10:20     KANTONE HOLDING<01059>-Announcement&Resumption of Trading-7         

    under any then available general mandate granted to                       
    the board of the Directors, the Company will be                           
    obliged to seek its shareholders' approval of the                         
    issue of such Shares prior to the issue of the Tranche                    
    2 Bonds and a separate announcement will be issued                        
    by the Company. If the Company decides to issue the                       
    Tranche 2 Bonds, it will comply with all relevant                         
    Listing Rules and applicable laws in respect of such                      
    issue and of the issue of Shares upon conversion of                       
    the Tranche 2 Bonds including any shareholders'                           
    approval requirement as mentioned above.                                  
                                                                              
    USE OF PROCEEDS AND REASON FOR THE BOND ISSUE                             
    The net proceeds of approximately US$7,697,000                            
    (equivalent to approximately HK$60,037,000) derived                       
    from the issue of the Original Tranche 1 Bonds,                           
    together with the approximate amount of HK$11,700,000                     
    which would be received subject to and upon exercise                      
    in full of the Subscription Right in respect of the                       
    Original Tranche 1 Bonds (subject to adjustment as                        
    set out in the Subscription Agreement), will be used                      
    as general working capital.                                               
                                                                              
    The Directors consider that the terms of the Bonds                        
    are favourable and the issue of the Bonds provides                        
    an opportunity to raise extra funds for the Company.                      
                                                                              
    SHAREHOLDING STRUCTURE                                                    
    As at the date of this announcement, the issued share                     
    capital of the Company is HK$234,311,002.90                               
    comprising 2,343,110,029 Shares. Champion Technology                      
    Holdings Limited ("Champion") and Lawnside                                
    International Limited ("Lawnside") are currently the                      
    controlling shareholder and the substantial                               
    shareholder of the Company (each as defined in the                        
    Listing Rules), holding 1,348,420,962 Shares and                          
    407,779,752 Shares respectively, representing                             
    approximately 57.55 per cent. and 17.40 per cent. of                      
    the existing issued share capital of the Company                          
    respectively. If the maximum possible number of                           
    Shares are issued pursuant to the conversion of the                       
    Original Tranche 1 Bonds and the Subscription Right                       
    in respect of the Original Tranche 1 Bonds is                             
    exercised in full, 192,757,572 new Shares will be                         
    issued based on the Fixed Conversion Price,                               
    representing approximately 8.23 per cent. and                             
    approximately 7.60 per cent. of the existing issued                       
    share capital and the enlarged issued share capital                       
    respectively. The shareholding interests of all the                       
    shareholders of the Company will be proportionately                       
    diluted by approximately 7.60 per cent. and the                           
    shareholding interest of Champion and Lawnside in the                     
    Company will be diluted correspondingly from                              
    approximately 57.55 per cent. to approximately 53.17                      
    per cent., and from approximately 17.40 per cent. to                      
    approximately 16.08 per cent. respectively.                               
                                                                              
    The shareholding structure of the Company before and                      
    after the conversion of the Original Tranche 1 Bonds                      
    and the exercise of Subscription Right in respect of                      
    the Original Tranche 1 Bonds based on the Fixed                           
    Conversion Price and the Relevant Exchange Rate will                      
    be as follows:                                                            
                                                                              
                                                    No. of Shares             
                                                    held by CSFB              
                    No. of Shares           No. of Shares           (assuming 
                    held by                 held by Lawnside                  
    CSFB has not                                                              
                    Champion                (assuming               disposed  
    of any                                                                    
                    (assuming               Lawnside will           Shares    
    received                No. of Shares                                     
                    Champion will not               not acquire