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Subaye, Inc. (SBAY) Announces Paying Online Video Customers Accelerated in Third Quarter Fiscal Year 2010

    GUANGZHOU, China, July 15 /PRNewswire-Asia-FirstCall/ --

    -- Online video subscriber growth in third quarter fiscal year ending June
       30 driven by organic growth in Guangdong province, sales staff
       additions and entrance into new markets.
    -- Growth in cloud computing business drives additional revenues and
       visitors to Company's website http://www.subaye.com .
    -- Significant future growth opportunities from secular growth in Chinese
       online advertising, expansion into new geographies and higher
       penetration of new services.
    -- Subaye to ring Opening Bell in ceremony for NASDAQ today

Subaye, Inc. (Nasdaq:SBAYNews) (“Subaye” or the “Company”), a leading outsourced marketing services provider in China engaged in online video advertising and cloud computing business solutions, announced today it had 34,382 paying online video advertising customers as of June 30th, 2010, an increase of 112% year-to-date for its fiscal year ending September 30, 2010, and an increase of 56% since the Company’s second fiscal quarter ended March 31, 2010. The current level of 34,382 paying members generates a monthly run rate of approximately $4.0 million in revenues, or $48.3 million annually.

Third Quarter Fiscal Year 2010 Update

The 56% growth in Subaye’s paying customer base from March 31, 2010 through June 30, 2010, was driven by an increase of 38% in paying members in Guangdong Province, the Company’s original and core online video advertising market. Subaye saw strong new paying member growth from both its largest province of Guangdong and from its new markets. In its third quarter ended June 30, 2010, Subaye added an additional 12,363 new paying members, with 5,419 new paying members coming from Guangdong Province and 6,944 new paying members coming from new markets. Year-to-date for the Company’s fiscal year ending September 30, 2010, paying members have more than doubled from 16,211 at September 30, 2009.

Sequential Quarter Comparison

This is the first quarter in which total new paying members from new markets exceeded that from Guangdong Province. Fiscal year-to-date, new member growth in Guangdong Province accelerated from 30% in May to 38% in June due to increased productivity from the more than 300 sales staff the Company has added in the past nine months.

                     Number of Paying Subscribers            Growth Rate
                                                        3/31-6/30    FY 2010
    Regions:      9/30/09  12/31/09   3/31/10 6/30/10      2010      To Date
    Guangdong      16,211   15,478(2)  16,998  22,417      +32%        +38%
    Hong Kong          --       --      1,361   1,361       --          --
    Taiwan             --       --        739     739       --          --
    Hunan              --       --      2,921   2,921       --          --
    Hainan             --       --         --   3,133       --          --
    Hubei(1)           --       --         --   3,811       --          --
    Total          16,211   15,478     22,019  34,382      +56%       +112%

    (1) First significant revenues to be earned in July 2010 as a result of
        pro rata subscription-based revenue model. The commission paid to
        agents equals 25% of 1st twelve months' revenues.
    (2) Decrease in quarterly revenues a result of end of DVD promotion;
        members who participated in DVD promotion were no longer incentivized
        to remain paying members.

Cloud Computing (CC)

Since Subaye started promoting its Cloud Computing services in March 2010, it has increased the number of paying subscribers to 7,344, an increase of 2,144, or 41%. Growth has accelerated month-over-month in every month since March, increasing by 4% in April, 15% in May, and 18% in June. Through its growing sales force of 615 at the end of May 31, 2010, the Company sells a cost-effective, user friendly and scalable solution that allows SMEs to manage their customer and supplier information. The 7,344 paying customers at June 30, 2010 generates approximately $0.7 million of revenues per month, or $8.8 million per year.

“The tremendous growth in our online video advertising customer base shows that our strategic refocus on this business is starting to bear fruit,” stated Mr. Cai. “We are well positioned to continue capturing additional market share in the fast-growing Chinese online advertising market as we increase our sales force from 300 at September 30, 2009 to 1,500 by the end of our fiscal 2010 in September, 30, 2010. We now have a second driver to our core online business with the increased adoption of our Cloud Computing services. By providing a cost-effective solution for SMEs to more effectively sell to a growing base of customers on our website, http://www.subaye.com , we are making great progress toward becoming a premier online business service provider for Chinese entrepreneurs.”

Investors, media and other interested parties can view a demonstration of the Company’s video showcase on its website http://www.subaye.com . Today’s NASDAQ ceremony to be attended by its Chief Executive Officer Mr. Zhiguang Cai and its Chief Financial Officer Mr. James Crane can also be accessed through its website.

About Subaye, Inc.

Subaye, Inc. is a leading outsourced marketing services provider in China engaged in online video advertising and cloud computing business solutions. Subaye’s online video advertising network provides production, upload, storage, and publishing onto video sharing websites. Subaye also offers cloud computing business solutions and is in the process of developing an online mall with 3D imaging throughout the online customer interface. Visitors of Subaye’s websites, namely, http://www.subaye.com , view video showcases of Subaye members, primarily small to mid-size enterprises (“SMEs”), and select products or services they wish to purchase. Paying members utilizing Subaye’s video advertising platform pay a membership fee of approximately $117.0 per month. The Company previously conducted a trade services and an entertainment media business. For further information on Subaye, Inc., please visit http://www.subaye.net .

Forward-Looking Statements

Certain statements contained herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about Subaye, Inc.’s industry, management’s beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of the Company may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Subaye, Inc.’s operations are conducted in the People’s Republic of China (“PRC”) and, accordingly, are subject to special considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political and social conditions in the PRC and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. Other potential risks and uncertainties include but are not limited to the ability to procure, properly price, retain and successfully complete projects, and changes in products and competition. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Readers should review carefully reports or documents the Company files periodically with the Securities and Exchange Commission

    For more information, please contact:

    Company:
     James Crane
     Chief Financial Officer
     P.R.C. Cell: +86-186-0125-0891
     U.S. Office: +1-617-209-4199

    Investor Relations:
     Ted Haberfield
     HC International, Inc.
     Tel:   +1-760-755-2716 (US)
     Email: thaberfield@hcinternational.net
     Web:   http://www.hcinternational.net
Thursday, July 15th, 2010 Uncategorized
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