This acquisition is expected to deepen and broaden Xinhua Finance's offering by providing comprehensive index services and better investment solutions and tools in China. It is the first ever introduction of risk management techniques into index services in China aimed at meeting rising demand for tailor-made and complex services.

With the addition of Beijing Alpha, Xinhua Finance's index services will be enriched with the risk management and performance evaluation, which are indispensable parts of making investment decisions and creating financial products, and its client base will be widened through cross-selling opportunity among both parties' clients in China. Xinhua Finance's index business lines now include Xinhua FTSE Index, Xinhua Lehman Index and Mergent's Index.

Fredy Bush, Xinhua Finance CEO, said, "we are pleased to have the addition of Beijing Alpha to the Xinhua Finance family enabling us to provide better investment tools to the markets.

"This is a pioneering step and market-driven decision to integrate risk management element into the index service in China. We are proud of being innovative and able to continue to set standard in China," added Bush.

Cheng Bing, Beijing Alpha General Manger said, "We look forward to working closely with Xinhua Finance's team. We believe that Beijing Alpha can further enhance the standard and quality of its risk management service and strengthen its sales and marketing capability with the support of Xinhua Finance whose products are all built on the international standard."

Founded in 1998 and led by the financial engineering professionals from the Chinese Academy of Science, Beijing Alpha has established a leading position in China with its risk analytic expertise and in-depth local knowledge. Backed by the first class research team, it has built an impressive clientele, including fund management companies like SYWG BNP Paribas, Boshi, Fuguo, Penghua; banks such as Bank of China and ICBC Beijing Branch; major insurance companies, securities firms, and the National Social Security Fund Council.

Transaction Details:

1. Reason for the Acquisition
   The acquisition deepens and broadens Xinhua Finance's offering by providing comprehensive index services and better investment solutions and tools. This is a market-driven decision to meet rising demand for tailor-made and complex service package of both index benchmark offering and risk management solutions.
   The synergy built upon the respective product expertise and client base will generate additional revenues for both parties.
2. Method of the acquisition
   Xinhua Finance will directly acquire 100% of the shares of Beijing Alpha Financial Engineering Limited from its shareholders Chen Bing and Ma Yuewen. The purchase price will be paid over a period of three years, in an amount linked to the performance of Beijing Alpha in 2005, 2006, 2007 and 2008. The total consideration is estimated at USD 2,000,000.
3. Description of the acquired corporation
   Trade name: Beijing Alpha Financial Engineering Limited
   Representative: Cheng Bing
   Address: Room 801, Unit F, Building 3, Hong Jia Li Yuan, Luo Zhuang Nan Li, Haidian District, Beijing 100088
   Date of Incorporation: October 22, 1998 Business: Development and transfer of software technology, technical training and service; sale of computers and auxiliary equipments.
   Fiscal year: 31 December
   Number of Employees: 21
   Registered capital: RMB 2,500,000
   
   Fiscal year ended on: 31 December 2005
   Revenue: USD 258,836
   Profit: USD 87,178
   Total assets: USD 234,099
   
4. Schedule of the acquisition
   The acquisition is subject to the approval from the Chinese regulatory authorities. It is expected that the approval process will take approximately 90 days.
5. Seller information Name
   Cheng Bing, Ma Yuewen
6. The number of shares and percentage in the total issued shares in the acquired corporation before and after acquisition
   Before the acquisition: 0
   After the acquisitions: 100% of equity
7. Expected Impact on the Consolidated Results of the Operations of the Reporting Company
   The Company expects that this acquisition's impact on its consolidated results of operations for 2006 will not be material.