1003390--10/14/2008--SILVERSTAR_HOLDINGS

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{regulation, change, law}

{competitive, industry, competition}

{property, intellectual, protect}

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RISKS ASSOCIATED WITH OUR SUBSIDIARIES Many titles have short lifecycles and fail to generate significant revenues. We may fail to anticipate changing consumer preferences. Our business is highly dependent on the success and availability of video game hardware systems manufactured by third parties, as well as our ability to develop commercially successful products for these systems. Our business is intensely competitive and hit driven. If we do not deliver a hit product or if consumers prefer our competitors products or services over our own, our operating results could suffer. We may not be able to protect the proprietary rights. We may be subject to intellectual propriety claims. Rating systems for entertainment software, potential legislation and consumer opposition could inhibit sales of products for the Company. We operate in a highly competitive industry. If products contain defects, the business could be harmed significantly. We rely on independent third parties to develop its software products. The software game market has gravitated toward mass merchant retailers. We may face difficultly obtaining access to retail shelf space necessary to market and sell the products effectively. We permit customers to return products and to receive pricing concessions which could reduce net revenues and results of operations. Technology changes rapidly in the business and failure to anticipate or successfully implement new technologies, the quality, timeliness and competitiveness of products and services will suffer. The business is highly dependent on the success, timely release and availability of new video game platforms, on the continued availability of existing video game platforms, as well as the ability to have commercially successful products developed for these platforms. The video game hardware manufacturers set the royalty rates and other fees that must be paid to publish games for their platforms and, therefore, have significant influence on costs. If one or more of these manufacturers adopt a different fee structure for future game consoles, profitability will be materially impacted. We need to raise additional capital to ensure continued operations. Covenants in agreements relating to the Variable Rate Secured Convertible Debentures due April 30, 2010 and the 9% Secured Convertible Debentures due March 19, 2012 may limit flexibility and prevent the Company from taking certain actions which could adversely affect the ability to execute the business strategy There is no assurance that the Company can successfully implement the business plan that calls for the acquisition of additional entertainment software titles and businesses to create a larger presence in the marketplace. If we are unable to successfully integrate acquisitions, revenue growth and future profitability may be negatively impacted. Since a significant amount of assets are denominated in foreign currency and business is conducted internationally, we are subject to currency and foreign regulatory risks. Currently we are disputing a tax liability with the South African revenue service and may be forced to expense additional amounts in this matter. We depend on the continued services of key personnel. RISKS RELATING TO THE COMPANY S COMMON STOCK We may not be able to comply with NASDAQ listing requirements, which could result in our common stock being delisted from The NASDAQ Capital Market. Our common stock may become subject to the SEC s penny stock rules. The price of common stock is highly volatile. Since we do not intend to declare dividends in the foreseeable future, the return on investment will depend upon the appreciation of the market price of the shares. Anti-takeover measures in the Bye-laws could adversely affect the voting power of the holders of the common stock. The rights of shareholders under Bermuda law may not be as extensive as the rights of shareholders under the laws of jurisdictions in the United States. Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

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1003390--10/14/2008--SILVERSTAR_HOLDINGS_LTD