UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o		REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

CHINA FINANCE ONLINE CO. LIMITED

(Exact name of Registrant as specified in its charter)

Not Applicable

Hong Kong

9th Floor of Tower C, Corporate Square
NO. 35 Financial Street, Xicheng District
Beijing 100032, China
(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
None		None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

American Depositary Shares, each representing 5 ordinary shares,

par value HK$0.001 per share *

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None

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: 104,384,933 ordinary shares, par value HK$0.001 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

oYes þ No

If this report is an annual or transaction 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.

o Yes þ No

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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer o     Accelerated filer o      Non-accelerated filer 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).

oYes þ No

Indicate by check mark which financial statement item the registrant has elected to follow:
      o Item 17 þ Item 18

CHINA FINANCE ONLINE CO. LIMITED

TABLE OF CONTENTS

INTRODUCTION
PART I
ITEM 1 Identity of Directors, Senior Management And Advisers			4
ITEM 2 Offer Statistics and Expected Timetable			4
ITEM 3 Key Information			5
ITEM 4 Information on the Company			30
ITEM 5 Operating and Financial Review and Prospects			50
ITEM 6 Directors, Senior Management and Employees			67
ITEM 7 Major Shareholders and Related Party Transaction			75
ITEM 8 Financial Information			80
ITEM 9 The Offer and Listing			80
ITEM 10 Additional Information			81
ITEM 11 Quantitative and Qualitative Disclosures About Market Risk			89
ITEM 12 Description of Securities Other than Equity Securities			89
PART II
ITEM 13 Defaults, Dividend Arrearages and Delinquencies			89
ITEM 14 Material Modifications to the Rights of Security Holders and Use of Proceeds			89
ITEM 15 Controls and Procedures			89
ITEM 16A Audit Committee Financial Expert			89
ITEM 16B Code of Ethics			90
ITEM 16C Principal Accountant Fee and Services			90
ITEM 16D Exemption from the Listing Standard for Audit Committees			90
ITEM 16E Purchases of Equity Securities by the Issue and Affiliated Purchasers			90
PART III
ITEM 17 Financial Statement			90
ITEM 18 Financial Statements			90
ITEM 19 Exhibits			90
EX-4.1 2004 INCENTIVE STOCK OPTION PLAN
EX-4.7 FRAMEWORK AGREEMENT ON EXERCISING PURCHASE OPTION
EX-4.8 SHARE TRANSFER CONTRACT
EX-4.9 LOAN AGREEMENT DATED NOVEMBER 20, 2006
EX-4.10 PURCHASE OPTION AND COOPERATION AGREEMENT
EX-4.11 SHARE PLEDGE AGREEMENT
EX-4.15 SHANGHAI STOCK EXCHANGE LEVEL-II QUOTATIONS LICENSE AGREEMENT
EX-4.16 SHENZHEN STOCK EXCHANGE PROPRIETARY INFOMATION LICENSE AGREEMENT
EX-4.17 DOMAIN NAME TRANSFER AGREEMENT
EX-4.18 DOMAIN NAME TRANSFER AGREEMENT
EX-4.22 LEASE CONTRACT FOR HOUSING UNIT
EX-4.23 LEASE CONTRACT FOR HOUSING UNIT
EX-4.25 LABOUR CONTRACT OF JEFF WANG DATED MAY 24, 2006
EX-4.30 SHARE TRANSFER AGREEMENT
EX-4.31 SHARE TRANSFER AGREEMENT
EX-8.1 LIST OF SUBSIDIARIES
EX-10.1 CONSENT OF DELOITTE TOUCHE TOHMATSU CPA LTD.
EX-12.1 CEO CERTIFICATION
EX-12.2 CFO CERTIFICATION
EX-13.1 CEO CERTIFICATION - SECTION 906
EX-13.2 CFO CERTIFICATION - SECTION 906

INTRODUCTION

Except where the context otherwise requires and for purposes of this annual report only:

	•		“we,” “us,” “our company” and “our” refer to China Finance Online Co. Limited, or CFO Hong Kong, its subsidiaries, China Finance Online (Beijing) Co., Ltd., or CFO Beijing, Fortune Software (Beijing) Co., Ltd., or CFO Software, Stockstar Information Technology (Shanghai) Co., Ltd., or CFO Stockstar, Shenzhen Genius Information Technology Co., Ltd., or CFO Genius, Jujin Software (Shenzhen) Co., Ltd. or Jujin, Zhengning Information Technology (Shanghai) Co., Ltd., or Zhengning and, in the context of describing our operations, also include our PRC-incorporated affiliate, Fuhua Innovation Technology Development Co., Ltd., or Fuhua, and Shanghai Meining Computer Software Co., Ltd., or CFO Meining, Fuhua’s wholly owned subsidiary;
	•		“shares” and “ordinary shares” refer to our ordinary shares, “preferred shares” refers to our preferred shares, all of which were converted into our ordinary shares upon the completion of our initial public offering on October 20, 2004, “ADSs” refers to our American depositary shares, each of which represents five ordinary shares, and “ADRs” refers to the American depositary receipts which evidence our ADSs;
	•		“China” or “PRC” refers to the People’s Republic of China, excluding Taiwan, Hong Kong and Macau;
	•		“Hong Kong” refers to the Hong Kong Special Administrative Region of the People’s Republic of China; and
	•		all references to “Renminbi,” “RMB” or “yuan” are to the legal currency of China, all references to “U.S. dollars,” “dollars,” “$” or “US$” are to the legal currency of the United States and all references to “Hong Kong dollars” or “HK$” are to the legal currency of Hong Kong. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.

We and certain selling shareholders of our company completed the initial public offering of 6,200,000 American Depositary Shares, each representing five of our ordinary shares, par value HK$0.001 per share on October 20, 2004. On October 15, 2004, we listed our ADSs on the Nasdaq Global Market (known as the Nasdaq National Market prior to July 1, 2006), or Nasdaq, under the symbol “JRJC.”

FORWARD-LOOKING INFORMATION

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 and similar expressions. The forward-looking statements included in this annual report relate to, among others:

	•		our goals and strategies, including how we effect our goals and strategies;
	•		our future business developments, business prospects, financial condition and results of operations;
	•		our future pricing strategies or policies;

	•		our plans to expand our service offerings;
	•		our plans to use acquisitions and strategic investments as part of our corporate strategy;
	•		competition in the PRC financial data and information services industry;
	•		performance of China’s securities markets;
	•		growth in our subscriber base;
	•		PRC governmental policies relating to taxes and how they will impact our business;
	•		PRC governmental policies relating to the Internet and Internet content providers;
	•		PRC governmental policies relating to the distribution of content, especially the distribution of financial content over the Internet; and
	•		PRC governmental policies relating to mobile value-added services.

These forward-looking statements involve various risks, assumptions 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 and worse than our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in Item 3.D of this annual report, “Key information — Risk Factors” and elsewhere in this annual report.

This annual report on Form 20-F also contains data related to the online financial data and information services market and the Internet. This market data includes projections that are based on a number of assumptions. The online financial data and information services market may not grow at the rates projected by market data, or at all. The failure of these markets to grow at the projected rates may have a material adverse effect on our business and the market price of our ADSs. In addition, the relatively new and rapidly changing nature of the online financial data and information services industry subjects any projections or estimates relating to the growth prospects or future condition of our markets to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the market data turns out to be incorrect, actual results may differ from the projections based on these assumptions.

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. You should not place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in Item 3.D of this annual report, “Key Information — Risk Factors.” 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.

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 selected consolidated financial data presented below have been derived from our consolidated financial statements. This data may not be indicative of our future condition or results of operations and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes.

		For the year ended December 31,
(in thousands of U.S. dollars, except per share or per ADS data)(1)		2002				2003				2004				2005				2006 (4)
Consolidated statement of operations and comprehensive income (loss) data:
Net revenues			1,050				2,271				6,016				7,482				7,128
Cost of revenues			(254	)			(298	)			(394	)			(482	)			(1,468	)
Gross profit			796				1,973				5,622				7,000				5,660
Operating expenses:
General and administrative			(253	)			(400	)			(727	)			(1,740	)			(2,956	)
Product development			(157	)			(149	)			(173	)			(236	)			(742	)
Sales and marketing			(275	)			(284	)			(801	)			(1,795	)			(2,666	)
Total operating expenses			(685	)			(833	)			(1,701	)			(3,771	)			(6,364	)
Income (loss) from operations			111				1,140				3,921				3,229				(704	)
Interest income			95				51				294				1,486				1,003
Other income (expense)			(4	)			(1	)			(2	)			—				115
Exchange gain (net)			—				—				—				366				267
Loss from impairment of cost method investment																			(1,322	)
Income (loss) before income taxes			203				1,190				4,213				5,081				(641	)
Income tax benefit (provision)			—				—				384				(457	)			41
Net income (loss)		$	203			$	1,190			$	4,597			$	4,624			$	(600	)
Dividends on preference shares			—				(352	)			—				—				—
Income (loss) attributable to ordinary shareholders		$	203			$	838			$	4,597			$	4,624			$	(600	)
Income (loss) per share-basic		$	0.01			$	0.04			$	0.12			$	0.05			$	(0.01	)
Income (loss) per share-diluted		$	0			$	0.01			$	0.05			$	0.04			$	(0.01	)
Income per ADS equivalent-basic(2)		$	0.06			$	0.21			$	0.59			$	0.25			$	(0.03	)
Income per ADS equivalent-diluted(2)		$	0.01			$	0.06			$	0.26			$	0.22			$	(0.03	)
Dividends declared per ordinary share or preference shares			—			$	0.01				—				—				—

		For the year ended December 31,
(in thousands of U.S. dollars)(1)		2002				2003				2004				2005				2006
Consolidated balance sheet data:
Cash and cash equivalents		$	4,451			$	5,806			$	70,596			$	46,168			$	44,956
Current working capital(3)			3,565				4,306				67,590				45,227				38,011
Total assets			4,929				6,606				71,861				63,113				71,119
Deferred revenue			934				1,278				3,487				1,859				6,419
Total current liabilities			982				1,875				3,773				2,282				8,521
Total shareholders’ equity		$	3,947			$	4,731			$	68,088			$	60,831			$	62,453

For the years ended December 31,		RMB per US$1.00
2002			8.2770
2003			8.2770
2004			8.2768
2005			8.1472
2006			7.9693

For consolidated balance sheet data, all translations from Renminbi to U.S. dollars were calculated at the exchange rate at the end of that year. The exchange rates were as set forth below as of the corresponding dates:

As at December 31,		RMB per US$1.00
2002			8.2800
2003			8.2769
2004			8.2765
2005			8.0702
2006			7.8087

(2)		Each ADS represents five ordinary shares.
(3)		Current working capital is the difference between total current assets and total current liabilities.
(4)		In 2006, the Company changed its method of accounting for stock-based compensation to conform to Statement of Financial Accounting Standard No. 123 (revised 2004), “Share-Based Payment”, effective on January 1, 2006.

Exchange Rate Information

We have published our financial statements in U.S. dollars. Our business is primarily conducted in China and denominated in Renminbi. Periodic reports will be made to shareholders and will be expressed in U.S. dollars using the then-current exchange rates. 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. Unless otherwise noted, all translations from Renminbi to U.S. dollars in this annual report were made at $1.00 to RMB7.8087, which was the prevailing rate on December 31, 2006. The prevailing rate on March 31, 2007 was $1.00 to RMB7.7342. 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.

The People’s Bank of China sets and publishes daily a base exchange rate. Until July 21, 2005, the People’s Bank of China set this rate with reference primarily to the supply and demand of Renminbi against the U.S. dollar in the market during the prior day. Beginning on July 21, 2005, the People’s Bank of China has set this rate with reference primarily to the supply and demand of Renminbi against a basket of currencies in the market during the prior day. The People’s Bank of China also takes into account other factors such as the general conditions existing in the international foreign exchange markets. Although governmental policies were introduced in the PRC 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 security, requires the approval of the State Administration for Foreign Exchange and other relevant authorities.

The following table sets forth various 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. The source of these rates is the Federal Reserve Bank of New York.

		Average(1)				High				Low				Period-end
		(RMB per U.S.$1.00)
2002			8.2770				8.2800				8.2669				8.2800
2003			8.2770				8.2800				8.2765				8.2769
2004			8.2768				8.2774				8.2764				8.2765
2005			8.1472				8.2765				8.0702				8.0702
2006			7.9693				8.0705				7.8051				7.8087
2007 (through May 15, 2007)			7.7450				7.8135				7.6739				7.6948

B. Capitalization and indebtedness.

Not Applicable.

C. Reasons for the offer and use of proceeds.

Not Applicable.

D. Risk factors.

Risks relating to our business

Our business is substantially dependent on the level of trading activity in China’s securities markets, which is dependent on factors outside of our control such as stock market volatility, tax and regulatory changes, inflation, interest rate and other factors that could dampen investors’ interest in investing in China’s securities markets and materially and adversely affect our revenue and profitability.

Our business is substantially dependent on user demand for market intelligence on China’s securities markets. Such demand has fluctuated with the level of trading activity in China’s securities markets. During the past several years, China’s securities markets have experienced significant volatility and decrease in value. The Shanghai Stock Exchange A-Share Index and the Shenzhen Stock Exchange A-Share Index declined 44.80% and 39.14%, respectively, from January 2, 2001 to December 30, 2005, and then increased 130.43% and 132.12%, respectively in 2006. On February 27, 2007, both the Shanghai Stock Exchange A-Share Index and the Shenzhen Stock Exchange A-Share Index each declined by approximately 9% on a single trading day, which was attributed in the financial press to rumors that the Chinese government would institute a capital gains tax and of increasing vigilance over bank loans to finance stock market activities. Any factors that lead to weakness or volatility in China’s securities markets in the future may diminish investors’ interest in China’s securities markets, and our business could be materially and adversely affected.

China’s securities market is further limited by a lack of hedging instruments that would assist investors in hedging against market volatility. For example, investors are not permitted to sell short in China’s securities markets. Because our business is dependent on investors’ interest in China’s securities markets, our business could be materially and adversely affected if market volatility and the lack of hedging instruments continue to affect China’s securities markets and dampen investors’ interest in China’s securities markets.

In response to the increased inflation rate during 2004, the Chinese government announced measures to restrict lending and investment in China in order to reduce inflationary pressure on China’s economy. In 2006, the People’s Bank of China announced a series of basic interest rate increases and other measures to reduce inflationary pressure. If China experiences increased inflation in future, the Chinese government may introduce further measures intended to reduce the inflation rate in China. Any such measures adopted by the Chinese central bank may have an adverse effect on China’s securities markets, which would adversely impact our business.

Our revenues and profits could decline if we fail to attract sufficient numbers of subscribers to our more comprehensive service packages or if we fail to retain our existing subscribers.

We depend on the sale of our more comprehensive service packages such as Value Engine and Grand Reference for a significant portion of our total revenues. In the fourth quarter of 2006, a significant portion of our recent revenue growth can be attributed to strong subscriber growth in our Value Engine series. For the year ended December 31, 2006, subscription revenues generated from sales of Value Engine and Grand Reference series were $4.2 million, representing 83% of our total subscription revenues during the same period. As our service packages become more comprehensive and higher priced, we expect that our future revenues and revenue growth will increasingly depend on sales of our more comprehensive service packages to a much greater extent than sales of our other service packages. If we fail to attract a sufficient number of subscribers to our more comprehensive service packages, our revenues and profits could decline. Moreover, our financial success depends on our ability to retain our subscribers and migrate them to newer, more comprehensive and higher priced service packages. If we are unsuccessful at developing new service packages that are attractive to our users, or if

our users elect to renew existing service packages rather than purchase newer or more comprehensive service offerings, our revenues and profits could decline.

Our business could be materially and adversely affected if we fail to develop or introduce new features and new research tools or if these new features and research tools are not accepted by users.

We currently offer to our subscribers a small number of service packages with different features and functionalities. If we introduce a new feature or a new research tool that is not favorably received, our current subscribers may not continue to use our service as frequently as before. New subscribers could also choose a competitive or different service offering over ours. We may also experience difficulties that could delay or prevent us from introducing new research tools or features. Furthermore, these research tools or features may contain errors that are discovered after the services are introduced. We may need to significantly modify the design of these research tools or features to correct these errors. Our business could be materially and adversely affected if we experience difficulties or delays in introducing new features and research tools or if these new features and research tools are not accepted by users.

Our business could be materially and adversely affected if our service package Value Engine could not generate sustainable growth.

In late August 2006 we launched Value Engine, a new series of service packages we developed to target investors who primarily use fundamental analysis in selecting stocks or who use fundamental analysis to supplement technical analysis. While there was a strong growth in the sales of Value Engine in the fourth quarter of 2006, we cannot assure you that we can maintain such growth. If other service offerings not offered by us are preferred by our target customers over Value Engine, or if we experience difficulties that could delay or prevent us from introducing new versions of Value Engine, we may not be able to grow our business in the financial data and information services market as we have projected and our business could be materially and adversely affected.

We have a limited operating history, which may make it difficult for you to evaluate our business.

Our business was incorporated in November 1998, and our current operations were established in April 2000. Our service offerings have only been commercially available since April 2001. Our senior management and employees have worked together at our company for only a relatively short period of time. Furthermore, the acquisition of CFO Genius, a financial information database provider mainly serving Chinese domestic institutional customers, in September 2006 and our October 2006 acquisition of CFO Stockstar, a leading finance and securities website in China, have altered the overall composition of company. Accordingly, we have a limited operating history upon which you can evaluate our business and prospects.

We may not be able to successfully implement our growth strategies, which could materially and adversely affect our business, financial condition and results of operations.

We are pursuing a number of growth strategies, which will require us to expand our data and information content and service offerings through internal development efforts and through partnerships, joint ventures and acquisitions. Some of these strategies relate to new service offerings for which there are no established markets in China, or relate to service offerings in which we lack experience and expertise. We cannot assure you that we will be able to deliver new service offerings on a commercially viable basis or in a timely manner, or at all.

In addition, online advertising business strategies may be developed in addition to our subscription-based service offerings. However, since we regard subscription-based services as

our current core business and allocate a significant portion of the advertising inventories of our websites, namely, www.jrj.com and www.stockstar.com, to promote our subscription-based service offerings, our current online advertising business has been limited and, to date, we do not have significant experience with selling Internet-based advertising. We cannot assure you that we will be able to efficiently or effectively implement and grow our online advertising business, or that online advertising on our websites will not detract from our users’ experience and thereby adversely affect our brand name or our subscription-based service offerings.

If we are unable to successfully implement our growth strategies, our revenue and profitability will not grow as we expect, if at all, and our competitiveness may be materially and adversely affected.

We face significant competition which could adversely affect our business, financial condition and results of operations.

The online financial data and information services market in China is relatively new, has few substantial barriers to entry and is competitive and rapidly changing. More broadly, the number of financial news and information sources competing for consumers’ attention and spending has increased since we commenced operations and we expect that competition will continue to intensify. We currently compete, directly and indirectly, for paying subscribers and viewers with companies in the business of providing financial data and information services, including publishers and distributors of traditional media, Internet portals providing information on business, finance and investing, dedicated financial information websites, personal stock research software vendors and stock brokerage companies, especially stock brokerage companies with online trading capabilities. Some of the sponsors with whom we currently maintain sponsorship arrangements could also become our competitors in the future.

Many of our existing competitors, as well as a number of potential new competitors, have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than we do. This may allow them to adopt our business model and devote greater resources than we can to the development and promotion of service offerings similar to or more advanced than our own. These competitors may also engage in more extensive research and development, undertake more far-reaching marketing campaigns, adopt more aggressive pricing policies and offer products and services that achieve greater market acceptance than ours. They may also undercut us by making more attractive offers to our existing and potential employees, content providers and sponsors. New and increased competition could result in price reductions for our research tools, reduced margin or loss of market share, any of which could materially and adversely affect our business, results of operations and financial condition.

In addition to us, many companies in China offer stock quotes, economic and company-specific news, historical stock performance statistics, online chatting regarding individual securities and other features for free over the Internet. If users determine that the information available for free over the Internet is sufficient for their investing needs, they would be unlikely to pay for subscription to our services, thus reducing our revenues and net income and forcing us to develop a new business model. Furthermore, the amount and quality of information available for free over the Internet may expand in the future, reducing the attractiveness of our services and forcing us to spend additional money to develop more sophisticated services in order to compete. There can be no assurance that we would be successful in developing a new business model or more advanced services in response to either of the above challenges. Failure to do so would lead to significant declines in our number of subscribers, revenues and net income.

Our business could be materially and adversely affected if the stock exchanges from which we receive data and information fail to deliver us reliable data and price quotes or other trading

related information on a real-time basis, or if we cannot maintain our current business relationships with our historical data providers on commercially reasonable terms.

We depend on two securities data providers associated with the Shanghai and Shenzhen Stock Exchanges to provide us with real-time stock, bond and mutual fund quotes and other trading related information. We primarily rely on contractual arrangements with Shanghai Stock Exchange Information Network Co., Ltd., which is associated with the Shanghai Stock Exchange, and with Shenzhen Securities Information Co., Ltd., which is associated with the Shenzhen Stock Exchange, pursuant to which we pay fixed service fees in exchange for receiving real-time price quotes and other trading related information through satellite communication. While our agreement with Shanghai Stock Exchange Information Network Co., Ltd. whereby we are certified to develop service packages based on Level II quotes (which provide insight into stock price movements and provide faster and more comprehensive trading data) and upgrade the features and functions of our current products is contemplated to continue through July 31, 2009, our contract with Shenzhen Securities Information Co., Ltd. will expire on March 1, 2008. Any disruption in our ability to secure data, price quotes or other trading related information on timely basis either through technical issues or through our inability to maintain and renew our contracts with the Shanghai and Shenzhen Stock Exchanges will have a material adverse effect on our business.

We have also recently transitioned the primary source of historical data and information on listed companies, bonds and mutual funds to Shenzhen Genius Information Technology Co. Ltd., or CFO Genius, which we acquired in September 2006. Starting from May 2007, CFO Genius has provided us with historical data and information, thereby mitigating our reliance on third-party backup providers of such historical data and information. Though we maintain raw data provision contracts with Financial China Information & Technology Co., Ltd. and Shanghai Gildata Service Co., Ltd. as alternative sources of historical data and information, any problems arising in or any disruption to the transition to CFO Genius as the primary provider of historical data and information will have a material adverse effect on our business.

We cannot assure you that we will be able to enter into business arrangements with either of the two securities data providers associated with the Shanghai and Shenzhen Stock Exchanges on commercially reasonable terms, or at all, after our current contracts expire. We cannot assure you that the two securities data providers will not charge us service fees substantially higher than the service fees we are currently paying. Our business, financial condition and results of operations could be materially and adversely affected if either of our two securities data providers imposes on us service fees substantially higher than the service fees we are currently paying. Even if we are able to maintain our current business arrangements for data on commercially reasonable terms, either of the two securities data providers may fail to deliver us reliable price quotes or other trading related information on a real-time basis. In either case, it would be difficult for us to receive reliable real-time price quotes and other trading related information from a different source, which could materially and adversely affect our business.

Additionally, we cannot assure you that we will be able to enter into or maintain our business arrangements with our current data providers on commercially reasonable terms or at all. In this case, it could take time for us to locate alternative providers of comprehensive historical data and information on commercially reasonable terms, which could cause disruptions to our operations and adversely affect our business. Even if we are able to find alternative data providers, they may fail to deliver to us reliable and comprehensive data and information in accordance with our specifications and requirements, which could materially and adversely affect our business.

Our business would be adversely affected if we do not continue to expand and maintain an effective customer support force.

We market our service offerings through our websites, as well as through our customer service centers in Beijing and Shanghai, which as of March 31, 2007 had 146 full-time and trained customer support personnel. In addition to sales and marketing functions, we depend on our customer support force to explain our service offerings to our existing and potential subscribers and resolve our subscribers’ technical problems. Many of our customer support personnel have only worked for us for a short period of time, and some of them may not have received sufficient training or gained sufficient experience to effectively serve our customers. In addition, we will need to further increase the size of our customer support force as our business continues to grow. We may not be able to hire, retain, integrate or motivate additional customer support personnel without any short-term disruptions of our operations. As a result, our business could be adversely affected if we do not continue to expand and maintain an effective customer support force.

Acquisitions present many risks, and we may not realize the financial and strategic goals that were contemplated at the time of any transaction.

An active acquisition program is an important element of our corporate strategy. For example, we acquired CFO Genius, a financial information database provider mainly serving Chinese domestic institutional customers, in September 2006. In October 2006, we also acquired CFO Stockstar, a leading finance and securities website in China. We may not be able to achieve all of the benefits of the business combination or to successfully integrate CFO Stockstar’s and CFO Genius’s operations into ours. While CFO Stockstar and CFO Genius contributed positive operating cash flows on a collective basis in the fourth quarter of 2006, we can assure you that they will continue to do so. Moreover, we expect to continue to acquire companies, products, services and technologies. Risks we may encounter in acquisitions include:

	•		the acquisition may not further our business strategy, or we may pay more than it is worth;
	•		we may not realize the anticipated increase in our revenues if we are unable to sell the acquired company’s products to our customer base, or the acquired contract models of acquired contract models companies;
	•		we may have difficulty identifying suitable acquisition opportunities and integrating acquired companies with our existing operations or their products and services with our existing products and services;
	•		we may have higher than anticipated costs in continuing support and development of acquired products;
	•		we may have multiple and overlapping product lines that are offered, priced and supported differently, which could cause customer confusion and delays;
	•		our due diligence process may fail to identify problems, such as issues with unlicensed use of intellectual property;
	•		we may have legal and tax exposures or lose anticipated tax benefits as a result of unforeseen difficulties in our legal entity integration activities;
	•		we may face contingencies related to intellectual property, financial disclosures and accounting practices or internal controls;
	•		our ongoing business may be disrupted and our management’s attention may be diverted by transition or integration issues; and

•

to the extent that we issue a significant amount of equity securities in connection with future acquisitions, existing ADS holders and shareholders may be diluted and earnings per share may decrease.

These factors could have a material adverse effect on our business, results of operations, financial condition or cash flows, particularly in the case of a larger acquisition or multiple concurrent acquisitions.

Our plan to make strategic investments may negatively affect our business due to the poor financial condition and operating performance of those companies we invest in and other risks.

As part of our business strategy, we may also make strategic investments intended to facilitate the introduction of new service offerings as well as to add capabilities that we do not currently have. For example, we invested in Moloon International, Inc., or Moloon, a Chinese wireless technology and service provider, in December 2005. However, the financial condition and operating results of companies we invest in such as Moloon could negatively affect our business and financial condition. Moreover, our cooperation with Moloon and potentially other companies may not generate meaningful revenue or any at all. Government regulations may adversely affect the business of companies we invest in, which could have a material and adverse impact on our business. For example, during the second half of 2006, China Mobile Communication Corporation announced policy changes in accordance with directives from China’s Ministry of Information Industry which, among others, required mobile value-added service, or MVAS, providers such as Moloon to extend free trial periods for customers prior to subscriptions and to send reminders to customers confirming new and existing subscriptions. These policy changes had a substantial negative impact on all MVAS providers including on Moloon’s MVAS business. Consequently, following an independent valuation of our cost method investment in Moloon based on its MVAS business, it is determined that a decline in value had occurred and we recorded non-cash asset impairment of $1.32 million in total, reducing the carrying balance of such investment from $13.93 million to $12.61 million. In the future, we may also consider further strategic investments and partnerships with companies that specialize in non-exchange traded financial products in order to acquire their expertise in that area which we believe are difficult to obtain otherwise.

Our ability to successfully make strategic investments will depend on the availability of suitable candidates at an acceptable cost, our ability to compete effectively to attract and reach agreement with strategic partners on commercially reasonable terms, the availability of financing to complete larger acquisitions or joint ventures, as well as our ability to obtain any required governmental approvals. In addition, the benefits of a partnership or joint venture transaction may take considerable time to develop, and we cannot assure you that any particular partnership or joint venture will produce the intended benefits. For example, we may experience difficulties in integrating acquisitions with our existing operations and personnel. The identification and completion of these transactions may require significant management time and resources. Moreover, the partnership and joint venture strategies we pursue could also cause earnings or ownership dilution to our shareholders’ interests, which could result in losses to investors.

Our business could be materially and adversely affected if increased usage strains our server systems or if we suffer from other system malfunctions.

In the past, our websites have experienced significant increases in traffic when there are significant business developments, financial news and activities, or stock market trading activities. In addition, the number of our users has continued to increase over time and we are seeking to further increase our user base. Therefore, our website must accommodate a high volume of traffic to meet peak user demand and deliver frequently updated information. Our

websites have in the past experienced and may in the future experience slower response time or login delays for a variety of reasons. It is essential to our success that our websites are able to accommodate our users in an efficient manner so that our users’ experience with us is viewed favorably and without frequent delays.

We also depend on other Internet content providers, such as other financial information websites, to provide data and information to our website on a timely basis. Our website could experience disruptions or interruptions in service due to the failure or delay in the transmission or receipt of this information. In addition, our users depend on Internet service providers, online service providers and other website operators for access to our website. Each of them has experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems. These types of occurrences could cause users to perceive our website as not functioning properly and therefore cause them to use other methods to obtain the financial data and information services they need. For example, on December 27, 2006, earthquakes in Taiwan caused widespread Internet and telecommunications disruptions in the PRC lasting for a week or more in certain areas, which affected the ability of Internet content providers to transmit data and information to our website and also affected the ability of Internet service providers and other website operators to access our website. Such disruptions may materially and adversely affect our business, results of operations and financial condition.

If we are not able to respond successfully to technological or industry developments, our business may be materially and adversely affected.

The online financial data and information services market is characterized by rapid advancements in technology, evolving industry standards and changes in customer needs. New services or technologies may render our existing services or technologies less competitive or obsolete. Responding and adapting to technological developments and standard changes in our industry, the integration of new technologies or industry standards or the upgrading of our networks may require substantial time, effort and capital investment. In the event that we are unable to respond successfully to technological industry developments, this may materially and adversely affect our business, results of operations and competitiveness.

We may be subject to, and may expend significant resources in defending against claims based on the content and services we provide through our website and our research tools.

Due to the manner in which we obtain, collect, categorize and integrate content for our website, and because our services, including our online bulletin boards and discussion forums, may be used for the distribution of information and expression of opinions, claims may be filed against us for defamation, subversion, negligence, copyright or trademark infringement or other violations due to the nature and content of such information. For example, our bulletin boards and online forums reflect the statements and views of persons we do not control and we cannot be assured that such information is true and correct and is not misleading. These persons may also have conflicts of interest in relation to their statements or views regarding securities or other financial matters. Liability insurance for these types of claims is not currently available in the PRC. While we do not take responsibility for statements or views presented on our website, we may incur significant costs investigating and defending these types of claims even if they do not result in liability. Any such claim may also damage our reputation if our users and subscribers do not view this content as reliable or accurate, which could adversely affect our business.

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 website content, online services and our research tools do not or will not infringe upon patents, valid copyrights or other intellectual property rights held by third parties. 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 affect our business.

Unauthorized use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business.

We regard our copyrights, trademarks, trade secret and other intellectual property as critical to our success. Unauthorized use of the intellectual property used in our business may adversely affect our business and reputation. We rely on trademark and copyright law, trade secret protection and confidentiality agreements with our employees, customers, business partners and others to protect our intellectual property rights. Despite our precautions, it may be possible for third parties to obtain and use our intellectual property without authorization. The validity, enforceability and scope of protection of intellectual property in Internet-related industries are uncertain and still evolving. In particular, the laws and enforcement procedures in the PRC do not protect intellectual property rights to the same extent as do the laws and enforcement procedures in the United States. Moreover, litigation may be necessary in the future to enforce our intellectual property rights. Future litigation could result in substantial costs and diversion of our resources, and could disrupt our business, as well as have a material adverse effect on our financial condition and results of operations.

We depend on our key personnel and our business and growth prospects may be severely disrupted if we lose their services.

Our future success is dependent upon the continued service of our key executives and employees. We rely on their expertise in our business operations. If one or more of our key executives were unable or unwilling to continue in their present positions, or if they joined a competitor or formed a competing company in violation of their employment agreements, we may not be able to replace them easily. As a result, our business may be significantly disrupted and our financial condition and results of operations may be materially and adversely affected.

Furthermore, since our industry is characterized by high demand and intense competition for talent, we may need to offer higher compensation and other benefits in order to attract and retain key personnel in the future. Our employees are required to enter into one-year employment agreements with us. We seek to enter into employment and non-competition agreements with our senior executives for longer terms. We cannot assure you that we will be able to attract or retain the key personnel that we will need to achieve our business objectives. We do not maintain key-man life insurance for any of our key personnel.

Undetected programming errors or defects in our research tools could materially and adversely affect our business, financial condition and results of operations.

Our research tools may contain programming errors or other defects that our internal testing did not detect, which are commonly referred to as programming bugs. The occurrence of undetected errors or defects in our research tools could disrupt our operations, damage our reputation and detract from the experience of our users. As a result, such errors and defects could materially and adversely affect our business, financial condition and results of operations.

The discontinuation of any of the preferential tax treatments currently available to us in the PRC could materially and adversely affect our business, financial condition and results of operations.

Our PRC wholly owned subsidiaries, CFO Beijing, CFO Software, CFO Stockstar and CFO Genius, enjoy preferential tax treatments, including reduced tax rates, tax holidays or tax refunds, provided by either the PRC government or its local agencies or bureaus. For example, as a foreign invested software development company, CFO Beijing was granted by the Beijing branch of the PRC tax bureau three tax incentives that have the effect of:

	•		Exempting the company from enterprise income tax for 2003 and 2004; and
	•		Providing the company a preferential enterprise income tax rate of 12% from 2005 to 2007, the rate currently applicable to wholly foreign-owned enterprises based in Beijing and not subject to other tax holidays.

Similarly, in December 2004, we established our subsidiary CFO Software in Beijing that was classified by the Beijing local government as a foreign invested high-technology company. With the classification of a foreign invested high-technology company, CFO Software expects to receive tax incentives provided to such companies from the Beijing branch of the PRC tax bureau that have the effect of:

	•		Exempting the company from enterprise income tax from 2005 to 2007; and
	•