of our commercial location network and in specific product areas in the major aisles
and near check-out counters in hypermarkets, supermarkets and convenience stores in the case of our
in-store network. In Beijing and Guangzhou, we contract a portion of the location development,
monitoring and maintenance work to local agents. We attempt to maintain terms favorable to our
network operations in our display placement agreements, such as long-term leases and exclusivity
provisions. For example, as of March 31, 2006, approximately 90% of our display placement
agreements in our commercial location and in-store networks gave us the exclusive right to place
television advertising in the lobby and elevator bank area of the locations in which we operate. We
are not reliant on any one landlord or property manager for a material portion of our network
coverage and as of March 31, 2006, no individual landlord or property manager accounted for more
than 1% of the locations in our commercial location network. As hypermarkets, supermarkets and
convenience stores have control over multiple locations, a smaller number of display placement
agreements and contractual arrangements account for a larger percentage of our in-store network
coverage. As of March 31, 2006, we had entered into display placement agreements covering 809
hypermarkets, 1,126 supermarkets and 3,283 convenience stores on our in-store network.
We believe that landlords and property managers generally do not view us as a major source of
revenue and are instead primarily attracted to our flat-panel displays as an innovative and
visually pleasing medium that complements their public areas and that provides an engaging means of
conveying building-related information to their tenants. In connection with certain of our display
placement agreements, we agree to provide concessions and services, such as displaying
building-related notifications, publicity and other information provided by the landlord or
property manager or granting time slots to the landlord or property manager for their own
promotional purposes.
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Our display placement agreements have initial terms ranging anywhere from one to ten years. As
of March 31, 2006, approximately 41.4% of our display placement agreements will expire after
December 31, 2007. As of March 31, 2006, we had the right under the majority of our display
placement agreements to renew the display placement agreements provided that the terms offered by
us are no less favorable than those offered by competing bidders. The rental terms and fees under
our display placement agreements vary considerably depending on the city, location of the building,
size of the building and number of flat-panel displays that may be installed. Under our display
placement agreements, we retain ownership of the flat-panel displays.
We enter into similar frame placement agreements for the deployment of its advertising poster
frames in elevators and public areas of residential complexes and commercial buildings. The
majority of our frame placement agreements have terms of two to three years, and contain
exclusivity and best offer renewal rights.
To secure locations in Shanghai for our outdoor LED network, we have entered into a four-year
exclusive agreement with Shanghai Yihukuan Media Co., Ltd., which leases all of its current, and
any future developed, LED digital billboard space in Shanghai to us for an annual fee.
Technology and Suppliers
Out-of-home television advertising is a relatively new advertising medium that owes its
development in large part to the emergence of new technologies, such as low-cost, light-weight,
flat-panel television displays and compact storage technology. The primary hardware required for
the operation of our business consists of components that comprise the flat-panel displays we use
in our advertising network. We also develop and install software in our flat-panel displays to
assist us with the configuration, editing and operation of our advertising content cycles.
Maintaining a steady supply of our proprietary flat-panel displays is important to our operations
and the growth of our advertising network.
We design the distinctive shape of our flat-panel displays, identify suppliers of component
parts used in our displays and contract the assembly of our flat-panel displays to third-party
contract assemblers. Our contract assemblers are responsible for purchasing the component parts
from suppliers we identify each month and assembling the flat-panel displays according to our
specifications using components purchased in off-the-shelf form from wholesale distributors. We
select component suppliers based on price and quality. Since we commenced our current operations,
we have used only one contract assembler at any one time, which we believe is logistically more
efficient and also enables us to better protect the proprietary design of our flat-panel displays.
As there are many qualified alternative suppliers for our equipment, our obligation to our current
contract assemblers is not exclusive. We have never experienced any material delay or interruption
in the supply of our flat-panel displays.
Competition
We compete with other advertising companies in China including companies that operate
out-of-home advertising media networks, such as JCDecaux and ClearMedia. We compete for advertising
clients primarily on the basis of network size and coverage, location, price, the range of services
that we offer and our brand name. We also compete for overall advertising spending with other
alternative advertising media companies, such as Internet, street furniture, billboard, frame and
public transport advertising companies, and with traditional advertising media, such as newspapers,
television, magazines and radio.
In the future, we may also face competition from new entrants into the out-of-home television
advertising network sector. In addition, starting December 10, 2005, wholly foreign-owned
advertising companies are allowed to be established. China's ongoing deregulation of the
advertising market in China will expose us to greater competition with existing or new advertising
companies in China including PRC subsidiaries of large well-established multi-national companies.
Facilities
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We currently maintain our headquarters at 28-30/F, Zhao Feng World Trade Building, 369 Jiangsu
Road, Shanghai 200050, People's Republic of China.We also have offices in 53 other cities including
those operated by our regional distributors.
Regulatory Matters
We operate our business in China under a legal regime consisting of the State Council, which
is the highest authority of the executive branch of the PRC central government, and several
ministries and agencies under its authority including the State Administration for Industry and
Commerce, or SAIC.
China's Advertising Law was promulgated in 1994. In addition, the State Council, SAIC and
other ministries and agencies have issued regulations that regulate our business, which are
discussed below.
Limitations on Foreign Ownership in the Advertising Industry
The principal regulations governing foreign ownership in the advertising industry in China include:
•
The Catalogue for Guiding Foreign Investment in Industry (2004); and
•
The Administrative Regulations on Foreign-invested Advertising Enterprises (2004).
These regulations require foreign entities that directly invest in the advertising industry to
have at least two years of direct operations in the advertising industry outside of China. Since
December 10, 2005, foreign investors have been permitted to own directly a 100% interest in
advertising companies in China, but such foreign investors are also required to have at least three
years of direct operations in the advertising industry outside of China. PRC laws and regulations
do not permit the transfer of any approvals, licenses or permits, including business licenses
containing a scope of business that permits engaging in the advertising business. In the event we
are able to qualify to acquire the equity interest of Focus Media Advertisement under the rules
allowing complete foreign ownership, Focus Media Advertisement would continue to exist as the
holder of the required advertising license consistent with current regulatory requirements.
Since we have not been involved in advertising outside of China for the required number of
years, our domestic PRC operating subsidiaries, which are considered foreign invested, are
currently ineligible to apply for the required advertising services licenses in China. Our
advertising business is currently mainly provided through our contractual arrangements with our
consolidated affiliated entities in China, including Focus Media Advertisement and its
subsidiaries, New Focus Media Advertisement, Framedia Advertisement, Guangdong Framedia, New
Structure Advertisement and Focus Media Wireless. Each of our PRC operating affiliates is currently
owned or controlled either by Jason Nanchun Jiang and Jimmy Wei Yu, both of whom are PRC citizens,
or by PRC companies owned by them or by us. Our PRC operating affiliates and certain of their
respective subsidiaries hold the requisite licenses to provide advertising services in China. We,
Focus Media Technology, Focus Media Digital, New Focus Media Advertisement, Framedia Investment and
Dotad Technology have entered into a series of contractual arrangements with our PRC operating
affiliates and their respective subsidiaries and shareholders under which:
•
we are able to exert effective control over our PRC operating affiliates and their
respective subsidiaries;
•
a substantial portion of the economic benefits of our PRC operating affiliates and
their respective subsidiaries will be transferred to us; and
•
we have an exclusive option to purchase all or part of the equity interests in our
PRC operating affiliates and all or part of the equity interests in Focus Media
Advertisement's subsidiaries that are owned by Focus Media Advertisement or its nominee
holders, as well as all or a part of the assets of our PRC operating affiliates, in
each case when and to the extent permitted by PRC law.
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See "Item 4.C Information on the Company—Organizational Structure" and "Item 7.B Major
Shareholders and Related Party Transactions—Related Party Transactions".
In the opinion of Global Law Office, our PRC legal counsel,
•
the respective ownership structures of Focus Media, Framedia, Focus Media Wireless
and their respective PRC affiliates and subsidiaries are in compliance with existing
PRC laws and regulations;
•
the contractual arrangements (i) among Focus Media, Framedia, Focus Media Wireless
and their respective PRC affiliates, subsidiaries and PRC shareholders, in each case
governed by PRC law are valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in effect; and
•
the PRC business operations of Focus Media, Framedia, Focus Media Wireless and their
respective affiliates and subsidiaries as described in this annual
report, are in
compliance with existing PRC laws and regulations in all material respects.
We have been advised by our PRC legal counsel, however, that there are substantial
uncertainties regarding the interpretation and application of current and future PRC laws and
regulations. Accordingly, there can be no assurance that the PRC regulatory authorities, in
particular the SAIC which regulates advertising companies, will not in the future take a view that
is contrary to the opinion of our PRC legal counsel. We have been further advised by our PRC
counsel that if the PRC government determines that the agreements establishing the structure for
operating our PRC advertising business do not comply with PRC government restrictions on foreign
investment in the advertising industry, we could be subject to severe penalties. See "Item 3.D Key
Information—Risk Factors — Risks Relating to Regulation of Our Business and to Our Structure — If
the PRC government finds that the agreements that establish the structure for operating our China
business do not comply with PRC governmental restrictions on foreign investment in the advertising
industry, we could be subject to severe penalties".
Regulation of Advertising Services
Business License for Advertising Companies
The principal regulations governing advertising businesses in China include:
•
The Advertising Law (1994);
•
The Advertising Administrative Regulations (1987); and
•
The Implementing Rules for the Advertising Administrative Regulations (2004).
These regulations stipulate that companies that engage in advertising activities must obtain
from the SAIC or its local branches a business license which specifically includes operating an
advertising business within its business scope. Companies conducting advertising activities without
such a license may be subject to penalties, including fines, confiscation of advertising income and
orders to cease advertising operations. The business license of an advertising company is valid for
the duration of its existence, unless the license is suspended or revoked due to a violation of any
relevant law or regulation. We do not expect to encounter any difficulties in maintaining our
business licenses. Each of Focus Media Advertisement, its subsidiaries and New Focus Media
Advertisement has obtained, or in the case of some of our new directly-operated cities, are in the
process of obtaining such a business license from the local branches of the SAIC as required by the
existing PRC regulations. Some of our regional distributors may not possess all the licenses
required to operate an advertising business, or may fail to maintain the licenses they currently
hold. We periodically monitor our regional distributors to ensure they have obtained all required
licenses and are complying with regulations relating to advertising content, although it is
possible that one or more of our regional distributors may not be in compliance with
all PRC
regulations at all times. To our knowledge, all of our regional distributors have received, or are
in the process of obtaining, the licenses required to operate an advertising business. If we learn
that any of our regional distributors are not in compliance with
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applicable terms and regulations
we notify such regional distributors of the need to complete any necessary procedures and to report
any developments to us. If a regional distributor fails to complete the steps necessary to receive
the required licenses, we will take steps to terminate the contract with such regional distributor.
See "Item 3.D Key Information—Risk Factors — Risks Relating to Our Business and Industry — One or
more of our regional distributors could engage in activities that are harmful to our reputation in
the industry and to our business".
Advertising Content
PRC advertising laws and regulations set forth certain content requirements for advertisements
in China, which include prohibitions on, among other things, misleading content, superlative
wording, socially destabilizing content or content involving obscenities, superstition, violence,
discrimination or infringement of the public interest. Advertisements for anesthetic, psychotropic,
toxic or radioactive drugs are prohibited. It is prohibited to disseminate tobacco advertisements
via broadcast or print media. It is also prohibited to display tobacco advertisements in any
waiting lounge, theater, cinema, conference hall, stadium or other public area. There are also
specific restrictions and requirements regarding advertisements that relate to matters such as
patented products or processes, pharmaceuticals, medical instruments, agrochemicals, foodstuff,
alcohol and cosmetics. In addition, all advertisements relating to pharmaceuticals, medical
instruments, agrochemicals and veterinary pharmaceuticals advertised through radio, film,
television, newspaper, magazine, out-of-home and other forms of media, together with any other
advertisements which are subject to censorship by administrative authorities according to relevant
laws and administrative regulations, must be submitted to the relevant administrative authorities
for content approval prior to dissemination. We do not believe that advertisements containing
content subject to restriction or censorship comprise a material portion of the advertisements
shown on our network.
Advertisers, advertising operators and advertising distributors are required by PRC
advertising laws and regulations to ensure that the content of the advertisements they prepare or
distribute are true and in full compliance with applicable law. In providing advertising services,
advertising operators and advertising distributors must review the prescribed supporting documents
provided by advertisers for advertisements and verify that the content of the advertisements comply
with applicable PRC laws and regulations. In addition, prior to distributing advertisements for
certain commodities which are subject to government censorship and approval, advertising
distributors are obligated to ensure that such censorship has been performed and approval has been
obtained. Violation of these regulations may result in penalties, including fines, confiscation of
advertising income, orders to cease dissemination of the advertisements and orders to publish an
advertisement correcting the misleading information. In circumstances involving serious violations,
the SAIC or its local branches may revoke violators' licenses or permits for advertising business
operations. Furthermore, advertisers, advertising operators or advertising distributors may be
subject to civil liability if they infringe on the legal rights and interests of third parties in
the course of their advertising business.
We employ qualified advertising inspectors who are trained to review advertising content for
compliance with relevant laws and regulations.
Outdoor Advertising
The Advertising Law stipulates that the exhibition and display of outdoor advertisements must not:
•
utilize traffic safety facilities and traffic signs;
•
impede the use of public facilities, traffic safety facilities and traffic signs;
•
obstruct commercial and public activities or create an eyesore in urban areas;
•
be placed in restrictive areas near government offices, cultural landmarks or
historical or scenic sites; and
•
be placed in areas prohibited by the local governments from having outdoor
advertisements.
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In additional to the Advertising Law, the SAIC promulgated the Outdoor Advertising
Registration Administrative Regulations on December 8, 1995, as amended on December 3, 1998, which
governs the outdoor advertising industry in China.
Outdoor advertisements in China must be registered with the local SAIC before dissemination.
The advertising distributors are required to submit a registration application form and other
supporting documents for registration. After review and examination, if an application complies
with the requirements, the local SAIC will issue an Outdoor Advertising Registration Certificate
for such advertisement. The content of the outdoor advertisement must be submitted for filing with
the local SAIC.
The placement and installation of LED billboards are subject to municipal zoning requirements
and governmental approvals, including application for an outdoor advertising registration
certificate for each LED billboard subject to a term of use of no more than six years for each LED
billboard. If the existing LED billboards placed by our LED location provider or us are required to
be removed, the attractiveness of this portion of our advertising network will be diminished.
Moreover, failure by an owner of LED billboards to maintain outdoor advertising registration
certificates would result in the inability to lease or market such space for the placement of
advertisements.
Print Advertising
Following our acquisition of Framedia on January 1, 2006, we also operate a network of
advertising poster frames placed primarily in the elevators and public areas of residential
complexes. The advertisements shown on our poster frame network are defined as "normal print
advertisements" under the Print Advertisements Administrative Regulations promulgated by the SAIC
on January 13, 2000, as amended on November 30, 2004, or the Print Advertisements Regulations.
Under these regulations, print advertisements must not be placed in areas prohibited by laws or
regulations from posting print advertisements.
Regulation of Telecommunications Value-added Service Providers
The Telecommunications Regulations (2000), or the Telecom Regulations, and the Administrative
Measures for Telecommunications Business Operating License (2002), or the Telecom License Measures,
contain provisions governing providers of telecommunications services, including value-added
service providers. The Telecom Regulations categorize all telecommunication services businesses in
China as either infrastructure telecommunication services businesses or value-added
telecommunication services businesses. The latter category includes WAP services. Under the Telecom
Regulations, certain services are classified as being of a value-added nature and require the
commercial mobile operator of such services to obtain an operating license, including online data
processing and transaction processing, call centers and Internet access. The Telecom Regulations
also set forth extensive guidelines with respect to different aspects of telecommunications
operations in China. Under the Telecom License Measures, an approved value-added telecommunication
services provider must conduct its business in accordance with the specifications recorded on its
value-added telecommunication services operating license. Under PRC law, it is unclear whether the
services offered by Focus Media Wireless should be deemed value-added telecommunication services,
which requires an operation permit which has a valid period of five years. Focus Media Wireless has
applied for an operation permit for its wireless advertising operations. If Focus Media Wireless is
deemed by the PRC regulatory authorities to be providing value-added telecommunication services but
an operation permit is not issued or if, once issued, it is revoked or if we are unable to renew
its operation permit upon its expiration, we will be required to suspend our services relating to
our mobile handset advertising network, and our advertising service revenue derived from this
portion of our network would be adversely affected. See "Item 3.D Key Information—Risk Factors —
Our recent entry into mobile handset advertising through our acquisition of Focus Media Wireless
may expose us to risks associated with operating in the telecommunications industry in China which
could materially affect our financial condition or results of operation".
C. Organizational Structure
Our predecessor company, Shanghai Aiqi Advertisement Co., Ltd., or Aiqi Advertisement, was
established by immediate family members of Jason Nanchun Jiang in September 1997 and operated as an
advertising agency. In May 2003, Aiqi Advertisement discontinued its advertising agency business,
was renamed Shanghai Focus Media
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Advertisement Co., Ltd., commenced operation of our out-of-home
television advertising network in China and reorganized its shareholdings. At the same time, we
entered into arrangements with Focus Media
Advertisement that resulted in the consolidation of
Focus Media Advertisement. Following this reorganization Jason Nanchun Jiang continued to hold a
controlling interest in Focus Media Advertisement.
In conjunction with the change in our business model in May 2003 and to facilitate foreign
investment in our company, we established our offshore holding company, Focus Media Holding Limited
as a company registered in the British Virgin Islands in April 2003. In April 2005, we completed
the process of changing Focus Media Holding Limited's corporate domicile to the Cayman Islands and
we are now a Cayman Islands company. On July 13, 2005, our ADSs were listed for quotation on the
Nasdaq National Market.
In January 2006, we acquired Framedia and E-Times, which operate networks of advertising
poster frames placed primarily in elevators and public areas of residential complexes in China. In
February 2006, we acquired Target Media. Target Media operated an out-of-home advertising network
using flat-panel displays placed in elevator lobbies and other public areas in commercial
buildings, hospitals, hotels, banks, residential buildings, convenience stores and other locations
in cities in China. Following the acquisition of Target Media, we combined Target Media's network
into our existing commercial location and in-store networks. Other than holding their existing
contracts, the former Target Media entities no longer conduct any operations, and the combined
network is operated through our existing corporate entities. In March 2006, we acquired Focus Media
Wireless, which operates a WAP-based advertising delivery platform on the mobile telecommunications
networks of China Mobile and China Unicom. See "Item 10.C Additional Information—Material
Contracts".
Our Corporate Structure and Contractual Arrangements
Substantially all of our operations are conducted in China as follows:
•
with regard to the operation of our out-of-home television networks, through Focus
Media Technology, our indirect wholly-owned subsidiaries in China, Focus Media Digital,
a 90%-owned subsidiary of Focus Media Technology, and New Focus Media Advertisement, a
90%-owned subsidiary of Focus Media Digital, and through our contractual arrangements
with several of our consolidated affiliated entities in China, including Focus Media
Advertisement, and its subsidiaries. Focus Media Advertisement owns the remaining 10%
equity interest in Focus Media Digital and New Focus Media Advertisement;
•
with regard to the operation of our poster frame network, through Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement, each of which is 90%
owned by Focus Media Advertisement and 10% owned by Focus Media Advertising Agency,
respectively; and
•
with regard to the operation of our mobile handset advertising network, through
Focus Media Wireless, which is 90% owned by Focus Media Advertisement and 10% owned by
Focus Media Advertising Agency, respectively.
Each of Framedia Investment and Dotad Technology and their respective affiliated entities and
shareholders, have entered into contractual arrangements substantially similar to those control
agreements entered into among Focus Media Technology, Focus Media Digital, New Focus Media
Advertisements, Focus Media Advertisement and its shareholders and subsidiaries. See "Item 7.B
Major Shareholders and Related Party Transactions—Related Party Transactions — Agreements Among
Focus Media Advertisement, Focus Media Advertising Agency, Framedia Investment, Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement" and "— Agreements Among Focus
Media Advertisement, Focus Media Advertising Agency, Focus Media Wireless and Dotad Technology".
The following diagram illustrates our current corporate structure other than dormant entities
and the former Target Media entities, which aside from holding their existing contracts, no longer
conduct any operations:
56
Table of Contents
(1)
Loans used to capitalize our PRC operating companies and to facilitate our control over
them.
(2)
Agreements that give us effective control over Focus Media Advertisement and its
subsidiaries, as described in "Item 7.B Major Shareholders and Related Party
Transactions—Related Party Transactions".
(3)
Agreement that transfer a substantial portion of the economic benefits of Focus Media
Advertisement and its subsidiaries to us, as described in "Related Party Transactions".
(4)
Agreements that give Framedia Investment effective control over the PRC-based operations of
Framedia, as described in "Item 7.B Major Shareholders and Related Party Transactions—Related
Party Transactions".
(5)
The remaining equity interests in Focus Media Advertisement's subsidiaries are held by Jimmy
Wei Yu, Focus Media Advertising Agency or unrelated third parties.
(6)
Agreements that give Dotad Technology effective control over the PRC-based operations of
Focus Media Wireless, as described in "Item 7.B Major Shareholders and Related Party
Transactions—Related Party Transactions".
(7)
Our out-of-home television network operations comprises our commercial location, in-store and
outdoor LED networks.
In connection with its entry into the World Trade Organization, China is required to
relax restrictions on foreign investment in the advertising industry in China. Accordingly, PRC
regulations stipulate that starting from December 10, 2005, foreign investors are allowed to
directly own 100% of PRC companies operating an advertising business if the foreign entity has at
least three years of direct operations in the advertising business outside of China or to directly
own less than 100% if the foreign entity has at least two years of direct operations in the
advertising business outside of China. We do not currently directly operate an advertising business
outside of China and cannot qualify for direct ownership of a PRC advertising company under PRC
regulations any earlier than two or three years, respectively, after we commence any such
operations or until we acquire a company which has directly operated an advertising business for
the required period of time. We do not currently know how or when we will be able to qualify under
these regulations. Even if we do qualify in the future, it may be burdensome or not cost effective
for us to meet the required criteria for direct ownership. If and when we qualify for direct
ownership, we intend to explore the commercial feasibility of changing our current structure,
including possibly direct ownership of Focus Media Advertisement and its subsidiaries, taking into
consideration relevant cost, market, competitive and other factors. In the event we take such
steps, we cannot assure you that we will be able to identity or acquire a qualified foreign company
for a possible future restructuring or that any restructuring we may undertake to facilitate direct
ownership will be successful.
Accordingly, since we have not been involved in the direct operation of an advertising
business outside of China, our domestic PRC subsidiaries, Focus Media Technology and Focus Media
Digital, which are considered foreign-invested, are currently ineligible to apply for the required
advertising services licenses in China. Our advertising business is currently mainly provided
through contractual arrangements with our consolidated affiliated entities in China, including (i)
Focus Media Advertisement and its subsidiaries with regard to our commercial location, in-store and
outdoor LED networks, (ii) Framedia Advertisement, Guangdong Framedia and New Structure
Advertisement with regard to our poster frame network, and (iii) Focus Media Wireless with regard
to our mobile handset advertising network. Focus Media Advertisement is owned by two PRC citizens,
Jason Nanchun Jiang, our chairman and chief executive officer, and Jimmy Wei Yu, one of our
directors, affiliated with UCI Group (China) Limited, one of our principal shareholders, while each
of Framedia Advertisement, Guangdong Framedia, New Structure Advertisement and Focus Media Wireless
is owned by Focus Media Advertisement and Focus Media Advertising Agency. Each of Focus Media
Advertisement, several of its subsidiaries, our newly established indirect subsidiary New Focus
Media Advertisement, Framedia Advertisement, Guangdong Framedia, New Structure Advertisement and
Focus Media Wireless, which we refer to collectively as our PRC operating affiliates, holds the
requisite licenses to provide advertising services in China. In 2006, we expect to begin operating
a portion of our advertising business through our 90%-owned indirect subsidiary New Focus Media
Advertisement after which time we will no longer entirely rely on contractual arrangements with our
PRC operating affiliates and their respective subsidiaries and shareholders for the operation of
our advertising business.
We have been and are expected to continue to be dependent on our PRC operating affiliates to
operate our advertising business until we acquire them as our wholly-owned subsidiaries. We and
Focus Media Technology,
57
Table of Contents
Focus Media Digital, New Focus Media Advertisement, Framedia Investment and
Dotad Technology, which we refer to as our wholly-foreign owned entities, have entered into
contractual arrangements with their respective PRC operating affiliates and shareholders, pursuant
to which:
•
we are able to exert effective control over our PRC operating affiliates;
•
a substantial portion of the economic benefits of our PRC operating affiliates will
be transferred to us; and
•
each of our wholly-foreign owned entities or their respective designees has an
exclusive option to purchase all or part of the equity interests in our PRC affiliated
entities or their respective nominee holders, or, in some cases, all or part of the
assets of our PRC affiliated entities, in each case when and to the extent permitted by
PRC law.
Each of our contractual arrangements with our PRC affiliated entities and their respective
shareholders and subsidiaries can only be amended with the approval of our audit committee or
another independent body of our board of directors. See "Item 7.B Major Shareholders and Related
Party Transactions—Related Party Transactions" for further information on our contractual
arrangements with these parties.
In the opinion of Global Law Office, our PRC legal counsel:
•
the respective ownership structures of Focus Media, Framedia, Focus Media Wireless
and their respective PRC operating affiliates and subsidiaries are in compliance with
existing PRC laws and regulations;
•
the contractual arrangements among Focus Media, Framedia, Focus Media Wireless and
their respective PRC operating affiliates, subsidiaries and shareholders, in each case
governed by PRC law are valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in effect; and
•
the PRC business operations of Focus Media, Framedia, Focus Media Wireless and their
respective PRC operating affiliates and subsidiaries as described in this annual report,
are in compliance with existing PRC laws and regulations in all material respects.
We have been advised by our PRC legal counsel, however, that there are substantial
uncertainties regarding the interpretation and application of current and future PRC laws and
regulations. Accordingly, there can be no assurance that the PRC regulatory authorities, in
particular the SAIC which regulates advertising companies, will not in the future take a view that
is contrary to the above opinion of our PRC legal counsel. We have been further advised by our PRC
counsel that if the PRC government finds that the agreements that establish the structure for
operating our PRC advertising business do not comply with PRC government restrictions on foreign
investment in advertising businesses, we could be subject to severe penalties. See "Item 7.B Major
Shareholders and Related Party Transactions—Risk Factors — If the PRC government finds that the
agreements that establish the structure for operating our China business do not comply with PRC
governmental restrictions on foreign investment in the advertising industry, we could be subject to
severe penalties", "— Our business operations may be affected by legislative or regulatory changes"
and "— The PRC legal system embodies uncertainties which could limit the legal protections
available to you and us".
Subsidiaries of Focus Media Holding Limited
58
Table of Contents
The following table sets forth information concerning our direct subsidiaries:
Place of
Percentage
Subsidiary
Incorporation
of ownership
Focus Media (China) Holding Ltd.
Hong Kong
100
%
Focus Media Technology (Shanghai) Co., Ltd.
PRC
100
%
Perfect Media Holding Ltd.
British Virgin Islands
("BVI")
100
%
Focus Media Qingdao Holding Ltd.
BVI
100
%
Focus Media Dalian Holding Ltd.
BVI
100
%
Focus Media Changsha Holding Ltd.
BVI
100
%
Focus Media Digital Information Technology (Shanghai) Co., Ltd.
PRC
100
%
New Focus Media Technology (Shanghai) Co., Ltd.
PRC
100
%
Sorfari Holdings Limited
BVI
100
%
Focus Media Tianjin Limited
BVI
80
%
Capital Beyond Limited
BVI
100
%
Shanghai New Focus Media Advertisement Co
PRC
90
%
Infoachieve Limited
BVI
100
%
Shanghai Framedia Investment Consultation Co., Ltd.
PRC
100
%
Target Media Holdings Limited
Cayman Islands
100
%
Target Media Multi-Media Technology (Shanghai) Co., Ltd.
PRC
100
%
Dotad Holdings Limited
BVI
100
%
Subsidiaries of Focus Media Advertisement
The following table sets forth information concerning Focus Media Advertisement's subsidiaries
each of which is incorporated in China:
Focus Media
Advertisement
'
s
Region of
Ownership Percentage
Operations
Primary Business
Shenzhen Bianjie Building
Advertisement Co., Ltd.
90.0%
(2)
Shenzhen
Operation and
maintenance of
frame advertising
network
Shanghai Focus Media Advertising Co.,
Ltd.
90.0%
(1)
Shanghai
Advertising agency
Shanghai Perfect Media Advertising
Agency Co., Ltd.
90.0%
(1)
Shanghai
Advertising company
that operates advertising
services network on
shoe-shining
machines
Qingdao Fukesi Advertisement Co., Ltd.
90.0%
(1)
Qingdao
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Changsha Focus Media Shiji
Advertisement Co., Ltd.
90.0%
(1)
Changsha
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Dalian Focus Media Advertising Co., Ltd.
90.0%
(1)
Dalian
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Shanghai Qianjian Advertising Co., Ltd.
90.0%
(1)
Shanghai
Operation and
maintenance of
out-of-home
television
advertising network
in banking
locations
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Table of Contents
Focus Media
Advertisement
'
s
Region of
Ownership Percentage
Operations
Primary Business
Guangzhou Framedia Advertising Company
Ltd.
90.0%
(1)
Guangzhou
Operation and
maintenance of
out-of-home
television
advertising network
Zhuhai Focus Media Culture and
Communication Company Ltd.
90.0%
(1)
Zhuhai
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Hebei Tianma Weiye Advertising Company
Ltd.
90.0%
(2)
Hebei
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Xiamen Focus Media Advertising Company
Ltd.
90.0%
(2)
Xiamen
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Sichuan Focus Media Advertising
Communications Co., Ltd.
90.0%
(3)
Chengdu
Operation and
maintenance of
out-of-home
television
advertising network
Shanghai New Structure Advertisement
Co., Ltd.
90.0%
(2)
Shanghai
Technical and
business
consultancy for
poster frame
network
Shanghai Framedia Advertising
Development Co., Ltd.
90.0%
(2)
Shanghai
Operation and
maintenance of
advertising poster
frame network
Guangzhou Shiji Shenghuo Advertisement
Co., Ltd.
90.0%
(2)
Guangzhou
Operation and
maintenance of
advertising poster
frame network
Nanjing Focus Media Advertising Co.,
Ltd.
90.0%
(3)
Nanjing
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Hefei Fukesi Advertising Co. Ltd.
90.0%
(2)
Hefei
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Jinan Focus Media Advertising Co., Ltd.
90.0%
(2)
Jinan
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Shenzhen E-Times Consulting Co.,
Ltd
90.0%
(2)
Shenzhen
Operation and
maintenance of
advertising poster
frame network
Shanghai Target Media Co.,
Ltd.
90.0%
(2)
Shanghai
Dormant (Former
operation and
maintenance of
Target Media's
out-of-home
television
advertising network)
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Focus Media
Advertisement
'
s
Region of
Ownership Percentage
Operations
Primary Business
Shenyang Target Media Ltd.
90.0%
(2)
Shenyang
Dormant (Former
operation and
maintenance of
Target Media's
out-of-home
television
advertising network)
Fuzhou Hengding United Media
Ltd.
90.0%
(2)
Fuzhou
Dormant (Former
operation and
maintenance of
Target Media's
out-of-home
television
advertising network)
Shanghai New Target Media Co.,
Ltd.
90.0%
(2)
Shanghai
Dormant (Former
operation and
maintenance of
Target Media's
out-of-home
television
advertising network)
Beijing Focus Media Wireless Co.,
Ltd.
90.0%
(2)
Beijing
Operation of mobile
handset advertising
service network
Yunnan Focus Media Co., Ltd.
89.5%
(3)
Kunming
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Tianjin Focus Tongsheng Advertising
Company Ltd.
80.0%
(3)
Tianjin
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Zhejiang Ruihong Focus Media
Advertising Communications Co., Ltd.
80.0%
(3)
Hangzhou
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Wuhan Geshi Focus Media Advertising
Co., Ltd.
75.0%
(3)
Wuhan
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Xi'an Focus Media Advertising &
Information Company Ltd.
70.0%
(3)
Xian
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Shenyang Focus Media Advertising Co.,
Ltd.
70.0%
(3)
Shenyang
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Fuzhou Focus Media Advertising Co., Ltd.
70.0%
(3)
Fuzhou
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
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Table of Contents
Focus Media
Advertisement
'
s
Region of
Ownership Percentage
Operations
Primary Business
Chongqing Geyang Focus Media Culture &
Broadcasting Co., Ltd.
60.0%
(3)
Chongqing
Operation and
maintenance of
out-of-home
television
advertising network
(former regional
distributor)
Shanghai On-Target Advertisement Co.,
Ltd.
60.0%
(3)
Shanghai
Advertising agency
New Focus Media Advertisement Co.,
Ltd.
19%
(4)
Shanghai
Sells advertising
time slots on our
out-of-home television
advertising
networks
(1)
The remaining equity interest is held by Jimmy Wei Yu as our nominee holder.
(2)
The remaining equity interest is held by Focus Media Advertising Agency.
(3)
The remaining equity interest in this entity is owned by unrelated third paries.
(4)
The remaining equity interest in this entity is owned by Focus Media Digital.
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Table of Contents
D. Property, Plants and Equipment
Please refer to "—B. Business Overview—Facilities" for a discussion of our property, plants and equipment.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results
of operations in conjunction with our consolidated financial statements and the related notes
included elsewhere in this annual report. Our consolidated financial statements have been prepared in
accordance with U.S. GAAP. In addition, our consolidated financial statements and the financial
data included in this annual report reflect our reorganization and have been prepared as if our
current corporate structure had been in place throughout the relevant periods. The following
discussion and analysis contains forward-looking statements that involve risks and uncertainties.
Actual results could differ materially from those projected in the forward-looking statements. For
additional information regarding these risks and uncertainties, see "Item 3.D Key Information —
Risk Factors".
Overview
Our out-of-home advertising network consists of (i) our commercial location, in-store and
outdoor LED networks, which we collectively refer to as our out-of-home television networks, (ii)
our poster frame network and (iii) our mobile handset advertising network. We have experienced
significant revenue and earnings growth, and the size of our network has grown significantly, since
the commercial launch of our advertising network in May 2003.
The significant increase in our operating results since we commenced our current business
operations is attributable to a number of factors, including the substantial expansion of our
flat-panel display network, the launch and ongoing expansion of our in-store network, the
commencement of operations of our poster frame network, the successful execution of strategic
acquisitions, such as our acquisition of Framedia, Target Media, Focus Media Wireless and a number
of our regional distributors, and the growing acceptance of our multi-platform network as an
appealing advertising medium by our clients.
We expect our future growth to be driven by a number of factors and trends including:
•
Overall economic growth in China, which we expect to contribute to an increase in
advertising spending in major urban areas in China where consumer spending is
concentrated;
•
The expansion of our commercial location network since we completed our acquisition
of Target Media;
•
Our ability to expand our network into new locations and additional cities;
•
Our ability to expand our sales force and engage in increased sales and marketing efforts;
•
Our ability to increase sales of advertising time slots and extend the duration of
our advertising cycle on our commercial location and in-store networks;
•
Our ability to expand our client base through promotion of our services and
cross-selling;
•
Our ability to successfully operate and expand our poster frame network, which we
acquired from Framedia in January 2006, including increasing the number of residential
complexes in which we place advertising poster frames;
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Table of Contents
•
Our ability to expand our in-store network which commenced operation in April 2005;
•
Our ability to integrate Target Media's former out-of-home television advertising
networks into our commercial location network and in-store network;
•
Our ability to identify and create new advertising channels by establishing separate
advertising networks that enable advertisers to target a diverse range of consumer
groups with specific demographic profiles. Our commercial location network is currently
marketed as six separate channels targeting different types of consumers: our premier A
and B office building channels, our travel channel, our fashion channel, our elite
channel and our healthcare channel;
•
Our ability to successfully enter into the mobile handset network advertising
business, in part through our recent acquisition of Focus Media Wireless;
•
Our ability to successfully operate and market our new outdoor LED network; and
•
Our ability to acquire companies that operate advertising businesses complementary
to our existing operations.
Because our primary source of revenue is our advertising service revenue, we focus on factors
that directly affect our advertising service revenue such as the number of advertising time slots
that we have available for sale and the price we charge for our advertising time slots after taking
into account any discounts. The effective price we charge advertising clients for time slots on our
network is affected by the attractiveness of our network to advertisers, the level of demand for
time slots in each city and the perceived effectiveness of our network in achieving the goals of
our advertising clients. The attractiveness and effectiveness of our commercial location network is
in turn directly related to our ability to secure and retain prime locations for our displays and
to increase the number of displays, locations and cities in our network.
As we continue to expand our network, we expect to face a number of challenges. We have
expanded our network rapidly, and we, as well as our competitors, have occupied many of the most
desirable locations in China's major cities. In order to continue expanding our network in a manner
that is attractive to potential advertising clients, we may continue to enter into new advertising
media platforms and to establish additional stand-alone networks that provide effective channels
for advertisers. In addition, we must react to continuing technological innovations, such as the
potential uses of wireless and broadband technology in our network, and changes in the regulatory
environment, such as the regulations allowing 100% foreign ownership of PRC advertising companies
and new regulations governing cross-border investment by PRC persons.
Our financial results since the beginning of 2006 also include those of Framedia that we
acquired on January 1, 2006, of Target Media that we acquired on February 28, 2006 and, starting in
the second quarter of 2006, those of Focus Media Wireless that we acquired in March 2006.
Revenues
In 2003, 2004 and 2005, and for the three months ended March 31, 2006, we had total revenues
of $3.8 million, $29.2 million, $68.2 million and $33.1 million, respectively. We generate revenues
primarily from the sale of advertising time slots on our out-of-home television advertising
networks and, beginning in 2006, from the sale of frame space on our poster frame network. Our
advertising service revenue includes the sale of advertising time slots on our network, as well as
a small amount of revenue attributable to other advertising related services we provide to our
advertising clients. We also derive revenues from the sale of our flat-panel displays to regional
distributors, which we refer to as our advertising equipment revenue. In 2003, 2004 and 2005, and
for the three months ended March 31, 2006, our advertising service revenue accounted for 89.6%,
90.1%, 98.1% and 99.1% of our total revenues, respectively. The following table sets forth a
breakdown of our total revenues for the periods indicated:
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Table of Contents
For the year ended December 31,
For the three months ended March 31,
2003
2004
2005
2005
2006
% of
% of
% of
% of
% of
total
total
total
total
total
$
revenues
$
revenues
$
revenues
$
revenues
$
revenues
(in thousands of U.S. dollars, except percentages)
Net revenues:
Commercial location
network(1)
$
3,369
89.6
%
$
26,321
90.1
%
$
61,435
90.0
%
$
9,432
98.5
%
$
21,472
64.8
%
In-store
network:(1)
—
—
—
—
5,469
8.0
%
—
—
5,293
16.0
%
Poster frame
network(1)
—
—
—
—
—
—
—
—
6,067
18.3
%
Advertising service
revenue
3,369
89.6
%
26,321
90.1
%
66,904
98.1
%
9,432
98.5
%
32,832
99.1
%
Advertising
equipment
revenue
389
10.4
%
2,889
9.9
%
1,325
1.9
%
142
1.5
%
304
0.9
%
Total revenues
$
3,758
100.0
%
$
29,210
100.0
%
$
68,229
100.0
%
$
9,574
100.0
%
$
33,136
100.0
%
(1)
Advertising service revenue is presented net of business tax. Business tax on advertising
service revenue from our commercial location network amounted to $311,770, $2.8 million, $6.0
million, $936,405 and $2.1 million in 2003, 2004 and 2005, and for the three months ended
March 31, 2005 and 2006, respectively. Business tax on advertising service revenue for our
in-store network amounted to $524,271, $nil and $524,357 in 2005 and for the three months
ended March 31, 2005 and 2006. Business tax on advertising service revenue for our poster
frame network amounted to $590,972 for the three months ended March 31, 2006. Business tax
includes business tax of 5.55% and cultural industries tax of 4.0%.
We also break down our total revenues into related-party and unrelated-party sources. The
following table presents a more detailed breakdown of our gross revenues and its component parts:
For the year ended December 31,
For the three months ended March 31,
2003
2004
2005
2005
2006
% of
% of
% of
% of
% of
total
total
total
total
total
$
revenues
$
revenues
$
revenues
$
revenues
$
revenues
(in thousands of U.S. dollars, except percentages)
Gross Advertising
Service
Revenue:
Commercial Locations
— Unrelated parties
$
2,581
68.7
%
$
25,322
86.7
%
$
62,633
91.8
%
$
9,234
96.5
%
$
21,400
64.6
%
— Related parties
1,099
29.2
%
3,788
13.0
%
4,793
7.0
%
1,134
11.8
%
2,154
6.5
%
Total Commercial
Locations
3,680
97.9
%
29,109
99.7
%
67,426
98.8
%
10,368
108.3
%
23,554
71.1
%
In-store Network
— Unrelated parties
—
—
—
—
5,475
8.0
%
—
—
5,215
15.7
%
— Related parties
—
—
—
—
518
0.8
%
—
—
602
1.8
%
Total in-store network
—
—
—
—
5,993
8.8
%
—
—
5,818
17.5
%
Poster Frame Network
— Unrelated parties
—
—
—
—
—
—
—
—
6,658
20.1
%
— Related parties
—
—
—
—
—
—
—
—
—
—
Total Poster Frame
Network
—
—
—
—
—
—
—
—
6,658
20.1
%
Gross Advertising
Services
Revenue:
3,680
97.9
%
29,109
99.7
%
73,419
107.6
%
10,368
108.3
%
36,030
108.7
%
Less: Sales taxes:
Commercial
Locations
311
8.3
%
2,788
9.6
%
5,991
8.7
%
936
9.8
%
2,082
6.2
%
In-store Network
—
—
—
—
524
0.8
%
—
—
524
1.6
%
Poster Frame
Network
—
—
—
—
—
—
—
—
592
1.8
%
Total sales taxes
311
8.3
%
2,788
9.6
%
6,515
9.5
%
936
9.8
%
3,198
9.6
%
Net Advertising Service
Revenue
3,369
89.6
%
26,321
90.1
%
66,904
98.1
%
9,432
98.5
%
32,832
99.1
%
Add: Advertising
Equipment Revenue:
389
10.4
%
2,889
9.9
%
1,325
1.9
%
142
1.5
%
304
0.9
%
Net revenues:
$
3,758
100.0
%
$
29,210
100.0
%
$
68,229
100.0
%
$
9,574
100.0
%
$
33,136
100.0
%
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Advertising Service Revenue
Sources of Revenues. We derive most of our total revenues from the sale of time slots on our
commercial location network and our in-store network to unrelated third parties and to some of our
related parties. Beginning in the first quarter of 2006, we began to derive revenue from the sale
of frame space on our poster frame network and WAP-based mobile handset advertisements. We report
our advertising revenue between related and unrelated parties because historically more than 10% of
our advertising service revenues came from clients related to some of our directors. Our
advertising services to related parties were provided in the ordinary course of business on the
same terms as those provided to our unrelated advertising clients on an arm's-length basis. In
addition, we generate a small percentage of advertising services revenue from other advertising
related services we provide to our advertising clients. Prior to May 2003, these other
advertising-related services included commissions we received when we operated as an advertising
agent. Since May 2003, these other advertising-related services have been derived from technical
services we provide to some of our regional distributors and other advertising-related services
commissioned by some of our advertising clients.
Our advertising service revenue is recorded net of any sales discounts from our standard
advertising rate cards that we may provide to our advertising clients. These discounts include
volume discounts and other customary incentives offered to our advertising clients, including
additional broadcast time for their advertisements if we have unused time slots available in a
particular city's advertising cycle, and represent the difference between our standard rate card
and the amount we charge our advertising clients. Our advertising clients include advertisers that
directly engage in advertisement placements with us and advertising agencies retained by some
advertisers to place advertisements on the advertiser's behalf. We expect that our advertising
service revenue will continue to be the primary source, and constitute the substantial majority of,
our revenues for the foreseeable future.
Our advertising service revenue reflects a deduction for business taxes and related surcharges
incurred in connection with the operations of Focus Media Advertisement and its subsidiaries. Their
revenues are subject to a sales tax consisting of a 5.55% business tax and a 4.0% cultural
industries tax on revenues earned from their advertising services provided in China. We deduct
these amounts from our advertising service revenues to arrive at our total revenues attributable to
advertising services.
Factors that Affect Our Advertising Service Revenue.
Commercial location network. Our advertising service revenue derived from our commercial
location network is directly affected by:
•
the number of advertising time slots that we have available to sell, which is
determined by the number of cities in which we directly operate, our expansion into
additional cities, the two- ninths portion of cycle time available on our regional
distributors' networks and the length of the advertising cycle, which is currently
twelve minutes except in some cities operated by our regional distributors that use a
nine minute cycle. We calculate the number of time slots available by taking the total
advertising time available on our network during a particular period, calculated in
aggregate seconds, which we then divide by 30 to determine the number of 30-second
equivalent time slots available. We can increase the number of advertising time slots
that we have available to sell by expanding into additional cities or acquiring our
regional distributors, which provides us with the remaining seven-ninths of the time
slots per cycle operated by the regional distributor. The length of our advertising
cycle can potentially be extended to longer durations depending on demand in each city.
The twelve-minute advertising cycle amounts to the equivalent of 24 30-second time
slots per week. In cities where our regional distributors use a nine-minute advertising
cycle, the cycle amounts to the equivalent of 18 30-second time slots per week; and
•
the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered. We
calculate average quarterly advertising service revenue for our Tier I, Tier II cities
and as a blended average of all cities each quarter.
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Table of Contents
In-store network. Our advertising service revenue derived from our in-store network is
directly affected by:
•
the number of advertising time slots that we have available to sell, which is
determined by the number of stores in which we operate, our expansion into additional
stores, and the length of the advertising cycle, which is currently twelve minutes, or
24 30-second equivalent time slots. As with our commercial location network, for our
in-store network we calculate the number of time slots according to the number of
30-second equivalent time slots available. The length of our advertising cycle can
potentially be extended to longer durations depending on demand in each city; and
•
the average price we charge for our advertising time slots, which we calculate by
dividing our advertising service revenue by the number of 30-second equivalent time
slots sold during that period, after taking into account any discount offered. Our
revenues are also affected by the average quarterly advertising service revenue we
derive per 30-second equivalent time slot sold per quarter.
Poster frame network
. Our advertising service revenue derived from our poster frame network
is directly affected by:
•
the number of frames in our poster frame network. We sell frame space on our poster
frame network on a per frame basis. Increasing the number of residential and other
locations on our poster frame network allows us to increase the number of frames on our
network, thereby increases the available frame space for sale to advertisers. We
generally place up to three advertising poster frames in each elevator where we deploy
frames per display; and
•
the average price we charge for frame space on a per frame basis, after taking into
account any discount offered.
Mobile handset advertising network
. Our advertising service revenue derived from our mobile
handset advertising network is directly affected by:
•
the number of messages we deliver to WAP users. We send WAP message advertisements
to WAP users from approximately 100 WAP service providers, and we charge fees based on
the number of successfully delivered messages; and
•
the average price we charge per message.
Prices for time slots on our commercial location and in-store networks and for frame space on
our poster frame network also vary significantly from city to city as income levels, standards of
living and general economic conditions vary significantly from region to region in China, which in
turn affect the advertising rates we are able to charge for time slots and frame space.
Network Expansion
. Many of the most desirable locations for our network have been occupied,
either by our network as a result of our expansion or by our competitors. As a result, we will need
to rely on means other than the rapid increase in the number of locations, flat-panel displays and
advertising poster frames in order to continue growing our revenues. We have focused, and expect to
continue to focus, on developing new channels in our out-of-home television advertising networks
and entering into new types of advertising media operations to continue to grow our revenues and to
address these potential capacity constraints on our existing network. In recent months, these steps
have included: (1) expanding our in-store network and (2) establishing discrete stand-alone
channels on our commercial location network, such as our premier A and B office building, travel,
fashion, elite and healthcare channels, enabling us to increase the number of time slots available
for sale. We expect to continue to explore opportunities to open up additional channels on our
existing network and to enter into new advertising media platforms in China. We believe these
measures will enable us to continue the future growth of our business. We have also expanded our
advertising network with the addition of Framedia's poster frame network in January 2006. We intend
to continue expanding our out-of-home advertising network both through increasing the number of
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Table of Contents
locations, displays and advertising poster frames on our commercial location, in-store and poster
frame networks and through strategic acquisition of competitors and businesses that complement our
existing out-of-home advertising network. Following our acquisition of Target Media in February
2006, we expanded our network significantly by combining Target Media's flat-panel display network
with our network. In addition, we recently entered into new advertising platforms through Focus
Media Wireless' WAP-based mobile handset advertising network and our outdoor LED digital billboard
network.
Seasonality
. Our advertising service revenue is subject to key factors that affect the level
of advertising spending in China generally. In addition to fluctuations in advertising spending
relating to general economic and market conditions, advertising spending is also subject to
fluctuations based on the seasonality of consumer spending. In general, a disproportionately larger
amount of advertising spending is concentrated on product launches and promotional campaigns prior
to the holiday season in December. In addition, advertising spending generally tends to decrease in
China during January and February each year due to the Chinese Lunar New Year holiday as office
buildings and other commercial venues in China tend to be closed during the holiday. We believe
this effect will be less pronounced with regard to advertising spending on our in-store network, as
we believe commercial activity in hypermarkets and supermarkets is stable or even enhanced during
the period of Chinese Lunar New Year. We also experience a slight decrease in revenues during the
hot summer months of July and August each year, when there is a relative slowdown in overall
commercial activity in urban areas in China. Our past experience, although limited, indicates that
our revenues would tend to be lower in the first quarter and higher in the fourth quarter of each
year, assuming other factors were to remain constant, such as our advertising rates and the number
of available time slots on our network. We expect this effect to be partially offset by steady or
enhanced advertising service revenue from our in-store network, which we believe is less
susceptible to the effects of seasonality than our commercial location network, poster frame
network and mobile handset advertising network.
Revenue Recognition
. We typically sign standard advertising contracts with our advertising
clients, which require us to run the advertiser's advertisements on our network in specified cities
for a specified period, typically from four to twelve weeks. We recognize advertising service
revenue ratably over the performance period of the advertising contract, so long as collection of
our fee remains probable. We do not bill our advertising clients under these contracts until we
perform the advertising service by broadcasting the advertisement on our network. Revenue collected
from our poster frame network is recognized in substantially the same manner as revenues collected
under the advertising contracts used for our commercial location and in-store networks.
We generally collect our advertising service fees by billing our advertising clients within 60
to 90 days after completion of the advertising contract and book these unbilled or unpaid amounts
as accounts receivable until we receive payment or determine the account receivable to be
uncollectible. Target Media's accounts receivable historically remained outstanding for longer
periods of time than ours. We expect the average number of days outstanding for our accounts
receivable to be higher as a result of our acquiring Target Media's accounts receivable. We expect
the average period that our accounts receivable will remain outstanding to revert to our historical
levels after we begin to apply our accounts receivable policy to Target Media's accounts
receivable.
Our accounts receivable are general unsecured obligations of our advertising clients and we do
not receive interest on unpaid amounts. We make specific reserves for accounts that we consider to
be uncollectible. We also provide a general reserve for uncollectible accounts that we reassess on
an annual basis. We made no provision for uncollectible accounts in 2003. In 2004 and 2005 and for
the three months ended March 31, 2006, we made provision of $173,837, $235,604 and $194,723,
respectively, for accounts receivable that were outstanding for longer than six months. The average
number of days outstanding of our accounts receivable, including from related parties, was 71, 66,
71 and 75, respectively, as of December 31, 2003, 2004 and 2005 and March 31, 2006.
Advertising Equipment Revenue
We also derive a portion of our total revenues from the sale of flat-panel displays to our
regional distributors on a cost-plus basis, which we record as advertising equipment revenue. Our
advertising equipment revenue represented 10.4%, 9.9%, 1.9% and 0.9% of our total revenues in 2003,
2004 and 2005 and for the three months ended March 31, 2006, respectively. Our advertising
equipment revenue is recorded net of the 17% value added tax to which equipment sales in China are
subject.
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Table of Contents
We expect that advertising equipment sales as a percentage of our total revenues will
continue to be low because as we acquire our regional distributors, any growth in our network in
these cities will not involve any future sales of advertising equipment; and growth in the size of
the networks of our regional distributors is expected to slow as the most desirable locations have
been occupied by them or our competitors.
We recognize advertising equipment revenue when delivery of flat-panel displays has occurred
and risk of ownership has passed to the distributor. We bill our regional distributors for
flat-panel displays upon delivery and generally require payment within three to five days of
delivery.
Cost of Revenues
Our cost of revenues consists of costs directly related to the offering of our advertising
services and costs related to our sales of advertising equipment.
The following table sets forth our cost of revenues, divided into its major components, by
amount and percentage of our total revenues for the periods indicated:
For the year ended
December 31,
For the three months ended March 31,
2003
2004
2005
2005
2006
% of
% of
% of
% of
% of
total
total
total
total
total
$
revenues
$
revenues
$
revenues
$
revenues
$
revenues
(in thousands of U.S. dollars, except percentages)
Total revenues
$
3,758
100.0
%
$
29,210
100.0
%
$
68,229
100.0
%
$
9,574
100.0
%
$
33,136
100.0
%
Cost of revenues:
Net advertising
service cost:
Commercial
location network
1,566
41.7
%
6,746
23.1
%
17,943
26.3
%
2,903
30.3
%
8,035
24.3
%
In-store network
—
—
—
—
7,423
10.9
%
286
3.0
%
3,973
12.0
%
Poster frame
network
—
—
—
—
—
—
—
—
2,397
7.2
%
Advertising
service cost
1,566
41.7
%
6,746
23.1
%
25,366
37.2
%
3,189
33.3
%
14,405
43.5
%
Net advertising
equipment cost
275
7.3
%
1,934
6.6
%
976
1.4
%
71
0.7
%
232
0.7
%
Total cost of
revenues
1,841
49.0
%
8,680
29.7
%
26,342
38.6
%
3,260
34.0
%
14,637
44.2
%
Gross profit
1,917
51.0
%
20,530
70.3
%
41,887
61.4
%
6,314
66.0
%
18,499
55.8
%
Net Advertising Service Costs
Our cost of revenues related to the offering of our advertising services on our advertising
network consists of location costs, flat-panel display depreciation costs and other cost items,
including salaries for and travel expenses incurred by our network maintenance staff and costs for
materials.
Our location costs for our out-of-home television networks consist of:
•
rental fees and one-time signing payments we pay to landlords, property managers and
stores pursuant to the display placement agreements we enter into with them;
•
commissions and public relations expenses we incur in connection with developing and
maintaining relationships with landlords and property managers; and
•
maintenance fees for keeping our displays in proper operating condition.
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Generally, we capitalize the cost of our media displays and recognize depreciation costs on a
straight-line basis over the term of their useful lives, which we estimate to be five years. The
primary factors affecting our depreciation costs are the number of flat-panel displays in our
network and the unit cost for those displays, as well as the remaining useful life of the displays.
We expect our results of operations for a period of at least seven years beginning in 2006 to be
negatively affected by the amortization of intangible assets in relation to, among other things,
material contracts and customer lists as a result of several acquisitions, particularly Framedia
and Target Media.
Our other cost of revenues consists of salary for and travel expenses incurred by our network
maintenance staff and costs for materials and maintenance in connection with the upkeep of our
advertising network. The primary factor affecting our other costs of revenues is the size of our
network maintenance staff. As the size of our network increases, we expect our network maintenance
staff, and associated costs, to increase in absolute terms, but to decrease as a percentage of
total revenues.
Commercial Location Network. Location costs are the largest component of our cost of revenues
for our commercial location network. The primary factors affecting the amount of our location costs
include the number of display placement agreements we enter into and the rental fees we pay under
those agreements. We expect these costs to decrease as a percentage of our advertising service
revenue for our commercial location network in the future, as our advertising service revenue for
our commercial location network is expected to increase faster than the additional cost we incur
from entering into new display placement agreements and any increases we may experience in renewing
existing display placement agreements. However, when our display placement agreements expire, we
may be unable to renew these agreements on favorable terms and the rental fee portion of our
location costs attributable to these existing locations could increase. As we continue to increase
the size of our network and as we update and replace our existing displays with new technology, our
depreciation costs in connection with our commercial location network are expected to increase.
In-store Network. The primary costs of revenues connected with our in-store network are
location costs resulting from rental and maintenance fees and depreciation costs for our displays.
We expect these costs to continue to increase in 2006 as we expand our in-store network and to
decrease as a percentage of advertising service revenue for our in-store network.
Poster Frame Network. The primary costs of revenues connected with our poster frame network
are location costs resulting from rental fees. Depreciation costs for our frames and other costs
for salary and maintenance fees also account for a significant portion of cost of revenues for our
poster frame network. We expect these costs to increase in 2006 as we expand our poster frame
network but to decrease as a percentage of advertising service revenue for our poster frame
network.
Net Advertising Equipment Cost
Our net advertising equipment cost consists of the amounts we pay to the contract assembler
who purchases the components and assembles them into the flat-panel displays we sell to our
regional distributors. Our net advertising equipment cost accounted for 7.3%, 6.6%, 1.4% and 0.7%
of our total revenues in 2003, 2004 and 2005 and for the three months ended March 31, 2006,
respectively. The primary factors affecting our net advertising equipment cost are the number of
flat-panel displays we sell and the unit cost we pay to our contract assembler for each such
flat-panel display.
Operating Expenses and Net Income
Our operating expenses consist of general and administrative and selling and marketing
expenses. In 2004, our operating expenses also included a goodwill impairment loss. The following
table sets forth our operating expenses, divided into their major categories by amount and as a
percentage of our total revenues for the periods indicated.
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Table of Contents
For the year ended December 31,
For the three months ended March 31,
2003
2004
2005
2005
2006
% of
% of
% of
total
total
% of total
% of total
total
$
revenues
$
revenues
$
revenues
$
revenues
$
revenues
(in thousands of U.S. dollars, except percentages)
Gross profit
$
1,917
51.0
%
$
20,530
70.3
%
$
41,887
61.4
%
$
6,314
65.9
%
$
18,499
55.8
%
Operating expenses:
General and
administrative
985
26.2
%
3,988
13.7
%
9,120
13.4
%
1,881
19.6
%
4,395
13.3
%
Selling and
marketing
407
10.8
%
3,454
11.8
%
9,544
14.0
%
1,492
15.6
%
4,057
12.2
%
Amortization of
acquired
intangibles
—
—
77
0.3
%
437
0.6
%
67
0.7
%
999
3.0
%
Goodwill impairment
loss
—
—
58
0.2
%
—
—
—
—
%
—
—
Total
1,392
37.0
%
7,577
26.0
%
19,101
28.0
%
3,440
35.9
%
9,451
28.5
%
Income from
operations
525
14.0
%
12,953
44.3
%
22,786
33.4
%
2,874
30.0
%
9,048
27.3
%
General and Administrative
. General and administrative expenses primarily consist of
salary and benefits for management, business tax mainly relating to license fees paid by our
affiliated PRC companies to Focus Media Advertisement and to Focus Media Digital, accounting and
administrative personnel, office rental, maintenance and utilities expenses, depreciation of office
equipment, other office expenses and professional services fees. General and administrative
expenses accounted for 26.2%, 13.7%, 13.4% and 13.3% of our total revenues in 2003, 2004 and 2005
and for the three months ended March 31, 2006, respectively. Salaries and benefits accounted for
28.1%, 20.2%, 26.9% and 20.2% of our general and administrative expenses in 2003, 2004 and 2005 and
for the three months ended March 31, 2006, respectively. We expect that our general and
administrative expenses will be relatively stable as a percentage of total revenues in the near
term but to increase in absolute terms as we hire additional personnel and incur additional costs
in connection with the expansion of our business and with being a publicly traded company,
including costs of enhancing our internal controls.
Share-based Compensation Relating to General and Administrative
. Our share-based compensation
expense relating to general and administrative consists of the amortized portion of deferred
share-based compensation recognized by us. We issued options representing 10.87% of our issued
share capital under our 2003 Employee Share Option Scheme, or the 2003 Option Plan. In addition, we
have issued options representing 3.95% of our issued share capital under our 2005 Share Option
Plan, or the 2005 Option Plan. Our share-based compensation relating to general and administrative
accounted for 7.5% and 25.7% of our general and administrative expenses in 2005 and for the three
months ended March 31, 2006, respectively. Our general and administrative expenses, including our
share-based compensation, have increased and are expected to continue to increase following the
effectiveness, as of January 2006, of the new accounting treatment Statement of Financial
Accounting Standards No. 123(R) relating to share-based compensation. As a result, we recorded
compensation expense of $1.5 million for the three months ended March 31, 2006.
Selling and Marketing
. Our selling and marketing expenses primarily consist of salaries and
benefits for our sales staff, marketing and promotional expenses, and other costs related to
supporting our sales force. Selling and marketing expenses accounted for 10.8%, 11.8%, 14.0% and
12.2% of our total revenues in 2003, 2004 and 2005 and for the three months ended March 31, 2006,
respectively. As we acquired more of our regional distributors, continue to expand our client base
and have commenced operation of new advertising platforms, we increased our sales force, which
resulted in an increase in salary expenses. We now budget approximately 15% of our advertising
revenues to be used for selling and marketing. We expect selling and marketing expenses to remain
relatively stable as a percentage of total revenues.
Amortization of Acquired Intangibles
. Our amortization of acquired intangibles consists of
the amortized portion of intangible assets we acquired through our acquisition of other companies,
businesses and assets. Amortization of acquired intangibles accounted for 0.6%, 0.7% and 3.0% of
our total revenues in 2005 and for the three months ended March 31, 2005 and 2006, respectively.
Critical Accounting Policies
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We prepare our financial statements in conformity with U.S. GAAP, which requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities on the date of the financial statements and the reported amounts
of revenues and expenses during the financial reporting period. We continually evaluate these
estimates and assumptions based on the most recently available information, our own historical
experience and on various other assumptions that we believe to be reasonable under the
circumstances. Since the use of estimates is an integral component of the financial reporting
process, actual results could differ from those estimates. Some of our accounting policies require
higher degrees of judgment than others in their application. We consider the policies discussed
below to be critical to an understanding of our financial statements as their application places
the most significant demands on our management's judgment.
Share-based Compensation
Through 2005, we accounted for our stock option plan using the intrinsic value method under
Accounting Principles Board, or APB, No. 25. Effective the beginning of 2006, we adopted Statement
of Financial Accounting Standards, or SFAS, No. 123-R, "Share-Based Payment", and elected to adopt
the modified prospective application method. SFAS No. 123-R requires us to use a fair-value based
method to account for share-based compensation. Accordingly, share-based expense is measured at the
grant date, based on the fair value of the award, and is recognized as expense over the employees'
requisite service period. Total compensation cost of our share plan in the first quarter 2006 was
$1.5 million. The expected impact that the adoption of the standard will have on our stock-based
compensation costs for 2006 is $6.1 million.
We estimated the fair value of share options granted using the Black-Scholes-Merton option
pricing model formula and a simple option award approach. The fair value was then amortized on a
straight-line basis over the requisite service periods of the awards, which is generally the
vesting period. This option-pricing model requires the input of highly subjective assumptions,
including the option's expected life, estimated forfeitures and the price volatility of the
underlying shares.
Income Taxes
We account for income taxes under the provisions of SFAS No. 109, "Accounting for Income
Taxes", with the required disclosures as described in note 15 to our consolidated financial
statements. We record a valuation allowance to reduce our deferred tax assets to the amount that we
believe is more likely than not to be realized. In the event we were to determine that we would be
able to realize our deferred tax assets in the future in excess of their recorded amount, an
adjustment to our deferred tax assets would increase our income in the period such determination
was made. Likewise, if we determine that we would not be able to realize all or part of our net
deferred tax assets in the future, an adjustment to our deferred tax assets would be charged to our
income in the period such determination is made. We record income tax expense on our taxable income
using the balance sheet liability method at the effective rate applicable to each of our affiliated
entities in China in our consolidated statements of operations and comprehensive income.
Goodwill and Acquisition Impairment
Beginning in 2002, with the adoption of SFAS No. 142, "Goodwill and Other Intangible Assets",
goodwill is no longer amortized, but instead tested for impairment upon first adoption and annually
thereafter, or more frequently if events or changes in circumstances indicate that it might be
impaired. SFAS No. 142 requires us to complete a two-step goodwill impairment test. The first step
compares the fair values of each business unit to its carrying amount, including goodwill. If the
fair value of each business unit exceeds its carrying amount, goodwill is not considered to be
impaired and the second step will not be required. SFAS No. 142 requires completion of this first
step within the first six months of initial adoption and annually thereafter. If the carrying
amount of a reporting unit exceeds its fair value, the second step compares the implied fair value
of goodwill to the carrying value of a business unit's 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.
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As of December 31, 2003, 2004 and 2005 and March 31, 2006, we had a goodwill balance of nil,
$9.1 million, $13.3 million and $406.8 million, respectively, which is not deductible for tax
purposes. We incurred a goodwill impairment loss of $58,397 in 2004 in connection with our
acquisition of Perfect Media. In conducting our annual impairment test, we undertook a valuation of
Perfect Media using the expected present value of cash flow and the income approach valuation
methods, which resulted in a goodwill impairment loss of $58,397 in 2004, indicating that the value
of Perfect Media was less than what we paid at the time we acquired it. We will perform the annual
goodwill impairment test generally as of December 31, to determine if there is any further goodwill
impairment. We recorded goodwill of $9.1 million in 2004 in connection with the acquisition of ten
of the eleven companies we acquired during that year, which will be subject to the annual goodwill
impairment test on December 31 of each year. The purpose of our acquisitions of our regional
distributors was to expand the size of our network while our acquisition of Shanghai Qianjian
Advertising Co., Ltd., or Qianjian, and Perfect Media enhanced our advertising services by adding
to our existing network complementary lines of business, such as advertising networks placed in
commercial banks, in the case of Qianjian, and advertising services offered at automatic shoe-shine
machines located in buildings, in the case of Perfect Media. The recognition of goodwill from these
acquisitions was a result of a purchase price in excess of the tangible assets of these companies
and the goodwill they had generated from the operation of various advertising services. We recorded
goodwill of $392 million in connection with Infoachieve, Target Media and Focus Media Wireless
which we acquired during the first quarter of 2006.
Commencing in 2005, we reorganized the financial information reviewed by the chief decision
maker, the chief executive officer, whereby the financial information of Perfect Media was prepared
and presented together with that of out-of-home media display advertising services. Accordingly, we
believe we have only one operating segment which is out-of-home advertising services as of December
31, 2005. As a result, for the purpose of SFAS No. 142, goodwill was tested for impairment at the
consolidated level as of December 31, 2005.
As a result of the acquisition of Infoachieve and Dotad in the period ended March 31, 2006, we
have two new operating and reporting segments, including poster frame network advertising services
and mobile-phone advertising service.
We may incur additional goodwill impairment charges in the future although we cannot predict
whether this will occur when we perform our goodwill impairment test each year.
Taxation
Cayman Islands, the British Virgin Islands and Hong Kong.
Under the current laws of the Cayman Islands, the British Virgin Islands and Hong Kong,
neither Focus Media Holding Limited, incorporated in the Cayman Islands, nor Infoachieve Limited
and Dotad Holdings Limited, incorporated in the British Virgin Islands, are subject to tax on its
income or capital gains. Focus Media Hong Kong, our wholly owned subsidiary incorporated in Hong
Kong, is subject to profits tax rate of 17.5% on its assessable profits, yet interest derived from
deposits placed in Hong Kong with authorized institutions are exempted from the Hong Kong profits
tax. In addition, payment of dividends by either company is not subject to withholding tax in those
jurisdictions.
PRC
Our PRC entities are subject to PRC business tax. We primarily pay business tax on gross
revenues generated from our advertising services. Focus Media Advertisement and its subsidiaries,
and New Focus Media Advertisement, pay a 5% business tax on the gross revenues derived from
advertising services and this business tax is deducted from total revenues in calculating the net
revenues. Focus Media Technology and Focus Media Digital pay a 5% business tax on the gross
revenues derived from their contractual arrangements with Focus Media Advertisement and its
subsidiaries and these taxes are primarily recorded in operating expenses.
In addition to business tax and cultural industries tax imposed on our advertising business
and VAT imposed on our sales of advertising equipment. Focus Media Technology, Focus Media Digital
and Focus Media Advertisement and its subsidiaries, including Focus Media Advertising Agency and
New Focus Media Advertisement, are subject
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to PRC enterprise income tax on their taxable income, except to the extent some of them enjoy
temporary tax exempt status as described in further detail below.
Pursuant to PRC law, enterprise income tax is generally assessed at the rate of 33% of taxable
income. Focus Media Technology, Focus Media Digital, Focus Media Advertisement and its subsidiaries
and New Focus Media Advertisement are currently subject to this 33% enterprise income tax. State
Administration of Taxation and its delegates of the PRC are authorized to grant an exemption from
enterprise income tax of up to two years to newly established domestic companies that have no
direct foreign ownership and that are financially independent and engaged in consulting services,
technology services or the information industry, which includes advertising services. A qualifying
company must apply for this tax-exempt status for each of the two years separately. Focus Media
Digital and Focus Media Advertising Agency were established in October 2004 and both were granted
exemptions from enterprise income tax in 2004 and 2005. In 2006 and 2007, we intend to continue our
tax exempt status through New Focus Media Advertisement, which were established in December 2005
and has obtained tax-exempt approval for 2006 and 2007.
In November 2004, Focus Media Technology, Focus Media Advertisement and some of its
subsidiaries sold all of their flat-panel display equipment to Focus Media Digital at fair market
value. As a result of this sale, Focus Media Technology and Focus Media Advertisement recorded a
non-cash charge to earnings in the aggregate of $4,773,030 in the fourth quarter of 2004, which
reflected the difference between the fair market value of the equipment and its then current book
value. In addition, since its establishment, through December 31, 2005, Focus Media Advertising
Agency has generated revenue by selling time slots on our advertising network and pays a
dissemination fee to Focus Media Advertisement and its certain subsidiaries, which places
advertisements for Focus Media Advertising Agency's clients on our network. Finally, Focus Media
Advertisement and its subsidiaries also license technology used in our business operations from
Focus Media Digital in exchange for license fees paid to Focus Media Digital. As a result of Focus
Media Advertisement's amortization of the license fee paid to Focus Media Digital, it incurred a
charge to earnings of $3.7 million in the fourth quarter of 2004. See "Item 7.B Major Shareholders
and Related Party Transactions — Related Party Transactions" for further information on these
transactions and contractual agreements. Although these transactions were eliminated upon
consolidation as transactions among members of our consolidated companies for financial accounting
purposes, they did have the affect of reducing our total income tax expense and increasing our
after tax net income in 2004.
As a result of these transactions, our effective tax rates were 72% and 2.9% in 2004 and 2005,
respectively. Excluding the non-recurring non-cash charge resulting from the change in fair value
of derivative liability associated with Series B convertible redeemable preference shares and
goodwill impairment loss, our effective tax rate for 2004 would have been 7.0%. The tax savings
resulting from the non-cash charge to earnings from the write-down of flat-panel display equipment
in 2004 and the charge to earnings from the amortization of the license fee paid in 2004 will not
continue in the future.
In December 2005, we established New Focus Media Advertisement which has received tax-exempt
approval for 2006 and 2007.
In December 2005, Focus Media Digital sold all of its flat-panel display equipment to New
Focus Media Advertisement at fair market value and Focus Media Digital sold all of its technology
to New Focus Media Advertisement in January 2006 at a fixed fee. As of January 2006, New Focus
Media Advertisement generates revenue by selling time slots on our advertising network and pays a
dissemination fee to Focus Media Advertisement and its certain subsidiaries, which places
advertisements for New Focus Media Advertisement's clients on our network. While we expect these
transactions to be eliminated upon consolidation as transactions among members of our consolidated
companies for financial accounting purposes, we expect them to have the affect of reducing our
total income tax expense and increasing our after tax net income in 2006 and 2007. See "Item 7.B
Major Shareholders and Related Party Transactions — Related Party Transactions" for further
information on these transactions and contractual agreements. In addition, upon expiration of these
tax exemptions, we will consider available options, in accordance with applicable law, that would
enable us to qualify for further tax exemptions, if any, to the extent they are then available to
us.
Under PRC law, arrangements and transactions among related parties may be subject to audit or
challenge by the PRC tax authorities. If any of the transactions described above are found not to
be on an arm's-length basis, or to
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Table of Contents
result in an unreasonable reduction in tax under PRC law, the PRC tax authorities have the
authority to disallow our tax savings, adjust the profits and losses of our respective PRC entities
and assess late-payment interest and penalties. A finding by the PRC tax authorities that we are
ineligible for the tax savings we achieved in 2004 and 2005, or that we expect to achieve in 2006
and 2007, or that Focus Media Digital, Focus Media Advertising Agency, New Focus Media
Advertisement, New Structure Advertisement, or Framedia Advertisement are ineligible for their tax
exemptions, would substantially increase our taxes owed and reduce our net income and the value of
your investment. As a result of this risk, you should evaluate our results of operations and
financial condition without regard to these tax savings. See "Item 3.D Key Information — Risk
Factors — Risks Relating to Regulation of Our Business and to Our Structure — Contractual
arrangements we have entered into among our subsidiaries and affiliated entities may be subject to
scrutiny by the PRC tax authorities and a finding that we owe additional taxes or are ineligible
for our tax exemption, or both, could substantially increase our taxes owed, and reduce our net
income and the value of your investment."
Recently Issued Accounting Standards
In February 2006, the Financial Accounting Standards Board, or FASB, issued Statement of
Financial Accounting Standard, or SFAS, No. 155, "Accounting for Certain Hybrid Instruments-an
amendment of FASB Statements 133 and 140", which is effective for all financial instruments
acquired or issued after the beginning of an entity's first fiscal year that begins after September
15, 2006. The statement improves financial reporting by eliminating the exemption from applying
SFAS No. 133 to interests in securitized financial assets so that similar instruments are accounted
for similarly regardless of the form of the instruments. The statement also improves financial
reporting by allowing a preparer to elect fair value measurement at acquisition, at issuance, or
when a previously recognized financial instrument is subject to a re-measurement event, on an
instrument-by-instrument basis, in cases in which a derivative would otherwise have to bifurcated,
if the holder elects to account for the whole instrument on a fair value basis. We are currently
evaluating the impact, if any, of this statement on our consolidated combined financial statements.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections", or SFAS
154, which replaces Accounting Principles Board Opinions No. 20, "Accounting Changes" and SFAS No.
3, "Reporting Accounting Changes in Interim Financial Statements — An Amendment of APB Opinion No.
28." SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error
corrections. It establishes retrospective application, or the latest practicable date, as the
required method for reporting a change in accounting principle and the reporting of a correction of
an error. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005. The adoption of this statement will not have a material
effect on our financial position or results of operations.
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment", or SFAS
123-R, which is a revision of SFAS No. 123, "Accounting for Share-Based Compensation", or SFAS 123.
SFAS 123-R supersedes APB 25, "Accounting for Stock Issued to Employees". Generally, the approach
in SFAS 123-R is similar to the approach described in SFAS 123. However, SFAS 123-R requires all
share-based payments to employees, including grants of employee stock options, to be recognized in
the income statement based on the grant-date fair values. Pro forma disclosure previously permitted
under SFAS 123 is no longer an alternative. Through 2005, we accounted for our share option plans
using the intrinsic value method under APB 25. Effective the beginning of 2006, we adopted SFAS
123-R and elected to adopt the modified prospective application method. SFAS 123-R requires us to
use a fair-value based method to account for share-based compensation. Accordingly, share-based
compensation cost is measured at the grant date. As a result, we recorded compensation expense of
$1.5 million for the three months ended March 31, 2006.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs — an amendment of ARB No. 43,
Chapter 4", or SFAS 151. SFAS 151 clarifies the accounting that requires abnormal amounts of idle
facility expenses, freight, handling costs, and spoilage costs to be recognized as current-period
charges. It also requires that allocation of fixed production overheads to the costs of conversion
be based on the normal capacity of the production facilities. SFAS 151 will be effective for
inventory costs incurred on or after July 1, 2005. The adoption of this standard will not have a
material effect on our financial position or results of operations.
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In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets — an
amendment of APB Opinion No. 29", or SFAS 153, which amends Accounting Principles Board Opinion No.
29, "Accounting for Nonmonetary Transactions", to eliminate the exception for nonmonetary exchanges
of similar productive assets and replaces it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. SFAS 153 is effective for nonmonetary assets
exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this statement
will not have a material effect on our financial position or results of operations.
Acquisitions
Since we commenced our current business operations in May 2003, we have acquired 24 companies
to expand the coverage of our network in China and to acquire businesses that are complementary to
our operations. See "Item 10.C Additional Information — Material Contracts".
Some of the businesses we acquired had entities located both in and outside of China. The
consideration we paid for these businesses was made in two parts, one part for the entity located
in China, and the other part for the entity located outside of China. For consideration paid to
acquire entities located in China, we withheld on behalf of sellers who are natural persons 20% of
the amount by which the acquisition price exceeded the registered capital of such PRC entity as
required under the PRC Individual Income Tax Law and related implementation rules. We were not
required to and did not withhold any tax in connection with payments made to acquire the entities
located outside of China. See "Item 3.D Key Information — Risk Factors — Risks Relating to the
People's Republic of China — The PRC tax authorities may require us to pay additional taxes in
connection with our acquisitions of offshore entities that conducted their PRC operations through
their affiliates in China".
The financial statements of:
•
Infoachieve, for the periods ended, and as of, December 31, 2003, 2004 and 2005;
•
Target Media Holdings, for the periods ended, and as of, December 31, 2004 and 2005;
•
Perfect Media Holding Ltd. for the periods ended, and as of, December 31, 2003 and
September 30, 2004;
•
Focus Media Changsha Holding Ltd., Focus Media Qingdao Holding Ltd. and Focus Media
Dalian Holding Ltd. for the period ended, and as of, October 31, 2004; and
•
Capital Beyond Limited for the periods ended, and as of, December 31, 2004 and March
31, 2005, respectively,
are available in our registration statement on Form F-1 (File No. 333-134714).
Quarterly Results of Operation
The following tables present unaudited consolidated quarterly financial data by amount and as
a percentage of our total revenues for each of the eight quarters in the period from April 1, 2004
to March 31, 2006. You should read the following table in conjunction with our audited consolidated
financial statements and related notes included elsewhere in this
annual report. We have prepared the
unaudited consolidated quarterly financial information on substantially the same basis as our
audited consolidated financial statements and using information derived from our unaudited
consolidated financial statements which are not included in this annual
report. The following
information contains normal recurring adjustments which are, in the opinion of our management,
necessary for a fair presentation of the results for such unaudited period. Our operating results
for any quarter are not necessarily indicative of results that may be expected for any future
period.
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Table of Contents
For the three months ended
Consolidated Statement
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
of Operations Data
2004
2004
2004
2005
2005
2005
2005
2006
(in thousands of U.S. dollars)
Net revenues:
Commercial location network(1)
$
5,495
$
7,049
$
11,083
$
9,432
$
13,981
$
17,287
$
20,735
$
21,472
In-store network(1)
—
—
—
—
339
1,813
3,317
5,293
Poster frame network(1)
—
—
—
—
—
—
—
6,067
Total advertising service
revenue
5,495
7,049
11,083
9,432
14,320
19,100
24,052
32,832
Advertising equipment revenue
905
863
683
142
264
366
553
304
Total revenues
6,400
7,912
11,766
9,574
14,584
19,466
24,605
33,136
Cost of revenues:
Commercial location network
1,372
1,655
2,680
3,189
4,066
4,943
6,031
8,035
In-store network
—
—
—
—
1,365
2,606
3,165
3,973
Poster frame network
—
—
—
—
—
—
—
2,397
Advertising service cost:
1,372
1,655
2,680
3,189
5,431
7,549
9,196
14,405
Advertising equipment cost
722
668
242
71
189
285
432
232
Total cost of revenues
2,094
2,323
2,922
3,260
5,620
7,834
9,628
14,637
Gross profit
4,306
5,589
8,844
6,314
8,964
11,632
14,977
18,499
Operating expenses:
General and administrative
500
1,105
2,005
1,881
2,346
2,337
2,585
4,395
Selling and marketing
704
936
1,497
1,492
1,954
2,703
3,366
4,057
Amortization of acquired
intangibles
5
10
62
67
123
120
128
999
Goodwill impairment loss
—
—
59
—
—
—                        —
—
Total operating expenses
1,209
2,051
3,623
3,440
4,423
5,160
6,079
9,451
Income from operations
3,097
3,538
5,221
2,874
4,541
6,472
8,898
9,048
Interest income
1
1
5
11
20
791
940
916
Other income (expenses), net
—
—
(2
)
5
(3
)
8
(171
)
46
Change in fair value of
derivative liability associated
with Series B convertible
redeemable preference shares
—
(3,166
)
(8,526
)
—
—
—
—
—
Income (loss) before income
taxes
and minority interest
3,098
373
(3,302
)
2,890
4,558
7,271
9,667
10,010
Total income taxes
(1,065
)
(1,382
)
1,922
(248
)
(155
)
(87
)
(204
)
(617
)
Minority interest
(49
)
10
54
0
(55
)
(52
)
(38
)
40
Equity income (loss) of
affiliates
—
—
—
—
—
—
—
—
Net income (loss)
1,984
(999
)
(1,326
)
2,642
4,348
7,132
9,425
9,433
Deemed dividend on Series A
convertible redeemable
preference shares
(8,308
)
—
—
—
—
—
—
—
Deemed dividend on Series B
convertible redeemable
preference shares
(2,191
)
—
—
—
—
—
—
—
Deemed dividend on Series C-1
convertible redeemable
preference shares
—
—
(13,356
)
—
—
—
—
—
Premium of Series B convertible
redeemable preference shares
—
—
12,906
—
—
—
—
—
Income (loss) attributable to
holders of ordinary shares
$
(8,515
)
$
(999
)
$
(1,776
)
$
2,642
$
4,348
$
7,132
$
9,425
$
9,433
(1)
Advertising service revenue is presented net of business tax. Business tax on advertising
service revenue from our commercial location network amounts to, $574,729, $714,647, $1.6
million, $936,405, $1.4 million, $1.8 million, $1.9 million and $2.1 million for the three
months ended June 30, 2004, September 30, 2004, December 31, 2004, March 31, 2005, June 30,
2005, September 30, 2005, December 31, 2005 and March 31, 2006, respectively. Business tax on
advertising service revenue for our in-store network amounted to $31,927, $187,515, $301,828
and $524,357 for the three months ended June 30, 2005, September 30, 2005, December 31, 2005
and March 31, 2006. Business tax on advertising service revenue for our poster frame network
amounted to $590,972 for the three months ended March 31, 2006. Business tax includes business
tax of 5.55% and cultural industries tax of 4.0%.
Consolidated
For the three months ended
Statement of
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
Operations Data
2004
2004
2004
2005
2005
2005
2005
2006
(in thousands of U.S. dollars)
Net revenues:
Commercial location
network(1)
85.9
%
89.1
%
94.2
%
98.5
%
95.9
%
88.8
%
84.3
%
64.8
%
In-store network
—
—
—
—
2.3
%
9.3
%
13.5
%
16.0
%
Poster frame network
—
—
—
—
—
—
—
18.3
%
Advertising
equipment revenue
14.1
%
10.9
%
5.8
%
1.5
%
1.8
%
1.9
%
2.2
%
0.9
%
Total revenues
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Cost of revenues:
77
Table of Contents
Consolidated
For the three months ended
Statement of
June 30,
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
Operations Data
2004
2004
2004
2005
2005
2005
2005
2006
(in thousands of U.S. dollars)
Net advertising
service cost:
Commercial location
network
21.4
%
20.9
%
22.8
%
33.3
%
27.9
%
25.4
%
24.5
%
24.3
%
In-store network
—
—
—
—
9.4
%
13.4
%
12.9
%
12.0
%
Poster frame network
—
—
—
—
—
—
—
7.2
%
Net advertising
equipment cost
11.3
%
8.5
%
2.1
%
0.7
%
1.3
%
1.5
%
1.8
%
0.7
%
Total cost of revenues
32.7
%
29.4
%
24.9
%
34.0
%
38.6
%
40.3
%
39.2
%
44.2
%
Gross profit
67.3
%
70.6
%
75.1
%
66.0
%
61.4
%
59.7
%
60.8
%
55.8
%
Operating expenses:
General and
administrative
7.8
%
14.0
%
17.0
%
19.7
%
16.1
%
12.0
%
10.5
%
13.3
%
Selling and marketing
11.0
%
11.8
%
12.7
%
15.6
%
13.4
%
13.9
%
13.7
%
12.2
%
Intangible
amortization
0.1
%
0.1
%
0.5
%
0.7
%
0.8
%
0.6
%
0.5
%
3.0
%
Goodwill impairment
loss
—
—
0.5
%
—
—
—
—
—
Total operating
expenses
18.9
%
25.9
%
30.7
%
36.0
%
30.3
%
26.5
%
24.6
%
28.5
%
Income from operations
48.4
%
44.7
%
44.4
%
30.0
%
31.1
%
33.2
%
36.2
%
27.3
%
Interest income
—
—
0.04
%
0.1
%
0.1
%
4.1
%
3.8
%
2.8
%
Other expenses, net
—
—
(0.01
)%
—
—
0.1
%
(0.7
)%
0.1
%
Change in fair value
of derivative
liability associated
with Series B
convertible
redeemable preference
shares
—
(40.0
)%
(72.5
)%
—
—
—
—
—
Income (loss) before
income taxes and
minority interest
48.4
%
4.7
%
(28.1
)%
30.1
%
31.2
%
37.4
%
39.3
%
30.2
%
Total income taxes
(16.6
)%
(17.4
)%
16.3
%
(2.6
)%
(1.0
)%
(0.4
)%
(0.8
)%
(1.9
)%
Minority interest
(0.8
)%
0.1
%
0.5
%
0
(0.4
)%
(0.3
)%
(0.2
)%
0.1
%
Equity income (loss)
of
affiliates
—
—
—
—
—
—
—
—
Net income (loss)
31.0
%
(12.6
)%
(11.3
)%
27.6
%
29.8
%
36.7
%
38.3
%
28.5
%
Deemed dividend on
Series A convertible
redeemable preference
shares
(129.8
)%
—
—
—
—
—
—
—
Deemed dividend on
Series B convertible
redeemable preference
shares
(34.2
)%
—
—
—
—
—
—
—
Deemed dividend on
Series C-1
convertible
redeemable preference
shares
—
—
113.5
%
—
—
—
—
—
Premium of Series B
convertible
redeemable preference
shares
—
—
109.7
%
—
—
—
—
—
Income (loss)
attributable to
holders of ordinary
shares
(133.0
)%
(12.6
)%
(15.1
)%
27.6
%
29.8
%
36.7
%
38.3
%
28.5
%
(1)
Advertising service revenue is presented net of business tax. Business tax on advertising
service revenue from our commercial location network represents 9.0%, 9.0%, 13.6%, 9.8%, 9.5%,
9.1%, 7.6% and 6.3% of total revenues for the three months ended June 30, 2004, September 30,
2004, December 31, 2004, March 31, 2005, June 30, 2005, September 30, 2005, December 31, 2005
and March 31, 2006, respectively. Business tax on advertising service revenue for our in-store
network represented 0.2%, 1.0%, 1.2% and 1.6% of total revenues for the three months ended
June 30, 2005, September 30, 2005, December 31, 2005 and March 31, 2006. Business tax on
advertising service revenue for our poster frame network represented 1.8% of total revenues
for the three months ended March 31, 2006. Business tax includes business tax of 5.55% and
cultural industries tax of 4.0%.
A. Operating Results
Results of Operations
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Table of Contents
Three Months Ended March 31, 2006 Compared to Three Months Ended March 31, 2005
Total Revenues
. Our total revenues increased substantially from $9.6 million for the three
months ended March 31, 2005 to $33.1 million for the three months ended March 31, 2006 due
primarily to an increase in our advertising service revenue.
Our total advertising service revenue increased significantly from $9.4 million for the three
months ended March 31, 2005 to $32.8 million for the three months ended March 31, 2006.
Commercial location network
. Advertising service revenue from our commercial location network
increased significantly from $9.4 million for the three months ended March 31, 2005 to $21.5
million for the three months ended March 31, 2006. The increase in advertising service revenue for
our commercial location network is attributable to an increase in the number of
30-second-equivalent advertising time slots we sold on our commercial location network, together
with an increase in the average selling price per time slot sold. For example, the number of time
slots we sold on our premier office A channel, which accounted for 91.2% of advertising service
revenue from our commercial location network for the three months ended March 31, 2006, increased
from 1,998 for the three months ended March 31, 2005 to 3,904 for the three months ended March 31,
2006 while the average selling price per time slot sold also increased from $4,721 for the three
months ended March 31, 2005 to $4,882 for the three months ended March 31, 2006. Network capacity
on our premier office A channel, measured by number of available time slots, also increased from
6,010 as of March 31, 2005 to 10,717 as of March 31, 2006. The increase in the number of
30-second-equivalent advertising time slots sold between these two periods on our commercial
location network including on individually marketed channels of the network, such as the premier
office A channel, was due primarily to the following factors:
•
Our network reach increased from 44 cities as of March 31, 2005, including 22 cities
directly operated by our company and 22 cities operated by our regional distributors,
to 86 cities as of March 31, 2006, including 50 cities directly operated by our company
and 36 cities operated by our regional distributors;
•
We gained an additional seven minutes of advertising cycle time from each of the
four regional distributors we acquired during the period between April 1, 2005 and
March 31, 2006;
•
On July 1, 2005, we extended the cycle time in our directly operated Tier II cities
from nine minutes to twelve minutes;
•
On February 28, 2006, we completed our acquisition of Target Media and integrated
its network into our out-of-home television networks, increasing the number of cities
in which we operate and increasing the overall number of time slots available and sold
on our network; and
•
On March 1, 2006, we launched several additional channels, which enable advertisers
to reach targeted consumer groups under our commercial location network.
In-store network
. Advertising service revenue from our in-store network, which commenced
operations in April 2005, was $5.3 million for the three months ended March 31, 2006. During the
first quarter of 2006, we expanded the size of our in-store network to 5,218 stores, including 809
hypermarkets, 1,126 supermarkets and 3,283 convenience stores, which included the addition on March
1, 2006 of Target Media's displays placed in convenience stores. The number of displays installed
in the in-store network amounted to 33,765 as of March 31, 2006 and the total number of 30-second
equivalent time slots (calculated on a per week per store basis) sold for the three months ended
March 31, 2006 was 76,498. The number of 30-second equivalent time slots available for sale, or
network capacity, was 245,314, for an in-store network utilization rate of 31.2%. Average
advertising revenue per 30-second equivalent time slot per store per week was $69 for the three
months ended March 31, 2006.
Poster frame network
. Advertising service revenue from our poster frame network, which we
commenced operating in January 2006 following our acquisitions of Framedia and E-Times, was $6.1
million for the three months ended March 31, 2006. During this period, the number of monthly frame
slots sold totaled 90,262 out of
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208,659 available monthly frame slots during this period for a poster frame network occupancy
rate of 43.3%. Average advertising revenue per monthly frame slot was $67 for the three months
ended March 31, 2006.
Advertising equipment revenue
. Our advertising equipment revenue increased from $142,163 for
the three months ended March 31, 2005 to $304,066 for the three months ended March 31, 2006 due to
the increase in number of LCD displays we sold to our regional distributors. We expect advertising
equipment revenue to remain stable or decrease over time as we continue to acquire our existing
regional distributors and as the most desirable cities for the establishment of similar networks by
regional distributors become saturated.
Cost of Revenues
. Our cost of revenues increased significantly from $3.3 million for the
three months ended March 31, 2005 to $14.6 million for the three months ended March 31, 2006 due to
increases in our net advertising service cost for our commercial location and the incurrence of
service costs in connection with our in-store network, which was launched in April 2005, and our
poster frame network, which we commenced operating in January 2006.
•
Net advertising service cost — commercial location network. Our net advertising
services cost for our commercial location network increased substantially from $3.2
million for the three months ended March 31, 2005 to $8.0 million for the three months
ended March 31, 2006. This increase was due to (i) the substantial increase in our
advertising service business on our commercial location network between these two
periods including substantial increases in our location costs due to a substantial
increase in the number of commercial locations where we entered into display placement
agreements, (ii) an increase in flat-panel display depreciation costs as a result of an
increase in the number of flat-panel displays we own and operate directly from 16,025
as of March 31, 2005 to 71,230 as of March 31, 2006 and to our acquisition of four
regional distributors during this period and (iii) an increase in other direct costs
associated with maintaining the network.
•
Net advertising service cost — in-store network. We began incurring net advertising
service cost relating to our in-store network in the first quarter of 2005 as we began
to install flat- panel displays in stores, although we did not commence commercial
operations of the network until April 2005. We incurred $nil in net advertising service
cost for our in-store network for the three months ended March 31, 2005 compared to
$4.0 million for the three months ended March 31, 2006, consisting of location costs
and depreciation costs relating to the installation and maintenance of our in-store
network.
•
Net advertising service cost — poster frame network. We began incurring net
advertising service cost relating to our poster frame network in January 2006 after
acquiring Framedia and E-Times. We incurred $2.4 million in net advertising service
cost for our poster frame network for the three months ended March 31, 2006, consisting
of location costs and depreciation costs relating to the installation and maintenance
of poster frames on our network.
•
Net advertising equipment cost. We incurred net advertising equipment costs of
$70,571 for the three months ended March 31, 2005 compared to $231,814 for the three
months ended March 31, 2006, which directly related to the number of displays we sold
to our regional distributors.
Gross Profit
. As a result of the foregoing, our gross profit increased by 193.0% from $6.3
million for the three months ended March 31, 2005 to $18.5 million for the three months ended March
31, 2006 although our overall gross margin decreased during the same period from 66.0% to 55.8%.
The decrease in our gross margin was largely a result of increased rental payments, including fixed
initial payments, to stores and depreciation costs incurred as we launched our in-store network.
For the three months ended March 31, 2006, our gross margins for our commercial location, in-store
and poster frame networks were 62.6%, 24.9% and 60.5%, respectively. In the future, our gross
margin may fluctuate depending on the respective financial performance and stage of development of
each of our networks as well as the relative contribution to our revenues and costs of each
network.
Operating Expenses
. Our operating expenses increased significantly from $3.4 million for the
three months ended March 31, 2005 to $9.5 million for the three months ended March 31, 2006 but
decreased as a percentage of revenues over this period from 35.9% to 28.5%. The increase in
operating expenses was primarily due to increases in our business tax, our selling and marketing
expenses and in our general and administrative expenses associated
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with the growth of our business, and in share-based compensation expenses under SFAS 123-R and
intangible amortization mainly resulting from the acquisition of Target Media and Framedia.
•
General and Administrative. General and administrative expenses increased
substantially from $1.9 million for the three months ended March 31, 2005 to $4.4
million for the three months ended March 31, 2006 mainly due to an increase in the size
of our administrative staff and corresponding increases in expenses for salary and
benefits as our operations have grown, increases in share-based compensation expense
and increases in costs associated with being a publicly listed company.
•
Selling and Marketing. Selling and marketing expenses increased substantially from
$1.5 million for the three months ended March 31, 2005 to $4.1 million for the three
months ended March 31, 2006 due to increases in marketing and promotional expenses by
our sales force, and in salary and benefits associated with the expansion of our sales
force as well as share-based compensation expenses.
•
Amortization of acquired intangibles. Amortization of acquired intangibles
increased substantially from $67,352 for the three months ended March 31, 2005 to $1.0
million for the three months ended March 31, 2006 due to several significant
acquisitions we completed during the first quarter of 2006, namely our acquisitions of
Framedia, Target Media and E-Times.
Income from Operations
. As a result of the foregoing, we had income from operations of $9.0
million for the three months ended March 31, 2006 compared to $2.9 million for the three months
ended March 31, 2005.
Income Before Income Taxes and Minority Interest
. Income before income taxes and minority
interest was $2.9 million for the three months ended March 31, 2005 compared to $10.0 million for
the three months ended March 31, 2006, which included interest income and other income (expenses).
•
Interest Income. Interest income increased from $10,895 for the three months ended
March 31, 2005 to $915,952 for the three months ended March 31, 2006. This interest
income was the result of a significant increase in our cash and cash equivalents
balances resulting from our initial public offering and follow-on public offering.
•
Income Taxes. Our income taxes were $248,801 for the three months ended March 31,
2005 with an effective tax rate of 9.0% compared to $616,790 for the three months ended
March 31, 2006 with an effective tax rate of 6.2%. The increase resulted from a change
in deferred tax assets.
Net Income
. As a result of the foregoing, our net income increased 257% from $2.6 million for
the three months ended March 31, 2005 to $9.4 million for the three months ended March 31, 2006.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
Total Revenues
. Our total revenues increased substantially from $29.2 million in 2004 to
$68.2 million in 2005 due to an increase in our advertising service revenue which was partially
offset by a decrease in advertising equipment revenue.
Our total advertising service revenue increased significantly from $26.3 million in 2004 to
$66.9 million in 2005.
Commercial location network
. Advertising service revenue from our commercial location network
increased significantly from $26.3 million in 2004 to $61.4 million, including $4.8 million to
related parties in 2005. The increase in advertising service revenue for our commercial location
network is attributable to:
•
an increase in the number of 30-second-equivalent advertising time slots we sold on
our commercial location network from 4,723 in 2004 to 13,943 in 2005 and partially
offset by a decrease in the average selling price per time slot sold from $5,573 in
2004 to $4,461 in 2005. Total network capacity, measured by number of available time
slots, also increased from 5,170 as of December 31, 2004 to
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9,028 as of December 31, 2005. The increase in the number of 30-second-equivalent
advertising time slots sold between these two periods is due primarily to the following
factors:
•
Our network reach increased from 34 cities as of December 31, 2004, including 11
cities directly operated by our company and 23 cities operated by our regional
distributors, to 58 cities as of December 31, 2005, including 26 cities directly
operated by our company and 32 cities operated by our regional distributors;
•
We gained an additional seven minutes of advertising cycle time from each of our
regional distributors after we acquired them between January 1, 2005 and December 31,
2005; and
•
On July 1, 2005, we extended the cycle time in our directly operated Tier II cities
from nine minutes to twelve minutes.
•
The increase in the number of 30-second-equivalent advertising time slots sold on
our commercial location network was also attributable to increased acceptance of our
network among our advertising clients, which we believe is primarily due to the
increased coverage and effectiveness of our network that grew from 15,415 flat-panel
displays as of December 31, 2004 to 48,226 displays as of December 31, 2005, including
our regional distributors.
•
The decrease in the average selling price was largely due to growth in sales of time
slots with lower selling prices in our Tier II cities, while the average selling price
of our advertising services in our Tier I cities increased between these two periods.
In-store network
. Advertising service revenue from our in-store network, which commenced
operations in April 2005, totaled $5.5 million in 2005. We expect the contribution to our total
revenues from our in-store network to increase in the near future.
Our advertising equipment revenue decreased from $2.9 million in 2004 to $1.3 million in 2005.
This decrease was primarily attributable to our acquisition of a number of our regional
distributors during 2004 and 2005 because, following each acquisition, we no longer sell flat-panel
displays to each former regional distributor. This decrease was also partially attributable to
decreased sales to our existing regional distributors, as the initial installation of the network
in their respective cities of operation was largely completed in 2004 and the first quarter of
2005. We expect advertising equipment revenue to remain stable or decrease over time as we continue
to acquire our existing regional distributors and as the most desirable cities for the
establishment of similar networks by regional distributors become saturated.
Cost of Revenues
. Our cost of revenues increased significantly from $8.7 million in 2004 to
$26.3 million in 2005 due to increases in our net advertising service cost for our commercial
location network and our in-store network and in our net advertising equipment cost.
•
Net advertising service cost — commercial location network. Our net advertising
services cost for our commercial location network increased substantially from $6.7
million in 2004 to $17.9 million in 2005. This increase was due to the substantial
increase in our advertising service business on our commercial location network between
these two periods. Our location costs increased substantially from $4.6 million in 2004
to $11.3 million in 2005 due to a substantial increase in the number of commercial
locations where we entered into display placement agreements. Our rental fees increased
as a percentage of total revenues between these two periods as a result of (1) a
significant increase in the number of locations in our commercial location network (2)
increased rental payments for the renewal of display placement agreements in the more
desirable locations on our commercial location network offset in part by lower rental
payments paid for new locations in our commercial location network because of a further
reduction in the number of available desirable locations that command more expensive
rental fees. Flat-panel display depreciation costs increased from $774,375 in 2004 to
$3.4 million in 2005, as a result of an increase in the number of flat-panel displays
we own and operate directly from 12,786 as of December 31, 2004 to 45,049 as of
December 31, 2005 and to our
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acquisition of 14 regional distributors during this period. Other cost of revenues
related to net advertising service cost increased from $1.4 million in 2004 to $3.2
million in 2005 as a result of (1) an increase in the volume of CF cards we purchased
even as the per-unit cost of CF cards decreased and (2) an increase in salary and
benefit expenses for personnel responsible for location relations and display placement
agreements with landlords and property managers and for maintaining and monitoring our
network.
•
Net advertising service cost — in-store network. We began incurring net advertising
service cost relating to our in-store network in April 2005 when we launched our
in-store network. We incurred $7.4 million in net advertising service cost for our
in-store network in 2005, consisting of location costs and depreciation costs relating
to the installation and maintenance of our in-store network.
•
Net advertising equipment cost. We incurred net advertising equipment costs of $1.9
million in 2004 compared to $975,747 in 2005, which decrease reflects the fact that we
have acquired many of our fastest-growing regional distributors. We expect net
advertising equipment costs to continue to decrease.
Gross Profit
. As a result of the foregoing, our gross profit increased from $20.5 million in
2004 to $41.9 million in 2005 although our overall gross margin decreased during the same period
from 70.0% to 61.3%. The decrease in our gross margin was largely a result of increased rental
payments, including fixed initial payments, to stores and depreciation costs incurred as we
launched our in-store network.
Operating Expenses
. Our operating expenses increased significantly from $7.6 million in 2004
to $19.1 million in 2005. This increase was primarily due to increases in our business tax, our
selling and marketing expenses and in our general and administrative expenses associated with the
growth of our business, such as salaries and costs associated with preparing to become a publicly
listed company.
•
General and Administrative. General and administrative expenses increased
substantially from $4.0 million in 2004 to $9.1 million in 2005 mainly due to an
increase in the size of our administrative staff and corresponding increases in
expenses for salary and benefits as well as accounting and administrative costs
relating to being a public company. In addition, in connection with the options granted
to our directors, employees and consultants since July 2004, we recorded stock based
compensation of $726,503 in 2005.
•
Selling and Marketing. Selling and marketing expenses increased substantially from
$3.5 million in 2004 to $9.5 million in 2005 due to increases in marketing and
promotional expenses by our sales force, and in salary and benefits associated with the
expansion of our sales force.
Income from Operations
. As a result of the foregoing, we had income from operations of $13.0
million in 2004 compared to $22.8 million in 2005.
Income Before Income Taxes and Minority Interest
. Income before income taxes and minority
interest was $1.3 million in 2004 compared to $24.4 million in 2005, which included interest income
and other income (expenses) and change in fair value of series B convertible redeemable preferred
shares in 2004.
•
Interest Income. Interest income increased from $9,739 in 2004 to $1.8 million in
2005. This interest income was the result of a significant increase in our cash and
cash equivalents balances resulting from cash payments collected from our advertising
operations, sales of our preference shares and proceeds from our initial public
offering.
•
Other Expense. We recorded other expense of $3,843 in 2004 compared to other
expense of $161,148 in 2005.
•
Change in Fair Value of Series B Convertible Redeemable Preferred Shares. We
incurred a change in fair value of series B convertible redeemable preferred shares of
$11.7 million in 2004. Upon the
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occurrence of our initial public offering in July 2005, all outstanding preference
shares were converted into ordinary shares, and accordingly we did not incur any change
in fair value of series B convertible redeemable preferred shares in 2005.
•
Income Taxes. Our income taxes were $907,550 in 2004 compared to $694,453 in 2005,
which decrease resulted from the fact that in 2005, we derived most of our revenue from
Focus Media Advertising Agency, which had no tax liability during this period, whereas
during 2004, we derived most of our revenues from Focus Media Advertisement, which had
tax liability.
•
Minority Interest. We had minority interest expense of $13,516 and $144,434 in 2004
and 2005, respectively, in connection with the pro rata income attributable to minority
shareholders of four of our subsidiaries.
Net Income
. As a result of the foregoing, we recorded net income of $23.5 million in 2005
compared to net income of $372,752 in 2004.
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
Total Revenues
. Our total revenues increased substantially from $3.8 million in 2003 to $29.2
million in 2004 due primarily to an increase in our advertising service revenue and partially to
sales of our flat-panel displays to our regional distributors which commenced in the fourth quarter
of 2003. For the periods prior to January 1, 2005, our out-of-home advertising network consisted of
our commercial location network, and all discussion for these periods, including references to our
network, refers only to our commercial location network.
Our advertising service revenue increased significantly from $3.4 million in 2003 to $26.3
million in 2004 (including $3.4 million to related parties). This increase is attributable to:
•
the fact that we commenced our advertising network operations in May 2003 and
therefore derived no revenues from the sale of time slots on our advertising network
for the first five months of 2003;
•
an increase in the number of 30-second-equivalent advertising time slots we sold
from 415 in 2003 to 4,723 in 2004, which increase was slightly offset by a decrease in
the average selling price per time slot sold from $8,088 in 2003 to $5,573 in 2004. The
increase in the number of 30-second-equivalent advertising time slots sold between
these two periods is due primarily to the following factors:
•
we expanded our network to include an additional 24 cities in 2004, including eleven
cities operated by our company and 23 cities operated by our regional distributors;
•
we gained an additional seven minutes of advertising cycle time from each of our
regional distributors after we acquired them in 2004; and
•
we extended the cycle time from nine minutes in 2003 to twelve minutes in 2004 in
our Tier I cities.
The increase in the number of 30-second-equivalent advertising time slots sold was also
attributable to an increase in our utilization rate from 25.0% in 2003 to 36.8% in 2004, which
reflects the increased acceptance of our network among our advertising clients, which we believe is
primarily due to the increased coverage and effectiveness of our network that grew from 923
commercial locations in 2003 to 8,977 commercial locations in 2004, and from 1,028 flat-panel
displays in 2003 to 15,415 displays in 2004, including our regional distributors.
The decrease in the average selling price was largely due to growth in sales of time slots
with lower selling prices in our second-tier cities, while the average selling price of our
advertising services in our major four cities increased between 2003 and 2004. We commenced sales
of flat-panel displays to regional distributors in the fourth quarter of 2003 and generated
$389,282 in advertising equipment revenue in 2003 compared to $2.9 million in 2004. Revenues
generated by the eleven companies we acquired in 2004 accounted for approximately 1% of our total
revenues in 2004.
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Cost of Revenues
. Our cost of revenues increased significantly from $1.8 million in 2003 to
$8.7 million in 2004 due to increases in both of our net advertising service cost and net
advertising equipment cost.
•
Net Advertising Service Cost. Our net advertising services cost increased
substantially from $1.6 million in 2003 to $6.7 million in 2004. This increase was due
to the substantial increase in our advertising service business between these two
periods.
•
Our location costs increased substantially from $1.2 million in 2003 to $4.6 million
in 2004 due to a substantial increase in the number of commercial locations where we
entered into display placement agreements from 754 in 2003 to 8,866 in 2004. Despite
the increase in our rental expense between these two periods, our rental fees decreased
as a percentage of total revenues in 2004 as a result of (i) the increase in our
advertising services revenue significantly outpacing the increase in rental payments
due to the increase in the number of display placement agreements we entered into and
(ii) lower rental payments paid for new locations because many of the most desirable
and expensive locations had been occupied either by us or our competitors.
•
Flat-panel display depreciation costs increased from $148,701 in 2003 to $774,375 in
2004, as a result of an increase in the number of flat-panel displays we own and
operate directly from 827 as of December 31, 2003 to 12,786 as of December 31, 2004.
This increase in our depreciation costs was also attributable to our acquisition of
eight regional distributors during this period. Flat-panel display depreciation costs
decreased as a percentage of total revenues, however, because the growth in our
advertising services revenue significantly outpaced our purchase of flat-panel displays
and corresponding depreciation costs.
•
Other cost of revenues related to net advertising service cost increased
significantly from $257,574 in 2003 to $1.4 million in 2004. This was primarily a
result of (i) an increase in the volume of DVDs we purchased even as the per-unit cost
of DVDs decreased and (ii) an increase in salary and benefit expenses for personnel
responsible for location relations and display placement agreements with landlords and
property managers and for maintaining and monitoring our network. Other cost of
revenues related to net advertising service cost decreased as a percentage of total
revenues between these two periods as a result of the increase in advertising service
revenue significantly outpacing the increase in other cost of revenues.
•
Net Advertising Equipment Cost. We incurred net advertising equipment costs of
$275,360 in 2003 compared to $1.9 million in 2004, reflecting our cost for flat-panel
displays we sold to our regional distributors. We did not commence our regional
distributor relationships until November 2003 and, accordingly, we recorded
significantly lower costs related to such sales in 2003. We expect net advertising
equipment costs to decrease as our purchase of flat-panel displays for resale to
regional distributors decreases as a result of our ongoing acquisition of our regional
distributors.
Gross Profit
. As a result of the foregoing, our gross profit increased from $1.9 million in
2003 to $20.5 million in 2004.
Operating Expenses
. Our operating expenses increased significantly from $1.4 million in 2003
to $7.6 million in 2004. This increase was primarily due to increases in our selling and marketing
expenses and in our general and administrative expenses associated with the growth of our business
and to the share-based compensation expense we recognized in 2004.
•
General and Administrative. General and administrative expenses increased
substantially from $1.0 million in 2003 to $4.0 million in 2004 due to an increase in
the size of our administrative staff and corresponding increases in expenses for salary
and benefits of $435,665 as our operations have grown, an increase in our office rental
payments of $292,078 as we established branch offices in a number of new cities, and
increases in public relations expenses, communications and travel expenses and fees for
professional services of $170,898. General and administrative expenses, however,
decreased as a percentage of total revenues from 26.2% to 13.7% due to (i) the overall
growth of our total revenues
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which outpaced these expenses and (ii) our establishment of a dedicated sales force in
2004 and assignment of sales, maintenance and location relationship personnel previously
included within our administrative department, respectively, to our newly established
sales and location relationship and maintenance departments. Our general and
administrative expenses in 2004 include share-based compensation. We incurred
share-based compensation expense of $488,711 in 2004 relating to the issuance of options
to purchase 25,208,200 of our ordinary shares that were granted to certain directors,
officers, employees and individual consultants and advisers in July and August 2004. We
did not incur share-based compensation expense in 2003.
•
Selling and Marketing. Selling and marketing expenses increased substantially from
$406,634 in 2003 to $3.5 million in 2004 due to increases in marketing and promotional
expenses by our sales force, and in salary and benefits associated with the creation
and expansion of our sales force. Marketing and promotional expenses, for which we
budget 10% of our advertising revenues, increased significantly from $355,398 in 2003
to $2.8 million in 2004 as a result of increased sales and promotional activities
relating to the increase in our advertising services revenue between these two periods.
Salary expenses in connection with our sales force increased from $49,870 in 2003 to
$471,723 in 2004 because, prior to 2004, we did not have a dedicated sales force and
for prior periods all salary expenses of our employees were classified under general
and administrative expenses. Our salary expenses increased slightly as a percentage of
total revenues between these two periods because we hired additional sales staff to
meet the growth in our advertising business.
•
Goodwill Impairment Loss. We incurred a one-time goodwill impairment loss of
$58,397 in 2004 in connection with our acquisition of Perfect Media. This goodwill
impairment loss represents the difference between the amount we paid to acquire Perfect
Media on September 22, 2004 and the fair market value of Perfect Media. In conducting
our annual impairment test, we undertook a valuation of Perfect Media using the
expected present value of cash flow and the income approach valuation methods, which
resulted in a goodwill impairment loss of $58,397 in 2004, indicating that the value of
Perfect Media was less than what we paid at the time we acquired it.
Income from Operations
. As a result of the foregoing, we had income from operations of
$525,110 in 2003 compared to $13.0 million in 2004.
Income Before Income Taxes and Minority Interest
. Income before income taxes and minority
interest was $516,751 in 2003 compared to income of $1.3 million in 2004, which included taxes and
minority interest included interest income and other expenses and a one-time non-cash charge of
$11.7 million for the change in fair value of derivative liability associated with Series B
convertible redeemable preference shares.
•
Interest Income. Interest income increased from $1,005 in 2003 to $9,739 in 2004.
This interest income was the result of a significant increase in our cash and cash
equivalents balances resulting from cash payments collected from our advertising
operations and sales of our preference shares.
•
Change in Fair Value of Derivative Liability Associated with Series B Convertible
Redeemable Preference Shares. We recorded a one-time non-cash charge to reflect the
change in fair value of derivative liability associated with Series B convertible
redeemable preference shares of $11.7 million in 2004, which, under applicable
accounting rules required us to mark to market the conversion feature of our Series B
convertible redeemable preference shares because they may be net settled in cash upon
conversion. We will not incur any such charges commencing January 1, 2005 as the
redemption feature of our Series B convertible redeemable preference shares was removed
prior to December 31, 2004.
•
Other Income (Expense). We recorded other expense of $9,364 in 2003 compared to
other expense of $3,843 in 2004.
•
Income Taxes. Our income taxes increased from $481,505 in 2003 to $907,550 in 2004
increased taxable income by certain of our consolidated entities that are subject to
PRC income tax.
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•
Minority Interest. We had minority interest income of $8,360 and $13,516 in 2003
and 2004, respectively in connection with the pro rata loss attributable to four
affiliates in which we hold a minority interest.
Net Income
. As a result of the foregoing, we recorded net income of $372,752 in 2004 compared
to net income of $25,483 in 2003. Our net income of $372,752 in 2004 includes a one-time non-cash
charge of $11.7 million reflecting the change in fair value of derivative liability associated with
our Series B convertible redeemable preference shares. We will not incur any such charges
commencing January 1, 2005 as the redemption feature of our Series B convertible redeemable
preference shares was removed prior to December 31, 2004.
B. Liquidity and Capital Resources
Liquidity and Capital Resources
Cash Flows and Working Capital
To date, we have financed our operations primarily through cash generated from operating
activities and sales of equity in private and public transactions. As of March 31, 2006, we had
approximately $41.9 million in cash and cash equivalents. As we have expanded our network, entered
into a large number of display placement agreements, increased our acquisition of regional
distributors and related businesses, and made strategic acquisitions, our cash needs for such
acquisitions, the purchase of flat-panel displays, payment of our location and maintenance costs
and employee costs increased significantly and accounted for the net cash used in investing
activities. Our cash and cash equivalents primarily consist of cash on hand, liquid investments
with original maturities of three months or less that are deposited with banks and other financial
institutions. We generally deposit our excess cash in interest bearing bank accounts. Although we
consolidate the results of Focus Media Advertisement and its subsidiaries in our consolidated
financial statements and we can utilize their cash and cash equivalents in our operations through
Focus Media Advertisement and its subsidiaries, we do not have direct access to the cash and cash
equivalents or future earnings of Focus Media Advertisement. However, these cash balances can be
utilized by us for our normal operations pursuant to our agreements with Focus Media Advertisement
and its subsidiaries that provide us with effective control over Focus Media Advertisement and its
subsidiaries. In addition, we have access to the cash flows of Focus Media Advertisement and its
subsidiaries through contractual arrangements with our subsidiaries Focus Media Technology and
Focus Media Digital, which provide technical and other services in exchange for fees. See "Item 7.B
Major Shareholders and Related Party Transactions — Related Party Transactions — Agreements Among
Us, Focus Media Technology, Focus Media Digital, New Focus Media Advertisement, Focus Media
Advertisement and Its Subsidiaries".
We expect to require cash in order to fund our ongoing business needs, particularly the
location costs connected with the placement of our television displays, to fund the ongoing
expansion of our network and for payments in connection with our acquisitions. Other possible cash
needs may include the upgrading of technology on our network as well as any payment of claims that
could be made against us. We have not encountered any difficulties in meeting our current cash
needs.
The following table shows our cash flows with respect to operating activities, investing
activities and financing activities in 2003, 2004, 2005 and for the three months ended March 31,
2005 and 2006:
For the three months ended
For the year ended December 31,
March 31,
2003
2004
2005
2005
2006
(in thousands of U.S. dollars)
Net cash provided by (used in) operating
activities
$
1,320
$
4,045
$
11,269
$
(877
)
$
4,766
Net cash used in investing activities
(2,706
)
(11,070
)
(117,667
)
(6,678
)
(66,073
)
Net cash provided by financing
activities
2,125
28,978
119,169
—
66,091
Net increase (decrease) in cash and cash
equivalents
701
21,953
13,984
(7,555
)
5,210
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For the three months ended
For the year ended December 31,
March 31,
2003
2004
2005
2005
2006
(in thousands of U.S. dollars)
Cash and cash equivalents at beginning of
period
15
716
22,669
22,669
36,653
Cash and cash equivalents at end of
period
$
716
$
22,669
$
36,653
$
15,114
$
41,863
We had cash provided by operating activities of $4.8 million for the three months ended
March 31, 2006. This was primarily attributable to net income generated from the operation of our
advertising network, adjusted up $908,927, $2.5 million, $1.7 million and $551,714 to reflect
amounts due from related parties, accounts receivable, rental deposits and deferred tax assets,
respectively, and adjusted down $18.6 million and $908,927 to reflect accrued expenses and other
current liabilities and amounts due from related parties, respectively. We had cash provided by
operating activities of $11.3 million in 2005. This was primarily attributable to net income
generated from the operation of our advertising network, adjusted up $666,703, $5.0 million,
$672,585 and $4.0 million to reflect amounts due from related parties, accounts payable, income
taxes payable and accrued expenses and other current liabilities, respectively, and adjusted down
$15.8 million and $2.3 million to reflect accounts receivable and prepaid expenses and other
current assets, respectively. We had net cash provided by operating activities of $4.0 million in
2004. This was primarily attributable to our net income from operation of our network, adjusted
down $4.5 million, $2.5 million, $1.6 million and $1.7 million to reflect our accounts receivable
from our advertising clients and regional distributors, a decrease in amounts due from related
parties, accounts payable from location and maintenance costs owed to third parties and prepaid
expenses and other current assets including location costs, respectively, and adjusted up $11.7
million, $4.2 million and $0.8 million to reflect the change in fair value of derivative liability,
accrued expenses from location costs and maintenance costs and other current liabilities and income
taxes payable, respectively. We had net cash provided by operating activities of $1.3 million in
2003. This was primarily attributable to accounts payable for location costs and equipment, accrued
expenses and other current liabilities, amount due to related parties and income taxes payable,
which was partially offset by accounts receivable from our advertising clients and regional
distributors, prepaid expenses and other current assets, amount due from related parties and
inventory, which consists primarily of our television displays.
We had net cash used in investing activities of $66.1 million for the three months ended March
31, 2006, primarily in connection with the acquisition of companies, including Target Media and
Focus Media Wireless, subsidiaries and regional distributors, purchase of equipment used to expand
our networks, and rental deposits paid for locations on our out-of-home television, poster frame
and outdoor LED networks. Our acquisition of Framedia involved our payment of $39.6 million in cash
and issuance of $55.4 million of our ordinary shares to the seller parties at a fixed value of
$2.456 per ordinary share. In addition, subject to Framedia's attainment of certain financial
performance goals in 2006, we may be obligated to issue up to $88 million in additional Focus Media
ordinary shares, at a fixed value of $2.456 per ordinary share, to the selling parties in 2007.
Pursuant to the share purchase agreement we entered into with E-Times and Skyvantage, we paid the
seller parties $5.0 million. We also paid $70 million in cash and issued 77 million ordinary shares
to the shareholders of Target Media. The issuance of such additional ordinary shares will also
result in lower earnings per share or per ADS when we calculate our earnings for 2007 than would
otherwise be the case were such additional shares not issued. See "Item 3.D Key Information —Risk
Factors — Risks Relating to this Offering — The sale or availability for sale of substantial
amounts of our ADSs could adversely affect their market price", "Item 10.C Additional Information —
Material Contracts — Framedia" and "— Target Media". We had net cash used in investing activities
of $117.7 million for in 2005, primarily in connection with the acquisition of companies,
subsidiaries and regional distributors, purchase of equipment used to expand our commercial
location and in-store networks, and rental deposits paid for locations on both our commercial
location and in-store networks. We had net cash used in investing activities of $11.1 million in
2004. This was primarily attributable to our purchase of property and equipment for the operation
of our network, rental deposits made in connection with our display placement agreements and our
acquisition of eleven businesses, eight of which were our former regional distributors. We had net
cash used in investing activities of $2.7 million in 2003, largely as a result of purchases of
property and equipment and the acquisition of a business from a related party.
$66.1 million net cash was provided by financing activities for the three months ended March
31, 2006, primarily from the proceeds of our follow-on public offering in February 2006. $119.2
million net cash was provided by financing activities in 2005, primarily from the proceeds of our
initial public offering in July 2005. We had net cash provided by financing activities of $29.0
million in 2004. This was attributable to the proceeds from the
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issuance of our Series B and Series C-2 convertible redeemable preference shares, offset
slightly by the repayment of a short-term loan from one of our shareholders. We had net cash
provided by financing activities of a $2.1 million in 2003. This was attributable to the proceeds
from the issuance of ordinary shares in May 2003 and proceeds from a short-term loan from one of
our shareholders. We used this loan for our business operations and the loan was secured by our
ordinary shares. We repaid the loan when it came due in June 2004.
We believe that our current cash and cash equivalents, cash flow from operations and the
proceeds from our recent public offering will be sufficient to meet our anticipated cash needs,
including for working capital and capital expenditures, for the foreseeable future. These
additional cash needs may include costs associated with the expansion of our network, such as the
purchase of flat-panel displays and LED digital billboards and increased location cost, including
in connection with our acquisition of Framedia, Target Media, E-Times and Focus Media Wireless, as
well as possible acquisitions of our regional distributors. We are also required under PRC law to
set aside 10% of our after-tax profits into a general reserve fund. We expect that revenues from
operation of our advertising network and the proceeds from this offering will be sufficient to
cover any such obligations and costs. We may, however, require additional cash resources due to
changed business conditions or other future developments. If these sources are insufficient to
satisfy our cash requirements, we may seek to sell debt securities or additional equity securities
or obtain a credit facility. The sale of convertible debt securities or additional equity
securities could result in additional dilution to our shareholders. The incurrence of indebtedness
would result in debt service obligations and could result in operating and financial covenants that
would restrict our operations. We cannot assure you that financing will be available in amounts or
on terms acceptable to us, if at all.
From time to time, we evaluate possible investments, acquisitions or divestments and may, if a
suitable opportunity arises, make an investment or acquisition or conduct a divestment.
Transactions with Related Parties
Our transactions with related parties have been conducted on arm's length terms. See "Item 7.
Major Shareholders and Related Party Transactions—B. Related Party Transactions" and Note 22 to
our audited consolidated financial statements included in this annual report.
Capital Expenditures
The following table sets forth our historical capital expenditures for the periods indicated.
Actual future capital expenditures may differ from the amounts indicated below.
For the year ended December 31,
For the three months ended March 31,
2003
2004
2005
2005
2006
(in thousands of U.S. dollars)
Total capital
expenditures
$
1,468
$
6,373
$
36,765
$
3,621
$
8,354
Our capital expenditures were made primarily to acquire flat-panel displays for our
advertising network. Our capital expenditures are primarily funded by net cash provided from
operating activities. We expect our capital expenditures in 2006, in an amount of approximately
$20.0 million, to primarily consist of purchases of components for our flat-panel displays and new
poster frames as we continue to expand our commercial location network, in-store network and poster
frame network. We also intend to upgrade our financial, accounting systems and internal control
systems. As opportunities arise, we may make additional acquisitions of regional distributors and
other businesses that complement our operations. We believe that we will be able to fund these
upgrades and equipment purchases through the revenues we generate, and do not anticipate that these
obligations will have a material impact on our liquidity needs.
Restricted Net Assets
Relevant PRC laws and regulations permit payments of dividends by our PRC subsidiaries only
out of their retained earnings, if any, as determined in accordance with PRC accounting standards
and regulations. In addition,
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PRC laws and regulations require that annual appropriations of 10% of after-tax income for our
general reserve fund should be set aside prior to payment of dividends. As a result of these PRC
laws and regulations, our PRC subsidiaries and our affiliated PRC entities are restricted in their
ability to transfer a portion of their net assets to us whether in the form of dividends, loans or
advances. As of December 31, 2004 and 2005, the amount of our restricted net assets was
approximately $14.8 million and $75.9 million, respectively.
C. Research, Development, Patents and Licenses, Etc.
Research and Development
We intend to continue to develop a more advanced model of flat-panel display that uses mobile
communications and wireless technology to receive, store, configure and playback advertising
content. Whether we deploy this newer technology will depend on considerations of cost and network
security. We are also developing related software systems that will enable us to configure and run
the content on our advertising network in conjunction with mobile communications systems.
Patents and Trademarks
We believe that the value of our advertising network derives from its effectiveness in
reaching a large number of consumers with higher-than-average disposable incomes in urban areas. To
a great extent, our business model does not rely on advanced or sophisticated technology or on
proprietary trade secrets because our flat-panel displays are assembled with components purchased
in off-the-shelf form from wholesale distributors. We endeavor to protect certain of the designs
and operating software we use in each generation of our flat-panel displays. We are currently
applying for design patents for our new model of flat-panel display and our software. As of March
31, 2006, we held one design patent for our flat-panel display technology. We have the right to use
several trademarks relating to the "Focus Media" brand name in China and in Singapore. We also have
the right to use several trademarks relating to the "Framedia" brand name in China.
D. Trend Information
Please refer to "—Overview" for a discussion of the most significant recent trends in our
production, sales, costs and selling prices. In addition, please refer to discussions included in
this Item for a discussion of known trends, uncertainties, demands, commitments or events that we
believe are reasonably likely to have a material effect on our net operating revenues, income from
continuing operations, profitability, liquidity or capital resources, or that would cause reported
financial information not necessarily to be indicative of future operating results or financial
condition.
E. 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 shareholder's equity, or that are
not reflected in our consolidated 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
any 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.
F. Tabular Disclosure of Contractual Obligations
The following table sets forth our contractual obligations and commitments with definitive
payment terms on a consolidated basis which will require significant cash outlays in the future as
of March 31, 2006.
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Payments due March 31
TOTAL
2006
2007
2008
2009
Thereafter
(in thousands of U.S. dollars)
Display and poster frame
placement agreement
obligations
$
115,263
$
41,468
$
32,225
$
21,429
$
14,159
$
5,982
Office premise lease
obligations
3,365
1,878
806
420
50
211
Short-term debt(1)
8,024
8,024
—
—
—
—
Total contractual
obligations
$
126,652
$
51,370
$
33,031
$
21,849
$
14,209
$
6,193
(1)
Includes interest.
Other than certain leasing arrangements relating to the placement of our flat-panel, as
of March 31, 2006, we did not have any long-term debt obligations, operating lease obligations or
purchase obligations. However, pursuant to our option agreement with the owners of Focus Media
Advertisement, Focus Media Technology has an option, exercisable at such time as it becomes legally
permissible to acquire 100% of the equity interest in Focus Media Advertisement at a purchase price
equal to the registered capital of Focus Media Advertisement or such higher price as required by
PRC law on the date of such purchase. Under the share purchase agreement for the acquisition of
Target Media, we are required to make three cash payments. The first installment of $45 million was
paid at closing on February 28, 2006. The second installment of $25 million was paid on April 28,
2006. The final installment of $24 million is to be paid on July 31, 2006, and may be increased or
decreased based on a calculation of Target Media's net working capital as of the closing date.
As of March 31, 2006, we held short-term debt securities in the amount of $34.8 million. As
of March 31, 2006, we had no other indebtedness, material contingent liabilities, or material
mortgages or liens. We intend to meet our future funding needs primarily through net cash provided
from operating activities and the proceeds of this offering. Our objective is to maintain the
safety and liquidity of our cash. Therefore we intend to keep our cash and cash equivalents in
short-term bank deposits and short-term bonds.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth certain information relating to our directors and executive
officers. The business address of each of our directors and executive officers is 28-30/F, Zhao
Feng World Trade Building, 369 Jiangsu Road, Shanghai 200050, People's Republic of China.
Name
Age
Position
Jason Nanchun Jiang
33
Chairman of the Board of Directors and
Chief Executive Officer
David Feng Yu(1)
44
Co-chairman of the Board of Directors and
President
Jimmy Wei Yu
33
Director
Fumin Zhuo(2)
54
Director
Neil Nanpeng Shen(2)
38
Director
Charles Chao(2)
40
Director
Daqing Qi(3)
43
Director
Daniel Mingdong Wu
39
Chief Financial Officer
Diana Congrong Chen
38
Chief Marketing Officer
July Lilin Wang
34
Chief Accounting Officer
Cindy Yan Chan
40
Chief Strategy Officer
Ergo Xueyuan Liu
35
Vice President — Commercial Location Network
Acer Jiawei Zhang
29
Vice President — In-store Network
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(1)
Mr. Yu was appointed as co-chairman of the board of directors and President of Focus
Media on February 28, 2006 pursuant to the terms of the share purchase agreement between us and
Target Media in connection with our acquisition of Target Media.
(2)
Independent director and a member of our audit committee, compensation committee and
nomination committee.
(3)
Mr. Qi was appointed as an independent director on February 28, 2006 by the seller parties
of Target Media pursuant to the terms of the share purchase agreement between us and Target Media
in connection with our acquisition of Target Media.
Jason Nanchun Jiang
, our founder, has served as the chairman of our board of directors
and our chief executive officer since May 2003. From 1994 to 2003, Mr. Jiang was the chief
executive officer of Everease Advertising Corporation, which is one of the top 50 advertising
agencies in China. Starting in 2003, Mr. Jiang was general manager of Aiqi Advertising, an
advertising company founded by his immediate family members in 1997 which was renamed Focus Media
Advertisement in May 2003 in connection with the establishment of our current business operations.
In December 2003, Mr. Jiang was selected by China News Publisher's Media magazine as one of the
"Media People of the Year". In September 2003, Mr. Jiang was selected by the Television and
Newspaper Committees of the China Advertising Commission as one of its "contemporary outstanding
advertising media personalities". Mr. Jiang received a Bachelor of Arts degree in Chinese language
and literature from Huadong Normal University in 1995.
David Feng Yu
has served as co-chairman of our board of directors and as our president since
February 28, 2006. From 2003 until February 2006, Mr. Yu was chairman and chief executive Officer
of Target Media, which we acquired in February 2006. From 2000 to 2003, Mr. Yu was chief executive
offer and the sole beneficial owner of Dian Yang, whose flat panel display advertising business was
transferred to Target Media in December 2003. From 1999 to 2000, Mr. Yu was the general manager of
Shanghai Yuanye Info Tech Co., Ltd. In May 2005, Mr. Yu was selected by the Advertising Newspaper
in China as one of the "Most Influential Advertising People of the Year." In December 2004, Mr. Yu
was selected by China Venture Capital Forum 2004 as one of the "Top 10 Enterprisers of the Year."
Mr. Yu received an Executive M.B.A. degree from China Europe International Business School in 2001
and a Master of Arts degree in philosophy from Fudan University in 1991.
Jimmy Wei Yu
has served as our director since May 2003. Mr. Yu is the chairman and chief
executive officer of United Capital Investment (China) limited, which is one of our principal
shareholders and the management company of United China Investment Limited and KTB/UCI China
Ventures I Limited and UCI China Venture II Limited. Mr. Yu is also the chairman of Shanghai
Multimedia Park Venture Capital, a position he has held since 2003. From 1995 to 1999, Mr. Yu
served in various capacities in several telecommunications companies, including as Chief
Representative of UTStarcom (Hong Kong) Ltd. He also has been the Chief Representative of Softbank
China Venture Capital, which is the management company of SB China Holdings Pte. Ltd., one of our
shareholders, since its incorporation in 1999.
Fumin Zhuo
has served as our director since December 2004 and has more than 27 years of
experience in investment and corporate management. Mr. Zhuo has also served as a general partner in
SIG Capital Limited since July 2005. Prior to this, Mr. Zhuo served as chairman and chief executive
officer of Vertex China Investment Company (VCI), a company concentrating in investments in the
Greater China region, since he joined the fund in July 2002. From 1995 to July 2002, Mr. Zhuo was
chief executive officer of Shanghai Industrial Holding Ltd. and chairman of SIIC Medical Science &
Technology (Group). Prior to this, starting in 1987, Mr. Zhuo served as chief assistant officer of
the Shanghai Economic System Reform Committee. Mr. Zhuo has extensive experience in venture capital
fund formation, mergers and acquisitions, and investment management. Mr. Zhuo graduated from
Shanghai Jiaotong University's Electrical Engineering School with a degree in enterprise management
and also holds a Master's degree in economics from Fudan University.
Neil Nanpeng Shen
has served as our director since December 2004. Mr. Shen is the founding
managing partner of Sequoia Capital China, or Sequoia China, a China-focused venture capital fund
which was established in August 2005. Prior to founding Sequoia China, Mr. Shen was president and
chief financial officer of Ctrip.com International Limited, or Ctrip, a Nasdaq-listed on-line
travel services company he co-founded and for which he continues to serve as a director. Prior to
founding Ctrip, Mr. Shen worked for more than eight years in the investment banking industry in New
York and Hong Kong. He was a director at Deutsche Bank Hong Kong where
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he worked from 1996 to 1999. Prior to 1996, he worked at Chemical Bank, Lehman Brothers and
Citibank in various investment banking positions. Mr. Shen is also co-founder and co-chairman of
Home Inns & Hotels Management (Hong Kong) Limited. Mr. Shen received his Master's degree from the
School of Management at Yale University and his Bachelor's degree from Shanghai Jiaotong
University.
Charles Chao
was appointed as our director in November 2005 to replace Ted Tak Dee Sun who
passed away in September 2005. Mr. Chao is president and chief executive officer of SINA
Corporation, an online media company listed on the Nasdaq National Market. Before he joined SINA
Corporation in September 1999, Mr. Chao served as an experienced audit manager with
PricewaterhouseCoopers LLP, providing auditing and business consulting services for high tech
companies in Silicon Valley, California. Mr. Chao received his master of professional accounting
from University of Texas at Austin. He also holds an MA degree in journalism from University of
Oklahoma and a BA degree in Journalism from Fudan University in Shanghai, China. Mr. Chao is a
certified public accountant and a member of the American Institute of Certified Public Accountants.
Daqing Qi
was appointed as our director in February 28, 2006 upon the closing of our
acquisition of Target Media. Professor Qi is professor of accounting and associate dean of the
Cheong Kong Graduate School of Business, where he has taught since 2002. From 1996 until 2002,
Professor Qi was an associate professor in the School of Accountancy at the Chinese University of
Hong Kong. Professor Qi also has extensive experience in providing executive training and
consulting services in accounting and corporate finance to government departments and private
companies, including the Ministry of Information Industries of the People's Republic of China, the
Shanghai Municipal Government, China Mobile, China Unicom, China Telecom, China Netcom, Nokia and
Ericsson. Professor Qi also serves on the board of directors of Sohu.com, a Nasdaq-listed company
that provides online services in China. Professor Qi holds a B.S. degree in biophysics and a B.A.
degree in journalism from Fudan University, an MBA degree from the University of Hawaii Manoa with
a concentration in accounting and finance and a Ph.D. degree in accounting from the Eli Broad
Graduate School of Management of Michigan State University.
Daniel Mingdong Wu
has served as our chief financial officer since February 2005. Mr. Wu was
chief financial officer and a director of Harbour Networks Ltd. from January 2004 until January
2005. Prior to that, Mr. Wu was a partner of Bridgecross Ltd. from 2001 until 2003 and acting chief
financial officer of Wi-Comm United Communications Inc. from May 2003 until January 2004. From 2000
until 2001, Mr. Wu was a vice president for technology investment banking at Merrill Lynch (Asia
Pacific) Ltd. From 1996 to 2000, Mr. Wu worked in the global communications group of Lehman
Brothers Inc. Mr. Wu holds a B.A. degree from the State University of New York at Buffalo and an
MBA degree from Columbia Business School.
Diana Congrong Chen
joined Focus Media as chief marketing officer in May 2005. Before joining
Focus Media, Ms. Chen worked for Phoenix Satellite TV from 1998 to 2004, serving as general
manager, director of international advertising and president of East China region. While at Phoenix
Satellite TV, Ms. Chen successfully developed business in Zhejiang and East China region and was
awarded Best Sales Team for several years. In 2004, Ms. Chen was honored with a Most Outstanding
Employee Award by Phoenix Satellite TV. Prior to that, Ms. Chen was the vice president of sales for
Tucano Clothing China and office manager for China Animal By-product Import and Export Co. Ms. Chen
holds a B.A. degree in journalism from Zhejiang University.
July Lilin Wang
joined Focus Media as chief accounting officer in April 2005. Prior to joining
Focus Media, Ms. Wang worked as a senior manager at Ernst & Young's Shanghai office from April 2004
to April 2005. From November 2002 to April 2004, Ms. Wang was a senior supervisor at Ernst &
Young's San Jose, California office. From 1994 to 2002, Ms. Wang worked as a senior manager at
Ernst & Young's Shanghai office. Ms. Wang received a B.A. degree in economics from Shanghai
University of Economics and Finance.
Cindy Yan Chan
joined Focus Media in August 2005 as chief strategy officer. Ms. Chan has over
10 years of experience in the advertising industry in China. Before joining Focus Media, Ms. Chan
was deputy general manger for iMPACT, ZenithOptimedia's outdoor media department, an outdoor media
buyer in China, from 2000 to 2005. Ms. Chan is also among the most reputable media researchers in
China, and has published articles on the theory of outdoor media and China's outdoor media market,
which has been quoted in prominent publications such as Forbes magazine and Media magazine. Ms.
Chan holds a master's degree in economics from Nankai University.
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Ergo Xueyuan Liu
joined Focus Media as Vice President — Commercial Location Network in June
2004. Prior to joining Focus Media, Mr. Liu worked for Everease as an account manager from March
2003 until June 2004. From June 2002 until February 2003, Mr. Liu was general manager and a
director of Beijing Fanenchangmei Advertising Co., Ltd., prior to which he was general manager of
Manager magazine from January 2001 until May 2002. In 1999 and 2000, Mr. Liu worked in the
enterprise department of the Shenzhen Special Economic Zone Group Company and was assistant manager
of Yigao Electronics Co., Ltd. Mr. Liu received a B.A. degree in Chinese literature from Huazhong
College of Engineering (now Huazhong Science and Technology University) in 1992.
Acer Jiawei Zhang
joined Focus Media as Vice President — In-store Network in March 2005. Prior
to joining Focus Media, Mr. Zhang worked for Media Partners International Holdings Inc. from 2001
to 2004, serving as account director, business director of the Beijing branch office and director
of agency relations. While at Media Partners International, Mr. Zhang established a national "key
account" service system, improved consulting and client services, and managed the development of
its digital outdoor media project. From 1998 to 2001, Mr. Zhang was a sales director for Media
Century Holdings Inc. in the Wuhan, Chengdu and Beijing offices. At Media Century, Mr. Zhang
assisted with developing new markets and preparing for its domestic initial public offering and
assisted in the acquisition of one of its key competitors. Mr. Zhang received a B.A. degree in arts
design from Hubei Polytechnic Institute.
We increased our board of directors from five to seven members when we completed our
acquisition of Target Media, and assisted in the nomination and appointment of David Feng Yu, the
founder, chairman and chief executive officer of Target Media, and Daqing Qi to fill the additional
seats as of February 28, 2006.
Duties Of Directors
Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith
with a view to our best interests. Our directors also have a duty to exercise the care, diligence
and skills that a reasonably prudent person would exercise in comparable circumstances. In
fulfilling their duty of care to us, our directors must ensure compliance with our amended and
restated memorandum and articles of association. A company has the right to seek damages if a duty
owed by our directors is breached.
The functions and powers of our board of directors 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;
•
determining our debt and finance policies and proposals for the increase or decrease
in our registered capital and the issuance of debentures;
•
formulating our major acquisition and disposition plans, and plans for merger,
division or dissolution;
•
proposing amendments to our amended and restated memorandum and articles of
association; and
•
exercising any other powers conferred by the shareholders' meetings or under our
amended and restated memorandum and articles of association.
B. Compensation
In 2005, we paid aggregate cash compensation of approximately $512,947 to our directors and
executive officers as a group. In 2004 and 2005 and for the three months ended March 31, 2006, we
granted to selected
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directors, officers and employees options to acquire an aggregate 20,643,400, 22,503,630 and
3,000,000 ordinary shares, respectively. We have no service contracts with any of our directors or
executive officers that provide benefits to them upon termination. We do not pay or set aside any
amounts for pension, retirement or other benefits for our officers and directors.
Share Option Plans
Our 2003 Employee Share Option Scheme, or our 2003 Option Plan, was adopted by our board of
directors at a meeting on June 1, 2003. Our members and board of directors adopted our 2005 Share
Option Plan, or our 2005 Option Plan, in May 2005. Both of our option plans are intended to promote
our success and to increase shareholder value by providing an additional means to attract,
motivate, retain and reward selected directors, officers, employees and third-party consultants and
advisors.
Originally, under our 2003 Option Plan, not more than 30% of our share capital was reserved
for grants of options. Prior to the adoption of our 2005 Option Plan, we issued options equivalent
to 10.87% of our issued share capital under our 2003 Option Plan. Under our 2005 Option Plan, the
amount of options we may issue has been reduced to an aggregate of 20% of our share capital,
including the 10.87% already granted under our 2003 Option Plan. In addition, during the three
years from the adoption of our 2005 Option Plan, we may issue no more than 5% of our share capital
for grants of options.
Under our 2003 Option Plan:
•
In July and August 2004, we granted:
•
options to purchase 12,181,600 shares, representing 3.7% of our pre-offering diluted
share capital, to certain members of our board of directors and our management group. Each of these
options has an exercise price of $0.24 per share. 8,460,800 of these options vest over three years
while the remaining 3,720,800 options vest over one year.
•
options to purchase 8,461,800 shares, representing 2.5% of our pre-offering
diluted share capital, to members of our staff. Each of these options has an
exercise price of $0.24 per share. 2,159,800 of these options vest over three years
while the remaining 6,302,000 options vest over one year.
•
options to purchase 4,564,800 shares, representing 1.4% of our pre-offering
diluted share capital, to third-party consultants and advisors. Each of these
options have an
•
exercise price of $0.24 per share. 1,310,400 of these options vest over three
years while the remaining 3,254,400 options vest over one year.
Under our 2005 Option Plan:
•
In January 2005, we granted additional options to
purchase 1,200,000 of our ordinary shares to some of our directors with an exercise price of $0.58 per share. All of these
options vest over three years.
•
In February 2005, we granted:
•
options to purchase 2,000,000 and 2,100,000 of our ordinary shares with an
exercise price of $0.58 and $0.75, respectively, to certain of our executive
officers and options to purchase 720,000 of our ordinary shares with an exercise
price of $0.75 to certain of our employees. All of these options vest over three
years.
•
options to purchase 1,240,000 of our ordinary shares to third-party consultants
and advisors with an exercise price of $0.75. All of these options vest over three
years.
•
In July 2005, we granted:
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•
options to purchase 11,683,630 of our ordinary shares with an exercise price of
$1.70, to certain of our executive officers and employees. All of these options
vest over three years.
•
options to purchase 100,000 of our ordinary shares to a third-party consultant
with an exercise price of $1.70. All of these options vest over three years.
In November 2005, we granted:
•
options to purchase 800,000 of our ordinary shares with an exercise price of
$2.60, to certain of our executive officers and employees. All of these options
vest over three years.
•
options to purchase 4,000,000 of our ordinary shares with an exercise price of
$2.70, to certain of our executive officers and employees. All of these options
vest over three years.
•
In March 2006, we granted options to purchase 3,000,000 of our ordinary shares with
an exercise price of $5.09, to certain of our executive officers, employees and
directors. All of these options vest over three years.
Options generally do not vest unless the grantee remains under our employment or in service
with us on the given vesting date. However, in circumstances where there is a death or disability
of the grantee, or, for certain option holders, a change in the control of our company, the vesting
of options will be accelerated to permit immediate exercise of all options granted to a grantee.
Our compensation committee, which administers our option plans, has wide discretion to award
options. Subject to the provisions of our option plans and the above allocation targets, our
committee that administers our option plans determines who will be granted options, the type and
timing of options to be granted, vesting schedules and other terms and conditions of options,
including the exercise price. Any of our employees may be granted options. The number of options
awarded to a person, if any, is based on the person's potential ability to contribute to our
success, the person's position with us and other factors chosen by our board of directors.
Generally, to the extent an outstanding option granted under our option plans has not become
vested on the date the grantee's employment by or service with us terminates, the option will
terminate and become unexercisable.
Our board of directors may amend, alter, suspend, or terminate each of our option plan at any
time, provided, however, that in order to increase the limit of 20% of our share capital that may
be granted as options, our board of directors must first seek the approval of our shareholders and,
if such amendment, alteration, suspension or termination would adversely affect the rights of an
optionee under any option granted prior to that date, the approval of such optionee. Without
further action by our board of directors, our 2003 Option Plan and our 2005 Option Plan will
terminate in June 2013 and May 2015, respectively.
The table below sets forth the option grants made to our directors and executive officers
pursuant to our 2003 and 2005 Option Plan as of March 31, 2006.
Number of ordinary
shares to be issued upon
Exercise price per
Name
exercise of options
ordinary share
Date of grant
Date of expiration
(in U.S. dollars)
Jason Nanchun Jiang
5,882,000
$
0.24
August 25, 2004
August 24, 2014
David Feng Yu
*
5.09
March 10, 2006
March 9, 2016
Jimmy Wei Yu
*
$
0.24
July 5, 2004
July 4, 2014
Jimmy Wei Yu
*
$
0.24
August 25, 2004
August 24, 2014
Jimmy Wei Yu
*
$
1.70
July 13, 2005
July 13, 2015
Fuming Zhuo
*
$
0.24
August 10, 2004
August 9, 2014
Neil Nanpeng Shen
*
$
0.58
January 1, 2005
December 31, 2014
Charles Chao
*
2.60
November 2, 2005
November 1, 2015
Daqing Qi
*
5.09
March 10, 2006
March 9, 2016
Daniel Mingdong Wu
*
$
0.58
February 2, 2005
February 1, 2015
Daniel Mingdong Wu
*
$
0.75
February 2, 2005
February 1, 2015
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Number of ordinary
shares to be issued upon
Exercise price per
Name
exercise of options
ordinary share
Date of grant
Date of expiration
(in U.S. dollars)
Daniel Mingdong Wu
*
$
1.70
July 13, 2005
July 13, 2015
July Lilin Wang
*
$
0.75
February 2, 2005
February 1, 2015
Ergo Xueyuan Liu
*
$
0.24
July 5, 2004
July 4, 2014
Acer Jiawei Zhang
*
$
0.75
February 2, 2005
February 1, 2015
Diana Congrong Chen
*
$
1.70
July 13, 2005
July 13, 2015
Cindy Yan Chan
*
$
1.70
July 13, 2005
July 13, 2015
*
Upon exercise of all options granted, would beneficially own less than 1% of our outstanding
ordinary shares, assuming all of our outstanding preference shares are converted into our
ordinary shares.
C. Board Practices
Each of our directors holds office until a successor has been duly elected and qualified
unless the director was appointed by our board of directors, in which case such director holds
office until the next following annual meeting of shareholders at which time such director is
eligible for reelection. All of our executive officers are appointed by and serve at the discretion
of our board of directors. Neither we nor any of our subsidiaries has entered into a contract with
any of our directors by which our directors are expected to receive benefits upon termination of
their employment.
Board Committees
Our board of directors has established an audit committee, a compensation committee and a
nominations committee.
Audit Committee.
Our audit committee currently consists of Neil Nanpeng Shen, Charles Chao
and Fumin Zhuo. Mr. Shen is the chairman of our audit committee. Our board of directors has
determined that all of our audit committee members are "independent directors" within the meaning
of Nasdaq Marketplace Rule 4200(a)(15) and meet the criteria for independence set forth in Section
10A(m)(3) of the U.S. Securities Exchange Act of 1934, or the Exchange Act.
Our audit committee is responsible for, among other things:
•
recommending to our shareholders, if appropriate, the annual re-appointment of our
independent auditors and pre-approving all auditing and non-auditing services permitted
to be performed by the independent auditors;
•
annually reviewing an independent auditors' report describing the auditing firm's
internal quality-control procedures, any material issues raised by the most recent
internal quality control review, or peer review, of the independent auditors and all
relationships between the independent auditors and our company;
•
setting clear hiring policies for employees or former employees of the independent
auditors;
•
reviewing with the independent auditors any audit problems or difficulties and
management's response;
•
reviewing and approving all proposed related-party transactions, as defined in Item
404 of Regulation S-K under the U.S. securities laws;
•
discussing the annual audited financial statements with management and the
independent auditors;
•
discussing with management and the independent auditors major issues regarding
accounting principles and financial statement presentations;
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•
reviewing reports prepared by management or the independent auditors relating to
significant financial reporting issues and judgments;
•
reviewing with management and the independent auditors the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures on our financial
statements;
•
discussing policies with respect to risk assessment and risk management;
•
reviewing major issues as to the adequacy of our internal controls and any special
audit steps adopted in light of material control deficiencies;
•
timely reviewing reports from the independent auditors regarding all critical
accounting policies and practices to be used by our company, all alternative treatments
of financial information within U.S. GAAP that have been discussed with management and
all other material written communications between the independent auditors and
management;
•
establishing procedures for the receipt, retention and treatment of complaints
received from our employees regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission by our employees of
concerns regarding questionable accounting or auditing matters;
•
annually reviewing and reassessing the adequacy of our audit committee charter;
•
such other matters that are specifically delegated to our audit committee by our
board of directors from time to time;
•
meeting separately, periodically, with management, the internal auditors and the
independent auditors; and
•
reporting regularly to the full board of directors.
Compensation Committee.
Our current compensation committee consists of Neil Nanpeng Shen,
Charles Chao and Fumin Zhuo. Mr. Chao is the chairman of our compensation committee. Our board of
directors has determined that all of our compensation committee members are "independent directors"
within the meaning of Nasdaq Marketplace Rule 4200(a)(15).
Our compensation committee is responsible for:
•
determining and recommending the compensation of our chief executive officer;
•
reviewing and making recommendations to our board of directors regarding our
compensation policies and forms of compensation provided to our directors and officers;
•
reviewing and determining bonuses for our officers;
•
reviewing and determining share-based compensation for our directors and officers;
•
administering our equity incentive plans in accordance with the terms thereof; and
•
such other matters that are specifically delegated to the compensation committee by
our board of directors from time to time.
Nominations Committee.
Our current nominations committee consists of Neil Nanpeng Shen,
Charles Chao and Fumin Zhuo. Mr. Zhuo is the chairman of our nominations committee. Our board of
directors has determined
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that all of our nominations committee members are "independent directors" within the meaning
of Nasdaq Marketplace Rule 4200(a)(15).
Our nominations committee is responsible for, among other things, selecting and recommending
the appointment of new directors to our board of directors.
D. Employees
As of March 31, 2006, we had a total of 3,250 full-time employees and no part-time employees.
The following table sets out the number of staff by business area as of March 31, 2006:
Number of
employees(1)
Percentage
Sales and marketing
744
23
%
Operations
1,871
58
%
Management and administration
635
19
%
Total number of employees
3,250
100
%
(1)
This excludes employees our regional distributors and agents who are not directly under our
employ.
As required by PRC regulations, we participate in various employee benefit plans that are
organized by municipal and provincial governments, including pension, work-related injury benefits,
maternity insurance, medical and unemployment benefit plans. We are required under PRC law to make
contributions to the employee benefit plans at specified percentages of the salaries, bonuses and
certain allowances of our employees, up to a maximum amount specified by the local government from
time to time. Members of the retirement plan are entitled to a pension equal to a fixed proportion
of the salary prevailing at the member's retirement date.
Generally we enter into a three-year standard employment contract with our officers and
managers and a one-year standard employment contract with other employees. According to these
contracts, all of our employees are prohibited from engaging in any activities that compete with
our business during the period of their employment with us. Furthermore, the employment contracts
with officers or managers include a covenant that prohibits officers or managers from engaging in
any activities that compete with our business for two years after the period of their employment
with us.
E. Share Ownership
Please see Item 6.B. and Item 7.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information with respect to the beneficial ownership, within
the meaning of Rule 13d-3 under the Exchange Act, of our ordinary shares, as of June 21, 2006 and
as adjusted to reflect the sale of the ADSs offered in this offering for:
•
each person known to us to own beneficially more than 5% of our ordinary shares and
•
each of our directors and executive officers who beneficially own our ordinary shares.
Beneficial ownership includes voting or investment power with respect to the securities.
Except as indicated below, and subject to applicable community property laws, the persons named in
the table have sole voting and investment power with respect to all ordinary shares shown as
beneficially owned by them. The number of our ordinary shares outstanding used in calculating the
percentage for each listed person includes our ordinary shares
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underlying
options held by such person that are exercisable within 60 days
of June 26, 2006,
but excludes ordinary shares underlying options held by any other person. Percentage of beneficial
ownership is based on 523,166,773 ordinary shares outstanding as of the date of this annual report.
Shares beneficially owned
NAME
Number
Percent
Principal Shareholders
JJ Media Investment Holding Ltd./
Jason
Nanchun
Jiang
(1)
87,635,759
16.63
%
David Feng Yu
35,584,287
6.80
%
Directors and Executive Officers
(2)
JJ Media Investment Holding Ltd./
Jason Nanchun Jiang
(3)
87,635,759
16.63
%
David Feng Yu
35,584,287
6.80
%
Jimmy Wei Yu
(4)
2,131,925
*
Neil Nanpeng Shen
—
*
Charles Chao
—
—
Fumin Zhuo
—
*
Daqing Qi
—
*
Daniel Mingdong Wu
—
*
Diana Congrong Chen
—
—
July Lilin Wang
—
*
Cindy Yan Chan
—
—
Ergo Xueyuan Liu
—
*
Acer Jiawei Zhang
—
*
*
Upon exercise of all options currently exercisable or vesting within 60 days of the
date of this annual
report, would beneficially own less than 1% of our ordinary shares.
(1)
Includes 83,959,509 ordinary shares owned by JJ Media Investment Holding Ltd. and
3,151,000 and 525,250 options to purchase our ordinary shares owned by Target Sales
International Limited and Target Management Group Limited. All of these entities are 100%
owned by Jason Nanchun Jiang, our founder, chairman and chief executive officer.
(2)
The address of our current directors and executive officers is c/o 28F, Zhao Feng World
Trade Building, 369 Jiangsu Road, Shanghai 200050, China.
(3)
See note 1.
(4)
Represents 56,250, 496,256, 306,925, 1,237,500 and 78,825 options to purchase our ordinary shares owned by Multimedia Park Venture Capital Ltd., United
Capital Investment Group Limited, Media Investment Consulting Limited, Universal Media
Consulting Limited and Union Enterprises Group Limited, respectively. These entities are
collectively referred to in this annual report as the UCI Entities.
Jimmy Wei Yu, one of our directors, has the sole investment and voting power over the
shares owned by the UCI Entities, except with respect to the shares owned by KTB/UCI, for
which Jimmy Wei Yu shares the investment and voting power with Wonho Hong. The address of the
UCI Entities is TrustNet Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands.
Jimmy Wei Yu disclaims beneficial ownership of the shares owned by the UCI Entities except to
the extent of his pecuniary interest therein.
None of our major shareholders have different voting rights from those of our other
shareholders. To the best of our knowledge, we are not directly or indirectly controlled by
another corporation, by any foreign government or by any other natural or legal person severally or
jointly.
We are not aware of any arrangement that may, at a subsequent date, result in a change of
control of our company.
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For information regarding our shares held or beneficially owned by persons in the United
States, see "Item 9. The Offer and Listing—Market Price Information for Our American Depositary
Shares" in this annual report.
B. Related Party Transactions
The following is a summary of the material provisions of these agreements. For more complete
information you should read these agreements in their entirety. Directions on how to obtain copies
of these agreements are provided in this annual report under
"Item 10.H Additional Information — Documents on
Display" and "Item 19. Exhibits".
Agreements among Us, Focus Media Technology, Focus Media Digital, New Focus Media Advertisement,
Focus Media Advertisement and its Subsidiaries
We have entered into a series of contractual arrangements with Focus Media Advertisement and
its shareholders and subsidiaries, including contracts relating to the provision of services and
certain shareholder rights and corporate governance matters. Each of our contractual arrangements
with Focus Media Advertisement and its shareholders and subsidiaries may only be amended with the
approval of our audit committee or another independent body of our board of directors.
Transfer of Ownership When Permitted By Law
Pursuant to the call option agreement, dated as of March 28, 2005, and subsequent
participation letters by new subsidiaries of Focus Media Advertisement, by and among Focus Media
Technology, Focus Media Advertisement and its subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu,
each of Jason Nanchun Jiang, as a shareholder of Focus Media Advertisement, Jimmy Wei Yu, as a
shareholder of Focus Media Advertisement and certain of its subsidiaries, and Focus Media
Advertisement, as a shareholder of its subsidiaries, has granted Focus Media Technology or its
designee an exclusive option to purchase all or part of their equity interests in Focus Media
Advertisement, and its subsidiaries, or all or part of the assets of Focus Media Advertisement, in
each case, at any time determined by Focus Media Technology and to the extent permitted by PRC law.
Pursuant to a separate letter of undertaking entered into by and among us, Focus Media Technology,
Jason Nanchun Jiang and Jimmy Wei Yu, dated as of March 28, 2005, each of Jason Nanchun Jiang and
Jimmy Wei Yu agrees to pay to Focus Media Technology or us any excess of the purchase price paid
for the equity interests in, or assets of, Focus Media Advertisement or its subsidiaries over the
respective registered capital of Focus Media Advertisement or its subsidiaries in the event that
Focus Media Technology or its designee exercises such option.
Voting Arrangement
Pursuant to the voting rights proxy agreement, dated as of March 28, 2005, and subsequent
participation letters by new subsidiaries of Focus Media Advertisement, by and among Focus Media
Technology, Focus Media Advertisement and its subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu,
Jason Nanchun Jiang, Jimmy Wei Yu and Focus Media Advertisement have granted a PRC individual
designated by Focus Media Technology the right to appoint all of the directors and senior
management of Focus Media Advertisement and those subsidiaries that it jointly owns with Jimmy Wei
Yu and all of their other voting rights as shareholders of Focus Media Advertisement and its
subsidiaries, as the case may be, as provided under the articles of association of each such
entity. Under the voting rights proxy agreement, there are no restrictions on the number, to the
extent allowed under the respective articles of association of Focus Media Advertisement and its
subsidiaries, or identity of those persons we can appoint as directors and officers.
Equity Pledge Agreement
Pursuant to the equity pledge agreement dated as of March 28, 2005, and subsequent
participation letters by new subsidiaries of Focus Media Advertisement, by and among Focus Media
Technology, Focus Media Digital, Focus Media Advertisement and its subsidiaries, Jason Nanchun
Jiang and Jimmy Wei Yu, each of Jason Nanchun Jiang, Jimmy Wei Yu and Focus Media Advertisement has
pledged his or its equity interest in Focus Media Advertisement and its subsidiaries, as the case
may be, to Focus Media Technology and Focus Media Digital to secure their obligations under the
relevant contractual control agreements to which each is a party, including but not
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limited to, the obligations of Focus Media Advertisement and its subsidiaries under the
technical services agreement and the trademark licence agreement and the obligation of each of
Jason Nanchun Jiang and Jimmy Wei Yu under the respective loan agreement dated March 28, 2005,
entered into by Focus Media Technology and Jason Nanchun Jiang and Jimmy Wei Yu, pursuant to which
Jason Nanchun Jiang obtained a loan in the amount of RMB35.5 million ($4.4 million) from Focus
Media Technology for the sole purpose of increasing the registered capital of Focus Media
Advertisement and Jimmy Wei Yu received a series of loans from Focus Media Technology for purposes
of increasing the registered capital of Focus Media Advertisement, and acquiring certain of our
regional distributors, respectively. See "— Loans to Jason Nanchun Jiang and Jimmy Wei Yu". Under
this equity pledge agreement, Jason Nanchun Jiang, Jimmy Wei Yu and Focus Media Advertisement have
agreed not to transfer, assign, pledge or otherwise dispose of their interest in Focus Media
Advertisement or its subsidiaries, as the case may be, without the prior written consent of Focus
Media Technology and Focus Media Digital.
Equity Trust Agreement
Pursuant to the equity trust agreement by and among Focus Media Advertisement and Focus Media
Technology dated as of March 28, 2005, Focus Media Advertisement holds a 9% equity interest in
Focus Media Digital in trust for the benefit of Focus Media Technology. Under the equity trust
agreement, Focus Media Technology provides trust funds to Focus Media Advertisement to be used for
the purchase of a 9% equity interest in Focus Media Digital and Focus Media Technology agrees to be
the beneficiary of any profits or other benefit generated that is attributable to the management,
use or disposal of the trust funds. Through these arrangements, we have enabled our indirect
subsidiary, Focus Media Technology, to beneficially hold an additional 9% of the interest in Focus
Media Digital in addition to the 90% equity interest it holds in its own name.
Trademark License Agreement
Pursuant to the trademark license agreement by and among Focus Media Technology, Focus Media
Advertisement and its subsidiaries dated as of March 28, 2005, Focus Media Technology has agreed to
license the use of its trademarks to be registered in China to Focus Media Advertisement and its
subsidiaries in exchange for a monthly licensing fee of RMB10,000 ($1,247) for each affiliated
company using such trademarks.
Cooperation Agreements
Pursuant to the cooperation agreements by and among New Focus Media Advertisement, Focus Media
Advertisement and its subsidiaries, dated as of May 22, 2006, New Focus Media Advertisement
entrusted Focus Media Advertisement and its subsidiaries to disseminate advertisements as required
by New Focus Media Advertisement in all locations rented by Focus Media Advertisement and its
subsidiaries, and to sell advertising time slots for those locations, and each of Focus Media
Advertisement and its subsidiaries ensures the allocation of advertising time slots on its
respective portion of the advertising network adequate for the dissemination of advertising content
as agreed upon between New Focus Media Advertisement and its advertising clients. New Focus Media
Advertisement pays a dissemination fee to Focus Media Advertisement and its relevant subsidiaries
for dissemination services on a cost-plus basis.
Asset Transfer Agreement
Pursuant to the asset transfer agreement entered into by and between Focus Media Digital and
New Focus Media Advertisement, dated as of December 31, 2005, Focus Media Digital transferred to
New Focus Media Advertisement all of its assets relating to its out-of-home LCD television
advertising business at fair market value.
Technology Transfer Agreement
Pursuant to the technology and assets transfer agreement by and between Focus Media Digital
and New Focus Media Advertisement, dated as of May 22, 2006, Focus Media Digital transferred to New
Focus Media Advertisement all of its technology at a fixed fee.
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Advertisement Dissemination Agreement
Pursuant to the advertisement dissemination agreement by and between New Focus Media
Advertisement and Focus Media Advertising Agency, dated as of May 22, 2006, New Focus Media
Advertisement agrees to disseminate advertisements for Focus Media Advertising Agency pursuant to
the agreements by and among Focus Media Advertising Agency and its clients, and Focus Media
Advertising Agency agrees to pay a dissemination fee to New Focus Media Advertisement for the
dissemination services.
Agreements Among Focus Media Advertisement, Focus Media Advertising Agency, Framedia Investment,
Framedia Advertisement, Guangdong Framedia and New Structure Advertisement
In connection with our acquisition of Framedia, we entered into a series of contractual
arrangements with Focus Media Advertisement's subsidiaries relating to our poster frame network,
Framedia Advertisement, New Structure Advertisement, and Guangdong Framedia, each of which is a
subsidiary of Focus Media Advertisement, including contracts relating to the provision of services
and certain shareholder rights and corporate governance matters. Each of our contractual
arrangements with Framedia Advertisement, Guangdong Framedia, New Structure Advertisement and their
shareholders may only be amended in writing by all of its parties unless the provisions being
amended only involve certain parties' interests in which case the amendment shall be made in
writing by such parties. Each of Framedia Advertisement, Guangdong Framedia and New Structure
Advertisement is 90%-owned by Focus Media Advertisement and 10%-owned by Focus Media Advertising
Agency, respectively.
Transfer of Ownership When Permitted By Law
Pursuant to the call option agreements by and among Framedia Investment, Framedia
Advertisement, Guangdong Framedia, New Structure Advertisement, Focus Media Advertisement and Focus
Media Advertising Agency dated as of January 13, 2006 and May 22, 2006, each of Focus Media
Advertisement and Focus Media Advertising Agency as the shareholders of Framedia Advertisement, New
Structure Advertisement and Guangdong Framedia, have granted Framedia Investment or its designee an
exclusive option to purchase all or part of their equity interests in Framedia Advertisement,
Guangdong Framedia and New Structure Advertisement, in each case, at any time determined by
Framedia Investment and to the extent permitted by PRC law.
Voting Arrangement
Pursuant to the voting rights proxy agreements by and among Framedia Investment, Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement, Focus Media Advertisement and
Focus Media Advertising Agency, dated as of January 13, 2006 and May 22, 2006, Focus Media
Advertisement and Focus Media Advertising Agency have granted a PRC individual designated by
Framedia Investment the right to appoint all of the directors and senior management of Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement and all of their other voting
rights as shareholders of Framedia Advertisement, Guangdong Framedia and New Structure
Advertisement, as the case may be, as provided under the articles of association of each such
entity. Under the voting rights proxy agreement, there are no restrictions on the number, to the
extent allowed under the respective articles of association of Framedia Advertisement, Guangdong
Framedia and New Structure Advertisement, or identity of those persons we can appoint as directors
and officers.
Equity Pledge Agreement
Pursuant to the equity pledge agreements by and among Framedia Investment, Focus Media
Advertisement, Focus Media Advertising Agency, Framedia Advertisement, Guangdong Framedia and New
Structure Advertisement, dated as of January 13, 2006 and May 22, 2006, each of Focus Media
Advertisement and Focus Media Advertising Agency has pledged his or its equity interest in Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement, as the case may be, to Framedia
Investment to secure their obligations under the
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relevant contractual control agreements to which each is a party, including the obligations of
each of Focus Media Advertisement and Focus Media Advertising Agency under the call option
agreement and the voting rights proxy agreement with Framedia Investment. Under this equity pledge
agreement, Focus Media Advertisement and Focus Media Advertising Agency have agreed not to
transfer, assign, pledge or otherwise dispose of their interest in Framedia Advertisement,
Guangdong Framedia and New Structure Advertisement, as the case may be, without the prior written
consent of Framedia Investment.
Agreements Among Focus Media Advertisement, Focus Media Advertising Agency, Focus Media Wireless
and Dotad Technology
In connection with our acquisition of Focus Media Wireless, we entered into a series of
contractual arrangements with Focus Media Wireless which is a subsidiary of Focus Media
Advertisement, including contracts relating to the provision of services and certain shareholder
rights and corporate governance matters. Each of our contractual arrangements with Focus Media
Wireless and their shareholders may only be amended in writing by all of its parties unless the
provisions being amended only involve certain parties' interests in which case the amendment shall
be made in writing by such parties. Focus Media Wireless is 90%-owned by Focus Media Advertisement
and 10%-owned by Focus Media Advertising Agency.
Transfer of Ownership When Permitted By Law
Pursuant to the call option agreement by and among Dotad Technology, Focus Media Wireless,
Focus Media Advertisement and Focus Media Advertising Agency dated as of May 22, 2006, each of
Focus Media Advertisement and Focus Media Advertising Agency as the shareholders of Focus Media
Wireless, have granted Dotad Technology or its designee an exclusive option to purchase all or part
of their equity interests in Focus Media Wireless, at any time determined by Dotad Technology and
to the extent permitted by PRC law.
Voting Arrangement
Pursuant to the voting rights proxy agreement by and among Dotad Technology, Focus Media
Wireless, Focus Media Advertisement and Focus Media Advertising Agency, dated as of May 22, 2006,
Focus Media Advertisement and Focus Media Advertising Agency have granted a PRC individual
designated by Dotad Technology the right to appoint all of the directors and senior management of
Focus Media Wireless and all of their other voting rights as shareholders of Focus Media Wireless,
as provided under its articles of association. Under the voting rights proxy agreement, there are
no restrictions on the number, to the extent allowed under the articles of association of Focus
Media Wireless, or identity of those persons we can appoint as directors and officers.
Equity Pledge Agreement
Pursuant to the equity pledge agreement by and among Dotad Technology, Focus Media
Advertisement, Focus Media Advertising Agency and Focus Media Wireless, dated as of May 22, 2006,
each of Focus Media Advertisement and Focus Media Advertising Agency has pledged his or its equity
interest in Focus Media Wireless to Dotad Technology to secure their obligations under the relevant
contractual control agreements to which each is a party, including the obligations of each of Focus
Media Advertisement and Focus Media Advertising Agency under the call option agreement and the
voting rights proxy agreement with Dotad Technology. Under this equity pledge agreement, Focus
Media Advertisement and Focus Media Advertising Agency have agreed not to transfer, assign, pledge
or otherwise dispose of their interest in Focus Media Wireless without the prior written consent of
Dotad Technology.
Other Related Party Transactions
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Shareholders Agreement
Pursuant to the terms of the shareholders agreement with all of our existing shareholders,
such shareholders are entitled to demand registration rights and piggyback registration rights. At
any time after six months following the closing of our initial public offering,
•
any of our shareholders representing a majority of the ordinary shares converted
from the Series A convertible redeemable preference shares;
•
any of our shareholders representing a majority of the ordinary shares converted
from the Series B convertible redeemable preference shares; or
•
any of our shareholders who are former Target Media shareholders representing 25% of
the ordinary shares issued to them as a group as consideration in connection with our
acquisition of Target Media;
may require us to effect the registration, on a form other than Form F-3, of the registrable
securities then held by such shareholder. In addition, at any time after six months following the
closing of our initial public offering, any of our shareholders representing 20% of the ordinary
shares converted from the Series C convertible redeemable preference shares may require
registration for registrable securities with reasonably anticipated aggregate price (net of selling
expenses) of at least US$20 million. We are not obligated to take any action to effect any such
registration on more than two occasions each on behalf of each group of shareholders described
above or more than once in any six month period or within six months of any other public offering
we conduct in which they had the opportunity to participate without the exclusion of any shares
eligible for registration under the shareholders agreement.
In addition, holders of any of our registrable securities may require us to effect a
registration statement on Form F-3 (or any successor form or any comparable form for a registration
in a jurisdiction other than the United States) for a public offering of registrable securities so
long as the reasonably anticipated aggregate price to the public (net of selling expenses) would be
at least $1,000,000 and we are entitled to use Form F-3 (or a comparable form) for such offering.
Holders of registrable securities may demand a registration on Form F-3 on unlimited occasions,
although we are not obligated to effect more than once in any six month period if within six months
of any other public offering we conduct in which they had the opportunity to participate without
the exclusion of any shares eligible for registration under the shareholders agreement.
Registrable securities are ordinary shares not previously sold to the public and issued or
issuable to holders of our preference shares, including (i) ordinary shares issued upon conversion
of our preference shares, (ii) ordinary shares issued or issuable upon exercise of their options or
warrants to purchase ordinary shares, and (iii) ordinary shares issued pursuant to share splits,
share dividends and similar distributions to holders of our preference shares. Under certain
circumstances, such demand registration may also include ordinary shares other than registrable
securities.
Holders of registrable securities also have "piggyback" registration rights, which may require
us to register all or any part of the registrable securities then held by such holders when we
register any of our ordinary shares.
If any of the offerings involves an underwriting, the managing underwriter of any such
offering has certain rights to limit the number of shares included in such registration. However,
the number of registrable securities included in an underwritten public offering subsequent to our
initial public offering pursuant to "piggyback" registration rights may not be reduced to less than
30% of the aggregate securities included in such offering without the consent of a majority of the
holders of registrable securities who have requested their shares to be included in the
registration and underwriting.
We are generally required to bear all of the registration expenses incurred in connection with
any registration pursuant to the shareholders agreement.
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Loans to Jason Nanchun Jiang and Jimmy Wei Yu
On June 10, 2003, we, Jason Nanchun Jiang and Jimmy Wei Yu and one of our employees, Yuanzhe
Fu, and two of our former employees, Yibing Zhou and Yiqing Hou, executed a loan agreement of
indefinite term, under which we agreed to extend to each of Jason Nanchun Jiang, Jimmy Wei Yu,
Yuanzhe Fu, Yibing Zhou and Yiqing Hou a loan in the aggregate amount of RMB10.0 million ($1.2
million) for the sole purpose of establishing and operating Focus Media Advertisement. Each of the
above individuals also agreed to pledge to us his respective shares in us to secure each of their
respective obligations under the loan agreement. In November 2004, Yuanzhe Fu, Yibing Zhou and
Yiqing Hou transferred their share in us to Jimmy Wei Yu and as a result, their respective rights
and obligations under the loan agreement were assumed by Jimmy Wei Yu. As of March 31, 2006, the
full amount of the loan remained outstanding. We granted this loan without interest and it is
payable on demand with thirty days' prior notice to Mr. Jiang and Mr. Yu. Pursuant to the loan
agreements entered into by Focus Media Technology and Jason Nanchun Jiang and Jimmy Wei Yu,
respectively, Jason Nanchun Jiang obtained a loan in the amount of RMB35.5 million ($4.4 million)
from Focus Media Technology for the sole purpose of increasing the registered capital of Focus
Media Advertisement and Jimmy Wei Yu received a series of loans totaling RMB5,085,000 ($628,394)
from Focus Media Technology for purposes of increasing the registered capital of Focus Media
Advertisement and acquiring certain of our regional distributors, respectively. As of March 28,
2005, the full amounts of the loans to Messrs. Jiang and Yu remained outstanding. Focus Media
Technology granted these loans without interest. The loans have a term of ten years starting from
March 28, 2005 and are payable in full at the end of such ten-year term or, with thirty-days'
written notice from Focus Media Technology to Messrs. Jiang and Yu, on demand. These loan
arrangements have been acknowledged and confirmed by the relevant parties in the loan agreement
between Focus Media Technology and Jason Nanchun Jiang and in the loan agreement by and among Focus
Media Technology, Focus Media Advertisement and Jimmy Wei Yu, both dated March 28, 2005.
Loan from Relative of Jason Nanchun Jiang
In March 2006, Weiqiang Jiang, the father of Jason Nanchun Jiang, provided a short-term loan
to us of RMB 20.0 million ($2.5 million) to relieve a temporary shortage of Renminbi we were
experiencing at that time. The loan is unsecured and was provided to us at no interest. As of March
31, 2006, the full amount of the loan remained outstanding. The loan will become due and payable in
full on June 30, 2006.
Transactions with Everease
Prior to establishing our business, Jason Nanchun Jiang, our founder, chairman and chief
executive officer, served as the chief executive officer of Everease from 1994 to 2003. Everease
and our company were considered to be under common control and any transaction we entered into with
Everease were treated as related party transactions. Starting in the first quarter of 2005,
Everease ceased to be our related party. Our previous related party transactions with Everease are
described below.
Asset and Business Purchase Agreement
Pursuant to the asset and business purchase agreement entered into between Everease and Focus
Media Advertisement dated July 2003, Focus Media Advertisement purchased equipment and assets from
Everease for a consideration of RMB10 million ($1.2 million). The equipment consisted primarily of
LCD flat-panel displays and the business and other assets consisted of contracts and other
operations in connection with Everease's operation of the flat-panel displays in commercial
locations.
Transfer Agreement
Pursuant to the transfer arrangements among Everease, Jason Nanchun Jiang and Focus Media in
May 2003, Everease and Jason Nanchun Jiang transferred certain know-how in connection with
flat-panel display synchronization technology to us for a fee of $750,000. The know-how consisted
primarily of technology and engineering concepts used in the synchronization of our network panels
that are placed in close proximity to one another as well as other related expertise and knowledge
provided by Mr. Jiang in his services to us.
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Everease Non-Competition Agreement
Pursuant to the Everease Non-competition Agreement between Everease and us, dated as of
November 2004, Everease, its affiliates, or its directors, officers or employees have agreed not to
disclose any confidential information regarding Focus Media to any third-party without our written
consent. In addition, for so long as Jason Nanchun Jiang continues to hold any equity interest in
our company and for two years thereafter, none of Everease, its affiliates, or its directors,
officers or employees may (i) engage in, or lend its name to, any business that competes with our
business, (ii) deal in a competitive manner with any of our customers, (iii) solicit any of our
directors, officers, employees or agents to become directors, officers, employees or agents of
others entities, or (iv) engage in any business conducted under a name that is the same as, or
similar to, ours or any trade name used by us where the use of such name is reasonably likely be
confused for our name. Everease entered into the non-competition agreement in consideration of its
business relationship with us at the time, which relationship was subsequently terminated, and
received no cash or other monetary compensation.
Cooperation and Transfer Agreements
Everease and Beijing Suodi Advertising Co., Ltd., or Suodi Advertising, entered into a series
of project cooperation agreements in February, April and June 2003 under which Suodi Advertising
agreed to develop Everease's flat-panel television advertising network by entering into display
placement agreements, to sell advertising time slots on Everease's advertising network and to
maintain the flat-panel displays on the network. In August 2003, Everease, Suodi Advertising and
Focus Media Advertisement entered into a transfer agreement under which Everease transferred to
Focus Media Advertisement all of its rights and obligations under its original project cooperation
agreements with Suodi Advertising.
Advertising Services Provided to Everease
We have provided our advertising services to Everease in the aggregate amounts of $978,058 and
$1.2 million in 2003 and 2004, respectively. These advertising services were provided in the
ordinary course of business on terms substantially similar to those provided to our unrelated
advertising clients on an arm's-length basis. Starting in the first quarter of 2005, Everease
ceased to be our related party.
Transactions with Entities Affiliated with Jimmy Wei Yu
We have provided our advertising services to certain companies for which Jimmy Wei Yu, one of
our directors, also serves as a director. The advertising service revenue for these services
totalled in the aggregate $120,821, $2.2 million, $5.0 million and $2.7 million in 2003, 2004 and
2005 and for the three months ended March 31, 2006, respectively. As of March 31, 2006, $2.9
million remained outstanding.
These advertising services were provided in the ordinary course of business on terms
substantially similar to those provided to our unrelated advertising clients on an arm's-length
basis.
Transactions with Ctrip.com International
We have provided our advertising services to Ctrip.com International, Limited, which is
affiliated with Neil Nanpeng Shen, one of our directors, in the aggregate amount of $nil, $43,662,
$264,120 and $40,719 in 2003, 2004 and 2005 and for the three months ended March 31, 2006,
respectively. Amounts due from Ctrip International in connection with these advertising services
totalled $44,895 as of March 31, 2006. These advertising services were provided in the ordinary
course of business on terms substantially similar to those provided to our unrelated advertising
clients on an arm's-length basis.
C. Interests of Experts and Counsel
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Please refer to Item 18 for a list of our annual consolidated financial statements filed as
part of this annual report.
Legal Proceedings
On March 16, 2006, Shanghai Xicheng Cultural Dissemination Co., Ltd., also referred to as
CGEN, brought a suit against us in [Shanghai municipal court] on the grounds of unfair competition.
CGEN, which is developing a network of flat-panel displays in hypermarkets and supermarkets,
claims to have established an exclusive business relationship with the Hymart chain of supermarkets
in Shanghai. Hymart notified us that it had requested in writing to terminate its relationship with
CGEN. In CGEN's pleadings, it alleges that Focus Media encouraged and supported Hymart to allegedly
violate its agreement with CGEN, resulting in losses to CGEN. In its pleadings, CGEN has requested
that the court order Focus Media to cease any alleged unfair competitive behavior, to undo the
effects of any alleged unfair competition and to pay RMB 13,570,920 (US$1.7 million) to CGEN. We
intend to defend against CGEN's claims to the fullest extent of the law. However, there can be no
assurance that we will prevail in any such litigation. We believe the outcome of this suit, even
if adversely determined, will not have a material adverse effect on our business or results of
operations.
Except as disclosed above, we are not currently a party to any material legal proceeding. From
time to time, we may be subject to various claims and legal actions arising in the ordinary course
of business.
Dividend Policy
We have not previously declared any dividends. In 2004, we recorded deemed dividends of $8.3
million, $2.2 million and $13.4 million in connection with our Series A, Series B and Series C-1
and Series C-2 convertible redeemable preference shares, of which $4.9 million of the deemed
dividend related to the difference between the fair value at that time of the Series C-1
convertible redeemable preference shares and ordinary shares in connection with a sale of 9,729,600
ordinary shares by Jason Nanchun Jiang, our chairman and CEO, to a third-party investor, which
shares were redesignated as Series C-1 convertible redeemable preference shares. These deemed
dividends were not cash dividends and upon conversion of our Series A, Series B and Series C-1 and
Series C-2 convertible redeemable preference shares into ordinary shares, we are no longer required
to record deemed dividends prospectively. We currently intend to retain all available funds and any
future earnings for use in the operation and expansion of our business and do not anticipate paying
any cash dividends on our ordinary shares, or indirectly on our ADSs, for the foreseeable future.
Future cash dividends, if any, will be at the discretion of our board of directors and will
depend upon our future operations and earnings, capital requirements and surplus, general financial
condition, shareholders' interests, contractual restrictions and other factors as our board of
directors may deem relevant. In addition, we can pay dividends only out of our profits or other
distributable reserves. Any dividend we declare will be paid to the holders of ADSs, subject to the
terms of the deposit agreement, to the same extent as holders of our ordinary shares, less the fees
and expenses payable under the deposit agreement. Other distributions, if any, will be paid by the
depositary to holders of our ADSs in any means it deems legal, fair and practical. Any dividend
will be distributed by the depositary, in the form of cash or additional ADSs, to the holders of
our ADSs. Cash dividends on our ADSs, if any, will be paid in U.S. dollars.
B. Significant Changes
Since the date of the audited financial statements included as a part of this annual report,
the following significant changes have occurred:
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•
On January 1, 2006, we completed our acquisition of Framedia, which operates a
network of Framedia. Under the terms of the transaction we acquired Framedia from the
seller parties for $39.6 million in cash and 22,157,003 of our ordinary shares, subject
to an earnout payment and other adjustments.
•
On January 1, 2006, we entered into a share purchase agreement with Shenzhen E-Times
Advertising Company and Skyvantage Group Limited, which owns and operates an
in-elevator poster frame advertising network placed in commercial and residential
buildings mainly in Shenzhen and Guangzhou, China. Shenzhen E-times' poster frame
network will be combined with Framedia's existing poster frame networks.
•
On February 28, 2006, we completed our acquisition of Target Media Holdings, its
affiliated PRC entity Shanghai Target Media and its subsidiary Target Multi-Media, by
purchasing 100% of the shares of Target Media Holdings from its shareholders.
•
In January and February 2006, we and certain of our pre-IPO shareholders
successfully completed a secondary offering. In this offering, including the
over-allotment option exercised by the underwriters, we sold 1,500,000 ADSs and the
selling shareholders sold an additional 5,915,389 ADSs to the public.
•
In March 2006, we acquired Dotad Mobile Holdings, which we subsequently renamed
Focus Media Wireless Co., Ltd., or Focus Media Wireless, which is a provider of mobile
phone advertising services delivered to mobile wireless phone users accessed through
wireless service providers in China.
•
In April 2006, we commenced operation of our new outdoor LED network, which consists
of 5' x 5' LED digital billboards installed on the street-sides in major shopping
districts and other locations with high pedestrian traffic in Shanghai and which
displays commercials on a repeating six-minute cycle.
•
On June 21, 2006, we and certain of our pre-IPO shareholders successfully completed
a follow-on public offering. In this offering, including the over-allotment option
exercised by the underwriters, we sold 1,600,000 ADSs and the selling shareholders sold
an additional 6,100,000 ADSs to the public.
Please see the section titled "Material Contracts" of Item 10.C. "Additional information".
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Market Price Information for Our American Depositary Shares
Our ADSs, each representing ten of our ordinary shares, have been listed on the Nasdaq
National Market since July 13, 2005. Our ADSs trade under the symbol "FMCN". For the period from
July 13, 2005 to June 21, 2006 the trading price of our ADSs on Nasdaq has ranged from US$17.60 to
US$69.95 per ADS. The following table provides the high and low trading prices for our ADSs on the
Nasdaq National Market Inc. for each month since July 2005.
SALE PRICE
HIGH
LOW
US$
US$
MONTHLY HIGHS AND LOWS
2005
(from July 13)
July (from July 13 until July 31)
21.00
17.60
August
22.09
18.25
September
27.00
18.25
October
27.31
22.50
November
31.94
26.00
December
35.30
29.70
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SALE PRICE
HIGH
LOW
US$
US$
2006
January
53.34
34.51
February
56.95
47.71
March
59.99
50.00
April
65.15
54.00
May
69.95
60.14
June (through June 23)
68.69
50.84
As of June 21, 2006, a total of 29,765,452 ADSs were outstanding. As of June 21, 2006,
297,654,520 shares were registered in the name of a nominee of Citibank, N.A., the depositary under
the deposit agreement. We have no further information as to shares held, or beneficially owned, by
U.S. persons.
B. Plan of Distribution
Not applicable.
C. Markets
Our ADSs, each representing ten of our ordinary shares, have been trading on the Nasdaq
National Market since July 13, 2005 under the symbol "FMCN."
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A.
Share Capital
Not applicable.
B. Memorandum and Articles of Association
We incorporate by reference into this annual report the description of our amended and
restated memorandum and articles of association contained in our F-1 registration statement (File
No. 333-134714), as amended, first filed with the Commission on June 2, 2006.
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C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business
or other than those described below and elsewhere in this annual report.
E-Times
In January 2006, for an aggregate purchase price of $5.0 million, we acquired the assets of
Shenzhen E-Times Advertising Co., Ltd. and the equity of Skyvantage Group Limited, which operated a
local out-of-home poster frame advertising network placed in commercial and residential buildings.
We refer to these entities collectively as E-Times. Following our acquisition of E-Times and, as
described below, Framedia, we combined Framedia and E-Times' networks, which were substantially
similar businesses, and now market our poster frame network under the brand name "Framedia".
Framedia
On January 1, 2006, we completed the acquisition of Infoachieve, and its affiliate Framedia
Advertisement by purchasing 100% of the shares of Infoachieve from Total Team, through which
Infoachieve held their respective interests in Infoachieve. Framedia installs and deploys poster
frames mainly inside elevators and throughout the public areas of residential complexes in major
cities in China and sells frame space to advertising clients.
Share Purchase Agreement
On October 15, 2005, we entered into a share purchase agreement to acquire the business of
Infoachieve, its subsidiary and affiliated PRC entities, by purchasing 100% of the shares in
Infoachieve from Total Team. Infoachieve, Total Team and its shareholders are referred to as the
seller parties below.
The following is a brief summary of material provisions of the share purchase agreement. This
summary is qualified in its entirety by reference to the share purchase agreement.
Structure
. We acquired 100% of the shares of Infoachieve, which controls its affiliates
Framedia Advertisement, New Structure Advertisement and Guangdong Framedia through contractual
relationships with Framedia Advertisement, New Structure Advertisement and Guangdong Framedia and
their shareholders. Under the share purchase agreement, we gain control of Framedia Advertisement,
New Structure Advertisement and Guangdong Framedia by gaining the right (i) to appoint their equity
holders and (ii) to take over the contractual arrangements among Infoachieve, Framedia
Advertisement, New Structure Advertisement and Guangdong Framedia and their equity holders.
Purchase Price
. On December 15, 2005, we paid the shareholders of Infoachieve $39.6 million
in cash. At the closing on January 1, 2006, we also issued to the former shareholders of
Infoachieve 19,306,840 Focus Media ordinary shares. We also issued 2,850,163 of our ordinary shares
to Total Team in consideration for their cancellation of the share option plan of Infoachieve prior
to our acquisition of it. Depending on Framedia's achievement of an earnings target in 2006, we may
issue additional Focus Media ordinary shares to Total Team in an amount no greater than $88.0
million as an earnout payment plus 400,000 ordinary shares that we withheld from the initial share
consideration pending Framedia's attainment of certain benchmarks, so that the maximum aggregate
payment for our acquisition of Framedia will be $183.0 million. All shares issued or issuable
to Total Team in connection with our acquisition of Framedia are valued at a fixed price of $2.456
per share and locked up for a specified period of time.
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Representations and Warranties
. In the share purchase agreement, the seller parties made
customary representations and warranties to us, which representations and warranties survive for a
period of two years following the closing date, and we made customary representations and
warranties to the seller parties, which representations and warranties survive for a period of six
months following the closing date.
Covenants
. During the period from the date of the share purchase agreement to the earnout
payment date, Infoachieve and the other seller parties have agreed to operate Framedia's business
in the ordinary course of business and to use commercially reasonable efforts to preserve its
business intact and preserve its relationships with customers, suppliers, employees and others
doing business with Framedia. In furtherance of these covenants, from the date of the share
purchase agreement until the closing date, Infoachieve and Framedia have agreed not to take actions
as specified in the share purchase agreement, without our prior written consent.
The share purchase agreement also includes customary covenants relating to, among other
things, notification of certain matters, access to information, public announcements,
non-competition of certain persons, treatment of related party accounts, agreement to pay back or
cancel all outstanding loans of Framedia, preparation of financial accounts; and to allow us to
appoint certain management members to Framedia prior to the closing date. The share purchase
agreement also contains covenants requiring us to enable the seller parties to operate Framedia as
an independent business unit in 2006, and to retain certain existing senior management of Framedia.
Voting Rights
. Under the terms of the share purchase agreement, after we issue shares to
Total Team on behalf of the seller parties, each of the shareholders of Total Team is required to
exercise their voting rights in Focus Media's shares independently of each other and Total Team's
authorized representative is required to solicit a proxy statement from each shareholder indicating
how the votes to which each shareholder is entitled should be voted. In the event a shareholder
does not provide a proxy from a shareholder, the shareholder will be deemed to have abstained and
Total Team will not be entitled to cast such votes.
Indemnification
. The seller parties have agreed to indemnify us for damages resulting from
inaccuracies of their representations and warranties or failure to perform their obligations under
the share purchase agreement. The seller parties' indemnification obligation is limited to the
total consideration we are to pay to them. If the seller parties indemnify us using our common
shares, the value of such shares shall be the value of the shares when any indemnified losses
become payable. If the seller parties' lock-up agreements are still in effect at such time, they
may dispose of only those shares that cover the amount of the indemnified losses.
We have agreed to indemnify the seller parties for damages resulting from inaccuracies of our
representations and warranties or failure to perform our obligations under the share purchase
agreement. Our indemnification obligation is limited to the total consideration (excluding any
earnout payment) to be paid to the seller parties.
Control Over Framedia
We have entered into a series of agreements with Focus Media Advertisement, Focus Media
Advertising Agency, Framedia Investment, Framedia Advertisement, Guangdong Framedia and its current
shareholders and New Structure Advertisement that provide us with effective control over Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement while enabling the Framedia
business to be consolidated with Infoachieve. These agreements are substantially similar to the
control agreements we have entered into with Focus Media Technology, Focus Media Digital, Focus
Media Advertisement and its shareholders and subsidiaries. See "Item 4.C Information on Our
Company—Organization Structure— Our Corporate Structure and Contractual Arrangements" and " Item
7.B Major Shareholders and Related Party Transactions—Related Party Transactions — Agreements Among
Focus Media Advertisement, Focus Media Advertising Agency, Framedia Investment, Framedia
Advertisement, Guangdong Framedia and New Structure Advertisement".
Target Media
On February 28, 2006, we acquired Target Media Holdings, its affiliated PRC entity Shanghai
Target Media and its subsidiary Target Multi-Media, by purchasing 100% of the shares of Target
Media Holdings from its shareholders. Target Media and several of its principal shareholders,
including David Feng Yu, its chairman of the
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board of directors and SII International Holding
Limited, are referred to as the seller parties. Collectively, Target Media's shareholders,
including The Carlyle Group, are referred to as the Target Media selling shareholders.
The following is a brief summary of material provisions of the share purchase agreement. This
summary is qualified in its entirety by reference to the share purchase agreement filed as an
exhibit to our registration statement.
Purchase Price
. We have agreed to pay the shareholders of Target Media US$94 million in cash,
subject to a working capital adjustment, and 77 million Focus Media ordinary shares. The cash
portion of the purchase price will be paid in three installments. The first installment of $45
million was paid at closing on February 28, 2006. The second installment of $25 million was paid on
April 28, 2006. The final installment of $24 million is to be paid on July 31, 2006, and may be
increased or decreased based on a calculation of Target Media's net working capital as of the
closing date. All of the Focus Media ordinary shares delivered at closing under the share purchase
agreement were newly issued shares.
Focus Media Options
. We have also granted options to purchase up to 3,000,000 Focus Media
ordinary shares to an agreed upon list of current employees of Target Media who entered into new
employment agreements with Focus Media.
Representations and Warranties
. In the share purchase agreement, the seller parties made
customary representations and warranties to us, which generally survive for a period of six months
following the closing date. However, a number of specified representations and warranties survive
for longer periods or indefinitely. In the definitive share purchase agreement, the Target Media
selling shareholders also made customary representations and warranties to us, which generally
survive for a period of six months following the closing date. However, a number of specified
representations and warranties survive for longer periods or indefinitely. In the definitive share
purchase agreement, we made customary representations and warranties to the Target Media selling
shareholders, which generally survive for a period of six months following the closing date.
However, a number of specified representations and warranties survive for longer periods or
indefinitely.
Covenants
. The definitive share purchase agreement includes customary covenants relating to,
among other things, notification of certain matters, public announcements, non-competition of
certain persons, treatment of related party accounts and preparation of financial accounts. The
share purchase agreement also contains covenants requiring us to enter into employment agreements
with key employees of Target Media.
We agreed under the definitive share purchase agreement and the employment agreement with Mr.
David Feng Yu to appoint him as co-chairman of the board of directors and president of Focus Media
upon the completion of the acquisition. He is in charge of developing our outdoor LED network. We
also agreed to increase our board of directors from five to seven members at closing, and to assist
in the nomination and appointment of David Feng Yu, the founder, chairman and chief executive
officer of Target Media, and a nominee of David Feng Yu to fill the additional seats at the first
annual meeting of our shareholders following the closing. The director nominated by David Feng Yu
will qualify as an independent director for the purpose of complying with NASDAQ listing standards
and Sarbanes-Oxley Act requirements so that a majority of our board of directors continues to be
independent. See "Item 6.A Directors, Senior Management and Employees—Directors and Senior
Management". We have also agreed to permit The Carlyle Group to appoint an observer to our board of
directors for a limited period of time.
Indemnification
. The seller parties have agreed to indemnify us for damages resulting from
inaccuracies of their representations and warranties or failure to perform their obligations under
the share purchase agreement; losses arising out of indebtedness of Target Media not reflected in
its financial statements; losses arising out of or pursuant to terms of the contracts of Target
Media that were not disclosed to us prior to the closing date due to their commercially sensitive
nature and those terms are not in the ordinary course of business of Target Media; and certain tax
liabilities.
Two Target Media selling shareholders that hold an approximately 49.7% equity interest in
Target Media, or collectively, the Controlling Target Media Selling Shareholders, have agreed to
indemnify us for damages resulting from inaccuracies of representations and warranties in relation
to Target Media and the Controlling Target Media Selling Shareholders, respectively, or failure of
Target Media or the Controlling Target Media Selling Shareholders
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to perform their respective
obligations under the share purchase agreement. The Target Media selling shareholders other than
the Controlling Target Media Selling Shareholders and The Carlyle Group, or collectively, the
Non-Controlling Target Media Selling Shareholders, have agreed to indemnify us for damages
resulting from inaccuracies of representations and warranties in relation to Target Media and the
Non-Controlling Target Media Selling Shareholders, respectively, or failure of the Non-Controlling
Target Media Selling Shareholders to perform their obligations under the share purchase agreement.
The Carlyle Group has agreed to indemnify us for damages resulting from inaccuracies of
representations and warranties in relation to The Carlyle Group, or failure of The Carlyle Group to
perform its obligations under the share purchase agreement.
The indemnification obligations of all Target Media selling shareholders (excluding The
Carlyle Group) are limited to US$80 million, provided that the Controlling Target Media Selling
Shareholders shall be responsible for indemnifying us up to $325 million for additional losses
arising out of several specified claims, including such contracts not disclosed to us prior to the
closing of the acquisition, which contracts contain clauses that are out of ordinary course of
Target Media's business. The indemnification obligation of The Carlyle Group is limited to $16.3
million, except for a breach with respect to their ownership of the shares they are selling to us.
For so long as the shares received by Target Media selling shareholders in this acquisition
are restricted from sales in the open market by either the lock-up, or securities laws, the Target
Media selling shareholders have the right to settle any indemnification obligation by paying us in
kind with our ordinary shares, valued at one-tenth of the closing price of our ADSs (each of which
represents ten of our ordinary shares) on the business day prior to the payment of such shares.
We have agreed to indemnify the seller shareholders for damages resulting from inaccuracies of
our representations and warranties or failure to perform our obligations under the share purchase
agreement. Certain of our indemnification obligations are capped at $39 million, while several
specified indemnification obligations of our company are capped at the total consideration to be
paid to the selling shareholders.
Focus Media Wireless
In March 2006, Focus Media acquired Dotad Media Holdings Limited, or Dotad Holdings, and its
wholly-owned PRC subsidiary Dotad Technology and their affiliated PRC operating company, now called
Beijing Focus Media Wireless Co., Ltd., or Focus Media Wireless, which operate a WAP-based
advertisement delivery platform in China through China Mobile and China Unicom's mobile networks.
Following our acquisition of Dotad Holdings, we rebranded the company under the brand name Focus
Media Wireless. Under the terms of the transaction, Focus Media acquired 100% of the equity of
Dotad for a purchase price of $15.0 million in cash. In addition under the terms of the agreement,
if Focus Media Wireless attains net income of at least $5 million and $8 million during the twelve
month periods ended March 31, 2007 and March 31, 2008, respectively, for each of these two net
earnings attainments, we will issue 1,500,000 of our ordinary shares to the seller parties.
D. Exchange Controls
Our operating businesses are currently conducted in China and substantially all of our
revenues and expenses are denominated in Renminbi. The People's Bank of China, or PBOC, 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 PBOC also takes into account
other factors, such as the general conditions existing in the international foreign exchange
markets. Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong
dollars and U.S. dollars, has been based on rates set by the PBOC, which are set daily based on the
previous day's inter-bank foreign exchange market rates and current exchange rates in the world
financial markets. From 1994 to July 20, 2005, the official exchange rate for the conversion of
Renminbi to U.S. dollars was generally stable. 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 securities, requires the approval of the State Administration for
Foreign Exchange and other relevant authorities. On July 21, 2005, the PRC government
introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate
within a regulated band based on market supply and demand and by reference to a basket of
currencies. On the same day, the value of the Renminbi appreciated by 2.0% against the U.S. dollar.
Since then, the PRC government has made, and may in the future make,
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further adjustments to the
exchange rate system. The PBOC announces the closing price of a foreign currency traded against the
Renminbi in the inter-bank foreign exchange market after the closing of the market on each working
day, and makes it the central parity for the trading against the Renminbi on the following working
day.
In January and April 2005, the PRC State Administration of Foreign Exchange, or SAFE, issued
two rules that require PRC residents to register with and receive approvals from SAFE in connection
with their offshore investment activities. SAFE has announced that the purpose of these regulations
is to achieve the proper balance of foreign exchange and the standardization of the cross-border
flow of funds.
On October 21, 2005, SAFE issued 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, or Notice 75, which became effective as of November 1,
2005. Notice 75 replaced the two rules issued by SAFE in January and April 2005 mentioned above.
According to Notice 75:
•
prior to establishing or assuming control of an offshore company for the purpose of
financing that offshore company with assets or equity interests in an onshore
enterprise in the PRC, each PRC resident, whether a natural or legal person, must
complete the overseas investment foreign exchange registration procedures with the
relevant local SAFE branch;
•
an amendment to the registration with the local SAFE branch is required to be filed
by any PRC resident that directly or indirectly holds interests in that offshore
company upon either (1) the injection of equity interests or assets of an onshore
enterprise to the offshore company, or (2) the completion of any overseas fund raising
by such offshore company; and
•
an amendment to the registration with the local SAFE branch is also required to be
filed by such PRC resident when there is any material change involving a change in the
capital of the offshore company, such as (1) an increase or decrease in its capital,
(2) a transfer or swap of shares, (3) a merger or division, (4) a long term equity or
debt investment, or (5) the creation of any security interests over the relevant assets
located in China.
Moreover, Notice 75 applies retroactively. As a result, PRC residents who have established or
acquired control of offshore companies that have made onshore investments in the PRC in the past
are required to complete the relevant overseas investment foreign exchange registration procedures
by March 31, 2006. Under the relevant rules, failure to comply with the registration procedures set
forth in Notice 75 may result in restrictions being imposed on the foreign exchange activities of
the relevant onshore company, including the payment of dividends and other distributions to its
offshore parent or affiliate and the capital inflow from the offshore entity, and may also subject
relevant PRC residents to penalties under PRC foreign exchange administration regulations.
As a Cayman Islands company, and therefore a foreign entity, if Focus Media Holding purchases
the assets or equity interest of a PRC company owned by PRC residents in exchange for our equity
interests, such PRC residents will be subject to the registration procedures described in Notice
75. Moreover, PRC residents who are beneficial holders of our shares are required to register with
SAFE in connection with their investment in us.
As a result of the lack of implementing rules and other uncertainties relating to the
interpretation and implementation of Notice 75, we cannot predict how these regulations will affect
our business operations or strategies. For example, our present or future PRC subsidiaries' ability
to conduct foreign exchange activities, such as remittance of dividends and foreign-currency-
denominated borrowings, may be subject to compliance with such SAFE registration requirements by
relevant PRC residents, over whom we have no control. In addition, we cannot assure you that any
such PRC residents will be able to complete the necessary approval and registration procedures
required by the SAFE regulations. We require all the shareholders in Focus Media Holding who
are PRC residents to comply with any SAFE registration requirements, but we have no control over
either our shareholders or the outcome of such registration procedures. Such uncertainties may
restrict our ability to implement our acquisition strategy and adversely affect our business and
prospects.
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E. Taxation
Cayman Islands Taxation
The following discussion of the material Cayman Islands federal income tax consequences of an
investment in our 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, possibly with retroactive effect. This
discussion does not deal with all possible tax consequences relating to an investment in our ADSs,
such as the tax consequences under state, local and other tax laws. To the extent that the
discussion relates to matters of Cayman Islands tax law, it represents the opinion of Conyers, Dill
& Pearman, our special Cayman Islands counsel.
The Cayman Islands currently levies no 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 or withholding tax applicable to us or to any holder of ADS, or ordinary shares. There
are no other taxes likely to be material to us levied by the Government of the Cayman Islands
except for stamp duties which may be applicable on instruments executed in, or after execution
brought within the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman
Islands on transfers of shares of Cayman Islands companies except those which hold interests in
land in the Cayman Islands. The Cayman Islands is not party to any double taxation treaties. There
are no exchange control regulations or currency restrictions in the Cayman Islands.
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:
(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on
profits or income or gains or appreciation shall apply to us or our operations; and
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall
not be payable on the shares, debentures or other obligations of the Company.
The undertaking for us is for a period of twenty years from May 3, 2005.
United States Federal Income Taxation
The following discussion, to the extent that it states matters of law or legal conclusions and
subject to the qualifications herein, represents the opinion of Simpson Thacher & Bartlett LLP, our
United States counsel, on the material United States federal income tax consequences of the
ownership of our ADSs as of the date hereof. Except where noted, it deals only with ADSs held as
capital assets. This discussion does not represent a detailed description of the United States
federal income tax consequences applicable to you if you are subject to special treatment under the
United States federal income tax laws, including if you are:
•
a bank;
•
a dealer in securities or currencies;
•
a financial institution;
•
a regulated investment company;
•
a real estate investment trust;
•
an insurance company;
•
a tax-exempt organization;
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•
a person holding our ADSs as part of a hedging, integrated or conversion
transaction, a constructive sale or a straddle;
•
a trader in securities that has elected the mark-to-market method of accounting for your securities;
•
a person liable for alternative minimum tax;
•
a person who owns 10% or more of our voting stock;
•
a partnership or other pass through entity for United States federal income tax purposes; or
•
a person whose "functional currency" is not the United States dollar.
Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings and judicial decisions thereunder as of the
date hereof, and such authorities may be repealed, revoked or modified so as to result in United
States federal income tax consequences different from those discussed below. In addition, this
summary is based, in part, upon representations made by the depositary to us and assumes that the
deposit agreement, and all other related agreements, will be performed in accordance with their
terms.
IF YOU ARE CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR ADSS, YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES TO YOU
IN LIGHT OF YOUR PARTICULAR SITUATION AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
OTHER TAXING JURISDICTION.
As used herein, the term "United States Holder" means a beneficial holder of an ADS that is:
•
an individual citizen or resident of the United States;
•
a corporation (or other entity treated as a corporation for United States federal
income tax purposes) created or organized in or under the laws of the United States,
any state thereof or the District of Columbia;
•
an estate the income of which is subject to United States federal income taxation
regardless of its source; or
•
a trust which either (1) is subject to the primary supervision of a court within the
United States and one or more United States persons have the authority to control all
substantial decisions of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a United States person.
If a partnership holds ADSs, the tax treatment of a partner will depend upon the status of the
partner and the activities of the partnership. If you are a partner of a partnership holding our
ADSs, you should consult your tax advisors.
ADSs
If you hold ADSs, for United States federal income tax purposes, you generally will be treated
as the owner of the underlying Shares that are represented by such ADSs. Accordingly, deposits or
withdrawals of Shares for ADSs will not be subject to United States federal income tax.
The United States Treasury has expressed concerns that parties to whom ADSs are pre-released
may be taking actions that are inconsistent with the claiming, by United States Holders of ADSs, of
foreign tax credits for United States federal income tax purposes. Such actions would also be
inconsistent with the claiming of the reduced rate of tax applicable to dividends received by
certain non-corporate United States Holders, as described below.
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Accordingly, the availability of
the reduced tax rate for dividends received by certain non-corporate United States Holders could be
affected by future actions that may be taken by the United States Treasury.
Taxation of Dividends
Subject to the discussion below under "Passive Foreign Investment Companies", the gross amount
of distributions on the ADSs will be taxable as dividends, to the extent paid out of our current or
accumulated earnings and profits, as determined under United States federal income tax principles.
Such income will be includable in your gross income as ordinary income on the day actually or
constructively received by the depositary. Such dividends will not be eligible for the dividends
received deduction allowed to corporations under the Code. With respect to non-corporate United
States investors, certain dividends received before January 1, 2009 from a qualified foreign
corporation may be subject to reduced rates of taxation. A foreign corporation is treated as a
qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADSs
backed by such shares) that are readily tradable on an established securities market in the United
States. United States Treasury Department guidance indicates that our ADSs, which are listed on the
Nasdaq National Market, will be readily tradable on an established securities market in the United
States. Non-corporate holders that do not meet a minimum holding period requirement during which
they are not protected from the risk of loss or that elect to treat the dividend income as
"investment income" pursuant to section 163(d)(4) of the Code will not be eligible for the reduced
rates of taxation regardless of our status as a qualified foreign corporation. In addition, the
rate reduction will not apply to dividends if the recipient of a dividend is obligated to make
related payments with respect to positions in substantially similar or related property. This
disallowance applies even if the minimum holding period has been met. You should consult your own
tax advisors regarding the application of this legislation to your particular circumstances.
To the extent that the amount of any distribution exceeds our current and accumulated earnings
and profits for a taxable year, as determined under United States federal income tax principles,
the distribution will first be treated as a tax-free return of capital, causing a reduction in the
adjusted basis of the ADSs (thereby increasing the amount of gain, or decreasing the amount of
loss, to be recognized by you on a subsequent disposition of the ADSs), and the balance in excess
of adjusted basis will be taxed as capital gain recognized on a sale or exchange.
Distributions of ADSs, ordinary shares or rights to subscribe for ordinary shares that are
received as part of a pro rata distribution to all of our shareholders generally will not be
subject to United States federal income tax. The basis of the new ADSs, ordinary shares or rights
so received will be determined by allocating the your basis in the old ADSs between the old ADSs
and the new ADSs, ordinary shares or rights received, based on their relative fair market values on
the date of distribution. However, the basis of the rights will be zero if:
•
the fair market value of the rights is less than 15 percent of the fair market value
of the old ADSs at the time of distribution, unless you elect to determine the basis of
the old ADSs and of the rights by allocating the adjusted basis of the old ADSs between
the old ADSs and the rights, or
•
the rights are not exercised and thus expire.
Passive Foreign Investment Companies
We operate an active advertising business in China and based on the past and projected
composition of our income and valuation of our assets, including goodwill, we believe we were not a
passive foreign investment company for 2005, we do not expect to be a passive foreign investment
company ("PFIC"), for 2006, and we do not expect to become one in the future, although there can be
no assurance in this regard. Because PFIC status is a factual determination, our United States
counsel expresses no opinion with respect to our PFIC status and also expresses no opinion with
respect to our expectations contained in this paragraph.
We will be a PFIC for any taxable year in which:
•
at least 75% of our gross income is passive income, or
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•
at least 50% of the value (determined on a quarterly basis) of our assets is
attributable to assets that produce or are held for the production of passive income.
For this purpose, passive income includes dividends, interest, royalties and rents (other than
royalties and rents derived in the active conduct of a trade or business and not derived from a
related person). If we own at least 25% (by value) of the stock of another corporation, we will be
treated, for purposes of the PFIC tests, as owning our proportionate share of the other
corporation's assets and receiving our proportionate share of the other corporation's income.
The determination of whether we are a PFIC is made annually for each taxable year of the
Company. Accordingly, it is possible that we may become a PFIC in the current or any future taxable
year due to changes in our asset or income composition. We could become a PFIC, for example though
a combination of factors, such as a failure to spend a sufficient amount of the net proceeds of the
offering (resulting in our holding cash, a passive asset) coupled with a decrease in the price of
our Shares (resulting in a decrease in the value of our goodwill, an active asset). Because of the
fact specific nature of the inquiry, we cannot predict at this time what portion of the net
proceeds we would need to spend in order to avoid PFIC status. If we are a PFIC for any taxable
year during which you hold our ADSs, you will be subject to special tax rules discussed below.
If we are a PFIC for any taxable year during which you hold our ADSs, you will be subject to
special tax rules with respect to any "excess distribution" received and any gain realized from a
sale or other disposition, including a pledge, of ADSs. Distributions received in a taxable year
that are greater than 125% of the average annual distributions received during the shorter of the
three preceding taxable years or your holding period for the ADSs will be treated as excess
distributions. Under these special tax rules:
•
the excess distribution or gain will be allocated ratably over your holding period
for the ADSs,
•
the amount allocated to the current taxable year, and any taxable year prior to the
first taxable year in which we were a PFIC, will be treated as ordinary income, and
•
the amount allocated to each other year will be subject to tax at the highest tax
rate in effect for that year and the interest charge applicable to underpayments of tax
will be imposed on the resulting tax attributable to each such year.
In addition, non-corporate United States Holders will not be eligible for reduced rates of
taxation on any dividends received from us prior to January 1, 2011, if we are a PFIC in the
taxable year in which such dividends are paid or in the preceding taxable year. You will be
required to file Internal Revenue Service Form 8621 if you hold our ADSs in any year in which we
are classified as a PFIC.
In certain circumstances, in lieu of being subject to the excess distribution rules discussed
above, you may make an election to include gain on the stock of a PFIC as ordinary income under a
mark-to-market method provided that such stock is regularly traded on a qualified exchange. Under
current law, the mark-to-market election may be available because the ADSs will be listed on the
Nasdaq National Market, which constitutes a qualified exchange as designated in the Internal
Revenue Code, although there can be no assurance that the ADSs will be "regularly traded".
If you make an effective mark-to-market election, you will include in each year as ordinary
income the excess of the fair market value of your ADSs at the end of the year over your adjusted
tax basis in the ADSs. You will be entitled to deduct as an ordinary loss each year the excess of
your adjusted tax basis in the ADSs over their fair market value at the end of the year, but only
to the extent of the net amount previously included in income as a result of the mark-to-market
election.
Your adjusted tax basis in the ADSs will be increased by the amount of any income inclusion
and decreased by the amount of any deductions under the mark-to-market rules. If you make a
mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years
unless the ADSs are no longer regularly traded on a qualified exchange or the Internal Revenue
Service consents to the revocation of the
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election. You are urged to consult your tax advisor about
the availability of the mark-to-market election, and whether making the election would be advisable
in your particular circumstances.
Alternatively, you can sometimes avoid the rules described above by electing to treat us as a
"qualified electing fund" under section 1295 of the Code. This option is not available to you
because we do not intend to comply with the requirements necessary to permit you to make this
election.
You are urged to consult your tax advisors concerning the United States federal income tax
consequences of holding ADSs if we are considered a PFIC in any taxable year.
Taxation of Capital Gains
Subject to the discussion above under "Passive Foreign Investment Companies", for United
States federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange
of ADSs in an amount equal to the difference between the amount realized for the ADSs and your tax
basis in the ADSs. Such gain or loss will generally be capital gain or loss. Capital gains of
individuals derived with respect to capital assets held for more than one year are eligible for
reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain
or loss recognized by you will generally be treated as United States source gain or loss.
Information Reporting and Backup Withholding
Information reporting will apply to dividends in respect of our ADSs and the proceeds from the
sale, exchange or redemption of our ADSs that are paid to you within the United States (and in
certain cases, outside the United States), unless you are an exempt recipient such as a
corporation. A backup withholding tax may apply to such payments if you fail to provide a taxpayer
identification number or certification of other exempt status or fail to report in full dividend
and interest income.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against your United States federal income tax liability provided the required information is
furnished to the Internal Revenue Service.
PROSPECTIVE PURCHASERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF
THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY ADDITIONAL TAX
CONSEQUENCES RESULTING FROM PURCHASING, HOLDING OR DISPOSING OF ADSs, INCLUDING THE APPLICABILITY
AND EFFECT OF THE TAX LAWS OF ANY STATE, LOCAL OR FOREIGN JURISDICTION, INCLUDING ESTATE, GIFT, AND
INHERITANCE LAWS.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We have filed this annual report on Form 20-F, including exhibits, with the SEC. As allowed by
the SEC, in Item 19 of this annual report, we incorporate by reference certain information we filed
with the SEC. This means that we can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated by reference is
considered to be part of this annual report.
We have previously filed with the Commission our registration statements on Form F-1 and
prospectuses under the Securities Act of 1933, as amended, with respect to our ADSs.
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The SEC also maintains a website that contains reports, proxy statements and other information
about issuers, such as us, who file electronically with the SEC. The address of that website is
http://www.sec.gov
. The information on that website is not a part of this annual report.
We will furnish to Citibank, N.A., as depositary of our ADSs, our annual reports. When the
depositary receives these reports, it will upon our request promptly provide them to all holders of
record of ADSs. We will also furnish the depositary with all notices of shareholders' meetings and
other reports and communications in English that we make available to our shareholders. The
depositary will make these notices, reports and communications available to holders of ADSs and
will upon our request mail to all holders of record of ADSs the information contained in any notice
of a shareholders' meeting it receives.
We are subject to periodic reporting and other informational requirements of the Exchange Act,
as applicable to foreign private issuers. Accordingly, we are required to file reports, including
annual reports on Form 20-F, and other information with the SEC. As a foreign private issuer, we
are exempt from the rules of the Exchange Act prescribing the furnishing and content of proxy
statements to shareholders under the federal proxy rules contained in Sections 14(a), (b) and (c)
of the Exchange Act, and our executive officers, directors and principal shareholders are exempt
from the reporting and short-swing profit recovery provisions contained in Section 16 of the
Exchange Act. The registration statements, reports and other information so filed can be inspected
and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. You can request copies of these documents upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms.
I. Subsidiary Information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our exposure to interest rate risk primarily relates to the interest income generated by
excess cash, which is mostly held in interest-bearing bank deposits. We have not used 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 market interests rates. However, our future interest income may fall short of
expectations due to changes in market interest rates.
Foreign Currency Risk
Substantially all our revenues and expenses are denominated in Renminbi. We have not had any
material foreign exchange gains or losses. Although in general, our exposure to foreign exchange
risks should be limited, the value of your investment in our ADSs will be affected by the foreign
exchange rate between U.S. dollars relative to the Renminbi because the value of our business is
effectively denominated in Renminbi, while the ADSs will be traded in U.S. dollars. Furthermore, a
decline in the value of the Renminbi could reduce the U.S. dollar equivalent of the value of the
earnings from, and our investments in, our subsidiaries and PRC-incorporated affiliates in China.
In addition, appreciation or depreciation in the value of the Renminbi relative to the U.S. dollar
would affect our reported financial results in U.S. dollar terms. See "Item 3.B. — Risk Factors —
Risks Relating to the People's Republic of China — Fluctuations in exchange rates could result in
foreign currency exchange losses".
Inflation
In recent years, China has not experienced significant inflation, and thus inflation has not
had a significant effect on our business historically. According to the National Bureau of
Statistics of China, the change in the Consumer Price Index in China was 0.7%, (0.8)%, 1.2%, 3.9% and 1.8% in 2001, 2002, 2003, 2004
and 2005, respectively.
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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None of these events occurred in any of fiscal 2003, 2004 and 2005.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
A.
Modifications of Rights
Upon the closing of our acquisition of Target Media, we amended our shareholder's agreement to
grant the former shareholders of Target Media registration rights with regard to the Focus Media
ordinary shares we issued to such former Target Media shareholders. Such shareholders are now
entitled to demand registration rights and piggyback registration rights under our amended and
restated shareholders agreement. At any time after six months following the closing of our initial
public offering,
•
any of our shareholders representing a majority of the ordinary shares converted
from the Series A convertible redeemable preference shares;
•
any of our shareholders representing a majority of the ordinary shares converted
from the Series B convertible redeemable preference shares;
•
any of our shareholders representing 20% of the ordinary shares converted from the
Series C convertible redeemable preference shares; and
•
since the closing of our acquisition of Target Media, any of the former Target Media
shareholders representing 25% of the ordinary shares issued to them as a group as
consideration in connection with our acquisition of Target Media;
may require us to effect the registration, on a form other than Form F-3, of at least 25% of the
registrable securities then outstanding. We are not obligated to take any action to effect any such
registration on more than two occasions each on behalf of each group of shareholders described
above or more than once in any six month period or within six months of any other public offering
we conduct in which they had the opportunity to participate without the exclusion of any shares
eligible for registration under the shareholders agreement.
In addition, holders of any of our registrable securities may require us to effect a
registration statement on Form F-3 (or any successor form or any comparable form for a registration
in a jurisdiction other than the United States) for a public offering of registrable securities so
long as the reasonably anticipated aggregate price to the public (net of selling expenses) would be
at least $1,000,000 and we are entitled to use Form F-3 (or a comparable form) for such offering.
Holders of registrable securities may demand a registration on Form F-3 on unlimited occasions,
although we are not obligated to effect more than once in any six month period if within six months
of any other public offering we conduct in which they had the opportunity to participate without
the exclusion of any shares eligible for registration under the shareholders agreement.
E. Use of Proceeds
The following "Use of Proceeds" information relates to
•
the registration statement on Form F-1 (File No. 333-125785) (the "IPO Registration
Statement") for our initial public offering of 7,757,500 ADSs, for an aggregate
offering price of $131,877,500, which
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IPO Registration Statement was declared effective
by the SEC on July 12, 2005 and was terminated after all of the registered securities
were sold;
•
the registration statements on Form F-1 (File No. 333-131065) (the "Follow-on
Registration Statement") and on Form F-1MEF (File No. 333-131312 (the "462(b)
Registration Statement") for our follow-on public offering of 1,500,000 ADSs, for an
aggregate offering price of $65,250,000, which Follow-on Registration Statement was
declared effective by the SEC on January 26, 2006 and which 462(b) Registration
Statement was effective upon filing on January 27, 2006 and each of which was
terminated after all of the registered securities were sold; and
•
the registration statement on Form F-1 (File No. 333-134714) (the "Second Follow-on
Registration Statement") and on Form F-1MEF (File No. 333-135062) (the "Second 462(b)
Registration Statement") for our second follow-on offering of 1,600,000 ADSs, for an
aggregate offering price of $86,400,000, which Second Follow-on Registration Statement
was declared effective by the SEC on June 15, 2006 and which Second 462(b) Registration
Statement was effective on filing on June 16, 2006, and each of which was terminated
after all of the securities were sold.
We received net proceeds of approximately $118.2 million from our initial public offering and
net proceeds of approximately $61.8 million from our follow-on public offering. None of the
transaction expenses for either offering included payments to directors or officers of our company
or their associates, persons owning more than 10% or more of our equity securities or our
affiliates.
We used the net proceeds received from our initial public offering as follows: approximately
$63.1 million for acquisitions, approximately $19 million for capital expenditures in connection
with the expansion of our commercial location and in-store networks, approximately $35 million was
invested in available-for-sale government securities, approximately $1.1 million for expenses
incurred in connection with strengthening internal controls and with being a public company, as
well as for general corporate purposes. As of May 30, 2006, all of the net offering proceeds from
our initial public offering had been applied.
Goldman Sachs (Asia) L.L.C., Credit Suisse, CIBC World Markets and Piper Jaffray were the
underwriters for our initial public offering. December 31, 2005, all of the net offering proceeds
from our initial public offering had been applied.
We used the net proceeds received from our follow-on public offering as follows:
approximately $58.8 million for acquisitions, approximately $3.0 million for capital expenditures in
connection with the expansion of our commercial location and in-store networks, As of May 30, 2006,
all of the proceeds of our first follow-on offering had been applied.
Goldman Sachs (Asia) L.L.C., Credit Suisse, Citigroup Global Markets Inc., Morgan Stanley and
Piper Jaffray were the underwriters for our first follow-on public offering.
We intend to use the net proceeds received from our follow-on public offering as follows:
approximately $24.0 million for the final cash installment in connection with our acquisition of
Target Media, approximately $20.0 million for capital expenditures in connection with the expansion
of our out-of-home television networks, approximately and the remainder for general corporate
purposes.
Credit Suisse, Goldman Sachs (Asia) L.L.C., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Citigroup Global Markets, Inc., Lehman Brothers Inc. and Piper Jaffray were the
underwriters for our follow-on public offering.
ITEM 15. CONTROLS AND PROCEDURES
As of the end of the period covered by this annual report, an evaluation has been carried out
under the supervision and with the participation of our management, including our chief executive
officer and our chief financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures, as such
123
Table of Contents
term is defined under Rules 13a-14(c) and 15d-14(c)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on
that evaluation, our chief executive officer and chief financial officer have concluded that our
disclosure controls and procedures are effective in ensuring that material information required to
be disclosed in this annual report is recorded, processed, summarized and reported to them for
assessment, and required disclosure is made within the time period specified in the rules and forms
of the Securities and Exchange Commission. In addition, we established a Disclosure Committee in
mid-2006 to assist us in fulfilling our responsibility for oversight of the accuracy and timeliness
of our periodic reports filed with the Securities and Exchange Commission.
There has been no change in our internal control over financial reporting that occurred during
the period covered by this annual report that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our Board of Directors has determined that Neil Nanpeng Shen and Charles Chao qualify as audit
committee financial expert as defined in Item 16A of the instruction to Form 20-F.
ITEM 16B. CODE OF ETHICS
Our board of directors adopted a code of business conduct and ethics on April 16, 2005, which
is applicable to our directors, officers and employees. Our code of business conduct and ethics is
publicly available on our website at:
http://nocache.corporate-ir.net/media_files/irol/19/190067/corp_gov/Conduct_and_Ethics.pdf.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees by categories specified below in connection
with certain professional services rendered by Deloitte Touche Tohmatsu CPA Ltd., our independent
registered public accounting firm, for the years indicated.
For the year ended December 31,
2004
2005
$
$
(in thousands)
Audit Fees
(1)
300,000
711,000
Audit-related Fees
(2)
—
—
Tax Fees
(3)
14,000
46,000
All Other Fees
(4)
—
—
Total
314,000
757,000
(1)
Audit fees consist of fees associated with the annual audit, the reviews of our
quarterly financial statements and statutory audits required internationally. They also
include fees billed for those services that are normally provided by the independent
accountants in connection with statutory and regulatory filings.
(2)
Audit-related fees consist of fees billed for assurance and related services
that are reasonably related to the performance of the audit or review of our financial
statements but not described in footnote (1) above. These services include consultations
concerning [financial accounting and reporting standards and review of capitalization of
retained earnings, financial covenants in loan agreements, and our affiliates' financial
information].
(3)
Tax fees include fees billed for professional services rendered by Deloitte Touche
Tohmatsu CPA Ltd., primarily in connection with our tax compliance activities.
(4)
All other fees comprise fees for all other services provided by Deloitte Touche
Tohmatsu CPA Ltd., other than those services covered in footnotes (1) to (3) above.
Prior to forming an audit committee, our board of directors is responsible for the
oversight of our independent registered public accounting firm. The policy of our board of
directors is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu
CPA Ltd., including audit services, audit-related services, tax services and other services, as
described above.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
None.
ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
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Table of Contents
PART III
ITEM 17. FINANCIAL STATEMENTS
The Registrant has elected to provide the financial statements and related information specified in Item 18.
ITEM 18. FINANCIAL STATEMENTS
The following is a list of the audited financial statements and report of independent
registered public accounting firm included in this annual report beginning on page F-1.
Page
Financial Statements of Focus Media Holding Limited
Report of Independent Registered Public Accounting
F-2
Consolidated Balance Sheets as of December 31, 2004 and 2005 and as of March 31, 2006 (unaudited)
F-3
Consolidated Statements of Operations for each of the years ended December 31, 2003, 2004 and
2005 and for the three month period ended March 31, 2005 (unaudited) and 2006 (unaudited)
F-4
Consolidated Statements of Changes in Shareholders' Equity (Deficiency) and Comprehensive Income
(Loss) for the years ended December 31, 2003, 2004 and 2005 and for the three month period ended
March 31, 2006 (unaudited)
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005 and
for the three month period ended March 31, 2005 (unaudited) and 2006 (unaudited)
F-6
Notes to the Consolidated Financial Statements
F-8
125
Table of Contents
ITEM 19. EXHIBITS
Exhibit
Number
Description of Exhibits
1.1*
Form of Underwriting Agreement.
3.1
†
Amended and Restated Memorandum and Articles of Association of Focus Media Holding Limited.
4.1
†
Specimen Ordinary Share Certificate.
4.2
†
Amended and Restated Shareholders Agreement of Focus Media Holding Limited, dated December 2,
2004, among Focus Media Holding Limited, its subsidiaries, its ordinary shareholders, its
preferred shareholders and the investors named therein.
4.3
†
Deposit Agreement dated July 18, 2005 among the Registrant, Citibank, N.A. and holders of the
American Depositary Receipts (incorporated by reference to the registration statement on Form F-6
(File No. 333-126011) filed with the Securities and Exchange Commission with respect to American
Depositary Shares representing ordinary shares).
5.1*
Form of opinion of Conyers, Dill & Pearman, Cayman Islands special counsel to the registrant,
regarding the validity of the ordinary shares being registered.
5.2*
Form of opinion of Global Law Office, counsel as to PRC law to the registrant, regarding the
validity of (i) the corporate structure of Focus Media Technology (Shanghai) Co., Ltd. and
Shanghai Focus Media Advertisement Co., Ltd. and contractual arrangements among Focus Media
Technology (Shanghai) Co., Ltd., Shanghai Focus Media Advertisement Co., Ltd. and its
subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu, (ii) the corporate structure of Framedia
Investment and Shanghai Framedia Advertisement Development Co., Ltd. and contractual arrangements
among Framedia Investment and Shanghai Framedia Advertisement Development Co., Ltd. and its
subsidiaries, Jason Nanchun Jiang and Jimmy Wei Yu and (iii) the corporate structure of Shanghai
Focus Media Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing
Dotad Technology Co., Ltd., Beijing Focus Media Wireless Technology Co., Ltd., Jason Nanchun Jiang
and Jimmy Wei Yu.
8.1*
Form of opinion of Conyers, Dill & Pearman, special Cayman Islands tax counsel to the registrant,
regarding tax matters.
8.2*
Form of opinion of Simpson Thacher & Bartlett LLP regarding United States federal taxation matters.
10.1
†
Rules of the 2003 Employee Share Option Scheme and form of grant letter.
10.2
†
Technology License and Service Agreement, dated March 28, 2005, by and among Focus Media Digital
Information Technology (Shanghai) Co., Ltd., Shanghai Focus Media Advertisements Co., Ltd. and the
subsidiaries of Shanghai Focus Media Advertisement Co., Ltd.
10.3
†
Business Cooperation Agreement, dated March 28, 2005, by and among Shanghai Focus Media
Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd. and the subsidiaries of
Shanghai Focus Media Advertisement Co., Ltd.
10.4
†
Equity Pledge Agreement, dated March 28, 2005, by and among Jason Nanchun Jiang, Jimmy Wei Yu,
Shanghai Focus Media Advertisement Co., Ltd., Focus Media Technology (Shanghai) Co., Ltd., Focus
Media Digital Information Technology (Shanghai) Co., Ltd. and the subsidiaries of Shanghai Focus
Media Advertisement Co., Ltd.
10.5
†
Call Option Agreement, dated March 28, 2005, among Jason Nanchun Jiang, Jimmy Wei Yu, Shanghai
Focus Media Advertisement Co., Ltd. and Focus Media Technology (Shanghai) Co., Ltd.
10.6
†
Shareholders' Voting Rights Proxy Agreement, dated March 28, 2005, among Jason Nanchun Jiang,
Jimmy Wei Yu, Shanghai Focus Media Advertisement Co., Ltd., Focus Media Technology (Shanghai) Co.,
Ltd. and the subsidiaries of Shanghai Focus Media Advertisement Co., Ltd.
10.7
†
Trust Agreement, dated March 28, 2005, by and between Shanghai Focus Media Advertisement Co., Ltd.
and Focus Media Technology (Shanghai) Co., Ltd.
10.8
†
Trademark License Agreement, dated March 28, 2005, by and among Focus Media Technology (Shanghai)
Co., Ltd., Shanghai Focus Media Advertisement Co., Ltd. and its subsidiaries.
10.9
†
Loan Agreement, dated June 10, 2003, among Focus Media Holding Limited, Jason Nanchun Jiang, Jimmy
Wei Yu, Yuanzhe Fu, Yibing Zhou and Yiqing Hou.
10.10
†
Loan Agreement, dated March 28, 2005, by and between Jason Nanchun Jiang and Focus Media
Technology (Shanghai) Co., Ltd.
10.11
†
Loan Agreement, dated March 28, 2005, by and among Jimmy Wei Yu, Focus Media Technology (Shanghai)
Co., Ltd. and Shanghai Focus Media Advertisement Co., Ltd.
10.12
†
Form of Employment Agreement of Focus Media Technology (Shanghai) Co., Ltd.
126
Table of Contents
Exhibit
Number
Description of Exhibits
10.13
†
Manager Non-Competition Agreement entered into by Focus Media Holding Limited and Jason Nanchun
Jiang on November 29, 2004.
10.14
†
Technology Transfer Agreement entered into by Jimmy Wei Yu and Focus Media Digital Information
(Shanghai) Co., Ltd., dated November 1, 2004.
10.15
†
Asset and Business Acquisition Agreement between Shanghai Everease Communication Company and
Shanghai Focus Media Advertisement Co., Ltd. dated July 1, 2003.
10.16
†
Everease Non-competition Agreement between Focus Media Holding Limited and Shanghai Everease
Communication Company, dated as of November 2004.
10.17
†
Sales Contract between Shanghai Everease Communication Company and Shanghai Focus Media
Advertisement Co., Ltd., dated May 2003.
10.18
†
Project Cooperation Framework Agreement between Shanghai Everease Communication Company and
Beijing Suodi Advertising Co., Ltd., dated February, April and June 2003.
10.19
†
Transfer Agreement on Project Cooperation Framework Agreement between Shanghai Focus Media
Advertisement Co., Ltd. and Beijing Suodi Advertising Co., Ltd., dated August 28, 2003.
10.20
†
Business Agency Agreement between Shanghai On-Target Advertising Co., Ltd. and Shanghai Focus
Media Advertisement Co., Ltd.
10.21
†
Agreement between Shanghai On-Target Advertising Co., Ltd., Jimmy Wei Yu, Shanghai Focus Media
Advertisement Co., Ltd., Union Enterprise Holding Co., Ltd. and Shenlong Lin, dated October 15,
2003.
10.22
†
Acknowledgement Letter entered into as of March 28, 2005 by and among Shanghai Focus Media
Advertisement Co., Ltd., Focus Media Technology (Shanghai) Co., Ltd., Focus Media Digital
Information Technology (Shanghai) Co., Ltd. and subsidiaries of Shanghai Focus Media Advertisement
Co., Ltd.
10.23
†
Share Option Plan 2005.
10.24
††
Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Fuzhou Fukesi Advertisement Co., Ltd.
10.25
††
Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.
10.26
††
Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January 13, 2006, of
Shanghai Focus Media Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.
10.27
††
Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenyang Focus Media Advertisement Co., Ltd.
10.28
††
Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.
10.29
††
Acknowledgement Letter for Participation of Equity Pledge Agreement, dated January 13, 2006, of
Shanghai Focus Media Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.
10.30
††
Acknowledgement Letter for Participation of Call Option Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Fuzhou Fukesi Advertisement Co., Ltd.
10.31
††
Acknowledgement Letter for Participation of Call Option Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.
10.32
††
Acknowledgement Letter for Participation of Call Option Agreement, dated January 13, 2006, of
Shanghai Focus Media Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.
10.33
††
Acknowledgement Letter for Participation of Call Option Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenyang Focus Media Advertisement Co., Ltd.
10.34
††
Acknowledgement Letter for Participation of Call Option Agreement, dated January 13, 2006, of
Shanghai Focus Media Advertisement Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.
10.35
††
Acknowledgement Letter for Participation of Call Option Agreement, dated January 13, 2006, of
Shanghai Focus Media Co., Ltd. and Shenzhen Bianjie Building Advertisement Co., Ltd.
10.36
††
Acknowledgement Letter for Participation of Shareholders' Voting Rights Proxy Agreement, dated
January 13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Fuzhou Fukesi Advertisement
Co., Ltd.
10.37
††
Acknowledgement Letter for Participation of Shareholders' Voting Rights Proxy Agreement, dated
January 13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Hefei Fukesi Advertisement
Co., Ltd.
10.38
††
Acknowledgement Letter for Participation of Shareholders' Voting Rights Proxy Agreement, dated
January 13, 2006, of Shanghai Focus Media Co., Ltd. and Hefei Fukesi Advertisement Co., Ltd.
10.39
††
Acknowledgement Letter for Participation of Shareholders' Voting Rights Proxy Agreement, dated
January 13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Shenyang Focus Media
Advertisement Co., Ltd.
127
Table of Contents
Exhibit
Number
Description of Exhibits
10.40
††
Acknowledgement Letter for Participation of Shareholders' Voting Rights Proxy Agreement, dated
January 13, 2006, of Shanghai Focus Media Advertisement Co., Ltd. and Shenzhen Bianjie Building
Advertisement Co., Ltd.
10.41
††
Acknowledgement Letter for Participation of Shareholders' Voting Rights Proxy Agreement, dated
January 13, 2006, of Shanghai Focus Media Co., Ltd. and Shenzhen Bianjie Building Advertisement
Co., Ltd.
10.42
††
Equity Pledge Agreement, dated January 13, 2006, by and among Shanghai Focus Media Advertisement
Co., Ltd., Shanghai Focus Media Co., Ltd., Shanghai Framedia Investment Consultancy Co., Ltd. and
the Local Advertisement Companies named therein.
10.43
††
Call Option Agreement, dated January 13, 2006, by and among Shanghai Focus Media Advertisement
Co., Ltd., Shanghai Focus Media Co., Ltd., Shanghai Framedia Investment Consultancy Co., Ltd. and
the Local Advertisement Companies named therein.
10.44
††
Shareholders' Voting Rights Proxy Agreement, dated January 13, 2006, by and among Shanghai Focus
Media Advertisement Co., Ltd., Shanghai Focus Media Co., Ltd., Shanghai Framedia Investment
Consultancy Co., Ltd. and the Local Advertisement Companies named therein.
10.45
††
Equity Pledge Agreement, dated January 13, 2006, by and among Lei Liu, Yong Shi, Shanghai Framedia
Investment Consultancy Co., Ltd. and Guangdong Century Shenghuo Advertisement Co., Ltd.
10.46
††
Call Option Agreement, dated January 13, 2006, by and among Lei Liu, Yong Shi, Shanghai Framedia
Investment Consultancy Co., Ltd. and Guangdong Century Shenghuo Advertisement Co., Ltd.
10.47
††
Shareholders' Voting Rights Proxy Agreement, dated January 13, 2006, by and among Lei Liu, Yong
Shi, Shanghai Framedia Investment Consultancy Co., Ltd. and Guangdong Century Shenghuo
Advertisement Co., Ltd.
10.48
††
Share Purchase Agreement, dated October 15, 2005, as amended and supplemented, among Focus Media
Holding Limited, Infoachieve Limited, Total Team Investments Limited and the other Infoachieve
parties named therein.
10.49
††
Share Purchase Agreement, dated as of January 7, 2006, among Focus Media Holding Limited, Target
Media Holdings Limited and Its Shareholders.
10.50
††
Asset Transfer Agreement, dated December 31, 2005, by and between Focus Media Digital Information
Technology (Shanghai) Co., Ltd. and Shanghai New Focus Media Advertisement Co., Ltd.
10.51*
Share Purchase Agreement, dated March 7, 2006, by and among Focus Media Holding Limited and Dotad
Wireless Holdings Co., Ltd.
10.52*
Equity Pledge Agreement, dated May 22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing Dotad Technology Co., Ltd and
Beijing Focus Media Wireless Co., Ltd.
10.53*
Call Option Agreement, dated May 22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing Dotad Technology Co., Ltd and
Beijing Focus Media Wireless Co., Ltd.
10.54*
Shareholders' Voting Rights Proxy Agreement, dated May 22, 2006, by and among Shanghai Focus Media
Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Beijing Dotad
Technology Co., Ltd and Beijing Focus Media Wireless Co., Ltd.
10.55*
Equity Pledge Agreement, dated May 22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Shanghai Framedia Investment Consulting
Co., Ltd. and Guandong Shiji Shenghuo Advertisement Co., Ltd.
10.56*
Call Option Agreement, dated May 22, 2006, by and among Shanghai Focus Media Advertisement Co.,
Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Shanghai Framedia Investment Consulting
Co., Ltd. and Guandong Shiji Shenghuo Advertisement Co., Ltd.
10.57*
Shareholders' Voting Rights Proxy Agreement, dated May 22, 2006, by and among Shanghai Focus Media
Advertisement Co., Ltd., Shanghai Focus Media Advertising Agency Co., Ltd., Shanghai Framedia
Investment Consulting Co., Ltd. and Guandong Shiji Shenghuo Advertisement Co., Ltd.
10.58*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shanghai New Focus Media Advertisement Co., Ltd.
10.59*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shanghai
New Focus Media Advertisement Co., Ltd.
10.60*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai New Focus Media Advertisement Co., Ltd.
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Table of Contents
Exhibit
Number
Description of Exhibits
10.61*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shanghai New Focus Media Advertising Agency Co., Ltd.
10.62*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shanghai
New Focus Media Advertising Agency Co., Ltd.
10.63*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai New Focus Media Advertising Agency Co., Ltd.
10.64*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shanghai Target Media Co., Ltd.
10.65*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shanghai
Target Media Co., Ltd.
10.66*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai Target Media Co., Ltd.
10.67*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Dongguan Focus Media Advertisement Co., Ltd.
10.68*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Dongguan
Focus Media Advertisement Co., Ltd.
10.69*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Dongguan Focus Media Advertisement Co., Ltd.
10.70*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of Fuzhou
Fukesi Advertising Co., Ltd.
10.71*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Fuzhou
Fukesi Advertising Co., Ltd.
10.72*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Fuzhou Fukesi Advertising Co., Ltd.
10.73*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of Hefei
Fukesi Advertising Co., Ltd.
10.74*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Hefei
Fukesi Advertising Co., Ltd.
10.75*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Hefei Fukesi Advertising Co., Ltd.
10.76*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shanghai On-Target Advertisement Co., Ltd.
10.77*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shanghai
On-Target Advertisement Co., Ltd.
10.78*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai On-Target Advertisement Co., Ltd.
10.79*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shanghai Jiefang Focus Media Advertisement Co., Ltd.
10.80*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shanghai
Jiefang Focus Media Advertisement Co., Ltd.
10.81*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai Jiefang Focus Media Advertisement Co., Ltd.
10.82*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shanghai Perfect Media Advertising Agency Co., Ltd.
10.83*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shanghai
Perfect Media Advertising Agency Co., Ltd.
10.84*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shanghai Perfect Media Advertising Agency Co., Ltd.
10.85*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shenzhen E-Time Commercial Consulting Co., Ltd.
10.86*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shenzhen
E-Time Commercial Consulting Co., Ltd.
10.87*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shenzhen E-Time Commercial Consulting Co., Ltd.
10.88*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shenzhen Bianjie Building Advertisement Co., Ltd.
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Table of Contents
Exhibit
Number
Description of Exhibits
10.89*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shenzhen
Bianjie Building Advertisement Co., Ltd.
10.90*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shenzhen Bianjie Building Advertisement Co., Ltd.
10.91*
Acknowledgement Letter of Participation of Equity Pledge Agreement, dated May 22, 2006, of
Shenyang Focus Media Advertising Co., Ltd.
10.92*
Acknowledgement Letter of Participation of Call Option Agreement, dated May 22, 2006, of Shenyang
Focus Media Advertising Co., Ltd.
10.93*
Acknowledgement Letter of Participation of Shareholders' Voting Rights Proxy Agreement, dated May
22, 2006, of Shenyang Focus Media Advertising Co., Ltd.
10.94*
Cooperation Agreement, dated May 22, 2006, by and among Shanghai Focus Media Advertisement Co.
Ltd. and its local advertising subsidiaries named therein and Shanghai New Focus Media
Advertisement Co. Ltd.
10.95*
Technology Transfer Agreement, dated as of May 22, 2006, by and between Focus Media Digital
Information Technology (Shanghai) Co., Ltd. and Shanghai New Focus Media Advertisement Co., Ltd.
10.96*
Advertisement Dissemination Agreement, dated May 22, 2006, by and between Shanghai Focus Media
Advertising Agency Co., Ltd. and Shanghai New Focus Media Advertisement Co., Ltd.
12.1
Certificate of Chief Executive
Officer.
12.2
Certificate of Chief Financial
Officer.
13.1
Certification of Periodic Financial
Report.
13.2
Certification of Periodic Financial Report.
15.1
Consent of Conyers, Dill & Pearman.
15.2
Consent of Global Law Office.
21.1*
List of Subsidiaries.
23.4*
Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 8.2).
*
Previously filed with the Registrant's registration statement on Form F-1 (File No. 333-134714).
†
Previously filed with the Registrant's registration statement on Form F-1 (File No. 333-125785).
††
Previously filed with the Registrant's registration statement on Form F-1 (File No. 333-131065).
130
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\
SIGNATURES
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.
Focus Media Holding Limited
By:
/s/ Jason Nanchun Jiang
Name:
Jason Nanchun Jiang
Title:
Chairman and Chief Executive Officer
Date: June 28, 2006
131
Table of Contents
FOCUS MEDIA HOLDING LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS
Page
Report of
    Independent Registered Public Accounting Firm
F-2
Consolidated
    balance sheets as of December 31, 2003, 2004 and 2005 and
    as of March 31, 2006 (unaudited)
F-3
Consolidated
    statements of operations for the years ended December 31,
    2003, 2004 and 2005 and for the three months ended
    March 31, 2005 (unaudited) and 2006 (unaudited)
F-4
Consolidated
    statements of shareholders' equity (deficiency) and
    comprehensive income (loss) for the years ended
    December 31, 2003, 2004 and 2005 and for the three months
    ended March 31, 2006 (unaudited)
F-5
Consolidated
    statements of cash flows for the years ended December 31,
    2003, 2004 and 2005 and for the three months ended
    March 31, 2005 (unaudited) and 2006 (unaudited)
F-6
Notes to the
    consolidated financial statements
F-8
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
FOCUS MEDIA HOLDING LIMITED
We have audited the accompanying consolidated balance sheets of
Focus Media Holding Limited and its subsidiaries (the
"Group") as of December 31, 2003 and 2004 and
2005 and the related consolidated statements of operations,
shareholders' equity (deficiency) and comprehensive
income (loss), and cash flows for the years ended
December 31, 2003 and 2004 and 2005, and related financial
schedule included in Schedule 1. These financial statements
and related financial statement schedule are the responsibility
of the Group's management. Our responsibility is to express
an opinion on these consolidated financial statements and
related financial statement schedule 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. The Group is not required to
have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Group's internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, 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
Focus Media Holding Limited and its subsidiaries as of
December 31, 2003 and 2004 and 2005 and the results of its
operations and its cash flows for the above stated years in
conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, the related
financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole,
presents fairly in all material respects, the information set
forth therein.
/s/ Deloitte Touche Tohmatsu CPA Ltd.
Shanghai, China
June 2, 2006
F-2
Table of Contents
FOCUS MEDIA HOLDING LIMITED
CONSOLIDATED BALANCE SHEETS
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
(In U.S. Dollars, except share data)
Assets
Current assets:
Cash and cash equivalents
$
716,388
$
22,669,106
$
36,653,180
$
41,862,726
Investment in available-for-sale
    securities
—
—
34,835,850
34,792,100
Accounts receivable, net of
    allowance for doubtful accounts of $nil, $173,837, $396,657 and
    $782,210 in 2003, 2004, 2005 and as of March 31, 2006
    (unaudited)
1,409,461
6,619,949
22,235,408
37,250,248
Inventories
90,950
1,243,140
479,529
605,290
Prepaid expenses and other current
    assets
148,906
2,109,468
45,363,833
7,810,070
Amounts due from related parties
252,576
2,740,032
2,073,329
2,982,256
Total current assets
2,618,281
35,381,695
141,641,129
125,302,690
Rental deposits
570,904
1,606,378
11,819,095
13,245,315
Equipment, net
1,978,399
9,197,143
43,694,888
70,993,193
Acquired intangible assets, net
—
708,306
1,157,920
30,881,195
Goodwill
—
9,058,086
13,298,072
406,790,780
Long-term investments
12,082
12,088
—
1,117,843
Other long term assets
—
—
—
220,553
Deferred tax assets
126,769
450,963
742,914
193,506
Total assets
$
5,306,435
$
56,414,659
$
212,354,018
$
648,745,075
Liabilities, mezzanine equity
    and shareholders' equity (deficiency)
Current liabilities:
Short-term bank loans
$
—
$
—
$
991,301
$
1,247,349
Other short-term loans
—
—
—
6,776,335
Accounts payable
436,244
607,091
5,847,530
8,279,605
Accrued expenses and other current
    liabilities
561,234
6,591,435
11,746,902
71,414,099
Amounts due to related parties
2,013,898
—
—
2,496,212
Short-term loan from a shareholder
500,000
—
—
—
Income taxes payable
608,275
1,435,486
2,108,071
2,188,412
Total current
    liabilities
4,119,651
8,634,012
20,693,804
92,402,012
Commitments (Note 20)
Minority interest
3,722
80,692
245,563
459,758
Mezzanine equity
Series A convertible
    redeemable preference shares ($0.00005 par value;
    41,967,400 shares authorized and nil, 41,967,400, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March 31, 2006 (unaudited), respectively)
—
6,295,110
—
—
Series B convertible
    redeemable preference shares ($0.00005 par value;
    48,191,600 shares authorized and nil, 48,191,600, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March 31, 2006 (unaudited), respectively)
—
12,062,696
—
—
Series C-1 convertible
    redeemable preference shares ($0.00005 par value;
    34,054,000 shares authorized and nil, 34,054,000, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March 31, 2006 (unaudited) , respectively)
—
17,500,350
—
—
Series C-2 convertible
    redeemable preference shares ($0.00005 par value;
    34,053,400 shares authorized and nil, 34,053,400, nil and
    nil shares issued and outstanding in 2003, 2004, 2005 and as of
    March 31, 2006 (unaudited), respectively)
—
17,415,000
—
—
Shareholders' equity
    (deficiency)
Ordinary shares ($0.00005 par
    value; 1,000,000,000, 885,516,600 ,19,800,000,000 and
    19,800,000,000 shares authorized in 2003, 2004, 2005 and as
    of March 31, 2006 (unaudited); 200,000,000, 142,464,600,
    378,306,000 and 506,457,633 shares issued and outstanding
    in 2003, 2004, 2005 and as of March 31, 2006 (unaudited),
    respectively)
10,000
7,124
18,916
25,324
Additional paid-in capital
1,188,817
5,981,154
177,419,761
530,088,836
Deferred share based compensation
—
(969,959
)
(246,569
)
—
Retained earnings (accumulated
    deficit)
26,000
(10,550,414
)
12,997,237
22,430,006
Accumulated other comprehensive
    income (loss)
(41,755
)
(41,106
)
1,225,306
3,339,139
Total shareholders' equity
    (deficiency)
$
1,183,062
$
(5,573,201
)
$
191,414,651
$
555,883,305
Total liabilities, mezzanine
    equity and shareholders' equity (deficiency)
$
5,306,435
$
56,414,659
$
212,354,018
$
648,745,075
The accompanying notes are an integral part of these
consolidated financial statements.
F-3
Table of Contents
FOCUS MEDIA HOLDING LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended
For the years ended December 31,
March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
(In U.S. Dollars, except share data)
Net revenues:
— Commercial
    Locations
$
3,368,557
$
26,321,179
$
61,434,760
$
9,431,521
$
21,472,376
— In-store
    Network
—
—
5,468,919
—
5,293,091
— Poster Frame
    Network
—
—
—
—
6,067,314
Advertising Service Revenue
3,368,557
26,321,179
66,903,679
9,431,521
32,832,781
Advertising Equipment Revenue
389,282
2,888,720
1,325,234
142,163
304,066
Total net revenues
3,757,839
29,209,899
68,228,913
9,573,684
33,136,847
Cost of revenues:
— Commercial
    locations
1,565,887
6,745,522
17,943,318
2,902,606
8,035,150
— In-store
    network
—
—
7,422,641
286,004
3,973,244
— Poster Frame
    Network
—
—
—
—
2,397,268
Advertising Service Cost
1,565,887
6,745,522
25,365,959
3,188,610
14,405,662
Advertising Equipment Cost
275,360
1,934,331
975,747
70,571
231,814
Total cost of revenues
1,841,247
8,679,853
26,341,706
3,259,181
14,637,476
Gross profit
1,916,592
20,530,046
41,887,207
6,314,503
18,499,371
Operating expenses:
General and administrative
984,848
3,987,496
9,119,846
1,881,111
4,395,342
Selling and marketing
406,634
3,453,533
9,543,748
1,491,644
4,057,199
Amortization of acquired intangible
    assets
—
77,443
437,837
67,352
999,178
Goodwill impairment loss
—
58,397
—
—
—
Total operating
    expenses
1,391,482
7,576,869
19,101,431
3,440,107
9,451,719
Income from operations
525,110
12,953,177
22,785,776
2,874,396
9,047,652
Interest income
1,005
9,739
1,761,909
10,985
915,952
Other income (expenses), net
(9,364
)
(3,843
)
(161,148
)
5,315
46,149
Change in fair value of derivative
    liability associated with Series B convertible redeemable
    preference shares
—
(11,692,287
)
—
—
—
Income before income taxes and
    minority interest
516,751
1,266,786
24,386,537
2,890,696
10,009,753
Income taxes:
Current
608,274
828,962
715,117
223,536
65,076
Deferred
(126,769
)
78,588
(20,664
)
25,265
551,714
Total income taxes
481,505
907,550
694,453
248,801
616,790
Net income after income taxes
    before minority interest and equity loss of affiliates
35,246
359,236
23,692,084
2,641,895
9,392,963
Minority interest
(8,360
)
(13,516
)
144,433
(598
)
(39,806
)
Equity loss of affiliates
(18,123
)
—
—
—
—
Net income
25,483
372,752
23,547,651
2,642,493
9,432,769
Deemed dividend on Series A
    convertible redeemable preference shares
—
(8,308,411
)
—
—
—
Deemed dividend on Series B
    convertible redeemable preference shares
—
(2,191,442
)
—
—
—
Deemed dividend on Series C-1
    convertible redeemable preference shares
—
(13,356,087
)
—
—
—
Premium of Series B
    convertible redeemable preference shares
—
12,906,774
—
—
—
Income (loss) attributable to
    holders of ordinary shares
$
25,483
$
(10,576,414
)
$
23,547,651
$
2,642,493
$
9,432,769
Income (loss) per share —
    basic
$
0.00
$
(0.07
)
$
0.09
$
0.02
$
0.02
Income (loss) per share —
    diluted
$
0.00
$
(0.07
)
$
0.06
$
0.01
$
0.02
Shares used in calculating basic
    income (loss) per share
144,657,600
160,998,600
252,128,545
142,464,600
438,232,094
Shares used in calculating diluted
    income (loss) per share
144,657,600
160,998,600
365,938,094
315,212,608
465,895,318
The accompanying notes are an integral part of these
consolidated financial statements.
F-4
Table of Contents
FOCUS MEDIA HOLDING LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DEFICIENCY) AND COMPREHENSIVE INCOME (LOSS)
Retained
Accumulated
Total
Ordinary
Additional
Deferred share
earnings
other
shareholders'
paid-in
based
(accumulated
comprehensive
equity
Comprehensive
Shares
Amount
capital
compensation
deficit)
income (loss)
(deficiency)
income (loss)
(In U.S. dollars, except share data)
Balance at January 1,
    2003
—
$
—
$
125,000
$
—
$
517
$
(4,183
)
$
121,334
$
—
Issuance of ordinary shares
200,000,000
10,000
1,615,000
—
—
—
1,625,000
—
Capital distribution relating to
    Everease
—
—
(551,183
)
—
—
—
(551,183
)
—
Cumulative translation adjustment
—
—
—
—
—
(37,572
)
(37,572
)
$
(37,572
)
Net income
—
—
—
—
25,483
—
25,483
25,483
Balance at December 31,
    2003
200,000,000
$
10,000
$
1,188,817
$
—
26,000
$
(41,755
)
$
1,183,062
$
(12,089
)
Issuance of ordinary shares
14,594,200
730
4,484,068
—
—
—
4,484,798
—
Reclassification of ordinary shares
    to Series A convertible redeemable preference shares
(62,400,000
)
(3,120
)
(1,048,469
)
—
—
—
(1,051,589
)
—
Reclassification of ordinary shares
    to Series C-1 convertible redeemable preference shares
(9,729,600
)
(486
)
(101,932
)
—
—
—
(102,418
)
Deferred share based compensation
—
—
1,334,835
(1,334,835
)
—
—
—
—
Amortization of share-based
    compensation expense
—
—
123,835
364,876
—
—
488,711
Deemed dividend on Series A
    convertible redeemable preference shares
—
—
—
—
(8,308,411
)
—
(8,308,411
)
—
Deemed dividend on Series B
    convertible redeemable preference shares
—
—
—
—
(2,191,442
)
—
(2,191,442
)
—
Deemed dividend on Series C-1
    convertible redeemable preference shares
—
—
—
—
(13,356,087
)
—
(13,356,087
)
—
Premium of Series B
    convertible redeemable preference shares
—
—
—
—
12,906,774
—
12,906,774
—
Cumulative translation adjustment
—
—
—
—
—
649
649
$
649
Net income
—
—
—
—
372,752
—
372,752
372,752
Balance at December 31,
    2004
142,464,600
$
7,124
$
5,981,154
(969,959
)
$
(10,550,414
)
$
(41,106
)
$
(5,573,201
)
$
373,401
Series A convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
41,967,400
2,098
6,293,012
—
—
—
6,295,110
—
Series B convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
48,191,600
2,409
12,060,287
—
—
—
12,062,696
—
Series C-1 convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
34,054,000
1,703
17,498,647
—
—
—
17,500,350
—
Series C-2 convertible
    redeemable preference shares converted into ordinary shares upon
    initial public offering
34,053,400
1,703
17,413,297
—
—
—
17,415,000
—
Issuance of ordinary shares upon
    initial public offering, net of issuance cost of $13,703,370
77,575,000
3,879
118,170,251
—
—
—
118,174,130
—
Deferred share based compensation
—
—
(264,751
)
264,751
—
—
—
—
Amortization of share-based
    compensation expense
—
—
267,864
458,639
—
—
726,503
—
Unrealized loss on
    available-for-sale securities
—
—
—
—
—
(164,150
)
(164,150
)
$
(164,150
)
Cumulative translation adjustments
—
—
—
—
—
1,430,562
1,430,562
1,430,562
Net income
—
—
—
—
23,547,651
—
23,547,651
23,547,651
Balance at December 31,
    2005
378,306,000
$
18,916
$
177,419,761
$
(246,569
)
$
12,997,237
$
1,225,306
$
191,414,651
$
24,814,063
Adjustment for adoption of
    SFAS 123 - R (unaudited)
—
—
(246,569
)
246,569
—
—
—
—
Issuance of ordinary shares for
    acquisitions (unaudited)
99,231,723
4,962
285,786,238
—
—
—
285,791,200
—
Issuance of ordinary shares upon
    secondary offering, net of issuance cost of $3,466,700
    (unaudited)
15,000,000
750
61,782,550
—
—
—
61,783,300
—
Exercise of employee stock options
    (unaudited)
13,919,910
696
3,880,316
—
—
—
3,881,012
—
Amortization of share-based
    compensation expense (unaudited)
—
—
1,466,540
—
—
—
1,466,540
—
Net income (unaudited)
—
—
—
—
9,432,769
—
9,432,769
$
9,432,769
Unrealized loss on
    available-for-sale securities (unaudited)
—
—
—
—
—
(43,750
)
(43,750
)
(43,750
)
Cumulative translation adjustments
    (unaudited)
—
—
—
—
—
2,157,583
2,157,583
2,157,583
Balance at March 31, 2006
    (unaudited)
506,457,633
$
25,324
$
530,088,836
$
—
$
22,430,006
$
3,339,139
$
555,883,305
$
11,546,602
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
Table of Contents
FOCUS MEDIA HOLDING LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended
For the year ended December 31
March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
(In U.S. dollars)
Operating activities:
Income (loss) attributable to
    holders of ordinary shares
$
25,483
$
(10,576,414
)
$
23,547,651
$
2,642,493
$
9,432,769
Deemed dividend on Series A
    convertible redeemable preference shares
—
8,308,411
—
—
—
Deemed dividend on Series B
    convertible redeemable preference shares
—
2,191,442
—
—
—
Deemed dividend on Series C-1
    convertible redeemable preference shares
—
13,356,087
—
—
—
Premium relating to Series B
    convertible redeemable preference shares
—
(12,906,774
)
—
—
—
Net income
25,483
372,752
23,547,651
2,642,493
9,432,769
Adjustments to reconcile net income
    to net cash provided by (used in) operating activities:
Minority interest
(8,360
)
(13,516
)
144,433
(598
)
(39,806
)
Bad debt provision
—
173,837
235,604
36,364
194,723
Share based compensation
—
488,711
726,503
333,960
1,466,540
Depreciation and amortization
143,876
923,163
4,927,016
622,175
3,605,818
Loss on disposal of equipment
—
22,470
—
—
—
Investment loss on equity investment
18,123
—
—
—
—
Change in fair value of derivative
    liability
—
11,692,287
—
—
—
Goodwill impairment
—
58,397
—
—
—
Changes in assets and liabilities,
    net of effects of acquisitions:
Accounts receivable, net
(1,331,107
)
(4,525,148
)
(15,757,053
)
(1,804,368
)
2,621,774
Inventories
(80,660
)
(1,030,529
)
(408,223
)
(788,522
)
(124,346
)
Prepaid expenses and other current
    assets
(121,304
)
(1,740,427
)
(2,347,426
)
(77,708
)
2,918,858
Amounts due from related parties
(252,576
)
(2,487,456
)
666,703
1,425,866
(908,927
)
Rental deposits
(570,904
)
(1,035,474
)
(10,076,230
)
(2,728,890
)
1,692,642
Deferred taxes assets
(126,769
)
78,586
(20,664
)
25,265
551,714
Accounts payable
429,144
(1,609,816
)
5,007,564
1,017,042
(683,773
)
Accrued expenses and other current
    liabilities
573,053
4,174,214
3,950,903
(2,217,452
)
(18,622,722
)
Amounts due to related parties
2,013,898
(2,322,276
)
—
—
2,496,212
Income tax payable
608,235
825,100
672,585
637,052
164,289
Net cash provided by (used in)
    operating activities
$
1,320,132
$
4,044,875
$
11,269,366
$
(877,321
)
$
4,765,765
Investing activities:
Purchase of equipment
$
(1,467,730
)
$
(6,373,124
)
$
(36,765,294
)
$
(3,621,229
)
$
(8,353,954
)
Acquisition of assets from a
    related party
(1,208,131
)
—
—
—
—
Purchase of subsidiaries, net of
    cash acquired
—
(4,697,378
)
(4,982,523
)
(3,056,622
)
(57,718,824
)
Deposit paid to acquire subsidiaries
—
—
(40,919,530
)
—
—
Acquisition of equity investment
(30,205
)
—
—
—
—
Investment in available-for-sale
    securities
—
—
(35,000,000
)
—
—
Net cash used in investing
    activities
$
(2,706,066
)
$
(11,070,502
)
$
(117,667,347
)
$
(6,677,851
)
$
(66,072,778
)
Financing activities:
Proceeds from short-term loan from
    a shareholder
500,000
—
—
—
—
Repayment of short-term loan from a
    shareholder
—
(500,000
)
—
—
—
Proceeds from issuance of ordinary
    shares, net of issuance costs of $nil in 2003, $13,703,370 in
    2005, and $3,466,700 in 2006 (unaudited)
1,625,000
—
118,174,130
—
65,664,312
F-6
Table of Contents
For the three months ended
For the year ended December 31
March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
(In U.S. dollars)
Proceeds from issuance of
    Series B convertible redeemable preference shares (net of
    issuance costs of $437,304)
—
12,062,696
—
—
—
Proceeds from issuance of
    Series C-2 convertible redeemable preference shares (net of
    issuance costs of $85,000)
—
17,415,000
—
—
—
Proceeds from short-term bank loans
—
—
991,301
—
1,247,349
Repayment of short-term bank loans
—
—
—
—
(991,301
)
Repayment of short short-term loans
—
—
—
—
(78,802
)
Capital injection from minority
    shareholders
—
—
3,089
—
249,470
Net cash provided by financing
    activities
$
2,125,000
$
28,977,696
$
119,168,520
$
—
$
66,091,028
Effect of exchange rate changes
$
(37,572
)
$
649
$
1,213,535
$
—
$
425,531
Net increase/ (decrease) in cash
    and cash equivalents
$
701,494
$
21,952,718
$
13,984,074
$
(7,555,172
)
$
5,209,546
Cash and cash equivalents,
    beginning of year/period
14,894
716,388
22,669,106
22,669,106
36,653,180
Cash and cash equivalents, end of
    year /period
$
716,388
$
22,669,106
$
36,653,180
$
15,113,934
$
41,862,726
Supplemental disclosure of cash
    flow information Income taxes paid
$
—
$
738
$
94,391
$
—
$
—
Interest paid
$
—
$
—
$
11,581
$
—
$
26,651
Supplemental disclosures of
    non-cash investing activity:
Issuance of ordinary shares in
    exchange for technical know-how
$
750,000
$
—
$
—
$
—
$
—
Acquisition of subsidiaries:
Value of ordinary shares issued
$
—
$
4,484,798
$
—
$
—
$
285,791,199
Cash consideration
—
4,423,515
5,137,252
4,079,091
106,782,978
Accounts payable
—
538,860
—
—
49,219,897
Assets acquired (including
    intangible assets and goodwill)
$
—
$
9,447,173
$
5,137,252
$
4,079,091
$
441,794,074
Non-cash financing activities:
Reclassification of ordinary shares
    to Series A convertible redeemable preference shares
$
—
$
9,360,000
$
—
$
—
$
—
Reclassification of Series A
    convertible redeemable preference shares to Series C-1
    convertible redeemable preference shares
$
—
$
3,064,890
$
—
$
—
$
—
Reclassification of Series B
    convertible redeemable preference shares to Series C-1
    convertible redeemable preference shares
$
—
$
976,955
$
—
$
—
$
—
The accompanying notes are an integral part of these
consolidated financial statements.
F-7
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
1.
Organization and Principal Activities
Prior to May 2003, the Group operated through Shanghai Focus
Media Advertisement Co. Ltd. ("Focus Media
Advertisement") (formerly Shanghai Aiqi Advertising Co.,
Ltd. ("Aiqi")) which was established in September
1997. On April 11, 2003, the majority shareholder of Focus
Media Advertisement, Jason Nanchun Jiang, incorporated Focus
Media Holding Limited ("Focus Media Holding") with the
same shareholders of Focus Media Advertisement. Through
contractual arrangements described below, Focus Media Holding is
deemed the primary beneficiary of Focus Media Advertisement
resulting in Focus Media Advertisement being deemed a subsidiary
of Focus Media Holding under the requirements of FIN 46
(Revised) "Consolidation of Variable Interest
Entities" ("FIN 46(R)") in substance, an
existing company, Focus Media Advertisement, has been
reorganized as a subsidiary of the new company Focus Media
Holding. Focus Media Holding has the same controlling
shareholder, the same non-controlling shareholders. Accordingly,
the Group's financial statements are prepared by including
the financial statements of Focus Media Advertisement through
May 2003 and thereafter is the consolidated financial statements
which includes Focus Media Holding and its subsidiaries and
Focus Media Advertisement and its subsidiaries. As of
March 31, 2006, the subsidiaries of Focus Media Holding and
Focus Media Advertisement's subsidiaries include the
following entities:
Focus Media Holding Subsidiaries:
Date of
Date of
Place of
Percentage of
Subsidiary
acquisition
incorporation
incorporation
ownership
Focus Media (China) Holding Ltd.
    ("Focus Media Hong Kong")
N/A
April 23, 2003
Hong Kong ("HK")
100
%
Focus Media Technology (Shanghai)
    Co., Ltd. ("Focus Media Technology")
N/A
June 19, 2003
PRC
100
%
Perfect Media Holding Ltd.
    ("Perfect Media")
September 22, 2004
June 4, 2004
British Virgin Islands
    ("BVI")
100
%
Focus Media Qingdao Holding Ltd.
    ("Focus Media Qingdao")
October 15, 2004
March 22, 2004
BVI
100
%
Focus Media Dalian Holding Ltd.
    ("Focus Media Dalian")
October 15, 2004
March 24, 2004
BVI
100
%
Focus Media Changsha Holding Ltd.
    ("Focus Media Changsha")
October 15, 2004
March 11, 2004
BVI
100
%
Focus Media Digital Information
    Technology (Shanghai) Co., Ltd. ("Focus Media Digital")
N/A
October 27, 2004
PRC
100
%
New Focus Media Technology
    (Shanghai) Co., Ltd. ("New Focus Media Technology")
N/A
September 5, 2005
PRC
100
%
Sorfari Holdings Limited
    ("Sorfari")
March 22, 2005
June 7, 2004
BVI
100
%
Focus Media Tianjin Limited
    ("Focus Media Tianjin")
March 21, 2005
November 19, 2004
BVI
80
%
Capital Beyond Limited
    ("CBL")
March 21, 2005
November 15, 2004
BVI
100
%
Shanghai New Focus Media
    Advertisement Co ("New Focus Media Advertisement")
N/A
December 20, 2005
PRC
90
%
Infoachieve Limited
    ("Infoachieve")
January 1, 2006
July 28, 2004
BVI
100
%
Shanghai Framedia Investment
    Consultation Co., Ltd. ("Framedia Consultation")
January 1, 2006
June 16, 2005
PRC
100
%
Target Media Holdings Limited
    ("Target Media Holding")
February 28, 2006
July, 2004
Cayman Islands
100
%
Target Media Multi-Media Technology
    (Shanghai) Co., Ltd. ("TMM")
February 28, 2006
August 17, 2004
PRC
100
%
Dotad Holdings Limited
    ("Dotad")
March 21, 2006
February 17, 2006
BVI
100
%
F-8
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
Focus Media Advertisement Subsidiaries:
Date of
Date of
Place of
Percentage of
Subsidiary
acquisition
incorporation
incorporation
ownership
Sichuan Focus Media Advertising
    Co., Ltd. ("Focus Media Sichuan")
N/A
October 16, 2003
PRC
90
%
Shanghai Focus Media Advertising
    Agency Co., Ltd. ("Focus Media Advertising Agency")
N/A
October 15, 2004
PRC
100
%
Shanghai On-Target Advertisement
    Co., Ltd. ("On- Target")
April 23, 2004
April 15, 2003
PRC
60
%
Wuhan Ge Shi Focus Media
    Advertising Co., Ltd. ("Focus Media Wuhan")
April 23, 2004 and
    March 1, 2006
November 13, 2003
PRC
100
%
Yunnan Focus Media Advertising Co.,
    Ltd. ("Focus Media Yunnan")
July 9, 2004 and
    November 9, 2004
March 3, 2004
PRC
89.5
%
Nanjing Focus Media Advertising
    Co., Ltd. ("Focus Media Nanjing")
August 10, 2004
September 18, 2003
PRC
90
%
Zhejiang Rui Hong Focus Media
    Advertising Co., Ltd. ("Focus Media Zhejiang")
September 15, 2004
March 24, 2004
PRC
80
%
Shanghai Perfect Media Advertising
    Co., Ltd. ("Shanghai Perfect Media")
September 22, 2004
June 4, 2003
PRC
100
%
Qingdao Fukesi Advertisement Co.
    Ltd.("Qingdao Advertising")
October 15, 2004
March 22, 2004
PRC
100
%
Dalian Focus Media Advertising Co.,
    Ltd. ("Dalian Advertising")
October 15, 2004
March 24, 2004
PRC
100
%
Changsha Focus Media Shiji
    Advertisement Co., Ltd. ("Changsha Advertising")
October 15, 2004
March 11, 2004
PRC
100
%
Chongqing Geyang Focus Media
    Culture Advertising & Broadcasting Co. Ltd.
    ("Chongqing Advertising")
September 15, 2004
October 10, 1999
PRC
60
%
Shanghai Qianjian Advertising Co.,
    Ltd. ("Qianjian Advertising")
October 15, 2004
July 3, 2003
PRC
100
%
Xi'an Focus Media
    Culture & Information Communication Co., Ltd.
    ("Xian Focus Media")
March 21, 2005
September 16, 2003
PRC
70
%
Xiamen Guomao Advertising Co., Ltd.
    ("Xiamen Advertising")
March 4, 2005
March 23, 1998
PRC
100
%
Tianjin Tongsheng Modern Display
    and Advertisement Co., Ltd. ("Tianjin Advertising")
March 21, 2005
September 3, 1998
PRC
80
%
Zhuhai Focus Media Culture and
    Communication Co., Ltd. ("Focus Media Zhuhai")
March 21, 2005
June 21, 2004
PRC
100
%
Hebei Tianmaweiye Advertisement
    Co., Ltd. ("Hebei Advertising")
March 22, 2005
December 6, 2004
PRC
100
%
Guangdong Framedia Advertisement
    Co., Ltd. ("Guangdong Framedia")
March 21, 2005
December 16, 2003
PRC
100
%
Shenzhen Bianjie Building
    Advertising Co., Ltd. ("Shenzhen Bianjie")
August 15, 2005
December 16, 2003
PRC
100
%
Hefei Focus Advertising Co., Ltd.
    ("Hefei Advertising")
N/A
October 27, 2005
PRC
100
%
Fuzhou Focus Advertising Co., Ltd.
    ("Fuzhou Advertising")
December 12, 2005
October 21, 2005
PRC
70
%
Jinan Focus Media Advertising Co.,
    Ltd. (Jinan Advertising")
December 6, 2005
June 7, 2005
PRC
100
%
Shenyang Focus Media Advertising
    Co., Ltd. ("Shenyang Advertising")
November 20, 2005
March 12, 2004
PRC
100
%
F-9
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
Date of
Date of
Place of
Percentage of
Subsidiary
acquisition
incorporation
incorporation
ownership
Framedia Advertisement Development
    (Shanghai) Co., Ltd. ("Framedia Development")
January 1, 2006
April 28, 2004
PRC
100
%
New Framedia Advertisement
    (Shanghai) Co., Ltd. ("New Framedia")
January 1, 2006
November 21, 2005
PRC
100
%
Guangdong Century Sparkle
    Advertisement Co., Ltd. ("Sparkle")
January 1, 2006
March 25, 2005
PRC
100
%
Shanghai Target Media Co., Ltd.
    ("STM")
February 28, 2006
December 16, 2003
PRC
100
%
Shenyang Target Media Ltd.
    ("Shenyang TM")
February 28, 2006
June 15, 2005
PRC
100
%
Fuzhou Heng Ding United Media Ltd.
    ("Heng Ding")
February 28, 2006
December 16, 2003
PRC
100
%
Shanghai New Target Media Co., Ltd.
    ("New STM")
February 28, 2006
January 22, 2006
PRC
100
%
Shenzhen E-times Consulting Co.,
    Ltd. ("E-times Consulting")
January 1, 2006
December 21, 2005
PRC
100
%
Beijing Focus Media Wireless Co.,
    Ltd. ("Focus Media Wireless")
March 21, 2006
December 8, 2005
PRC
100
%
Focus Media Holding and all of its subsidiaries including Focus
Media Advertisement and its subsidiaries are collectively
referred to as the "Group".
In May 2003, in connection with the establishment of Focus Media
Holding, the Group changed its business model from operating as
an advertising agency generating revenue from commissions for
selling advertisements to media companies on behalf of
advertising clients to selling
out-of
-home television
advertising time slots on its network of flat-panel television
advertising displays located in high traffic areas in commercial
locations.
PRC regulations currently limit foreign ownership of companies
that provide advertising services, including
out-of
-home television
advertising services. To comply with these regulations, the
Group conducts substantially all of its activities through Focus
Media Advertisement and its subsidiaries, a variable interest
entity which was renamed from Aiqi, and was established in
Shanghai China on September 2, 1997. Focus Media
Advertisement entered into various agreements with the Group,
including a transfer of trademarks and exclusive services
agreement. Under these agreements, Focus Media Advertisement has
the right to use the trade name of the Group, and the Group,
through Focus Media Technology, is the provider of technical and
consulting services to Focus Media Advertisement. In return,
Focus Media Advertisement is required to pay the Group services
fees for the use of trade name and for the technical and
consulting services it receives. The technical and consulting
service fees are adjusted at the Group's sole discretion.
The Group is entitled to receive service fees in an amount up to
all of the net income of Focus Media Advertising. The Group has
also provided funds to Focus Media Advertisement in an amount up
to $732,536 as of March 31, 2006 (unaudited), to finance
the development of its business.
In addition, the Group has been assigned all voting rights by
the direct and indirect owners of Focus Media Advertisement
through an agreement valid indefinitely that cannot be amended
or terminated except by written consent of all parties. Finally
the Group has the option to acquire the equity interests of
Focus Media Advertisement and its subsidiaries for a purchase
price equal to the respective registered capital of Focus Media
Advertisement and its subsidiaries or a proportionate amount
thereof, or such higher price as required under PRC laws at the
time of such purchase. Each of the shareholders of Focus Media
Advertisement has agreed to pay the Group any excess of the
purchase price paid for such equity interests in, or assets of,
Focus Media Advertisement or its
F-10
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
subsidiaries over the registered capital of Focus Media
Advertisement or its subsidiaries in the event that such option
is exercised.
The Group and its related parties hold all the variable
interests of Focus Media Advertisement and the Group has been
determined to be most closely associated with Focus Media
Advertisement. Therefore the Group is the primary beneficiary of
Focus Media Advertisement. The agreements described above
provided for effective control of Focus Media Advertisement to
be transferred to the Group at April 11, 2003. Focus Media
Advertisement had operating activity prior to entering into
these agreements with the Group. As a result, the consolidated
financial statements reflect the consolidation of Focus Media
Advertisement starting from May 2003.
In January 2003, the Financial Accounting Standards Board
("FASB") issued Financial Interpretation
("FIN") No. 46 "Consolidation of Variable
Interest Entities", which requires certain variable
interest entitles to be consolidated by the primary beneficiary
of the entity if the ownership interest held by the equity
investors in the entity does not have characteristics of a
controlling financial interest or does 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 January 31, 2003. FASB issued
FIN 46 (Revised) "Consolidation of Variable Interest
Entities", which provides for the deferral of the
implementation date to the end of the first reporting period
after March 15, 2004, unless the Group has a special
purpose entity, in which case the provisions must be applied for
fiscal years ended December 31, 2003. However, the Group
has elected to retroactively apply FIN 46 (Revised) and has
consolidated Focus Media Advertisement as its variable interest
entity since May 2003.
2.
Summary of Significant Accounting Policies
(a) Basis of Presentation
The consolidated financial statements of the Group have been
prepared in accordance with the accounting principles generally
accepted in the United States of America ("US GAAP").
The consolidated financial statements reflect consolidated
operations thereafter.
(b) Basis of Consolidation
The consolidated financial statements include the financial
statements of the Group, its majority owned subsidiaries and its
variable interest entity, Focus Media Advertisement and its
majority owned subsidiaries. All inter-company transactions and
balances have been eliminated upon consolidation. The affiliated
companies where the Group owns more than 20% of the investment
are accounted for using the equity method of accounting. The
Group's share of earnings of the equity investments are
included in the accompanying consolidated statements of
operations.
(c) 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 3 months or less when
purchased.
(d) 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
F-11
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
revenue and expenses in the financial statements and
accompanying notes. Significant accounting estimates reflected
in the Group's financial statements include allowance for
doubtful accounts, the useful lives of and impairment for
equipment and intangible assets, valuation allowance for
deferred tax assets and impairment of goodwill.
(e) Significant Risks and Uncertainties
The Group participates in a young and dynamic industry and
believes that changes in any of the following areas could have a
material adverse effect on the Group's future financial
position, results of operations or cash flows: the Group's
limited operating history; advances and trends in new
technologies and industry standards; share market performance
and public interest in companies operating in China that are
listed on share market in the U.S.; competition from other
competitors; regulatory or other PRC related factors; and risks
associated with the Group's ability to attract and retain
employees necessary to support its growth, risks associated with
the Group's growth strategies; and general risks associated
with the advertising industry.
(f) Investment in Available-for-sale
Securities
The Group classifies all of its short-term investments as
available-for-sale securities. Such short-term investments
consist primarily of debt instrument which are stated at fair
market value, with unrealized gains and losses recorded as
accumulated other comprehensive income (loss). Unrealized
losses, which are deemed other than temporary, are recorded in
the statement of operations as other expenses.
(g) Inventory
Inventory is stated at the lower of cost or market value.
(h) Equipment, Net
Equipment, net is carried at cost less accumulated depreciation
and amortization. Depreciation and amortization is calculated on
a straight-line basis over the following estimated useful lives:
Media display equipment
5 years
Computers and office equipment
5 years
Vehicles
5 years
Leasehold Improvements
lesser of the term of the lease or
    the estimated useful lives of the assets
The Group assembles certain of the media display equipment. In
addition to costs under assembly contracts, external costs
directly related to the assembly of such equipment, including
duty and tariff, equipment installation and shipping costs are
capitalized.
(i) Impairment of Long-Lived Assets
The Group reviews its long-lived assets 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 Group 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 flow is less than
F-12
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
the carrying amount of the assets, the Group would recognize an
impairment loss based on the fair value of the assets.
(j) Goodwill
Beginning in 2002, with the adoption of Statement of Financial
Accounting Standards ("SFAS") 142, "Goodwill and
Other Intangible Assets," goodwill is no longer amortized,
but instead tested for impairment upon first adoption and
annually thereafter, or more frequently if events or changes in
circumstances indicate that it might be impaired.
SFAS No. 142 requires the Group to complete a two-step
goodwill impairment test. The first step compares the fair
values of each reporting unit 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. SFAS No. 142
requires completion of this first step within the first six
months of initial adoption and annually thereafter. If the
carrying amount of a reporting unit exceeds its fair value, the
second step compares the implied fair value of goodwill to the
carrying value of a reporting unit's 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.
Management performed the annual goodwill impairment test as of
December 31, 2004 and an impairment loss of $58,397 was
recorded for the Perfect Media reporting unit. The fair value of
the Perfect Media reporting unit was estimated using a
combination of expected present value of future cash flow and
income approach valuation methodologies. The Group recorded an
impairment charge because the amount the Group paid for the
acquisition of Perfect Media exceeded its fair market value.
Management also performed an annual goodwill impairment test as
of December 31, 2005, and no impairment loss was required.
F-13
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
The changes in the carrying amount of goodwill for the year
ended December 31 2004, 2005 and three months ended
March 31, 2006 (unaudited) are as follows:
In-elevator
poster frame
Out-of-home
network
Mobile-phone
television
advertising
advertising
advertising
Perfect Media
services
service
services
Balance as of January 1, 2004
$
—
$
—
$
—
$
—
Goodwill acquired during the year
4,783,749
—
—
4,717,785
Tax benefits arising from acquired
    subsidiaries
(39,527
)
—
—
(345,524
)
Impairment losses
(58,397
)
—
—
—
Balance as of December 31, 2004
$
4,685,825
—
—
4,372,261
Transfer to out-of-home advertising
    services
(4,685,825
)
—
—
4,685,825
Goodwill acquired during the year
—
—
4,043,747
Tax benefits arising from acquired
    subsidiaries
—
—
(244,236
)
Modification of original purchase
    price allocation
—
—
64,477
Translation adjustments
—
—
375,998
Balance as of December 31, 2005
—
—
13,298,072
Goodwill acquired during the period
    (unaudited)
91,842,602
8,320,374
291,781,399
Translation adjustments (unaudited)
695,404
—
852,929
Balance as of March 31, 2006
    (unaudited)
$
92,538,006
$
8,320,374
$
301,246,575
Commencing in 2005, the Group reorganized the financial
information reviewed by the chief decision maker, the CEO,
whereby the financial information of Perfect Media was prepared
and presented together with that of
out-of
-home television
advertising services. Accordingly, the Group believes it has
only one operating segment which is the
out-of
-home advertising
services as of December 31, 2005. As a result, for the
purpose of SFAS No. 142, goodwill was tested for
impairment at the consolidated level as of December 31,
2005.
As a result of the acquisition of Infoachieve and Dotad in the
period ended March 31, 2006 (unaudited), the Group has two
new operating and reporting segments, including poster frame
network advertising services and mobile-phone advertising
service.
(k) Revenue Recognition
The Group's revenues are primarily derived from advertising
services and to a lesser extent, sales from advertising
equipment. Revenues from advertising services are recognized
ratably over the year in which the advertisement is displayed.
Revenues from advertising equipment are recognized once the
advertising equipment is delivered. Accordingly, revenue is
recognized when all four of the following criteria are met:
(i) pervasive evidence that an arrangement exists;
(ii) delivery of the products and/or services has occurred
and risks and rewards of ownership have passed to the
F-14
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
customer; (iii) the selling price is both fixed and
determinable; and (iv) collection of the resulting
receivable is reasonably assured.
Prepayments for the advertising services are deferred and
recognized as revenue when the advertising services are rendered.
Prior to May 2003, the Group operated as an advertising agency,
by which it acted as an advertising agency generating revenue
from commissions for selling advertisements to media companies
on behalf of advertising clients. The Group was responsible for
collecting the full charges and remitted flat amount, less
commissions to the media companies. The commission revenue
represented the negotiated percentage of the sales price. The
Group evaluates the criteria outlined in Emerging Issues Task
Force ("EITF") No. 99-19, "Reporting Revenue
Gross as Principal Versus Net as an Agent," in determining
whether it is appropriate to record the gross amount of revenues
and related costs or the net amount earned after deducting fees
remitted to media companies. Accordingly, the Group recorded the
net amount billed to its customers since the Group was the agent
in these transactions, and had little latitude in establishing
prices, and was not involved in the determination of the service
specifications.
F-15
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
The Group presents advertising service revenue, net of sales
taxes incurred, as follows:
Three months ended
For the years ended December 31,
March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
(In U.S. dollars, except per share data)
Gross Advertising Service Revenue:
Commercial Locations
— Unrelated parties
$
2,581,448
$
25,321,614
$
62,632,982
$
9,233,745
$
21,200,216
— Related parties
1,098,879
3,787,798
4,793,275
1,134,181
2,353,672
Total Commercial Locations
3,680,327
29,109,412
67,426,257
10,367,926
23,553,888
In-store Network
— Unrelated parties
—
—
5,475,192
—
5,215,360
— Related parties
—
—
517,998
—
602,088
Total in-store network
—
—
5,993,190
—
5,817,448
Poster Frame Network
— Unrelated parties
—
—
—
—
6,658,286
— Related parties
—
—
—
—
—
Total Poster Frame Network
—
—
—
—
6,658,286
Gross Advertising Services Revenue:
3,680,327
29,109,412
73,419,447
10,367,926
36,029,622
Less: Sales taxes:
Commercial Locations
311,770
2,788,233
5,991,497
936,405
2,081,512
In-store Network
—
—
524,271
—
524,357
Poster Frame Network
—
—
—
—
590,972
Total sales taxes
311,770
2,788,233
6,515,768
936,405
3,196,841
Net Advertising Service Revenue
3,368,557
26,321,179
66,903,679
9,431,521
32,832,781
Add: Advertising Equipment Revenue:
389,282
2,888,720
1,325,234
142,163
304,066
Net revenues:
$
3,757,839
$
29,209,899
$
68,228,913
$
9,573,684
$
33,136,847
(l) 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 periods.
(m) Advertising Costs
The Group expenses advertising costs as incurred. Total
advertising expenses were $17,919, $45,712, $76,428, $15,985,
and $271,700 for the years ended December 31, 2003, 2004,
and 2005 and the three months ended March 31, 2005
(unaudited) and 2006 (unaudited), respectively and have
been included as part of selling and marketing expenses.
F-16
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(n) Foreign Currency Translation
The functional and reporting currency of Focus Media Holding is
the United States dollar ("US dollar").
Monetary assets and liabilities denominated in currencies other
than the US dollar are translated into the US dollar
at the rates of exchange ruling at the balance sheet date.
Transactions in currencies other than the US dollar during
the year are converted into US dollar at the applicable
rates of exchange prevailing at the first day of the month
transactions occurred. Transaction gains and losses are
recognized in the statements of operations.
The financial records of the Group's subsidiaries and its
variable interest entity are maintained in its local currency,
the Renminbi ("RMB"), which is the functional
currency. Assets and liabilities are translated at the exchange
rates at the balance sheet date, equity accounts 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 (loss) in the statement of
shareholders' equity (deficiency).
(o) Income Taxes
Deferred income taxes are recognized for temporary differences
between the tax basis 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. Current income
taxes are provided for in accordance with the laws of the
relevant taxing authorities.
(p) Comprehensive Income (Loss)
Comprehensive income (loss) includes foreign currency
translation adjustments and unrealized gains (losses) on
marketable securities classified as available for sale.
Comprehensive income (loss) is reported in the statements of
shareholders' equity (deficiency).
(q) Fair Value of Financial Instruments
Financial instruments include cash and cash equivalents,
investment in available-for-sale securities, short-term
borrowing and the Series A, Series B and Series C
convertible redeemable preference shares. The carrying values of
cash and cash equivalents, investment in available-for-sale
securities and short-term borrowing approximate their fair
values due to their short-term maturities. The Group utilized a
third party valuations firm to determine the fair value of the
mezzanine equity component and the embedded liability of the
Series A, Series B and Series C convertible
redeemable preference shares. The valuation report utilized
generally accepted valuation methodologies such as the current
value method and the market value approach, which incorporates
certain assumptions such as the Group's expected future
cash flows and discount rates.
(r) Share-based Compensation
Effective January 1, 2006 the Group adopted SFAS
No. 123 (revised 2004), "Share-Based Payment"
("SFAS 123-R") using the modified prospective
application transition method, which establishes accounting for
share-based awards exchanged for employee services. Accordingly,
F-17
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
share-based compensation cost is measured at grant date, based
on the fair value of the award, and recognized in expense over
the requisite service period. The Group previously applied
Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees"
("APB 25"), and related Interpretations and
provided the pro forma disclosures required by
SFAS No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). APB 25
required the Group to record a compensation charge for the
excess of the market value of the share at the grant date or any
other measurement date over the amount an employee must pay to
acquire the share. The compensation expense is recognized over
the service period which is the vesting period.
Periods prior to the adoption of SFAS 123-R.
Prior to the adoption of SFAS 123-R, the Group
provided the disclosures required under SFAS 123, as
amended by SFAS No. 148,
"Accounting for
Stock-Based Compensation — Transition and
Disclosures"
("SFAS 148").
The following table illustrates the effect on net income and
income per share as if the Group had applied the fair value
recognition provisions of SFAS 123 to options granted under
the Group's share-based compensation plans prior to the
adoption. For purposes of this pro forma disclosure the value of
the options was estimated using the Black-Scholes option-pricing
model and amortized using an accelerated method over the
respective vesting periods of the awards. Disclosures for the
F-18
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
three months ended March 31, 2006 are not presented because
share-based payments were accounted for under
SFAS 123-R's fair-value method during this period.
Years ended December 31,
Three months
ended March 31,
2004
2005
2005
(Unaudited)
Net income, as reported
$
372,752
$
23,547,651
$
2,642,493
Add: Share based compensation as
    reported
488,711
726,503
333,960
Less: Share based compensation
    determined using the fair value method
(566,819
)
(3,225,668
)
(877,618
)
Pro forma net income
$
294,644
$
21,048,486
$
2,098,835
Deemed dividend on Series A
    convertible redeemable preference shares
(8,308,411
)
—
—
Deemed dividend on Series B
    convertible redeemable preference shares
(2,191,442
)
—
—
Deemed dividend on Series C-1
    convertible redeemable preference shares
(13,356,087
)
—
—
Premium of Series B
    convertible redeemable preference shares
12,906,774
—
—
Pro forma net income (loss)
    attributable to holders of ordinary shareholders
$
(10,654,522
)
$
21,048,486
$
2,098,835
Basic income (loss) per share:
As reported
$
(0.07
)
$
0.09
$
0.02
Pro forma
$
(0.07
)
$
0.08
$
0.01
Diluted income (loss) per share:
As reported
$
(0.07
)
$
0.06
$
0.01
Pro forma
$
(0.07
)
$
0.06
$
0.01
The fair value of each employee, officer and director option
granted is estimated on the date of grant using the
Black-Scholes option-pricing model with the following
assumptions used for grants during the applicable period.
Three months ended
March 31,
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Option granted to employees:
Average risk-free rate of return
2.97%
3.10-4.43%
3.38%
4.74%
Weighted average expected option
    life
1-3 years
2-3 years
3 years
2 years
Volatility rate
36.2%
30.49%-36.2%
36.2%
40.0%
Dividend yield
0%
0%
0%
0%
Prior to 2004 the Group did not grant share options to
employees, directors or consultants or advisors or any members
of the Group.
F-19
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
Adoption of SFAS 123-R.
Effective the quarter
ended March 31, 2006, the Group recorded share-based
compensation cost totaling the amount that would have been
recognized had the fair value method been applied since the
effective date of SFAS 123-R. Results for prior periods
have not been restated. The effect of recording share-based
compensation for the three month period ended March 31,
2006 (unaudited) was that the Group recorded additional
share-based compensation of $1,389,563.
As required by SFAS 123-R, management has made an estimate
of expected forfeitures and is recognizing compensation costs
only for those equity awards expected to vest. The cumulative
effect of initially adopting SFAS 123-R was not significant.
(s) Income (loss) per Share
Basic income (loss) per share is computed by dividing income
(loss) attributable to holders of ordinary shares by the
weighted average number of ordinary shares outstanding during
the year/period. Diluted 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. Ordinary share equivalents are excluded
from the computation in loss years as their effects would be
antidilutive.
(t) Recently Issued Accounting Standards
In February 2006, the FASB issued SFAS No. 155,
"Accounting for Certain Hybrid Instruments-an amendment of
FASB Statements 133 and 140", which is effective for
all financial instruments acquired or issued after the beginning
of an entity's first fiscal year that begins after
September 15, 2006. The statement improves financial
reporting by eliminating the exemption from applying
SFAS No. 133 to interests in securitized financial
assets so that similar instruments are accounted for similarly
regardless of the form of the instruments. The Statement also
improves financial reporting by allowing a preparer to elect
fair value measurement at acquisition, at issuance, or when a
previously recognized financial instrument is subject to a
re-measurement event, on an instrument-by-instrument basis, in
cases in which a derivative would otherwise have to bifurcated,
if the holder elects to account for the whole instrument on a
fair value basis. The Group is currently evaluating the impact,
if any, of this Statement on the consolidated combined financial
statements.
In December 2004, the Financial Accounting Standards Board
("FASB") issued SFAS
No.
123-R,
which
is a revision of SFAS 123. SFAS 123-R supersedes
APB 25, "Accounting for Stock Issued to
Employees." Generally, the approach in SFAS 123-R is
similar to the approach described in SFAS 123. However,
SFAS 123-R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in
the income statement based on the grant-date fair values. Pro
forma disclosure previously permitted under SFAS 123 is no
longer an alternative. Through 2005, the Group accounted for its
stock option plans using the intrinsic value method under
APB 25. Effective the beginning of 2006, the Group adopted
SFAS 123-R and elected to adopt the modified prospective
application method. SFAS 123-R requires the Group to use a
fair-value based method to account for share-based compensation.
Accordingly, share-based compensation cost is measured at the
grant date, based on the fair value of the award, and is
recognized as expense over the employees' requisite service
period. Total compensation cost for the Group's stock plan
in the first quarter of 2006 (unaudited) was $1,466,540.
The expected impact that the adoption of the standard will have
on the Group for 2006 (unaudited) is $6,061,212.
F-20
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
In November 2004, the FASB issued SFAS No. 151,
"Inventory Costs — an amendment of ARB
No. 43, Chapter 4" ("SFAS 151").
SFAS 151 clarifies the accounting that requires abnormal
amounts of idle facility expenses, freight, handling costs, and
spoilage costs to be recognized as current-period charges. It
also requires that allocation of fixed production overheads to
the costs of conversion be based on the normal capacity of the
production facilities. SFAS 151 will be effective for
inventory costs incurred on or after July 1, 2005. The
adoption of this standard will not have a material effect on the
Group's financial position or results of operations.
In December 2004, the FASB issued SFAS No. 153,
"Exchanges of Nonmonetary Assets — an amendment
of APB Opinion No. 29" ("SFAS 153"),
which amends Accounting Principles Board Opinion No. 29,
"Accounting for Nonmonetary Transactions" to eliminate
the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance.
SFAS 153 is effective for nonmonetary assets exchanges
occurring in fiscal periods beginning after June 15, 2005.
The adoption of this statement will not have a material effect
on the Group's financial position or results of operations.
In May 2005, the FASB issued SFAS No. 154,
"Accounting Changes and Error Corrections"
("SFAS 154"), which replaces Accounting
Principles Board Opinions No. 20, "Accounting
Changes" and SFAS No. 3, "Reporting
Accounting Changes in Interim Financial Statements —
An Amendment of APB Opinion No. 28." SFAS 154
provides guidance on the accounting for and reporting of
accounting changes and error corrections. It establishes
retrospective application, or the latest practicable date, as
the required method for reporting a change in accounting
principle and the reporting of a correction of an error.
SFAS 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after
December 15, 2005. The adoption of this statement will not
have a material effect on the Group's financial position or
results of operations.
(u) Reclassification
Certain prior year amounts have been reclassified to conform
with the current period's presentation.
(v) Unaudited interim financial information
The interim financial information as of March 31, 2006 and
for the three months ended March 31, 2005 and 2006 are
unaudited and have been prepared on the same basis as the
audited financial statements. In the opinion of management, such
unaudited financial information includes all adjustments
(consisting only of normal recurring adjustments) necessary for
a fair presentation of the interim information. Operating
results for the three months ended March 31, 2006 are not
necessarily indicative of the results that may be expected for
the year ended December 31, 2006.
F-21
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
3.
Acquisitions
During the years ended December 31, 2004, 2005 and three
months ended March 31, 2006, the Group made the following
acquisitions to continue to expand their networks in desirable
locations and to establish other stand alone networks that
provide effective channels for advertisers:
(1)
On April 23, 2004, the Group increased its
existing ownership of On-Target from 30% to 60% by acquiring an
additional 30% of the outstanding ordinary shares of On-Target,
an advertising agency, in exchange for cash of $36,247. 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 purchase price was allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
197,555
Intangible assets:
Customer base
138,898
7 years
Goodwill
94,904
N/A
Total
$
36,247
(2)
On April 23, 2004, the Group acquired 75%
of the outstanding ordinary shares of Focus Media Wuhan
("Focus Media Wuhan"), an advertising service
provider, for zero cash consideration. Subsequently, on
March 1, 2006, the Group acquired remaining 25% of the
outstanding ordinary shares of Focus Media Wuhan for share
consideration of 74,720 ordinary shares, valued at of
$5 per ordinary share, which was determined based on
average market price of Focus Media Holding's common shares
traded over 3 days before and after the acquisition were
agreed and announced. 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 purchase price was allocated as
follows:
Amortization
April 23, 2004
March 1, 2006
period
(Unaudited)
Net tangible liabilities assumed
$
4,667
$
—
Intangible assets:
Lease Agreements
29,269
—
2.3 years
Goodwill
—
373,600
N/A
Total
$
24,602
$
373,600
F-22
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(3)
In July and November, 2004, the Group acquired
89.5% of the outstanding ordinary shares of Focus Media Yunnan,
an advertising service provider, in exchange for cash of
$273,062, of which $217,483 was paid as of December 31,
2004 and the remainder was paid in 2005. 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
purchase price was allocated as follows:
Amortization
period
Net tangible assets acquired
$
27,181
Intangible assets:
Lease Agreements
6,103
2.3 years
Customer base
6,050
7 years
Goodwill
233,728
N/A
Total
$
273,062
(4)
On August 10, 2004, the Group acquired 90%
of the outstanding ordinary shares of Focus Media Nanjing, an
advertising service provider for zero consideration. 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 purchase price was allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
270,230
Intangible assets:
Lease Agreements
13,810
2.3 years
Customer base
41,321
7 years
Goodwill
215,099
N/A
Total
$
—
(5)
On September 15, 2004, the Group acquired
80% of the outstanding ordinary shares of Focus Media Zhejiang,
an advertising service provider, in exchange for cash of
$821,593 of which $410,797 was paid as of December 31, 2004
and the remainder was paid in 2005. 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 purchase price was
allocated as follows:
Amortization
period
Net tangible assets acquired
$
315,347
Intangible assets:
Lease Agreements
47,169
2.3 years
Customer base
24,357
7 years
Goodwill
434,720
N/A
Total
$
821,593
F-23
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(6)
On September 22, 2004, the Group acquired
100% of the outstanding ordinary shares of Perfect Media which
includes its then variable interest entity Shanghai Perfect
Media, an advertising services provider, in exchange for cash of
$500,000 and 14,594,200 ordinary shares having a fair value of
$0.31 per ordinary share which was determined by a
retrospective valuation performed by an unrelated party.
The valuation was based on the guideline companies approach
which incorporates the market performance of comparable listed
companies as well as the financial results and growth trends of
the Group to derive the total equity value of the Group. The
valuation model then allocated the equity value between the
ordinary shares and the preference shares and determined the
fair value of ordinary shares based on two scenarios: preference
shares that have a value in excess of their conversion price
were treated as if they had converted into ordinary shares; and
preference shares that have a value below their conversion price
were assigned a value that took into consideration their
liquidation preference. Ordinary shares were assigned a value
equal to their pro rata share of the residual amount (if any)
that remained after consideration of the liquidation preference
of preferred stock with a value below their conversion price.
Immediately following the acquisitions, Perfect Media became a
wholly owned subsidiary of Focus Media Holding and Shanghai
Perfect Media became a wholly owned subsidiary of Focus Media
Advertisement. 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 Group's primary reason for the
acquisition of Perfect Media was its complementary business
model and its strong relationships with landlords and property
managers of commercial building locations in which the Group
desired to locate its flat-panel displays. The acquisition of
Perfect Media resulted in a significant amount of goodwill
because the amount the Group paid for Perfect Media exceeded its
fair market value. The Group was willing to pay in excess of
Perfect Media's fair market value in order to maintain its
competitive advantage within the commercial buildings the Group
already occupied. The aggregate purchase price of $4,984,798
consisted of the following:
Cash consideration
$
500,000
Value of the ordinary shares issued
4,484,798
Total consideration
$
4,984,798
The purchase price was allocated as follows:
Amortization
period
Net tangible assets acquired
$
1,086
Intangible assets:
Lease Agreements
185,947
2.3 years
Customer base
14,016
7 years
Goodwill
4,783,749
N/A
Total
$
4,984,798
F-24
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(7)
On October 15, 2004, the Group acquired
100% of the outstanding ordinary shares of Focus Media Qingdao
including its then variable interest entity Qingdao Advertising,
an advertising services provider, in exchange for cash of
$989,496. Immediately following the acquisition Focus Media
Qingdao became a wholly owned subsidiary of Focus Media Holding
and Qingdao Advertising became a wholly owned subsidiary of
Focus Media Advertisement. 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 purchase price was allocated as
follows:
Amortization
period
Net tangible liabilities assumed
$
74,642
Intangible assets:
Lease Agreements
54,733
2.3 years
Customer base
9,183
7 years
Goodwill
1,000,222
N/A
Total
$
989,496
(8)
On October 15, 2004, the Group acquired
100% of the outstanding ordinary shares of Focus Media Dalian
including its then variable interest entity Dalian Advertising,
an advertising services provider, in exchange for cash of
$989,584. Immediately following the acquisition Focus Media
Dalian became a wholly owned subsidiary of Focus Media Holding
and Dalian Advertising became a wholly owned subsidiary of Focus
Media Advertisement. 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 purchase price was allocated as
follows:
Amortization
period
Net tangible liabilities assumed
$
40,347
Intangible assets:
Lease Agreements
24,044
2.3 years
Customer base
13,653
7 years
Goodwill
992,234
N/A
Total
$
989,584
F-25
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(9)
On October 15, 2004, the Group acquired
100% of the outstanding ordinary shares of Focus Media Changsha
including its then variable interest entity Changsha
Advertising, an advertising services provider, in exchange for
cash of $989,484. Immediately following the acquisition Focus
Media Changsha became a wholly owned subsidiary of Focus Media
Holding and Changsha Advertising became a wholly owned
subsidiary of Focus Media Advertisement. 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
purchase price was allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
76,098
Intangible assets:
Lease Agreements
81,194
2.3 years
Customer base
5,316
7 years
Goodwill
979,072
N/A
Total
$
989,484
(10)
On October 15, 2004, the Group acquired
100% of the outstanding ordinary shares of Qianjian Advertising,
an advertising services provider, in exchange for cash of
$338,307 of which $265,822 was paid as of December 31, 2004
and the remainder was paid in 2005. 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 purchase price was
allocated as follows:
Amortization
period
Net tangible assets acquired
$
125,599
Intangible assets:
Lease Agreements
37,818
2.3 years
Customer base
—
7 years
Goodwill
174,890
N/A
Total
$
338,307
F-26
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(11)
On March 21, 2005, the Group increased its
existing ownership of Xian Focus Media Culture &
Communication Co., Ltd, an advertising service provider, from
10% to 70% by acquiring an additional 60% of the outstanding
ordinary shares, in exchange for cash consideration of $84,577,
all of which was paid as of December 31, 2005. 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 purchase price was allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
99,663
Intangible assets:
Lease Agreements
20,637
2.3 years
Customer base
4,313
7 years
Goodwill
159,290
N/A
Total
$
84,577
(12)
On March 4, 2005, the Group acquired 100%
of the outstanding ordinary shares of Xiamen Advertising, an
advertising services provider, in exchange for cash
consideration of $327,505, all of which was paid as of
December 31, 2005. 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 purchase price was allocated as
follows:
Amortization
period
Net tangible assets acquired
$
100,704
Intangible assets:
Lease Agreements
23,923
2.3 years
Customer base
47,967
7 years
Goodwill
154,911
N/A
Total
$
327,505
F-27
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(13)
On March 21, 2005, the Group acquired 80%
of the outstanding ordinary shares of Focus Media Tianjin,
including its then variable interest entity Tianjin Advertising,
an advertising services provider, in exchange for cash
consideration of $797,439, all of which was paid as of
December 31, 2005. Immediately following the acquisition,
Focus Media Tianjin became an 80% owned subsidiary of Focus
Media Holding and Tianjin Advertising became an 80% owned
subsidiary of Focus Media Advertisement. 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
purchase price was allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
100,825
Intangible assets:
Lease Agreements
40,306
2.3 years
Customer base
83,417
7 years
Goodwill
774,541
N/A
Total
$
797,439
(14)
On March 21, 2005, the Group acquired 100%
of the outstanding ordinary shares of Focus Media Zhuhai, an
advertising services provider, in exchange for cash
consideration of $42,288, all of which was paid as of
December 31, 2005. 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 purchase price was allocated as
follows:
Amortization
period
Net tangible liabilities assumed
$
18,003
Intangible assets:
Lease Agreements
60,291
2.3 years
Total
$
42,288
F-28
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(15)
On March 21, 2005, the Group acquired 100%
of the outstanding ordinary shares of CBL, including its then
variable interest entity Guangdong Framedia, an advertising
services provider, in exchange for cash consideration of
$2,054,008, all of which was paid as of December 31, 2005.
Immediately following the acquisition, CBL became a 100% owned
subsidiary of Focus Media Holding and Guangdong Framedia became
a 100% owned subsidiary of Focus Media Advertisement. 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 purchase price was allocated as follows:
Amortization
period
Net tangible assets acquired
$
337,252
Intangible assets:
Lease Agreements
471,818
2.3 years
Customer base
10,633
7 years
Goodwill
1,234,305
N/A
Total
$
2,054,008
(16)
On March 22, 2005, the Group acquired 100%
of the outstanding ordinary shares of Sorfari, including its
then variable interest entity Hebei Advertising, an advertising
services provider, in exchange for cash consideration of
$773,274, all of which was paid as of December 31, 2005.
Immediately following the acquisition, Sorfari became a 100%
owned subsidiary of Focus Media Holding and Hebei Advertising
became a 100% owned subsidiary of Focus Media Advertisement. 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 purchase price was allocated as follows:
Amortization
period
Net tangible assets acquired
$
94,639
Intangible assets:
Lease Agreements
19,090
2.3 years
Goodwill
659,545
N/A
Total
$
773,274
(17)
On August 15, 2005, the Group acquired
100% of the outstanding ordinary shares of Shenzhen Bianjie, in
exchange for cash consideration of $457,185. The acquisition was
recorded using the purchase method of accounting and,
accordingly, the acquired assets and liabilities were
F-29
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
recorded at their fair market value at the date of acquisition.
The purchase price was allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
50,166
Intangible assets:
Lease Agreements
22,141
2.34 years
Goodwill
485,210
N/A
Total
$
457,185
(18)
On November 20, 2005, the Group acquired
100% of the outstanding ordinary shares of Shenyang Advertising,
an advertising services provider, in exchange for cash
consideration of $495,651, all of which was paid as of
December 31, 2005. 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 purchase price was preliminarily
allocated as follows:
Amortization
period
Net tangible assets acquired
$
16,949
Intangible assets:
Lease Agreements
24,460
1.8 years
Goodwill
454,242
N/A
Total
$
495,651
(19)
On December 6, 2005, the Group acquired
100% of the outstanding ordinary shares of Jinan Advertising, an
advertising services provider, in exchange for cash
consideration of $61,956, all of which was paid as of
December 31, 2005. 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 purchase price was preliminarily
allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
78,470
Intangible assets:
Lease Agreements
18,723
3.1 years
Goodwill
121,703
N/A
Total
$
61,956
(20)
On December 12, 2005, the Group acquired
100% of the outstanding ordinary shares of Fuzhou Advertising,
an advertising services provider, in exchange for cash
consideration of $43,369, all of which was paid as of
December 31, 2005. The acquisition was recorded using the
purchase
F-30
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
method of accounting and, accordingly, the acquired assets and
liabilities were recorded at their fair market value at the date
of acquisition. The purchase price was preliminarily allocated
as follows:
Amortization
period
Net tangible assets acquired
$
26,237
Intangible assets:
Lease Agreements
17,132
3.5 years
Total
$
43,369
Unaudited
(21)
On January 1, 2006, the Group acquired
100% of the outstanding ordinary shares of Infoachieve Limited
("Infoachieve"), which includes its then variable
interest entity Shanghai Framedia Advertisement Development Ltd.
("Framedia"), the largest poster frame advertising
network operator in China, in exchange for cash of $39,600,000,
all of which were paid as of December 31, 2005, as well as
22,157,003 ordinary shares having a fair value of
$2.456 per ordinary share which was determined based on
average market price of Focus Media Holding's common shares
traded over 3 days before and after the acquisition were
agreed and announced. Additional payment of up to 35,830,619
ordinary shares may be made contingent upon Infoachieve
attaining certain earnings target in 2006.
Immediately following the acquisitions, Infoachieve became a
wholly owned subsidiary of Focus Media Holding and Framedia
became a wholly owned subsidiary of Focus Media Advertisement.
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 aggregate purchase price of $94,328,709
consisted of the following:
Cash consideration
$
39,600,000
Other acquisition costs
311,110
Value of the ordinary shares issued
54,417,599
Total consideration
$
94,328,709
The purchase price was preliminarily allocated as follows:
Amortization
period
Net tangible liabilities assumed
$
5,684,145
Intangible assets:
Lease Agreements
8,300,000
6 years
Customer base
2,676,000
7 years
Non-compete agreement
466,000
3 years
Trademark
943,000
1 years
Contract backlog
70,000
1 years
Goodwill
87,557,854
N/A
Total
$
94,328,709
F-31
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(22)
On January 1, 2006, the Group acquired the
signed lease agreements, frames and ongoing advertising
agreements of Shenzhen
E-times
Advertising
Co., Ltd. ("E-times") and Skyvantage Group Limited,
one of the major poster frame advertising network operators in
South China, in exchange for cash consideration of $5,000,000.
This is considered an acquisition of a business and accordingly
the purchase method of accounting has been applied. Accordingly,
the acquired assets and liabilities were recorded at their fair
market value at the date of acquisition. The aggregate purchase
price of $5,034,008 consisted of the following:
Cash consideration
$
5,000,000
Other acquisition costs
34,008
Total consideration
$
5,034,008
The purchase price was preliminarily allocated as follows:
Amortization
period
Intangible assets:
Lease Agreements
$
749,260
6 years
Goodwill
4,284,748
N/A
Total
$
5,034,008
(23)
On February 28, 2006, the Group acquired
100% of the outstanding ordinary shares of Target Media Holdings
Limited ("Target Media"), its wholly-owned subsidiary,
Target Media Multi-Media technology (Shanghai) Co., Ltd.
("TMM"), and a consolidated variable interest entity
Shanghai Target Media Co., Ltd. ("STM"), one of the
largest
out-of
-home
advertising network operator in China, in exchange for cash of
$94,000,000, of which $44,780,103 was paid as of March 31,
2006 the remaining will be paid in 2006, as well as 77,000,000
ordinary shares having a fair value of $3 per ordinary
share which was determined based on average market price of
Focus Media Holding's common shares were traded over
3 days before and after the acquisition were agreed and
announced.
Immediately following the acquisitions, Target Media became a
wholly owned subsidiary of Focus Media Holding, and TTM became a
wholly owned subsidiary of Focus Media Advertisement, whereas
STM became a consolidated variable interest entity. 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 aggregate purchase price of $327,057,757 consisted of the
following:
Cash consideration
$
94,000,000
Other acquisition costs
2,057,757
Value of the ordinary shares issued
231,000,000
Total consideration
$
327,057,757
F-32
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
The purchase price was preliminarily allocated as follows:
Amortization
period
Net tangible assets acquired
$
24,822,958
Intangible assets:
Lease Agreements
4,509,000
10 years
Customer base
449,000
7 years
Trademark
5,720,000
10 years
Contract backlog
149,000
1 years
Goodwill
291,407,799
N/A
Total
$
327,057,757
(24)
On March 21, 2006, the Group acquired 100%
of the outstanding ordinary shares of Dotad Media Holdings
Limited ("Dotad"'). Dotad will be renamed as
Focus Media Wireless, a leading mobile-phone advertising service
provider in China, in exchange for cash consideration of
$15,000,000, all of which was paid as of March 31, 2006.
Contingent upon Dotad's meeting certain earning targets in
2006 and 2007, additional share consideration will be paid up to
$15 million in the form of Focus Media Holding's
ordinary shares (valued at $5 per ordinary shares), for an
aggregate potential payment of up to $30 million. 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.
Additional payment of up to 3,000,000 ordinary shares may be
made contingent upon Dotad's attaining certain earnings
targets in 2006 and 2007. The purchase price was allocated as
follows:
The purchase price was preliminarily allocated as follows:
Amortization
period
Net tangible assets acquired
$
82,270
Intangible assets:
Customer base
3,999,751
7 years
Completed technology
2,480,354
5 years
License
16,216
5 years
Partnership
101,035
5 years
Goodwill
8,320,374
N/A
Total
$
15,000,000
The purchase price allocation and intangible asset valuations
for each of the acquisitions described above were based on a
valuation report provided by a third party valuation firm. The
valuation report utilizes and considers generally accepted
valuation methodologies such as the income, market, cost and
actual transaction of Group shares approach. The Group has
incorporated certain assumptions which include projected cash
flows and replacement costs.
Pro forma
The following summarized unaudited pro forma results of
operations for the years ended December 31, 2004, 2005 and
three months ended March 31, 2006, assuming that all
acquisitions
F-33
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
during the year ended December 31, 2005 and three months
ended March 31, 2006 occurred as of January 1, 2004,
2005 and January 1, 2006. These pro forma results have been
prepared for comparative purposes only and do not purport to be
indications of the results of operations which actually would
have resulted had the significant acquisitions occurred as of
January 1, 2004, 2005 and 2006.
For the three months
Year ended December 31,
ended March 31,
2004
2005
2006
(Unaudited)
(Unaudited)
(Unaudited)
Revenues
$
37,799,600
$
113,750,432
$
36,205,136
Net income (loss) attributable to
    holders of ordinary shares
(14,944,599
)
3,250,017
1,159,298
Income (loss) per share —
    basic
$
(0.06
)
$
0.01
$
0.00
Income (loss) per share —
    diluted
(0.06
)
0.01
0.00
4.
Investment in Available-for-Sale Securities
The following is a summary of short-term available-for-sale
securities:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Federal home loan cost
$
—
$
—
$
35,000,000
$
35,000,000
Gross unrealized loss
—
—
(164,150
)
(207,900
)
Fair Value
$
—
$
—
$
34,835,850
$
34,792,100
All the securities are due within
    one year
5.
Accounts Receivable, net
Accounts receivable, net consist of the following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Billed receivables
$
858,649
$
4,782,521
$
14,587,026
$
31,218,690
Unbilled receivables
550,812
1,837,428
7,648,382
6,031,558
$
1,409,461
$
6,619,949
$
22,235,408
$
37,250,248
Unbilled receivables represent amounts earned under advertising
contracts in progress but not billable at the respective balance
sheet dates. These amounts become billable according to the
contract term. The Group anticipates that substantially all of
such unbilled amounts will be billed and collected within twelve
months of balance sheet dates.
F-34
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
6.
Inventories
Inventories consist of the following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Finished goods
$
74,140
$
1,075,210
$
433,844
$
599,120
Spare parts and consumables
16,810
167,930
45,685
6,170
$
90,950
$
1,243,140
$
479,529
$
605,290
7.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the
following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Other receivables
$
100,576
$
295,650
$
751,602
$
1,121,396
Other taxes refundable
—
—
—
732,357
Advances to supplier
—
—
1,274,353
2,036,393
Staff advances
48,330
239,136
964,555
1,129,394
Prepaid expenses
—
162,304
276,861
327,104
Interest receivables
—
—
417,369
374,789
Deposit for acquisitions
—
362,472
40,919,530
2,063,690
Note receivables
—
42,288
—
24,947
Loan to Infoachieve
—
—
759,563
—
Deferred offering costs
—
1,007,618
—
—
$
148,906
$
2,109,468
$
45,363,833
$
7,810,070
8.
Acquired Intangible Assets, Net
Acquired intangible assets, net consist of the following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Lease agreements
$
—
$
529,676
$
1,278,059
$
14,876,822
Customer bases
—
273,820
430,879
7,568,078
Trademark
—
—
—
6,682,799
Completed technology
—
—
—
2,480,354
Contract backlog
—
—
—
219,533
Non-compete agreement
—
—
—
466,883
Partnership
—
—
—
101,035
License
—
—
—
16,216
Less: accumulated amortization
—
(95,190
)
(551,018
)
(1,530,525
)
$
—
$
708,306
$
1,157,920
$
30,881,195
F-35
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
During the year 2004, 2005 and the three months ended
March 31, 2005 and 2006, the Group acquired certain lease
agreements and customer bases through various acquisitions (see
Note 3). The Group also recorded amortization expense of
$nil, $77,443, $437,837 $67,352, and $999,178 for the years
ended December 31, 2003, 2004 and 2005 and the three months
ended March 31, 2005 (unaudited) and 2006 (unaudited),
respectively. The Group will record amortization expense of
$5,461,966, $4,561,595, $4,400,871, $4,154,231 and $4,145,868,
for 2006, 2007, 2008, 2009 and 2010, respectively.
9.
Long-term Investments
Investment consists of the following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Xian Focus Media Advertising Co.
    Ltd. ("Xian Focus
    Media")
(a)
$
12,082
$
12,088
$
—
$
—
Shanghai Xinna Media Co., Ltd.
    ("Xinna")
(b)
—
—
—
911,033
Tianjin Subway Media Service Co.,
    Ltd.
(c)
—
—
—
144,443
Target Network Chengcheng Co.
    Ltd.
(d)
—
—
—
62,367
$
12,082
$
12,088
$
—
$
1,117,843
(a)
On September 23, 2003, the Group acquired 10% of the
    outstanding ordinary shares of Xian Focus Media. The Group has
    accounted for its investment in Xian Focus Media using the cost
    method of accounting. Subsequently in March 2005, the Group
    acquired an additional 60% of the outstanding ordinary shares of
    Xian Focus Media. Accordingly, the Group commenced consolidating
    Xian Focus Media upon obtaining control of this subsidiary (See
    Note 3(11)).
(b)
On January 6, 2006, STM acquired 20% equity interest in
    Xinna for cash consideration of $911,033. The Group has
    accounted for its investment in Xinna using the equity method of
    accounting.
(c)
On September 22, 2005, STM, a subsidiary of Target Media,
    formed a 50% owned entity — Tianjin Subway Media
    Service Co., Ltd. ("Tianjin Subway Project") with a
    third party for a cash consideration of $144,443. The Group has
    accounted for its investment in Tianjin Subway Project using the
    equity method of accounting.
(d)
In November 2005, STM, a subsidiary of Target Media, invested
    $62,367 in a 50% owned entity named Target Network Chengcheng
    Co. Ltd. ("Chengcheng"). The Group has accounted for
    its investment in Chengcheng using the equity method of
    accounting.
F-36
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
10.
Equipment, Net
Equipment, net consists of the following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Media display equipment
$
1,830,972
$
9,384,262
$
40,191,968
$
68,852,703
Computers and office equipment
292,200
675,053
1,267,696
2,844,038
Leasehold improvements
14,505
167,932
537,130
869,779
Vehicles
—
83,834
349,575
445,639
$
2,137,677
$
10,311,081
$
42,346,369
$
73,012,159
Less: accumulated depreciation and
    amortization
(159,278
)
(1,142,742
)
(5,975,119
)
(12,505,458
)
Assembly in progress
—
28,804
7,323,638
10,486,492
$
1,978,399
$
9,197,143
$
43,694,888
$
70,993,193
The Group wrote down certain LCD display equipment for the total
of $1,871,024 because the location were close down.
Assembly in process relates to the assembly of flat-panel
television screens. These assets will be placed in service in
late 2006.
11.
Short-term Bank Loans
The Group had $4,365,723 outstanding under credit arrangement
which consisted of lines of credit and revolving credit
agreement at March 31, 2006 (unaudited). The amount
available to the Group for additional borrowings under the lines
of credit and resolving agreement was $3,118,374 at
March 31, 2006 (unaudited). The agreement was subject to
interest rates of 10% discount of six-month loan interest rate
of The People's Bank of China. The interest expenses
incurred in 2005 and the three months ended March 31, 2006
(unaudited) amounted to $46,005 and $13,297, respectively.
The bank loans bear interest at 4.698% per annum as of
December 31, 2005 and March 31, 2006 (unaudited),
respectively.
12.
Other Short Term Loans
Other short term loans consist of:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Other loan due to ex-shareholder of
    Target Media
(a)
$
—
$
—
$
—
$
3,742,048
Other loan due to ex-shareholder of
    Framedia
(b)
—
—
—
3,034,287
$
—
$
—
$
—
$
6,776,335
(a)
In December 2005, the ex-shareholder of Target Media and STM,
    Shanghai Investment Information Co., Ltd. ("SII")
    provided a short term loan of $3,742,048 to STM. The loan bears
    interest at an annual rate of 4.698%. The interest expenses
    incurred in the three months ended March 31, 2006
    (unaudited) amounted to $14,580.
F-37
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
(b)
At March 31, 2006 (unaudited), the short-term loans from
    ex-shareholders of Framedia are non-interest bearing, all of
    which was repayable within one year.
13.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the
following:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Accrued expenses
$
119,840
$
759,817
$
3,161,133
$
5,146,963
Other taxes payables
248,288
1,728,850
3,037,443
6,679,253
Advance from customers
94,308
1,459,976
3,387,224
5,687,075
Accrued employee payroll and welfare
86,426
473,054
1,059,717
1,052,173
Accrued offering costs
—
767,821
—
—
Accrued merger and acquisition costs
—
—
—
1,100,000
Payables related to acquisitions
—
538,860
99,130
50,027,231
Amount due to minority shareholders
    of subsidiary
—
426,858
200,848
326,916
Others
12,372
436,199
801,407
1,394,488
$
561,234
$
6,591,435
$
11,746,902
$
71,414,099
14.
Share Option
In June 2003, the Group adopted the 2003 employee share option
scheme (the "Option Plan") which allows the Group to
offer a variety of incentive awards to employees, directors or
consultants and advisors or any members of the Group. For 2004,
2005, and 3 months ended March 31, 2006 (unaudited),
options to purchase 25,208,200, 23,843,630 and
3,000,000 ordinary shares are authorized under the Option
Plan, respectively. Under the terms of the Option Plan, options
are generally granted at prices equal to the fair market value
as determined by the Board of Directors and expire 10 years
from the date of grant and generally vest over 3 years
while certain options granted vest over 1 year. Subsequent
to the initial public offering, options will be granted at the
fair market value of the ordinary shares at the date of grant.
As of December 31, 2004, 2005 and March 31, 2006
(unaudited), options to purchase 25,208,200 and 49,051,830
and 38,131,920 ordinary shares were granted and outstanding. Not
more than 30% of the Group's share capital is reserved for
issuance under the Option Plan.
Options to Employees
In July and August 2004, the Group granted 20,643,400 share
options with an exercise price of $0.24 to purchase ordinary
shares to directors, officers and employees. The Group recorded
deferred share based compensation of $969,959 as of
December 31, 2004 and compensation expense of $364,876 for
2004 related to the difference between the exercise price and
the deemed fair value of the ordinary shares. Prior to the
Group's initial public offering, the derived fair value of
the ordinary shares underlying the options was determined for
the July and August 2004 grants, based on a retrospective
third-party valuation conducted by a third party valuation firm
using a generally accepted valuation methodology, the guideline
companies approach, which incorporates certain assumptions
including the market performance of comparable listed companies
as well as
F-38
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
the financial results and growth trends of the Group, to derive
the total equity value of the Group. The valuation model
allocated the equity value between the ordinary shares and the
preference shares and determined the fair value of ordinary
shares based on two assumptions: where conversion into ordinary
shares would result in a higher economic value, preference
shares were treated as if they had converted into ordinary
shares; and preference shares that have a value higher than
their conversion price were assigned a value that took into
consideration their liquidation preference. Our ordinary shares
were assigned a value equal to their pro rata share of the
residual amount, if any, that remained after consideration of
the liquidation preference of preferred shares with a value
below their conversion price.
In January and February 2005, the Group granted
6,020,000 share options with exercise prices ranging from
$0.58 to $0.75 to purchase ordinary shares to directors,
officers and employees. In July 2005, the Group granted
11,683,630 share options with exercise price of $1.7 to
purchases ordinary shares to directors, offers and employees. In
November 2005, the Group further granted 4,800,000 share
options with exercise price ranging from $2.6 to $2.7 to
purchases ordinary shares to directors, officers and employees.
The Group recorded deferred share based compensation of $264,751
as of December 31, 2005 and compensation expense of
$458,639 for 2005, related to the difference between the
exercise price and the deemed fair value of the ordinary shares.
The Group determined the fair value of ordinary shares for those
grants in January and February 2005 using the Series C
preference share price of $0.51 and the fair value of ordinary
shares for the grants in July and November 2005 using the fair
market value of the ordinary shares quoted in the Nasdaq Stock
Exchange.
In March 2006, the Group granted 3,000,000 share options
with exercise prices of $5.093 to purchase ordinary shares to
directors, officers and employees. Effective January 1,
2006, the Group adopted SFAS 123-R. The fair value of stock
options granted to employees is determined using the
Black-Scholes option pricing model. The determination of the
fair value of share-based compensation awards on the date of
grant using an option-pricing model is affected by the
Group's stock price as well as assumptions regarding a
number of complex and subjective variables, including the
expected volatility of the Group's stock price over the
term of the awards, actual and projected employee stock option
exercise behaviors, risk-free interest rate and expected
dividends. As a result, the Group recorded compensation expense
of $1,466,540 for three months ended March 31, 2006
(unaudited).
Options to Non-employees
In 2004, the Group also granted 4,564,800 share options
with an exercise price of $0.24 to purchase ordinary shares to
its external consultants and advisors in exchange for past
services, which part of them vest over 1 year and part of
them vest over 3 years. In February 2005, the Group granted
1,240,000 share options with an exercise price of $0.75 to
purchase ordinary shares to its external consultants and
advisors in exchange for services. In July 2005, the Group
granted 100,000 share options with an exercise of $1.7 to
purchase ordinary shares to its external consultants and
advisors in exchange for services. No options were granted to
external consultants and advisors subsequent to July 2005. The
Group recorded compensation expense of approximately $123,835
and $267,864 and $26,710 for 2004, 2005 and three months ended
March 31, 2006 (unaudited), respectively, estimated using
the Black-Scholes option pricing model as such method provides a
more accurate estimate of the fair value of services received by
the external consultants and advisors.
F-39
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
A summary of share-based compensation recognized in the
consolidated statement of operations are as follows:
Years ended
Three months ended
December 31,
March 31,
2004
2005
2005
2006
(Unaudited)
(Unaudited)
General and administrative
$
461,183
$
683,186
$
320,273
$
1,129,610
Selling and marketing
27,528
43,317
13,687
336,910
$
488,711
$
726,503
$
333,960
$
1,466,540
The fair value of each employee, officer and director option
granted is estimated on the date of grant using the
Black-Scholes option-pricing model with the following
assumptions used for grants during the applicable period.
Year ended
Three months ended
December 31,
March 31,
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Option granted to employees:
Average risk-free rate of return
2.97%
3.10-4.43%
3.38%
4.74%
Weighted average expected option
    life
1-3  years
2-3 years
3 years
2 years
Volatility rate
36.2%
30.49%-36.2
%
36.2%
40.0%
Dividend yield
0%
0%
0%
0%
Prior to 2004 the Group did not grant share options to
employees, directors or consultants or advisors or any members
of the Group.
A summary of the share option activity is as follows:
Weighted
Number
average
of option
exercise price
Options outstanding at
    December 31, 2003
—
$
—
Granted
25,208,200
$
0.24
Cancelled
—
—
Options outstanding at
    December 31, 2004
25,208,200
$
0.24
Granted
23,843,630
$
1.59
Cancelled
—
—
Options outstanding at
    December 31, 2005
49,051,830
$
0.89
Granted
3,000,000
$
5.09
Cancelled
—
—
Exercised
(13,919,910
)
$
0.29
Options outstanding at
    March 31, 2006 (unaudited)
38,131,920
$
1.44
F-40
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
The weighted average per share fair value of options as of their
respective grant dates was as follows:
Years ended
Three months ended
December 31,
March 31,
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Ordinary shares
$
0.10
$
0.23
$
0.16
$
0.37
The following table summarizes information with respect to share
options outstanding at December 31, 2005:
Options outstanding
Option exercisable
Weighted
Weighted
Weighted
average
average
average
Aggregate
No. of
remaining
exercise
Number
exercise
Intrinsic
outstanding
contractual life
price
exercisable
price
value
Ordinary shares:
$0.24
25,208,200
8.62 yrs
$
0.24
17,892,580
$
0.24
$
199,751
$0.58
3,200,000
9.14 yrs
$
0.58
800,000
$
0.58
—
$0.75
4,060,000
9.17 yrs
$
0.75
1,015,000
$
0.75
47,234
$1.70
11,783,630
9.58 yrs
$
1.70
—
36,308
$2.60-$2.70
4,800,000
9.92 yrs
$
2.70
—
71,999
49,051,830
19,707,580
$
355,292
The following table summarizes information with respect to share
options outstanding at March 31, 2006 (unaudited):
Options outstanding
Options exercisable
Weighted
Weighted
Weighted
average
average
average
Aggregate
Number of
remaining
exercise
Number
exercise
intrinsic
outstanding
contractual life
price
exercisable
price
value
Ordinary shares:
$0.24
12,805,160
8.44 years
$
0.24
6,366,680
$
0.24
$
150,170
$0.58
2,512,500
8.88 years
$
0.58
250,000
$
0.58
—
$0.75
3,230,630
8.92 years
$
0.75
312,500
$
0.75
$
37,661
$1.70
11,783,630
9.33 years
$
1.70
—
—
$
29,470
$2.60 - $2.70
4,800,000
9.67 years
$
2.70
—
—
$
61,015
$5.09
3,000,000
10 years
$
5.09
—
—
—
38,131,920
6,929,180
$
278,316
As of March 31, 2006 (unaudited), there was $9,924,890 of
total unrecognized compensation expense related to non-vested
share-based compensation arrangement granted under the Option
Plan. That cost is expected to be recognized over a
weighted-average period of 2.04 years.
F-41
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
The following table summarizes information regarding options
issued within
12-month
prior to March 31, 2006:
Number of
Fair value of
options
ordinary
Exercise
Intrinsic
Type of
Grant date
issued
shares
price
value
valuation
July 5, 2004
14,391,800
$
0.29
$
0.24
$
0.05
(a
)
August 1, 2004
506,800
$
0.29
$
0.24
$
0.85
(a
)
August 10, 2004
504,200
$
0.29
$
0.24
$
8.05
(a
)
August 25, 2004
9,805,400
$
0.29
$
0.24
$
0.05
(a
)
January 1, 2005
1,200,000
$
0.51
$
0.58
—
(b
)
February 2, 2005
2,000,000
$
0.51
$
0.58
—
(b
)
February 2, 2005
4,060,000
$
0.51
$
0.75
—
(b
)
July 13, 2005
11,783,630
$
1.70
$
1.70
—
(c
)
November 2, 2005
800,000
$
2.60
$
2.70
$
0.10
(d
)
November 2, 2005
4,000,000
$
2.70
$
2.70
—
(d
)
March 10, 2006
3,000,000
$
5.06
$
5.09
—
(d
)
52,051,830
Type of Valuation
(a)
The fair value was determined based on a retrospective unrelated
    party valuation.
(b)
Based on Series C-2 convertible redeemable preference
    shares sold to third party members for cash proceeds
    (Note 17(c))
(c)
The fair value was determined based on the initial public
    offering price on the grant date.
(d)
The fair value was determined based on the closing quoted market
    price of the ordinary shares quoted in the Nasdaq Stock Exchange.
15.
Income Taxes
Focus Media Holding and certain of its subsidiaries are
tax-exempted companies incorporated in the British Virgin
Islands.
Focus Media Hong Kong has not recorded a tax provision for Hong
Kong tax purposes as the Group does not have any assessable
profit in Hong Kong.
The Group's remaining subsidiaries, registered in the PRC
(with the exception of Focus Media Technology, New Focus Media
Technology, Framedia Consultation and TMM), are all domestically
owned and subject to PRC Enterprise Income Tax ("EIT")
on the taxable income in accordance with the relevant PRC income
tax laws. Focus Media Technology is a Foreign Invested
Enterprise and subject to the Foreign Enterprise Income Tax
("FEIT") on the taxable income as calculated in
accordance with the relevant PRC income tax law. EIT and FEIT
rate for each Group member operating in the PRC is ranging from
15% to 33%.
F-42
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
The principal components of the Group's deferred income tax
assets are as follows:
December 31,
March 31,
2003
2004
2005
2006
(Unaudited)
Deferred tax assets:
Net operating loss carry forwards
$
215,308
$
276,673
$
545,208
$
2,891,620
Accrued expenses temporarily
    non-deductible
42,363
54,281
46,695
590,374
Pre-operating expenses
75,764
62,862
80,102
74,954
Bad debt provision
29,044
57,147
130,897
193,506
Total deferred tax assets
$
362,479
$
450,963
$
802,902
$
3,750,454
Valuation allowance on deferred tax
    assets
(235,710
)
—
(59,988
)
(3,556,948
)
Net deferred tax assets
$
126,769
$
450,963
$
742,914
$
193,506
The Group did not have any timing differences relating to
deferred tax liabilities as of December 31, 2003, 2004,
2005 and March 31, 2006 (unaudited).
A significant portion of the deferred tax assets recognized
relate to net operating loss carry forwards. The Group operates
through multiple subsidiaries and the valuation allowance is
considered on each individual subsidiary basis. Where a
valuation allowance was not recorded, the Group believes that
there was sufficient positive evidence to support its conclusion
not to record a valuation allowance as it expects to generate
sufficient taxable income in the future.
The valuation allowance from 2003 to 2004 has decreased as the
Group has implemented a tax planning strategy which more likely
than not allow the Group to utilize its deferred tax assets. The
valuation allowance in 2004, 2005 and for the three months ended
March 31, 2006 (unaudited) have been increased in
connection to the net operating losses which the Group believes
cannot generate future taxable income to recognize the income
tax benefit.
Reconciliation between total income tax expense and the amount
computed by applying the statutory income tax rate to income
before taxes is as follows:
Three months ended
Years ended December 31,
March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Statutory rate
33.0
%
33.0
%
33.0
%
33.0
%
33.0
%
Permanent book-tax difference
45.0
%
58.0
%
(30.3
)%
(24.0
)%
(61.7
)%
Change in valuation allowance
15.0
%
(19.0
)%
0.2
%
—
34.9
%
Effective tax rate
93.0
%
72.0
%
2.9
%
9.0
%
6.2
%
F-43
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
16.
Net income (loss) per Share
The following table sets forth the computation of basic and
diluted income (loss) per share for the years/periods indicated:
Years Ended December 31,
Three Months Ended March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Income (loss) attributable to
    holders of ordinary shareholders (numerator):
$
25,483
$
(10,576,414
)
$
23,547,651
$
2,642,493
$
9,432,769
Shares (denominator):
Weighted average ordinary shares
    outstanding used in computing basic income (loss) per share
144,657,600
160,998,600
252,128,545
142,464,600
438,232,094
Plus weighted average preference
    shares outstanding
—
—
84,119,675
158,266,400
—
Plus incremental weighted average
    ordinary shares from assumed conversions of stock option using
    treasury stock method
—
—
29,689,874
14,481,608
27,663,224
Weighted average ordinary shares
    outstanding used in computing diluted income (loss) per share
144,657,600
160,998,600
365,938,094
315,212,608
465,895,318
Net income (loss) per
    share — basic
$
0.00
$
(0.07
)
$
0.09
$
0.02
$
0.02
Net income (loss) per
    share — diluted
$
0.00
$
(0.07
)
$
0.06
$
0.01
$
0.02
F-44
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
For the above mentioned years/periods, the Group had securities
outstanding which could potentially dilute basic earnings per
share in the future, but which were excluded from the
computation of diluted net income (loss) per share in the
years/periods presented, as their effects would have been
antidilutive. Such outstanding securities consist of the
following:
December 31,
March 31,
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Series A convertible
    redeemable preference shares
—
41,967,400
—
41,967,400
—
Series B convertible
    redeemable preference shares
—
48,191,600
—
48,191,600
—
Series C-1 convertible
    redeemable preference shares
—
34,054,000
—
34,054,000
—
Series C-2 convertible
    redeemable preference shares
—
34,053,400
—
34,053,400
—
Outstanding options to purchase
    ordinary shares
—
25,208,200
49,051,830
32,468,200
38,131,920
—
183,474,600
49,051,830
190,734,600
38,131,920
17.
Convertible Redeemable Preference Shares
Each Series A, Series B, Series C-1 and
Series C-2 convertible redeemable preference shares was
automatically converted into ordinary shares at the then
effective conversion price upon the closing of a qualified
underwritten public offering of the ordinary shares of the
Group. Upon the completion of the Group's initial public
offering on July 13, 2005, all of the issued and
outstanding Series A, Series B, Series C-1 and
Series C-2 convertible redeemable preference shares were
converted into ordinary shares.
a)
In April 2004, the Group issued 52,083,400
Series B convertible redeemable preference shares to a
group of third party investors for cash proceeds of $12,062,696,
net of issuance costs of $437,304. The holders of Series B
redeemable convertible preference shares could have redeemed the
Series B convertible redeemable preference shares at any
time (i) before December 31, 2005 if the Group
received a notice from the holders of a majority of
Series B convertible redeemable preference shares
indicating a material breach by the Group and its affiliates of
their representation, warranties or covenants under
Series B convertible redeemable preference shares, the
shareholders agreement or the Restructuring Documents (as
defined in the amended Series B Purchase Agreement), or
(ii) after April 28, 2004 ("Redemption Start
Date"), at the option of a majority of the holders of the
Series B convertible redeemable preference shares then
outstanding. In the event of a redemption pursuant to this
right, the Group could have redeemed up to all of the
Series B convertible redeemable preference shares at a
redemption price per Series 13 redeemable convertible
preference share equal to $0.24x(1+(0.15xN)) plus all declared
but unpaid dividends. N refers to a fraction the numerator of
which is the number of calendar days between April 28, 2004
F-45
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
and the Redemption Start Date and the denominator of which
is 365. The Group recorded a deemed dividend of $2,191,442 in
2004, which resulted from the amortization of the 15% redemption
premium associated with Series B convertible redeemable
preference shares. According to the articles of association
amended on November 29, 2004, the redemption price of
Series B preferred stock is $0.24.
b)
In April 2004, 62,400,000 outstanding ordinary shares
were reclassified and re-designated into 62,400,000
Series A convertible redeemable preference shares. The
re-designation has resulted in a deemed dividend of $8,308,411
which represents the difference between the fair value of the
Series A convertible redeemable preference shares at the
date of re-designation of $0.15 and the initial issuance price
of the ordinary shares of $0.05 for 10,000,000 shares and
approximately $0.01 for 52,400.000 shares.
The holders of Series A convertible redeemable preference
shares had the right to cause the Group to redeem such
preference shares, at any time commencing on a
Redemption Start Date, at the option of a majority of
holders of Series A redeemable convertible preference
shares at a redemption price per Series A convertible
redeemable preference share equal to $0.06 plus all declared but
unpaid dividends. Series A convertible redeemable
preference shares could not have been redeemed until the Group
had redeemed all of the Series B convertible redeemable
preference shares and paid the aggregate Series B
convertible redeemable preference shares redemption price in
full.
c)
On November 29, 2004, the Group issued 34,053,400
Series C-2 convertible redeemable preference shares to
group of third party investors for cash proceeds of $17,415,000,
net of issuance costs of $85,000. The holder of a
Series C-2 convertible redeemable preference share could
have redeemed Series C-2 convertible redeemable preference
shares at any time after the earlier of (i) such time as
the holders of a majority of the Series C-2 convertible
redeemable preference share delivered notice in writing to the
Group that the Group and/or its affiliates was in material
breach of any of its representations, warranties and covenants
under the Series C Purchase Agreement, the Shareholders
Agreement or the Ancillary Documents (as defined in the
Series C Purchase Agreement) so long as such notice was to
have been delivered before December 31, 2006 and
(ii) anytime following the fourth anniversary of the
issuance of the Series C-2 convertible redeemable
preference share under the Series C Purchase Agreement. In
connection with the redemption of any Series C-2
convertible redeemable preference share, the Group was to pay a
redemption price equal to the Series C-2 convertible
redeemable preference share Issue Price of $0.51 plus all
declared but unpaid dividends on the Series C-2 convertible
redeemable preference share through to the date of redemption
thereof.
d)
On November 29, 2004, certain investors of
Series A and/or Series B convertible redeemable
preference shares sold 20,432,600 outstanding Series A
convertible redeemable preference shares and 3,891,800
outstanding Series B convertible redeemable preference
shares to Series C-1 convertible redeemable preference
shares investors at a price of US$0.51. These Series A
convertible redeemable preference shares and Series B
convertible redeemable preference shares were re-designated as
Series C-1 convertible redeemable preference shares. The
re-designation
resulted
in a deemed dividend of $8,458,464 which represented the
difference between the fair value of the
Series
C-1
convertible redeemable preference shares of $0.51 and the
issuance price of Series A and Series B convertible
redeemable preference shares of $0.15 and $0.24, respectively.
F-46
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
e)
In December 2004, an investor of ordinary shares sold
9,729,600 outstanding ordinary shares to third party investors
at a price of $0.51. These ordinary shares were
re-designated
as
Series
C-1
convertible redeemable preference shares. The
re-designation
resulted
in a deemed dividend of $4,897,623 which represented the
difference between the fair value of the
Series
C-1
convertible redeemable preference shares of $0.51 and the
issuance price of ordinary shares of $0.01.
Prior to the redemption or conversion of all
Series
C-2
convertible redeemable preference shares issued by the Group,
any holder of
Series
C-1
convertible redeemable preference shares thereof could have, at
any time, required the Group to redeem such shares out of funds
legally available therefore in connection with the redemption of
any Series
C-1
convertible redeemable preference shares under this Clause, the
Group would have paid a redemption price equal to the
Series
C-1
convertible redeemable preference shares Issue Price of $0.51
plus all declared but unpaid dividends on the
Series
C-1
convertible redeemable preference shares through to the date of
redemption thereof.
The significant terms of the Series A, Series B,
Series
C-1
and
Series
C-2
convertible redeemable preference shares are as follows:
Conversion
Each Series A and Series B convertible redeemable
preference share was automatically convertible into one ordinary
share at any time after the date of issuance of such shares,
subject to anti-dilution or performance adjustment based on an
initial conversion price of $0.15 and $0.24, respectively, upon
the consummation of a Series A/ B Qualified Public Offering
or obtaining the necessary written consent from the holders of
Series A and Series B convertible redeemable
preference shares. A Series A/B Qualified Public Offering
referred to the closing of an underwritten public offering of
the ordinary shares of the Group in the United States that was
registered under the Securities Act of 1933 representing at
least 25% of the fully-diluted share capital of the Group
immediately following the offering, at a price per share that
values the Group at no less than $200,000,000 immediately prior
to the offering.
Each Series
C-1
and Series
C-2
convertible redeemable preference share was automatically
convertible into one ordinary share at any time after the date
of issuance of such shares, subject to anti-dilution or
performance adjustment based on an initial conversion price of
$0.51 and $0.51, respectively, upon the consummation of a
Series C Qualified Public Offering or obtaining the
necessary written consent from the holders of
Series
C-1
and
Series
C-2
convertible redeemable preference shares. A Series C
Qualified Public Offering referred to the closing of an
underwritten public offering of the ordinary shares of the Group
in the United States that has been registered under the
Securities Act of 1933 which represents at least 25% of the
fully-diluted share capital of the Group immediately following
the offering, at a price per share that values the Group at no
less than $335,000,000 immediately prior to the offering.
The conversion price of Series A, Series B,
Series
C-1
and
Series
C-2
convertible redeemable preference shares was subject to
adjustment for dilution, including but not limited to share
splits, share dividends and recapitalization.
F-47
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
Additionally, the conversion price was to be adjusted for
dilution in the following circumstances:
1) In the event that the Group issued additional ordinary
    shares at a price per share less than the then prevailing
    Series A, Series B and Series C convertible
    redeemable preference shares' respective conversion price,
    the Series A, Series B and Series C convertible
    redeemable preference shares' respective conversion price
    was to be reduced, concurrently with such issuance, to a price
    (calculated to the nearest cent) equal to the price per share at
    which such additional shares were to be issued.
2) If the Group's financial results of 2004 and 2005
    did not meet specified targets. Under the terms of the amended
    and restated memorandum and articles of association in April
    2005, the performance-based adjustment was not triggered in 2004.
Voting Rights
Each Series A, Series B, Series C-1 and
Series C-2 redeemable convertible preference share had
voting rights equivalent to the number of shares of ordinary
shares into which it was convertible.
Dividends
The holders of Series A, Series B, Series C-1 and
Series C-2 redeemable convertible preference shares were to
be entitled to receive out of any funds legally available
therefore, when and if declared by the Board of Directors of the
Group, dividends at the rate or in the amount as the Board of
Directors considers appropriate.
Liquidation Preference
In the event of any liquidation, dissolution or winding up of
the Group, as defined, the holders of Series A,
Series B, Series C-1 and Series C-2 convertible
redeemable preference shares were to receive $0.06 per
share, $0.24 per share, $0.51 per share and
$0.51 per share, respectively, plus all declared but unpaid
dividends. Such amounts were to be adjusted for any share
splits, share dividends and recapitalization.
In the event of any liquidation, dissolution or winding up of
the Group caused by a "Trade Sale", which is defined
as any sales of shares, merger, consolidation or other similar
transaction involving the Group in which its shareholders do not
retain a majority of the voting power in the surviving entity,
or a sale of all or substantially all the Group's assets,
the holder of Series B redeemable convertible preference
shares were to receive the higher of (i) 200% of the
original purchase price of the Series B preference shares,
for each Series B redeemable convertible preference share
outstanding or (ii) the amount the holder would have
received if all of the Series B redeemable convertible
preference shares held by such holder were to be converted to
ordinary shares immediately prior to such liquidation,
dissolution or winding up of the Group. According to the
articles of association amended on November 29, 2004 (the
"Modification Date"), the net settlement feature of
the Series B convertible redeemable preference shares under
trade sale was removed.
The embedded conversion option of Series B convertible
redeemable preference shares has been recorded at its fair value
of $1,179,689 and accounted for separately as an embedded
conversion option. The Group has accounted for the derivative
liability relating to the conversion option by adjusting the
liability its estimated fair value at each subsequent balance
sheet date up to the Modification Date, with adjustments
recorded as other income or expenses. In 2004, the Group
F-48
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
adjusted the derivative liability to fair market value and
recorded a change in fair value of the derivative liability of
$11,692,287 in the consolidated statements of operations. The
Group recorded a deemed dividend of $1,179,689 in 2004, which
resulted from the accretion of the discount of Series B
convertible redeemable preference shares. On the Modification
Date, the Group has re-combined the fair value of the derivative
liability of $12,871,976 with Series B convertible
redeemable preference shares and subsequently recorded an
accretion of premium of $12,906,774, which represented the
difference of the carrying balance of Series B convertible
redeemable preference shares at the Modification Date and its
initial issuance date.
18.
Ordinary Shares
(a) In April 2003 the Group issued 2,000,000 ordinary
shares for cash proceeds of $1,625,000.
(b) In May 2003, the Board of Directors approved a share
split of 100:1 of the ordinary shares which has been
retroactively reflected in the Group's financial statements.
(c) In April 2004, 62,400,000 outstanding ordinary shares
were reclassified and redesignated into 62,400,000 Series A
convertible redeemable preference shares.
(d) In September 2004, the Group issued 14,594,200 ordinary
shares as partial consideration of the acquisition of all the
outstanding ordinary shares of Perfect Media (Note 3 (6)).
(e) In December 2004, 9,729,600 outstanding ordinary shares
were sold and redesignated in 9,729,600
Series
C-1
convertible redeemable preference shares.
(f) On May 31, 2005, shareholders of the Group
approved a
200-for-1
split of the Company's shares, with immediate effect. The
200-for-l share split of the Company's shares has been
retroactively applied to all periods presented.
(g) Upon initial public offering, the Group issued
77,575,000 ordinary shares, for US$1.7 per ordinary share,
for total proceeds of US$118,174,130, net of offering expenses.
(h) On January 1, 2006, the Group issues 22,157,003
ordinary shares, for US$2.46 per share, as partial consideration
of the acquisition of all the outstanding ordinary shares of
Infoachieve (Note 3 (21)).
(i) In January 2006 upon the secondary offering, the Group
issued 15,000,000 ordinary shares, for US$4.35 per ordinary
share, for total proceeds of US$61,783,300, net of offering
expenses of US$3,466,700.
(j) On February 28, 2006, the Group issues 77,000,000
ordinary shares, for US$3.00 per share, as partial consideration
of the acquisition of all the outstanding ordinary shares of
Target Media (Note 3 (23)).
(k) On March 1, 2006, the Group issues 74,720 ordinary
shares, for US$5.00 per share, as full consideration of the
acquisition of the remaining 25% outstanding ordinary
shares of in Focus Media Wuhan (Note 3 (2))
19.
Mainland China Contribution Plan and Profit Appropriation
Full time employees of the Group in the PRC participate in a
government-mandated multiemployer defined contribution plan
pursuant to which certain pension benefits, medical care,
F-49
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
unemployment insurance, employee housing fund and other welfare
benefits are provided to employees. PRC labor regulations
require the Group to accrue for these benefits based on certain
percentages of the employees' salaries. The total
contribution for such employee benefits were $60,609, $338,923,
$619,831 and $440,349 for the years ended December 31,
2003, 2004, 2005 and three months ended March 31, 2006
(unaudited), respectively.
Pursuant to laws applicable to entities incorporated in the PRC,
the Group subsidiaries in the PRC must make appropriations from
after-tax profit to non-distributable reserve funds. These
reserve funds include one or more of the following: (i) a
general reserve, (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
accounting principles generally accepted in the PRC at each
year-end) until such cumulative appropriation reaches 50% of the
registered capital; 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 bonus
and welfare and are not distributable as cash dividends. In
2003, 2004, 2005, the Group made total appropriations of $nil,
$1,488,000, $98,729, respectively.
20.
Commitments
(a) Leases
The Group has entered into certain leasing arrangements relating
to the placement of the flat-panel television screens and poster
frames in various locations where the Group operates the
networks and in connection with the lease of the Group's
office premises. Rental expense under operating leases for 2003,
2004, 2005 and three months ended March 31, 2006
(unaudited) were $803,079, $3,648,829 and $15,481,200 and
$2,910,231, respectively.
Future minimum lease payments under non-cancelable operating
lease agreements were as follows (unaudited):
March 31,
2007
$
43,346,190
2008
33,031,315
2009
21,849,103
2010
14,209,352
2011
4,508,331
2012 and thereafter
1,684,262
$
118,628,553
21.
Segment and Geographic Information
The Group is engaged in operating
out-of
-home advertising
network in China using audiovisual television displays, based on
the number of locations and number of flat-panel television
displays in our network.
The Group's chief operating decision maker has been
identified as the Chief Executive Officer, who reviews
consolidated results when making decisions about allocating
resources and assessing performance of the Group. Based on this
assessment, the Group has determined that it has three operating
and reporting segments as of March 31, 2006 (unaudited),
which are poster frame network
F-50
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
advertising services, mobile-phone advertising services and
out-of-home television advertising services. The out-of-home
television advertising service is still the most significant
segment as of March 31, 2006 (unaudited). The Group has not
provided 2003, 2004 or 2005 segment disclosure for the poster
frame network advertising service or the mobile phone
advertising services because they did not exist prior to 2006.
The following table presents selected financial information
relating to the Group's segments for the three months ended
March 31, 2005 (unaudited) and 2006 (unaudited):
Poster frame
network
Mobile phone
Out-of-home
advertising
advertising
advertising
services
services
services
Revenue
For the three months ended
    March 31, 2005 (unaudited)
—
—
9,431,521
For the three months ended
    March 31, 2006 (unaudited)
6,067,314
—
26,765,467
Cost of revenue
For the three months ended
    March 31, 2005 (unaudited)
—
—
3,188,610
For the three months ended
    March 31, 2006 (unaudited)
2,397,268
—
12,008,394
Net income
For the three months ended
    March 31, 2005 (unaudited)
—
—
2,642,493
For the three months ended
    March 31, 2006 (unaudited)
2,626,783
—
6,805,986
Total assets
For the three months ended
    March 31, 2005 (unaudited)
—
—
60,839,516
For the three months ended
    March 31, 2006 (unaudited)
17,980,760
630,764,315
Geographic Information
The Group operates in the PRC and all of the Group's long
lived assets are located in the PRC.
As of December 31, 2003, 2004, 2005, there were no
customers which accounted for 10% or more of the Group's
net revenues and accounts receivable. As of March 31, 2006
(unaudited), one of our customers, Portland Outdoor Advertising
Co., Ltd., accounted for 6.11% of the Group's net revenue
and 11.69% of net accounts receivable. As of December 31, 2003,
2004 and 2005, Portland Outdoor Advertising Co., Ltd.,
accounted for nil, nil and 6.52% of the Group's net revenue
and nil, nil and 10.92% of net accounts receivable, respectively.
Although the Group operates through multiple cities in China
which include Beijing, Shanghai, Guangzhou and Shenzhen, it
believes it operates in one segment as all cities provide
selling
out-of
-home
television advertising time slots on their network of flat-panel
television advertising displays. Accordingly all financial
segment information can be found in the consolidated financial
statements.
22.
Related Party Transactions
In 2003, Jason Nanchun Jiang, a major shareholder of the Group,
contributed technical know-how which valued at historical cost
of $nil.
F-51
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
In 2003, the Group purchased equipment from a company under
common control for cash proceeds of $1,208,131.
Details of gross advertising service revenue from related
parties for the years ended December 31, 2003, 2004, 2005
and three months ended March 31, 2005 (unaudited) and
2006 (unaudited) are as follows:
Three months ended
Year ended December 31,
March 31,
Name of related parties
Director interested
2003
2004
2005
2005
2006
(Unaudited)
(Unaudited)
Everease Advertising &
    Communication Ltd.
Jason Nanchun Jiang
$
978,058
$
1,367,351
$
—
$
307,387
$
—
Multimedia Park Venture Capital
Jimmy Wei Yu
120,821
1,227,267
2,330,945
660,417
1,636,076
Shanghai Jobwell Business
    Consulting Ltd.
Jimmy Wei Yu
—
411,034
1,050,258
16,637
474,754
Shanghai Wealove Wedding Service
    Co., Ltd.
Jimmy Wei Yu
—
372,488
757,850
10,817
410,158
Shanghai Hetong Network Technology
    Co., Ltd.
Jimmy Wei Yu
—
361,371
908,100
15,865
390,089
Ctrip Travel Information Technology
    (Shanghai) Co., Ltd.
Neil Nanpeng Shen
—
48,287
264,120
123,058
44,683
$
1,098,879
$
3,787,798
$
5,311,273
$
1,134,181
$
2,955,760
F-52
Table of Contents
FOCUS MEDIA HOLDING LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005 AND
FOR THE
THREE MONTHS ENDED MARCH 31, 2005 (UNAUDITED) AND 2006
(UNAUDITED)
(In U.S. dollars except share data and unless otherwise
stated)
Details of amounts due from related parties as of
December 31, 2003, 2004, 2005 and March 31, 2006
(unaudited) are as follows:
December 31,
March 31,
Name of related parties
Director interested
2003
2004
2005
2006
(Unaudited)
Shanghai Everease
    Advertising & Communication Ltd.
Jason Nanchun Jiang
$
252,576
$
1,259,138
$
—
$
—
Multimedia Park Venture Capital
Jimmy Wei Yu
—
690,212
330,700
1,656,268
Shanghai Jobwell Business
    Consulting Ltd.
Jimmy Wei Yu
—
275,971
546,207
477,022
Shanghai Wealove Wedding Service
    Co., Ltd.
Jimmy Wei Yu
—
251,556
662,953
412,118
Shanghai Hetong Network Technology
    Co., Ltd.
Jimmy Wei Yu
—
263,155
533,469
391,953
Ctrip Travel Information Technology
    (Shanghai) Co., Ltd.
—
—
—
44,895
$
252,576
$
2,740,032
$
2,073,329
$
2,982,256
Details of amounts due to related parties as of
December 31, 2003, 2004, 2005 and March 31, 2006
(unaudited) are as follows:
December 31,
March 31,
Name of related parties
Director interested
2003
2004
2005
2006
(Unaudited)
Shanghai Everease
    Advertising & Communication Ltd.
Jason Nanchun Jiang
$
1,386,124
$
—
$
—
$
—
Weiqiang Jiang (direct family
    member)
Jason Nanchun Jiang
—
—
—
2,496,212
Multimedia Park Venture Capital
Jimmy Wei Yu
627,774
—
—
—
$
2,013,898
$
—
$
—
$
2,496,212
In March 2006, Weiqiang Jiang, the father of Jason Nanchun
Jiang, provided a short-term loan to the Group of approximately
$2.5 million to relieve a temporary shortage of Renminbi
the Group experienced at that time. The loan is unsecured and
was provided to us at no interest. The loan will become due and
payable in full on June 30, 2006.
22.
Restricted Net Assets
Relevant PRC statutory laws and regulations permit payments of
dividends by the Group's PRC subsidiaries only out of their
retained earnings, if any, as determined in accordance with PRC
accounting standards and regulations. In addition, PRC laws and
regulations require that annual appropriations of 10% of
after-tax income should be set aside prior to payment of
dividends as general reserve fund. As a result of these PRC laws
and regulations, the Group's PRC subsidiaries and PRC
affiliates are restricted in their ability to transfer a portion
of their net assets to either in the form of dividends, loans or
advances, which restricted portion amounted to approximately
$14,792,000 and $75,911,158 as of December 31, 2004 and
2005, respectively.
23.
Subsequent Event (Unaudited)
On June 21, 2006, the Group and
certain of the Group's pre-IPO shareholders successfully completed a
follow-on public offering. In this offering, including the
over-allotment option exercised by the underwriters, the Group sold
1,600,000 ADSs and the selling shareholders sold an additional
6,100,000 ADSs to the public.
F-53
Table of Contents
INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL
INFORMATION
Page
Introduction to Unaudited Pro Forma
    Condensed Consolidated Financial Information
P-2
Unaudited Pro Forma Condensed
    Consolidated Statement of Operations for the year ended
    December 31, 2005
P-3
Unaudited Pro Forma Condensed
    Consolidated Statement of Operations for the three months
    ended March 31, 2006
P-4
Notes to the Unaudited Pro Forma
    Condensed Consolidated Financial Information
P-5
P-1
Table of Contents
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
(in U.S. dollars)
Introduction to Unaudited Pro Forma Condensed Consolidated
Financial Information
The following unaudited pro forma condensed consolidated
financial information is derived from the historical financial
statements of Focus Media Holding Limited, appearing elsewhere
in this annual report, after giving effects to the pro forma
adjustments described in the notes thereto. Financial
information with respect to the acquisitions are derived from
the historical financial statements of Capital Beyond Limited,
Infoachieve Limited and Target Media Holdings Limited
("Target Media") available in Focus Media Holding Limited's
registration statement on Form F-1 (File No. 333-134714).
The preparation of the unaudited pro forma condensed
consolidated statements of operations appearing below is based
on financial statements prepared in accordance with the
accounting principles generally accepted in the United States of
America ("US GAAP"). These principles require the use
of estimates that affect the reported amounts of revenues and
expenses. Actual results could differ from those estimates. The
objective of the unaudited pro forma condensed consolidated
statements of operations is to provide information on the impact
of the acquisitions of Capital Beyond Limited, Infoachieve
Limited and Target Media (the "Acquired Businesses").
These Acquired Businesses permitted Focus Media Holding Limited
to expand its network including the growth and further
segmentation of its commercial location and in-store networks,
and the addition of its poster frame advertising network.
The unaudited pro forma condensed consolidated statement of
operations for the year ended December 31, 2005 presents
adjustments as if the acquisitions of Acquired Businesses had
been consummated on January 1, 2005. The unaudited pro
forma condensed consolidated statement of operations for the
three months ended March 31, 2006 presents adjustments as
if the acquisitions of Target Media had been consummated on
January 1, 2005.
The following unaudited pro forma condensed consolidated
statements of operations should be read in conjunction with the
historical consolidated financial statements, unaudited pro
forma condensed consolidated statements of operations and
"Item 5. Operating and Financial Review and Prospects" included elsewhere in
this annual report.
The unaudited pro forma condensed consolidated financial
information presented in this annual report includes all the
adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the operating results in
the historical periods. However, because such adjustments are
based on estimates such as the estimated amortization period for
the acquired intangible assets for Framedia and Target Media, it
is not intended to show how the consolidated companies would
have actually performed if the events described above had in
fact occurred on the dates assumed or to project the results of
operations or financial position for any future date or period.
In addition, the financial information of Target Media for the
two month period ended February 28, 2006 has not been
audited or reviewed by an independent registered public
accounting firm but is derived from management accounts.
Accordingly, the financial information of Target Media for that
period, including the statement of operations relating to Target
Media, that has been used to calculate the pro forma financial
information as of and for the three month period ended
March 31, 2006 may differ significantly from any actual
consolidated statement of operations financial information had
it been audited or reviewed by an independent registered public
accounting firm. See "Item 3.D Key Information — Risk Factors — The
unaudited pro forma condensed consolidated financial information
included in this annual report contains financial information that
has not been audited or reviewed by an independent certified
public accounting firm, and that is derived in part by
estimates, and accordingly the pro forma financial information
may differ significantly from the actual consolidated financial
information".
P-2
Table of Contents
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2005
(In U.S. Dollars, except share data)
Infoachieve
Target Media
Focus Media
Capital Beyond
Limited for
Limited for
Holding Limited
Limited for the
the year
the year
for the year ended
three months
ended
ended
December 31,
ended March
December 31,
December
Pro forma
2005
31, 2005
2005
31, 2005
Adjustments
Note
Pro Forma
(a)
Net Revenues:
— Commercial locations
$
61,434,760
$
—
$
—
$
33,693,000
$
—
$
95,127,760
— In-store network
5,468,919
—
—
—
—
5,468,919
— Poster Frame Network
—
—
11,828,519
—
—
11,828,519
Advertising Service Revenue
66,903,679
—
11,828,519
33,693,000
—
112,425,198
Advertising Equipment Revenue
1,325,234
—
—
—
—
1,325,234
Total net revenues
68,228,913
—
11,828,519
33,693,000
—
113,750,432
Cost of Revenues:
— Commercial locations
17,943,318
122,038
—
16,321,000
(55,934
)
(4)
34,330,422
— In-store network
7,422,641
—
—
—
—
7,422,641
— Poster Frame Network
—
—
7,233,043
—
—
7,233,043
Advertising Service Cost
25,365,959
122,038
7,233,043
16,321,000
(55,934
)
48,986,106
Advertising Equipment Cost
975,747
—
—
—
—
—
975,747
Total cost of revenues
26,341,706
122,038
7,233,043
16,321,000
(55,934
)
49,961,853
Gross profit (loss)
41,887,207
(122,038
)
4,595,476
17,372,000
55,934
63,788,579
Operating expenses:
General and administrative
9,119,846
607
5,428,018
1,945,000
(307,672
)
(4)
16,185,799
Selling and marketing
9,543,748
—
3,363,704
8,584,000
(88,468
)
(4)
21,402,984
Amortization of acquired intangibles
437,837
—
—
—
4,201,715
(1)
4,639,552
Total operating
    expenses
19,101,431
607
8,791,722
10,529,000
3,805,575
42,228,335
Income (loss) from
    operations
22,785,776
(122,645
)
(4,196,246
)
6,843,000
(3,749,641
)
21,560,244
Interest income/(expenses)
1,761,909
48
(170,557
)
68,000
—
1,659,400
Other income (expenses), net
(161,148
)
(29
)
(3,857
)
(94,000
)
—
(259,034
)
Income (loss) before income
    taxes and minority interests
24,386,537
(122,626
)
(4,370,660
)
6,817,000
(3,749,641
)
22,960,610
Income taxes:
Current
715,117
—
1,941
—
—
717,058
Deferred
(20,664
)
—
—
—
—
(20,664
)
Total income taxes
694,453
—
1,941
—
—
(6)
696,394
Net income (loss) after
    income taxes before minority interests
23,692,084
(122,626
)
(4,372,601
)
6,817,000
(3,749,641
)
22,264,216
Minority interests
144,433
—
—
(22,000
)
—
122,433
Net income (loss)
23,547,651
(122,626
)
(4,372,601
)
6,839,000
(3,749,641
)
22,141,783
—
Deemed dividend on ordinary shares
—
—
(15,187,200
)
—
—
(15,187,200
)
Deemed dividend on Series A-1
    convertible redeemable preference shares —
    Redesignation
—
—
(1,136,700
)
—
1,136,700
(3)
—
Deemed dividend on Series A-1
    convertible redeemable preference shares — Accretion
    of redemption premium
—
—
(378,985
)
—
378,985
(3)
—
Deemed dividend on Series A-2
    convertible redeemable preference shares —
    Redesignation
—
—
(623,700
)
—
623,700
(3)
—
Deemed dividend on Series A-2
    convertible redeemable preference shares — Accretion
    of redemption premium
—
—
(207,820
)
—
207,820
(3)
—
Accretion to Series A
    redeemable convertible preferred shares redemption value
—
—
—
(3,288,000
)
3,288,000
(3)
—
Accretion to Series B
    redeemable convertible preferred shares redemption value
—
—
—
(960,000
)
960,000
(3)
—
Beneficial conversion of
    Series A redeemable convertible preferred shares
—
—
—
(3,021,000
)
—
(3,021,000
)
Beneficial conversion of
    Series B redeemable convertible preferred shares
—
—
—
(806,000
)
—
(806,000
)
Net income
    (loss) attributable to holders of ordinary shares
$
23,547,651
$
(122,626
)
$
(21,907,006
)
$
(1,236,000
)
$
2,845,564
$
3,127,583
Income per share — basic
$
0.09
$
0.01
Shares used in calculating basic
    income per share
252,128,545
(5)
351,285,548
Income per share — diluted
$
0.06
$
0.01
Shares used in calculating diluted
    income per share
365,938,094
(5)
465,095,097
Note(a) The translations of amounts from RMB into United States
dollars ("US$") as of and for the year ended
December 31, 2005, are solely for the convenience of the
reader and were calculated at the rate of US$1.00 =
RMB8.0702, on December 31, 2005, representing the noon
buying rate in the City of New York for cable transfers of RMB,
as certified for customs purposes by the Federal Reserve Bank of
New York. No representation is intended to imply that the RMB
amounts could have been, or could be, converted, realized or
settled into US$ at that rate on December 31, 2005, or at
any other rate.
The accompanying notes are an integral part of these unaudited
pro forma
condensed consolidated financial statements.
P-3
Table of Contents
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2006
(In U.S. Dollars, except share data)
Focus Media Holding
Target Media Limited
Limited for the three
for the two months
months ended
ended February 28,
Pro forma
March 31,2006
2006
Adjustments
Note
Pro Forma
(b)
Net Revenues:
— Commercial locations
$
21,472,376
$
3,068,289
$
—
$
24,540,665
— In-store network
5,293,091
—
—
5,293,091
— Poster Frame Network
6,067,314
—
—
6,067,314
Advertising Service Revenue
32,832,781
3,068,289
—
35,901,070
Advertising Equipment Revenue
304,066
—
—
304,066
Total net revenues
33,136,847
3,068,289
—
36,205,136
Cost of Revenues:
— Commercial locations
8,035,150
3,792,503
—
11,827,653
— In-store network
3,973,244
—
—
3,973,244
— Poster Frame Network
2,397,268
—
—
2,397,268
Advertising Service Cost
14,405,662
3,792,503
—
18,198,165
Advertising Equipment Cost
231,814
—
—
231,814
Total cost of revenues
14,637,476
3,792,503
—
18,429,979
Gross profit (loss)
18,499,371
(724,214
)
—
17,775,157
Operating expenses:
General and administrative
4,395,342
2,541,194
—
6,936,536
Selling and marketing
4,057,199
3,114,507
—
7,171,706
Amortization of acquired intangibles
999,178
—
205,350
(2
)
1,204,528
Total operating
    expenses
9,451,719
5,655,701
205,350
15,312,770
Income (loss) from
    operations
9,047,652
(6,379,915
)
(205,350
)
2,462,387
Interest income/(expenses)
915,952
(23,177
)
—
892,775
Other income (expenses), net
46,149
(1,755,019
)
—
(1,708,870
)
Income (loss) before income
    taxes and minority interests
10,009,753
(8,158,111
)
(205,350
)
1,646,292
Income taxes:
Current
65,076
(59,402
)
—
5,674
Deferred
551,714
—
—
551,714
Total income taxes
616,790
(59,402
)
—
(6
)
557,388
Net income (loss) after
    income taxes before minority interests
9,392,963
(8,098,709
)
(205,350
)
1,088,904
Minority interests
(39,806
)
(30,588
)
—
(70,394
)
Net income
    (loss) attributable to holders of ordinary shares
$
9,432,769
$
(8,068,121
)
$
(205,350
)
$
1,159,298
Income per share — basic
$
0.02
$
0.00
Shares used in calculating basic
    income per share
438,232,094
(5
)
488,709,872
Income per share — diluted
$
0.02
$
0.00
Shares used in calculating diluted
    income per share
465,895,318
(5
)
516,373,096
Note(b) Translations of amounts from Renminbi ("RMB")
into United States dollars ("US$") are solely for the
convenience of the reader and were calculated at the rate of
US$1.00=RMB8.0415, on February 28, 2006, representing the
noon buying rate in the City of New York for cable transfers of
RMB, as certified for customs purposes by the Federal Reserve
Bank of New York. No representation is intended to imply that
the RMB amounts could have been, or could be, converted,
realized or settled into US$ at that rate on February 28,
2006, or at any other date.
The accompanying notes are an integral part of these unaudited
pro forma
condensed consolidated financial statements.
P-4
Table of Contents
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The following pro forma adjustment has been made to the
unaudited pro forma condensed consolidated financial information.
(1) Reflects amortization for the acquired intangible
assets recorded as a result of our acquisitions of Capital
Beyond Limited in March 2005, Infoachieve Limited in January
2006 and Target Media in February 2006 to reflect amortization
for the year ended December 31, 2005.
The aggregate purchase price of $94.3 million of
Infoachieve Limited is comprised of the following:
(in thousands
of U.S. dollars)
Cash consideration
$
39,600
Other acquisition costs
311
Fair Value of ordinary shares issued
54,418
$
94,329
The fair value of the ordinary shares issued for purchase price
allocation purposes was estimated using the closing market price
for a reasonable period before and after the date of the
announcement of the acquisition.
Preliminary purchase price allocation:
(in thousands
Amortization
of U.S. dollars)
period
Net tangible liabilities acquired
5,684
Acquired intangible assets
12,455
7 years
Goodwill
87,558
Total
$
94,329
The preliminary purchase price allocation and preliminary
intangible asset valuations for each of the acquisitions
described above were based on a valuation report provided by a
third party valuation firm. The valuation report utilizes and
considers generally accepted valuation methodologies such as the
income, market, cost and actual transaction of shares approach.
We have incorporated certain assumptions which include projected
cash flows and replacement costs.
The amortization expense for Infoachieve Limited and Target
Media of $2,879,074 and $1,211,073, respectively, for the year
ended December 31, 2005 have been estimated based on a
valuation report provided by a third-party valuation firm.
(2) Reflects amortization for the intangible assets
recorded as a result of our acquisition of Target Media which
occurred on February 28, 2006 to reflect amortization from
January 1, 2006 to February 28, 2006.
The aggregate purchase price of $327.1 million of Target
Media is comprised of the following:
(in thousands
of U.S. dollars)
Cash consideration
$
94,000
Other acquisition costs
2,058
Fair Value of ordinary shares issued
231,000
$
327,058
P-5
Table of Contents
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL
INFORMATION — (Continued)
The cash portion of the purchase price will be paid in three
installments. The first installment of $45 million was paid
at closing. The second installment is to be paid on
April 28, 2006. The final installment of $24 million
is to be paid on July 31, 2006. The fair value of the
ordinary shares issued for purchase price allocation purposes
was estimated using the closing market price for a reasonable
period before and after the date of the announcement of the
acquisition.
(in thousands
Amortization
of U.S. dollars)
period
Net tangible assets acquired
24,823
Acquired intangible assets
10,827
7 years
Goodwill
291,408
Total
$
327,058
The preliminary purchase price allocation and preliminary
intangible asset valuations for each of the acquisitions
described above were based on a valuation report provided by a
third party valuation firm. The valuation report utilizes and
considers generally accepted valuation methodologies such as the
income, market, cost and actual transaction of Group shares
approach. The Group has incorporated certain assumptions which
include projected cash flows and replacement costs.
The amortization expense for Target Media of $205,350, for the
period ended March 31, 2006 have been estimated based on a
valuation report provided by a third party valuation firm.
(3) Assumes the conversion upon completion of the
acquisitions of all convertible redeemable convertible
preference shares of Infoachieve Limited and Target Media.
Accordingly, the deemed dividends and redemption value accretion
relating to these shares have been reversed.
(4) Reflects the adjustment relating to the conformity in
accounting policy of Target Media for employee stock options
from FAS 123(R) to APB 25 which is the accounting
policy adopted by Focus Media Holding Limited.
(5) The following table sets forth the shares used in
computing pro forma per share amounts for the periods indicated:
December 31,
March 31,
2005
2006
Shares used in calculating basic
    income per share on a pro forma basis:
Weighted average ordinary shares
    outstanding used in computing basic income per share for Focus
    Media Holding Limited
252,128,545
438,232,094
Issuance of ordinary shares for the
    acquisition of Infoachieve Limited
22,157,003
—
Issuance of ordinary shares for the
    acquisition of Target Media
77,000,000
50,477,778
351,285,548
488,709,872
P-6
Table of Contents
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL
INFORMATION — (Continued)
December 31,
March 31,
2005
2006
Shares used in calculating diluted
    income per share on a pro forma basis:
Weighted average ordinary shares
    outstanding used in computing diluted income per share for Focus
    Media Holding Limited
365,938,094
465,895,318
Issuance of ordinary shares for the
    acquisition of Infoachieve Limited
22,157,003
—
Issuance of ordinary shares for the
    acquisition of Target Media
77,000,000
50,477,778
465,095,097
516,373,096
(6) There have been no pro forma tax adjustments recorded
because none of the pro forma adjustments discussed above has
any tax impact.
P-7