Starnet Communications Announces No Charges Filed, Services Fully Operational as CEO Updates Shareholders; Company Retains Legal Counsel; Condemns Child Pornography.

VANCOUVER, B.C.--(BUSINESS WIRE)--Aug. 25, 1999--

Starnet Communications International Inc. (OTC: SNMM), an online provider of interactive media and information systems and the recognized leader in Internet gaming, stated today that legal counsel retained by the company has not received charges from Canadian authorities against Starnet, that Starnet is continuing to cooperate with authorities and that its business is 100% fully operational. In addition, the company emphasizes that it is not, nor has it ever been, associated with child pornography, and is strongly opposed to such matters in policy and practice.

Mark Dohlen, chief executive officer of Starnet, stated, "We have retained top legal counsel in Vancouver, who have informed us that they have received no communications from Canadian authorities charging Starnet. Our offices are open and 100% operational. To the best of our knowledge, based on information made available to us by the CLEU, the physical investigation of Starnet headquarters facilities in Vancouver is now complete. We expect no further interruption of our service to customers."

Dohlen further added, "We do not expect this investigation to have any serious long-term effects on our operations, our customers or our business and financial relationships. Our plans to grow and expand our business remain intact. The management of Starnet reiterates our intention to proceed aggressively with our strategic business initiatives as we continue to offer assistance and insight regarding our gaming operations to appropriate legal authorities. "

Commenting on the future of online gaming, Dohlen noted, "Starnet is the leading company at the nexus of technology and online gaming where, unfortunately, very little legal precedent exists. Starnet will support efforts to define the online frontier as we continue to grow operations worldwide."

Dohlen continued, "With regard to Starnet's entertainment business, we announced earlier this week our intention to monetize that unit and have invited bids from interested parties. We are confident that the expeditious sale of that business will provide Starnet with important capital resources to support our strategic intent and build our gaming operations. In addition, the company's clear focus on gaming will be enhanced.

"Certain media reports have stated or implied Starnet involvement with illegal and reprehensible child pornography," said Dohlen. "I state without fear of contradiction that our company eschews this practice and has in place policy that forbids such illegal commerce by this organization.

"The goal of this message is to ensure employees, shareholders, customers and the general public that Starnet Communications remains strong in our commitment to offer sophisticated gaming opportunities in an orderly, legal and consistent manner," Dohlen added. "We are grateful to our various constituents for their many recent statements of confidence in our company. We invite them to continue their relationships with Starnet as we emerge from this unexpected and unpleasant incident stronger and more focused in our goal to grow our core gaming business and provide enhanced value to shareholders."

Starnet, named "the established leader in Internet gaming and entertainment" by The Wall Street Journal, is a fully reporting, publicly held interactive entertainment company.

The statements in this press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934 and is subject to the safe harbor created by these sections. Actual results may differ materially from Starnet's expectations.