Chinese wireless value-added services and digital entertainment company KongZhong Corporation announced its unaudited first quarter 2011 financial results.

Total revenues for the first quarter of 2011 increased 11% quarter-over-quarter to USD40.1 million.

Net loss in for the quarter however was USD0.46 million, including a change in the fair value of the Dacheng contingent consideration of USD3.73 million. Excluding this change, net income in th quarter was USD3.27 million, a 3% increase compared to USD3.17 million in the frist quarter of 2010. Basic net loss per ADS was USD0.01 based on 37.58 million ADS outstanding as of March 31, 2011.

As of March 31, 2011, the company had USD118.3 million in cash and cash equivalents or USD3.1 per basic ADS in cash and cash equivalents. This includes a USD9.3 million payment for the early extinguishment of convertible note issued to Nokia Growth Partners, a USD14.6 million payment for the cash portion related to the final payment for Dacheng and a USD21.2 million investment in RMB denominated short-term loan to a third party.

WVAS revenues in the first quarter of 2011 were USD21.36 million, a 23% increase from the previous quarter but a 21% decrease from the same period last year. Total mobile game revenues in the quarter were USD12.27 million, a 29% increase from the same period last year but a 4% decrease from the fourth quarter of 2010.

The company expects total revenues for the second quarter of 2011 to be within the range of USD41.5 million to USD42.5 million, with business unit revenues at the mid-point expected to roughly consist of WVAS revenues of USD20 million, mobile game revenues of USD12 million and online game revenues of USD10 million.