Digiwave Solutions, Inc.

A fully operational subsidiary of PEP, Digiwave Solutions Inc. (Digiwave) is a local software development and entertainment firm. It aims to establish itself as the market leader in Internet gaming software in the Philippines and eventually compete in the international arena, anchored on its proven expertise, experience and innovations in interactive gaming and entertainment.

On February 22, 2008, PEP and Digiwave Solutions, Inc. (Digiwave) inked a share swap agreement, with the shareholders of the latter acquiring nearly 70 percent of the former. The move is in line with the two companies bid to capture a dominant and profitable share of the Philippine online gaming software market and establish a presence in the booming leisure and entertainment business. The Securities of Exchange Commission (SEC) subsequently issued a Certificate of Approval of Valuation of the share swap between the two companies.

The share swap agreement calls for the issuance of more than 1 billion shares of PEP in exchange for 100 percent ownership of Digiwave. Once the share swap is completed, Digiwave shareholders shall own 68.5 percent of PEP, which in turn, shall own and control 100 percent of the outstanding capital of the former. Digiwave shareholders have already infused Php 125 million in cash to PEP for the increase in the capitalization of the Company.

Digiwave’s founder and former Chairman, Mr. Jung Ku Lee, has been appointed as Chairman and Chief Executive Officer of PEP on July 23, 2008, while Mr. Dong Hun Lee has been appointed President and Chief Operating Officer on May 16, 2008.

For more information about Digiwave, visit http://www.digiwave.com.ph/

History

Founded on August 9, 2006, Digiwave is a Philippine-based entertainment and IT company principally focused on software development and distribution, particularly for leisure gaming purposes, using state-of-the-art South Korean technology. It currently operates seven (7) PAGCOR e-Games Stations (PEGS) located in Silver City (Pasig), Adriatico Street (Manila), Don Antonio (Quezon City), San Roque (Antipolo), General Trias (Cavite), Quirino (Manila) and Arranque (Manila), and a Poker Club (Mandaluyong City).

In April 2004, Mr. Jung Ku Lee, working under a different company at the time, started his first PEGS set up, located in Kamias corner EDSA. The operation of this PEGS was a new endeavor to the local government, PAGCOR and PhilWeb.

Sales were bleak and dismal during the first year of operation. The licensed software was limited and lacked the versatility and user-friendliness available today. Believing in the potential of the business, Mr. Jung Ku Lee remained steadfast and continued to expand the business, opening branches in Roxas Blvd. (Manila), Ortigas and Libis (Pasig). The system slowly improved, with new software licensed and utilized by PhilWeb and PAGCOR, and errors were minimized, translating to improved sales.

Expanding to over ten (10) branches, Mr. Lee’s operated PEGS became the benchmark for other current and future operators. He invested in the development of each and every site, making sure it had the best equipment, most comfortable amenities and the right ambiance, and excellent services from the employees.

Mr. Lee’s operated PEGS have averaged approximately 38 percent of the total sales in the whole country despite the fact that his PEGS constitute less than eight (8) percent in number of branches.

On August 9, 2006, armed with expertise in PEGS operation and management, Mr. Jung Ku Lee set up and established Digiwave Solutions, Inc. (Digiwave or DWI), a firm engaged in the operation of interactive gaming facilities, and software development and distribution. Digiwave was subsequently registered with the Securities and Exchange Commission (SEC) on October 23, 2006.

Digiwave immediately started its foray into software development for Internet Casinos. It registered and began testing three (3) of its games, Matgo, Baduki, and 7-Card Stud Poker under PAGCOR’s supervision.

On May 24, 2007, Digiwave entered into a Memorandum of Agreement (“MOA”) with PhilWeb Corp. for the use of its latest multiplayer games in the PEGS. The company also entered into a MOA dated September 19, 2007 with Running Mate Inc. (RMI), a PEGS operator in the Philippines, for DWI to provide technical support and preventive maintenance and equipment services to all RMI PEGS.

The company opened its first PEGS on January 15, 2008 in Adriatico St., Malate, Manila, marking its initial entry into PEGS operation and management. This was followed by the February 7, 2008 opening of its Silver City branch in Pasig; and subsequently, opened operations in Antipolo, Don Antonio (QC), General Trias (Cavite) and Arranque (Manila). In January 2009, DWI has acquired its seventh branch in Quirino Ave. in Manila.

Out of the 117 PEGS in the country, Digiwave’s Silver City branch has been consistent as the top PEGS nationwide in terms of sales, and continues in setting new records. It retained its top position as of January 2009.

Digiwave is currently supplying games like “Baduki” and “7-Card Stud” poker, which are available in the PEGS branches of the state-run PAGCOR, through the facilities of Philweb Corporation. The company anticipates boosting its market share by launching new games per quarter and setting its software as an alternative to the current gaming software providers of PAGCOR. Digiwave is continuously in discussions with leading software providers and developers to improve its product lineup and to export gaming software. With strategic alliances from both international and domestic gaming operators and developers, Digiwave aims to capture at least five percent of the estimated $4-billion Asian online gaming market by 2010.

In 2008, the company was able to sell six of its online gaming software, “7-Card Stud Poker”, “Texas Hold’em Poker”, “Baccarat”, “Super 6”, “Baduki” and “Mahjong”, to Goodandgood Management Inc., a South Korean-based firm, for US$ 3 million.

In May 2009, Digiwave opened its first poker club, The Big Ace Liberty Club, located in Mandaluyong City. The club offers high quality gaming and features state-of-the-art equipment.

It is currently in the development of a slot machine kiosk, with more than 200 games, that links all machines for a grand jackpot. The slot machine kiosk development is being done in partnership with Microgaming Corporation and is expected to come out in the coming year.