KongZhong (KONG) announced its first quarter 2005 financial results and showed revenue for the quarter grow 138% year-over-year and 3% sequentially to $17 million.

Net income for the quarter increased 87% year-over-year but declined 11% sequentially to $5.88 million. Diluted earnings per ADS was $0.17, up from $0.11 in 1Q04 but down from $0.19 in 4Q04.

The company's operating expenses include $0.86 million in legal expenses related to the issues raised in the class-action litigation commenced in August 2004. If the company had not incurred these legal expenses, the diluted earnings per ADS would have been $0.02 greater for the quarter.

At the end of the quarter, KongZhong had $96.22 million in cash and cash equivalent funds and $112 million in total assets.

Cash flow from operating activities totaled $6.78 million in the first quarter, compared to $2.24 million in 1Q04 and $8.99 million in the forth quarter of 2004. The net increase in cash and cash equivalents was $5.50 million.

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