HandHeld Entertainment Completes Reverse Merger and $7.6 Million Private Placement; Common Stock Beg

HandHeld Entertainment, Inc. (OTC BB: HNDH) today announced the completion of a reverse merger and the closing of a $7.6 million private placement, details of which are described in current reports filed with the Securities and Exchange Commission on Form 8-K. Trading in the common stock of HandHeld Entertainment will begin on March 6, 2006 on the Over-The-Counter Bulletin Board under the symbol “HNDH.”

[ClickPress, Thu Mar 02 2006] HandHeld Entertainment, Inc. (OTC BB: HNDH) today announced the completion of a reverse merger and the closing of a $7.6 million private placement, details of which are described in current reports filed with the Securities and Exchange Commission on Form 8-K. Trading in the common stock of HandHeld Entertainment will begin on March 6, 2006 on the Over-The-Counter Bulletin Board under the symbol “HNDH.”

HandHeld Entertainment, a “pure play” digital-media-to-go company with its ZVUE™ family of mass-market portable media players as well as its own online video content store, completed a reverse merger with Vika Corp. on February 10, 2006. Subsequently, HandHeld Entertainment completed the sale of 3,802,500 shares of its common stock at $2.00 per share through a private placement to institutional and accredited investors resulting in gross proceeds of $7,605,000 to the company. The proceeds will be used by the company for general working capital purposes. After taking effect of both the reverse merger and private placement, HandHeld Entertainment has approximately 13.9 million shares of common stock outstanding, of which approximately 2.4 million shares of common stock are in the public float.

HandHeld Entertainment introduced its entry level ZVUE (the Model 200) in 2003 at a price point of $99.95. Available today in more than 1,800 Wal-Mart stores around the United States, the mass-market-priced ZVUE is the perfect digital-media-to-go-solution because ZVUEs allow users to watch their favorite videos, listen to music or look at photos anywhere, anytime. HandHeld Entertainment has also announced three new ZVUE models, the first of which is slated for completion in the first quarter of 2006, and each of which is upgradeable and designed to take advantage of dropping storage pricing to further promote customer flexibility at reasonable price points.

Additionally, the company recently launched the beta version of ZTV™, its video download store, at www.zvue.com, a place where lovers of digital video on the go can find hundreds of free video selections in a dozen genres, as well as hundreds of Pay ‘n’ Play™ video selections available for online purchase from $0.99 to $1.99 per downloaded video. HandHeld Entertainment also announced plans in January to expand ZTV in mid-2006 with a video subscription service known as ZVISION™. Additional details on ZVISION will be revealed by the company at a future date.

Special Note: The common stock sold in the private placement has not been registered under the Securities Act of 1933, as amended or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements. The common stock was offered and sold only to accredited investors in offerings exempt from the registration requirements of the Securities Act. This announcement is not an offer to sell or the solicitation of an offer to buy shares of common stock of HandHeld Entertainment.

About HandHeld Entertainment, Inc.
HandHeld Entertainment is a “pure play” digital-media-to-go company with a family of mass-market portable media players priced at mass-market prices as well as its own online video content store. Its ZVUE portable media players are available for purchase online and in more than 1,800 retail locations across the United States, while portable video lovers can visit ZTV (HandHeld Entertainment’s video content store at www.zvue.com) to buy pay-per-download videos or download thousands of free media titles. For more information, visit www.hheld.com or call 415-495-6470.

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HandHeld Entertainment, ZVUE, ZTV, Pay ‘n’ Play and ZVISION are trademarks of HandHeld Entertainment. All other trademarks are property of their respective owners.

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

This release contains forward-looking statements. To the extent that any statements made in this release contain information that is not historical, these statements are forward-looking. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by these forward-looking statements. These risks and uncertainties include, without limitation: HandHeld Entertainment’s dependence on contract manufacturing of its products; its reliance on a single major mass-market retailer; its ability to develop and market successfully and in a timely manner new products and services; its ability to predict market demand for, and gain market acceptance of, its products and services; the impact of competitive products and services and of alternative technological advances; its ability to raise additional capital to finance its activities; its limited and unprofitable operating history; its ability to operate as a public company; its ability to reduce product return rates; the affect of inventory and price protections required by major retailers; the availability and affordability of digital media content; its ability to protect its proprietary information and to avoid infringement of others’ proprietary rights; its ability to attract and retain qualified senior management and research and development personnel; the reliability and security of its information systems and networks; and other factors described in HandHeld Entertainment’s filings with the Securities and Exchange Commission, including Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K. These forward-looking statements are made as of the date hereof. HandHeld Entertainment does not undertake any obligation to publicly update any forward-looking statements. As a result, investors should not place undue reliance on these forward-looking statements.

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