CCDDT Group, our 49%-owned PRC Joint Venture, has been granted rights from the Ministry of Culture Market Development Centre ("MOCMDC") to exclusively work with them for a period of circa 30 years to establish and operate the Karaoke CMS Platform for the provision of services to China's massive Karaoke Industry. Services include the collection of royalty fees on behalf of the owners from karaoke venues in return for a fee, as well as the provision of value added services ("VAS") within karaoke venues.

The China Audio & Video Copyright Association ("CAVCA") and its members, which own and control the copyrights of approximately 98% of video program content played in China's karaoke venues, have exclusively appointed CCDDT Group as their sole conduit for the collection of royalty fees on their behalf from karaoke venues for a period of 10 years.

The CCDDT Group has established operations in 30 of China's provinces and has commenced the collection of royalty fees on behalf of copyright owners in over 20 provinces. Penetration rate is rising rapidly with over 50% of karaoke venues in major jurisdictions such as Beijing and Shanghai now paying royalties. The CCDDT Group is now working on accelerating the collection of royalties nationwide.

Potential industry revenues from royalty collection are significant. China has over 50,000 licensed dedicated karaoke venues with a total of circa 2.4 million rooms with over 40 billion songs sung in karaoke venues nationwide each year.

The 50,000 venues also are also a substantive and attractive market for VAS. The CCDDT Group has developed VAS software and hardware for provision of services ranging from in-room spot commercials and in-room acquisition of quick draw (drawn every 10 minutes) welfare lottery tickets within karaoke venues, to the provision of industry statistics for the music industry.

Pilot tests of the spot commercial and lottery services in Chongqing China, have been successful and plans are now being devised to roll these services out nationwide in the near future. CCDDT Group's VAS are expected to increase the revenue of karaoke venues and their operators while enhancing service to and the entertainment experience of venue patrons.