VODone welcomes the Regulations on the Administration of Internet Audio-Visual Program Service, promulgated by The State Administration of Radio, Movie and Television and Ministry of Information Industry on 29 December 2007, that will formally come into force starting from 31 January 2008.

According to the captioned Regulation, any application related to the engagement of Internet audio-visual program services, including production, editing, integration and provision of audio-visual programs to be made available to the public through the Internet, as well as uploading and broadcasting internet visual program services for them, will be limited to state-owned enterprises or companies held by an SOE.

Vodone Telemedia a strategic partner of VODone Limited, is the first and a leading online video media group in China. It is also the only SOE in the PRC which owns a complete set of licenses to operate video broadcasting on the Internet. Vodone Telemedia has contracted the technical and promotional services to a wholly owned subsidiary of VODone for 50 years.

Commenting on the impact of the regulation on the industry and VODone, Dr. Zhang Lijun, Chairman of the Company, said, "With the complete set of licenses for operating in the Internet industry in the PRC, VODone enjoys strong competitive advantages over its competitors. The Company also enjoys a first mover advantage as it is a pioneer in online video advertising. We have also built a solid foundation for quality delivery of online video content."

Mr Zhang added, "The promulgation of Regulations on the Administration of Internet Audio-Visual Program Service offers stronger protection to the Company's business development, which gives rise to a promising outlook."

Apart from the new internet regulation, the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sport in PRC recently issued The Notice Regarding Relevant Issues relating to the Sale of Lotteries through Internet by Lottery Institutions. As a state-owned enterprise, VODone will fully comply with the regulation. Meanwhile, the tightened standards of the Internet lottery business will further strengthen the industry by eliminating illegal websites, which is beneficial to the Company's future development.