Crypto Flow Technology Limited — Proxy Solicitation & Information Statement 2008

Mar 28, 2008

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant, or other professional adviser.

If you have sold all your shares in Melco LottVentures Limited (the “Company”), you should at once hand this circular to the purchaser or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser.

This circular, for which the directors of the Company (the “Directors”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on the Growth Enterprise Market (“GEM”) of the Stock Exchange (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief, (i) the information contained in this circular is accurate and complete in all material respects and not misleading; (ii) there are no other matters the omission of which would make any statement in this circular misleading; and (iii) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

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Melco LottVentures Limited 新濠環彩有限公司

(formerly known as Wafer Systems Limited)

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 8198)

PROPOSED GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND PROPOSED RE-ELECTION OF DIRECTORS

The notice convening the annual general meeting of the Company to be held at Units 901-7, 9/F., Prosperity Millennia Plaza, 663 King’s Road, North Point, Hong Kong on Monday 28 April 2008 at 3:30 p.m. (the “AGM”) is set out in the annual report of the Company for the year ended 31 December 2007 (the “Annual Report”).

A form of proxy for the AGM is enclosed with the Annual Report of the Company. Whether or not you propose to attend the AGM, you are requested to complete the form of proxy and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-7, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time appointed for the AGM. Completion and delivery of the form of proxy will not preclude you from attending and voting at the AGM if you so wish.

This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting and the Company’s website at www.wafersystems.com.

31 March 2008

CHARACTERISTICS OF GEM

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board of the Stock Exchange and no assurance is given that there will a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the internet website operated by the Stock Exchange. GEM listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website at www.hkgem.com in order to obtain up-to-date information on GEM-listed issuers.

• i -

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Chairman
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
General Mandates to Issue and Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
New Issue Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Repurchase Mandate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Procedures for Demanding a Poll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Appendix – Explanatory Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

• ii -

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions have the following meanings:

“AGM”	the annual general meeting of the Company to be held at Units
	901-7, 9/F., Prosperity Millennia Plaza, 663 King’s Road, North
	Point, Hong Kong on Monday 28 April 2008 at 3:30 p.m., notice
	of which is set out in the Annual Report;
“AGM Notice”	the notice for convening the AGM set out in the Annual
	Report;
“Annual Report”	the annual report of the Company for the year ended 31 December
	2007;
“Articles of Association”	the articles of association of the Company as may be amended
	from time to time;
“associate(s)”	has the meaning ascribed to it under the GEM Listing Rules;
“Board”	the board of Directors or a duly authorised committee thereof
	from time to time;
“Company”	Melco LottVentures Limited, a company incorporated in the
	Cayman Islands with limited liability, the issued shares of which
	are listed on GEM;
“Directors”	the directors of the Company from time to time;
“GEM”	the Growth Enterprise Market of the Stock Exchange;
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM as may
	be amended from time to time;
“Group”	the Company and its subsidiaries;
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China;
“Latest Practicable Date”	25 March 2008, being the latest practicable date prior to the
	printing of this circular for ascertaining certain information
	contained in this circular;
“month”	calendar month;

• 1 -

DEFINITIONS

• “New Issue Mandate” a proposed general unconditional mandate to be granted to the Directors to exercise the power of the Company to allot, issue and deal with Shares during the period as set out in Ordinary Resolution no. 5 (1) in the AGM Notice up to twenty percent (20%) of the issued share capital of the Company as at the date of passing such Ordinary Resolution;

• “Ordinary Resolution(s)” the proposed ordinary resolution(s) as referred to in the AGM Notice;

• a proposed general unconditional mandate to be granted to the Directors to exercise the power of the Company to allot, issue and deal with Shares during the period as set out in Ordinary Resolution no. 5 (1) in the AGM Notice up to twenty percent (20%) of the issued share capital of the Company as at the date of passing such Ordinary Resolution;

• “Repurchase Mandate” a proposed general unconditional mandate to be granted to the Directors to exercise the power of the Company to repurchase Shares during the period as set out in Ordinary Resolution no. 5 (2) in the AGM Notice up to ten percent (10%) of the issued share capital of the Company as at the date of passing such Ordinary Resolution;

• “SFO” Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong);

• “Share(s)” share(s) of HK$0.01 each in the capital of the Company;

• “Shareholders” holders of Share(s);

• “Stock Exchange” The Stock Exchange of Hong Kong Limited;

• “Takeovers Code” the Hong Kong Code on Takeovers and Mergers;

• “2007 Share Issue Mandate” The Share Issue Mandate to issue shares given to the Directors at the AGM of the Company held on 27 April 2007;

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong; “%” per cent.

• 2 -

LETTER FROM THE CHAIRMAN

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Melco LottVentures Limited 新濠環彩有限公司

(formerly known as Wafer Systems Limited)

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8198)

Executive Director:

Mr. Chan Sek Keung, Ringo (Chairman & Chief Executive Officer) Mr. Ko Chun Fung, Henry

Independent Non-Executive Directors:

Mr. David Tsoi Mr. Pang Hing Chung, Alfred Mr. So Lie Mo, Raymond

Registered Office: 4th Floor, Scotia Centre P.O. Box 2804 George Town Grand Cayman KY1-1112 Cayman Islands British West Indies

Head Office and Principal Place of Business: Units 901-7, 9th Floor Prosperity Millennia Plaza 663 King’s Road North Point Hong Kong

31 March 2008

To the Shareholders

Dear Sir or Madam,

PROPOSED GRANT OF GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES AND PROPOSED RE-ELECTION OF DIRECTORS

INTRODUCTION

At the annual general meeting of Shareholders held on 27 April 2007 approval was given by Shareholders for giving general unconditional mandates to the Directors to issue and repurchase Shares. At the extraordinary general meeting of Shareholders held on 16 January 2008, approval was given by Shareholders for refreshment of the 2007 Share Issue Mandate (as defined below) and granting a general mandate to Directors to allot issue Shares not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue on the date of the passing of the resolution (the “Refreshment Mandate”). As at the date hereof, no Shares have been allotted and issued pursuant to the 2007 Share Issue Mandate and the Refreshment Mandate. In accordance with the terms of the approval, the 2007 Repurchase Mandate (as defined below) and the Refreshment Mandate will expire at the conclusion of the AGM to be held on 28 April 2008. Ordinary Resolutions will be proposed at the AGM to renew these general mandates.

• 3 -

LETTER FROM THE CHAIRMAN

The purpose of this circular is to provide you with further details regarding the proposed renewal of the general mandates to issue and repurchase Shares, the re-election of two directors and to seek your approval of the Ordinary Resolutions relating to these matters at the AGM.

GENERAL MANDATES TO ISSUE AND REPURCHASE SHARES

At the annual general meeting of Shareholders held on 27 April 2007 approval was given by Shareholders for giving general unconditional mandates to the Directors to:

• (a) allot, issue and deal with Shares with a total nominal value not exceeding twenty percent (20%) of the total issued share capital of the Company as at the date of passing of the relevant ordinary resolution approving such new issue mandate;

• (b) repurchase such number of Shares representing up to ten percent (10%) of the total issued share capital of the Company as at the date of passing of the relevant ordinary resolution approving such repurchase mandate (the “ 2007 Repurchase Mandate ”); and

• (c) add to the general mandate for issuing Shares set out in paragraph (a) above an amount representing the aggregate nominal value of the share capital of the Company repurchased by the Company pursuant to the repurchase mandate set out in paragraph (b) above. (together with the general unconditional mandate set out in paragraph (a) above, called the “ 2007 Share Issue Mandate ”)

At the extraordinary general meeting of Shareholders held on 16 January 2008, approval was given by Shareholders for refreshment of the 2007 Share Issue Mandate and granting a general mandate to Directors to allot issue Shares not exceeding 20% of the aggregate nominal amount of the share capital of the Company in issue on the date of the passing of the resolution (“Refreshment Mandate”) . As at the date hereof, no Shares have been allotted and issued pursuant to the 2007 Share Issue Mandate and the Refreshment Mandate.

In accordance with the terms of the approval, the 2007 Repurchase Mandate and the Refreshment Mandate will expire at the conclusion of the AGM to be held on 28 April 2008. It is therefore proposed to seek your approval to renew these general mandates at the AGM.

The Appendix to this circular contains an explanatory statement, as required by Rule 13.08 of the GEM Listing Rules, to provide the requisite information to the Shareholders to enable the Shareholders to make an informed decision on whether to vote for or against the Ordinary Resolution in relation to the Repurchase Mandate.

• 4 -

LETTER FROM THE CHAIRMAN

NEW ISSUE MANDATE

At the AGM, an Ordinary Resolution will be proposed to grant to the Directors the New Issue Mandate, details of which are set out in Ordinary Resolution no. 5(1) in the AGM Notice. The Shares which may be allotted, issued and dealt with pursuant to the New Issue Mandate is limited to a maximum of twenty percent (20%) of the issued share capital of the Company as at the date of passing of the Ordinary Resolution approving the New Issue Mandate. In addition, conditional upon the Ordinary Resolutions to grant to the Directors the New Issue Mandate and the Repurchase Mandate being passed, an Ordinary Resolution will be proposed that the New Issue Mandate be extended so as to authorise the Directors to allot, issue and otherwise deal with further Shares up to an aggregate nominal amount equal to the aggregate nominal amount of the share capital of the Company repurchased by the Company under the Repurchase Mandate.

Based on the 435,478,995 Shares in issue as at the Latest Practicable Date and on the basis that no further Shares will be issued and/or repurchased by the Company between the Latest Practicable Date and the date of the AGM, if the New Issue Mandate is approved at the AGM, the total number of new Shares that may be issued under the New Issue Mandate will be 87,095,799 Shares, representing 20% of the 435,478,995 Shares in issue as at the date of the AGM. If the New Issue Mandate is approved by the Shareholders at the AGM, it will be and will continue to be in force from the date of the AGM until the earliest of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Company’s articles of association or any applicable laws of the Cayman Islands to be held; or (iii) the passing of an ordinary resolution by the Shareholders in a general meeting revoking or varying such mandate, whichever occurs first.

REPURCHASE MANDATE

At the AGM, an Ordinary Resolution will be proposed to grant to the Directors the Repurchase Mandate, details of which are set out in Ordinary Resolution no. 5(2) in the AGM Notice. The Shares which may be repurchased pursuant to the Repurchase Mandate is limited to a maximum of ten percent (10%) of the issued share capital of the Company as at the date of passing of the Ordinary Resolution approving the Repurchase Mandate.

RE-ELECTION OF DIRECTORS

The Directors have recommended the re-election of the following directors:–

Mr. CHAN Sek Keung, Ringo , aged 48, is the Chairman and Chief Executive Officer of the Company and also the Compliance Officer and one of the two Authorised Representatives of the Company in respect of the Company’s listing on GEM. He is also a member of the Remuneration Committee of the Board.

Mr. Chan first joined the Company in November 1998 and has been on the board ever since. He retires by rotation under Article 87 of the Articles of Association of the Company and, being eligible, offers himself for re-election. Apart from being a director of the Company, Mr. Chan has not been a director of any public listed company for the past three years.

• 5 -

LETTER FROM THE CHAIRMAN

Mr. Chan has over 20 years working experience in the data and networking communication field. He holds a Bachelor’s degree in Electrical Engineering from the University of Hong Kong and is a Fellow Member of the Hong Kong Institute of Directors and a deputy of the Chinese People’s Political Consultative Conference (CPPCC) for both cities of Jinan, Shandong Province and of Chengdu, Sichuan Province, China.

Mr. Chan has been appointed as an executive director of the Company for a term of three years commencing 1 January 2006, subject to the retirement by rotation as required by the Articles of Association of the Company. His remuneration package has been determined by his duties, responsibilities and experience, include, mainly and amongst others; (1) an annual salary of HK$990,000.00 with effect from 1 January 2008; (2) an annual management bonus of 5% on the audited net profits of the Company when such net profit exceeds HK$5 million; and (3) Company paid accommodation and related facilities of maximum HK$45,000.00 per month with effect from 15 January 2008.

Mr. Chan’s interests in the Shares, within the meaning of Part XV of the SFO as at 31 December 2007 include 18,160,000 Shares beneficially own by him, 3,000,000 share options granted to him on 30 April 2002 at the exercise price of HK$0.55 per Share and 1,200,000 shares options granted to him on 20 February 2003 at the exercise price of HK$0.138 per Share. The above options granted to Mr. Chan will expire, if not exercised, on the respective dates 10 years from the date of grant.

Mr. Chan does not have any relationships with any Directors, senior management or substantial or controlling Shareholders within the meaning of Part XV of SFO.

Save as those disclosed above, there are no other matters need to be brought to the attention of the shareholders of the Company.

Save as those disclosed above, there are no other information to be disclosed pursuant to the requirements of rule 17.50(2)(h) to (v) of the GEM Listing Rules.

Mr. David TSOI , aged 60, is an independent non-executive director of the Company. Mr. Tsoi first joined the Company in October 2001. He retires by rotation under Article 87 of the Articles of Association of the Company and, being eligible, offers himself for re-election. Apart from being a director of the Company, Mr. Tsoi has not been a director of any public listed company for the past three years.

Mr. Tsoi is a Certified Public Accountant by profession, and he is now practising as Director of Alliott, Tsoi CPA Limited. Mr. Tsoi holds an MBA degree from the University of East Asia, Macau, is a Fellow Member of both the Chartered Association of Certified Accountants, the Hong Kong Institute of Certified Public Accounts and an Associate Member of the Association of Certified General Accountants of Canada and the Institute of Chartered Accountants of England & Wales.

Mr. Tsoi’s appointment as an independent non-executive director with the Company for the two years ending 31 March 2008 carries an annual fee of HK$120,000.00. The said fee is determined by reference to his duties, responsibilities and experience. The appointment has been renewed at the increased fee level of HK$144,000.00 for a further two (2) years term commencing from 1 April 2008.

• 6 -

LETTER FROM THE CHAIRMAN

Mr. Tsoi has served on both the Audit Committee and the Remuneration Committee of the Board, as chairman, ever since their inception and will remain a member of both committees in the new term.

Mr. Tsoi’s interests in the Shares, within the meaning of Part XV of the SFO as at 31 December 2007 include 326,000 shares beneficially own by him, 750,000 share options granted to him on 12 January 2007 at the exercise price of HK$0.088 per Share. This options granted to Mr. Tsoi will expire, if not exercised, on the respective dates 10 years from the date of grant. Another grant was made to Mr. Tsoi on 7 December 2007 are 200,000 shares options at the exercise price of HK$2.72 per Share. The above options granted to Mr. Tsoi will expire, if not exercised, on the respective dates 2 years from the date of grant.

Mr. Tsoi does not have any relationships with any Directors, senior management or substantial or controlling Shareholders within the meaning of Part XV of SFO.

Save as those disclosed above, there are no other matters need to be brought to the attention of the shareholders of the Company.

Save as those disclosed above, there are no other information to be disclosed pursuant to the requirements of rule 17.50(2)(h) to (v) of the GEM Listing Rules.

AGM

The AGM Notice is set out in the ending pages of the Annual Report.

A form of proxy for the AGM is enclosed with the Annual Report. Whether you intend to attend the AGM or not, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited at Rooms 1806-7, 18th Floor, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not less than 48 hours before the time fixed for the AGM. Completion and delivery of the form of proxy will not preclude you from attending and voting at the AGM in person if you so wish.

PROCEDURES FOR DEMANDING A POLL

Article 66 of the Company’s articles of association sets out the procedures by which shareholders of the Company may demand a poll.

A resolution put to the vote of a meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded:

• (a) by the Chairman of such meeting; or

• (b) by at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

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LETTER FROM THE CHAIRMAN

• (c) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) by a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Shareholder.

RECOMMENDATION

The Directors are of the opinion that the proposals referred to in this circular are in the best interests of the Company and the Shareholders and therefore recommend the Shareholders to vote in favour of the Ordinary Resolutions at the AGM.

Yours faithfully,

For and on behalf of The Board of Directors of Melco LottVentures Limited Chan Sek Keung, Ringo Chairman and Chief Executive Officer

• 8 -

EXPLANATORY STATEMENT

APPENDIX

This is an explanatory statement given to all Shareholders relating to the ordinary resolution to be proposed at the AGM authorising the Repurchase Mandate. This explanatory statement contains all the information required pursuant to Rule 13.08 of the GEM Listing Rules and other relevant provisions of the GEM Listing Rules.

1. SHARE CAPITAL

As at the Latest Practicable Date, the issued share capital of the Company comprised 435,478,995 Shares.

Subject to the passing of the Ordinary Resolution no. 5(2) in the AGM Notice and on the basis that no further Shares are issued or repurchased by the Company prior to the AGM, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 43,547,899 Shares, representing 10% of the issued share capital of the Company during the period from the date of the passing of such Ordinary Resolution until (i) the conclusion of the next annual general meeting of the Company; (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Articles of Association or any applicable laws of the Cayman Islands to be held; or (iii) the revocation, variation or renewal of the Repurchase Mandate by ordinary resolution of the Shareholders in general meeting, whichever occurs first.

2. REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders for the Directors to have general authority from Shareholders to enable the Company to repurchase Shares in the market. Repurchases of Shares will only be made when the Directors believe that such repurchase will benefit the Company and the Shareholders. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value and/or its earnings per Share of the Company.

3. FUNDING OF REPURCHASES

In repurchasing Shares, the Company may only apply funds legally available for such purpose in accordance with its memorandum of association and Articles of Association, the GEM Listing Rules and the applicable laws and regulations of the Cayman Islands. The Company may not repurchase its own Shares on GEM for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

4. GENERAL

There might be a material adverse impact on the working capital or gearing position of the Company (as compared with the position disclosed in the audited financial statements contained in the Annual Report) in the event that the Repurchase Mandate is exercised in full. However, the Directors do not propose to exercise the Repurchase Mandate to such an extent as would, in the circumstances, have a material adverse effect on the working capital requirements of the Company or on the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

• 9 -

EXPLANATORY STATEMENT

APPENDIX

5. SHARE PRICES

The highest and lowest prices at which the Shares have traded on the GEM in each of the previous twelve months preceding the Latest Practicable Date were as follows:

Month	Highest	Lowest
	HK$	HK$
2007
March	0.280	0.110
April	0.300	0.153
May	0.330	0.210
June	0.460	0.285
July	0.960	0.340
August	1.500	0.500
September	1.620	1.040
October	2.320	1.360
November	3.400	2.260
December	2.820	2.200
2008
January	3.100	1.400
February	1.650	1.120
March (up to the Latest Practicable Date)	1.450	0.760

6. DIRECTORS’ UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the GEM Listing Rules, the memorandum of association of the Company, the articles of Association and the applicable laws of the Cayman Islands.

7. THE TAKEOVERS CODE

If as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a Shareholder, or a group of Shareholders acting in concert (within the meaning under the Takeovers Code), depending on the level of increase in the Shareholder’s interests, could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, the following Shareholders are interested in more than 10% of the Shares in issue and in the event that the Directors exercise in full the power to repurchase Shares in accordance with the Repurchase Mandate, the percentage interest in the Shares:

• 10 -

EXPLANATORY STATEMENT

APPENDIX

					Approximate
					percentage
					of interest
			Number of		when exercise in
		Number of	underlying	Approximate	full the power
		Share	Shares	percentage	to repurchase
Name	Capacity	interested	interested	of interest	Shares
Power Way Group	Beneficial	72,000,000	713,882,352	180.46%	200.52%
Limited (“Power	Owner		(Note 5)
Way”)
Melco LottVentures	Interest	72,000,000	713,882,352	180.46%	200.52%
Holdings Limited	through a	(Note 1)	(Note 5)
(“Melco	controlled
LottVentures”)	corporation
Melco Leisure and	Interest through	72,000,000	713,882,352	180.46%	200.52%
Entertainment	controlled	(Note 2)	(Note 5)
Group Limited	corporations
(“Melco Leisure”)
Melco International	Interest through	72,000,000	713,882,352	180.46%	200.52%
Development	controlled	(Note 3)	(Note 5)
Limited (“Melco”)	corporations
Mr. Ho, Lawrence	Interest through	72,000,000	713,882,352	180.46%	200.52%
Yau Lung	controlled	(Note 4)	(Note 5)
(“Mr. Ho”)	corporations
Mr. Chan Sek Keung,	Beneficial	18,352,000	4,200,000	5.18%	5.75%
Ringo_(Note 6)_	Owner		(Note 6)
	Interest	56,400,000	–	12.95%	14.39%
	through
	controlled
	corporation
Woodstock	Beneficial	56,400,000	–	12.95%	14.39%
Management	Owner
Limited
(Note 6)
Mr. Ng Lai Yick	Beneficial	3,134,744	–	0.72%	0.80%
(Note 7)	Owner
	Interest	36,900,000	–	8.47%	9.41%
	through
	controlled
	corporation
North 22 Nominees	Beneficial	36,900,000	–	8.47%	9.41%
Limited_(Note 7)_	Owner
Enso Capital	Interest through	39,164,000	–	8.99%	9.99%
Management LLC	controlled
(“Enso”)(Note 8)	corporation
Enso Global Equities	Beneficial	23,603,110	–	5.42%	6.02%
Master Partnership	Owner
LP_(Note 8)_
Legg Mason Inc	Interest through	30,000,000	–	6.89%	7.65%
	controlled
	corporations

• 11 -

EXPLANATORY STATEMENT

APPENDIX

Notes:

1. Melco LottVentures is deemed to be interested in the 72,000,000 Shares by virtue of its controlling interests in Power Way.

2. Melco Leisure is deemed to be interested in the 72,000,000 Shares by virtue of its controlling interests in its wholly-owned subsidiary, Melco LottVentures.

3. Melco is deemed to be interested in the 72,000,000 Shares by virtue of its controlling interests in its whollyowned subsidiary, Melco Leisure.

4. Mr. Ho is deemed to be interested in the 72,000,000 Shares by virtue of his controlling interests in Melco, which are held by him personally and his controlled corporations.

5. Convertible bonds in the principal amount of HK$606,800,000 carrying the rights to subscribe for Shares at an initial conversion price of HK$0.85 per Share was issued by the Company to Power Way on 13 December 2007 to satisfy part of the consideration for the acquisition of the entire issued share capital of Precious Success Holdings Limited and 60% of the entire issued share capital of Oasis Rich International Limited under the agreement dated 8 October 2007 entered into among the Company, Rising Move International Limited (a wholly-owned subsidiary of the Company), Power Way, LottVision Limited, Melco International Development Limited and Frrich Enterprises Co., Ltd.. If Power Way exercises the conversion rights attaching to the said convertible bonds in full at the initial conversion price, a total of 713,882,352 Shares will be issued to Power Way. However, no conversion of the convertible bonds shall be made, if immediately upon such conversion, (1) Power Way and its parties acting in concert (as defined under the Takeovers Code) with it will be under an obligation to make a general offer under the Code; (2) each of (i) any of the existing Shareholders holding more than 20% or more of the voting rights of the Company as at the date of the Agreement; and (ii) Power Way and its parties acting in concert (as defined under the Takeovers Code) will hold 20% or more of the voting rights of the Company respectively; or (3) the public float of the Shares falls below 25% (or any given percentage as required by the GEM Listing Rules) of the issued Shares.

6. Mr. Chan Sek Keung, Ringo, Chairman, Chief Executive Officer and Executive Director, is deemed, by virtue of the SFO, to be interested in the 56,400,000 Shares held by Woodstock Management Limited, a company whollyowned by him, in addition to 18,352,000 Shares held by him personally, 3,000,000 share options granted to him on 30 April 2002 at the exercise price of HK$0.55 per Share and 1,200,000 shares options granted to him on 20 February 2003 at the exercise price of HK$0.138 per Share.

7. Mr. Ng Lai Yick is deemed, by virtue of the SFO, to be interested in the 36,900,000 Shares held by North 22 Nominees Limited, a company wholly-owned by him, in addition to the 3,134,744 Shares held by him personally.

8. Enso is deemed, by virtue of the SFO, to be interested in the 39,164,000 Shares which include the 23,603,110 Shares held by Enso Global Equities Master Partnership LP, which is a discretionary fund controlled by Enso.

The Directors are not aware of any consequences which may arise under the Takeovers Code as a consequence of any purchase made under the Repurchase Mandate. However, the Company may not repurchase Shares which would result in the number of Shares held by the public being reduced to less than 25 per cent.

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EXPLANATORY STATEMENT

APPENDIX

The GEM Listing Rules prohibit the Company from knowingly purchasing its securities on GEM from a “connected person”, that is, a director, chief executive, management shareholders or substantial shareholder of the Company or any of its subsidiaries or their respective associates.

None of the Directors nor, to the best of their knowledge, having made all reasonable enquiries, any of their associates (as defined in the GEM Listing Rules) have any present intention to sell Shares to the Company or its subsidiaries under the Repurchase Mandate if such is approved by the Shareholders.

No connected person (as defined in the GEM Listing Rules) of the Company has notified the Company that it has a present intention to sell Shares to the Company or its subsidiaries, or has undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

8. SHARES REPURCHASE MADE BY THE COMPANY

No repurchases of Shares have been made by the Company (whether on the GEM or otherwise) during the six months immediately preceding the Latest Practicable Date.

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