Kantone Holdings Limited — Capital/Financing Update 2007

Jul 6, 2007

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KANTONE HOLDINGS LIMITED

(Incorporated in the Cayman Islands with limited liability)

Stock code: 1059

ISSUE OF UP TO US$24,000,000 1 PER CENT. UNLISTED AND UNSECURED CONVERTIBLE BONDS DUE 2008 27[th] MONTHLY ANNOUNCEMENT

Reference is made to the Company’s announcements dated 7 April 2005 and 24 August 2006. The Company made this announcement as per the requirements of the listing approvals granted by the Stock Exchange in respect of the Shares to be issued and allotted upon the conversion of the Original Tranche 1 Bonds and the Additional Tranche 1 Bonds and upon the exercise of their respective Subscription Rights. During the month of June 2007, US$2,000,000 Additional Tranche 1 Bonds were converted and 40,620,000 new shares were issued pursuant to such conversions.

Reference is made to the Company’s announcements dated 7 April 2005 and 24 August 2006 (the “Announcements”). The Company made this announcement as per the requirements of the listing approvals granted by the Stock Exchange in respect of the Shares to be issued and allotted upon the conversion of the Original Tranche 1 Bonds and the Additional Tranche 1 Bonds and upon the exercise of their respective Subscription Rights. Unless the context herein otherwise requires, terms used in this announcement shall have the same meanings as in the Announcements.

The Company would like to report that there was no conversion for the Original Tranche 1 Bonds and conversions of the Additional Tranche 1 Bonds were made by the holders of Bonds during the month of June 2007 with details as follows:

			Amount of
	No. of	Conversion	Additional Tranche 1	Outstanding Additional
	new Shares	price	Bonds converted	Tranche 1 Bonds after the
Conversion date	issued	(HK$)	(US$)	conversion (US$)
8 June 2007	20,310,000	0.3844	1,000,000	3,300,000
21 June 2007	20,310,000	0.3844	1,000,000	2,300,000
	___________________________		_______________________
	40,620,000		2,000,000

The outstanding Original Tranche 1 Bonds and Additional Tranche 1 Bonds were US$100,000 and US$2,300,000 respectively as at 30 June 2007, whereas the change in the issued shares for the period was as follows:

Change in the issued shares for the month of June 2007 No. of issued Shares The issued share capital as at 1 June 2007 3,099,150,572 Total no. of news shares issued pursuant to the conversions during the month 40,620,000 Total no. of Shares issued pursuant to other transactions during the month 60,161,464*[Total issued share capital as at 30 June 2007 ] 3,199,932,036

• These shares are issued pursuant to the scrip dividend scheme of the Company with respect to the interim dividend declared for the year ending 30 June 2007.

This announcement is only released through the web-site of The Stock Exchange of Hong Kong Limited and no publication in the newspaper is made.

By Order of the Board Lai Yat Kwong Executive Director

Hong Kong, 6 July 2007

As at the date of this announcement, the executive directors of the Company are Mr Paul Kan Man Lok and Mr Lai Yat Kwong; the non-executive directors are Mr Leo Kan Kin Leung, Ms Shirley Ha Suk Ling and Mr Paul Michael James Kirby; and the independent non-executive directors are Prof Liang Xiong Jian, Prof Ye Pei Da, Mr Frank Bleackley, Prof Julia Tsuei Jo and Mr Ho Yiu Ming.