DYNASTY BUYING UP CHINESE FIRMS

26 October 2007

Reverse takeover in progress


Toronto-listed Mahjong provider Dynasty Gaming Inc. has announced details of its intention to acquire all of the issued and outstanding shares of two companies, Junnet Omnimedia Inc. ("Junnet"), based in Tortola, British Virgin Islands and Beijing Baihui Digital Stars Co. Ltd. ("Baihui"), based in Beijing, China.

Both companies are controlled by Dr. Wilson Cho, resident of Hong Kong and Dr. Dominic Chan, resident of Los Angeles, USA. Junnet is a distributor of online prepaid cards in China and a marketer of digital products such as software, music titles, games, video and other products delivered in digital form. Baihui is engaged in the development, installation and technical support of these types of digital products throughout China.

Under terms of a Letter of Intent signed on 16 October 2007, Dynasty proposes to acquire all of the shares in these two companies from their current owners in exchange for the issue of 320 million new Dynasty Gaming shares, based on a price of Cdn $0.25 per Dynasty share. This transaction, based on a valuation of U.S. $50 million for Junnet and U.S. $30 million for Baihui, will constitute a reverse takeover (RTO). Dynasty Gaming's business activities involving online entertainment distribution and game software development will focus primarily on China.

One significant condition of the proposed transaction is that Dynasty must first complete a financing for a minimum of U.S. $30 million based on a value of $0.25 per Dynasty share. Exploratory discussions with a possible underwriter for this financing are already underway.

The raising of this new funding, to be used primarily for marketing and business development, will result in the issue of an additional 120 million Dynasty common shares. Upon completion of all conditions under this proposed transaction, Dynasty's issued capital will increase from just over 92.3 million common shares to over 532.3 million common shares, excluding any additional shares that may result from the exercise of 24.7 million options and warrants.

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