Hurray's (HRAY) Beijing Enterprise, one of its operating companies providing WAP services through China Mobile, has been issued a sanction by China Mobile for improper promotion of one of its WAP services.

As part of the sanction, China Mobile has downgraded all Beijing Enterprise WAP services to the bottom of menu and temporally suspended the approval of new service applications on all platforms (including Java, MMS, WAP, CRBT, IVR, and SMS) by Beijing Enterprise and joint promotions with Beijing Enterprise.

Separately, Hurray Solutions, one of Hurray operating companies providing SMS services through China Unicom has received an one time fine of approximately US$700,000 from China Unicom for delivering one of its SMS services not in accordance with the terms in its original service application approved by China Unicom.

Commenting on the incidents, QD Wang, Chairman and CEO of the company, said, "We regret what happened and rectified the situation as soon as we could. We are working closely with China Mobile to minimize the impact this

sanction may have on our business. We already provide wireless value added services on the Java, MMS, WAP, IVR, CRBT and SMS platforms and through multiple operating units including Beijing Enterprise on a national basis. We will focus our near-term efforts on promoting services through our other operating companies. We believe the China Mobile sanction, while creating short term pressure on Beijing Enterprise's business, should not have lasting impact on our consolidated results beyond a quarter or two."