-----------------------------------------------------------------------
Pro Forma EBITDA $ (2,798) $ (3,424)
-------------------------------------------------------------------------
Outlook
The Company continues to focus on the integration of our business including migration of platforms and services offerings, development of new distribution channels as well as focusing on complementary acquisition which is inline with the Company's aggressive growth strategy.
Forward Looking Statements
This news release may contain forward-looking statements that are based on current projections, and that are not guarantees of future performance, and involve certain risks and uncertainties that are difficult to predict. The future results of the Company may differ materially from those expressed in the forward-looking statements contained in this news release, due to, among other factors, the risks and uncertainties inherent in the business of the Company, the risk factors discussed in the Company's 2005 Annual Information Form and in other documents published or filed by, or on behalf of, the Company from time to time with the Canadian securities regulators. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect the occurrence of unanticipated events.
About FUN Technologies
FUN Technologies Inc. is one of the world's leading online casual games providers. FUN's strategy is to provide its cutting-edge games systems to top distribution partners around the world. FUN is 51% owned by Liberty Media Corporation, and FUN's common shares are listed on both the Toronto Stock Exchange and the Alternative Investment Market (AIM) of the London Stock Exchange under the symbol "FUN".
Notice to Reader of the Unaudited Interim Consolidated Financial
Statements
The unaudited interim consolidated financial statements of FUN Technologies Inc. (the "Company") and the accompanying unaudited interim consolidated balance sheet as at June 30, 2006 and the related statement of operations and cash flows for the three and six months ended June 30, 2006, the unaudited financial statements are the responsibility of the Company's management. These consolidated financial statements have not been audited or reviewed on behalf of the shareholders by the independent external auditors of the Company, KPMG LLP.
The unaudited interim consolidated financial statements have been prepared by management and include the selection of appropriate accounting principles, judgments and estimates necessary to prepare these financial statements in accordance with accounting principles generally accepted in Canada.
Lorne K. Abony Stephen K. Tucker
Chief Executive Officer Chief Financial Officer
Toronto, Canada Toronto, Canada
August 14, 2006 August 14, 2006
FUN TECHNOLOGIES INC.
Consolidated Balance Sheets
(Expressed in U.S. dollars)
-------------------------------------------------------------------------
June 30, December 31,
2006 2005
-------------------------------------------------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 20,712,491 $ 1
Restricted cash 511,519 -
Short-term investments 48,824 -
Accounts receivable, net of allowance for
doubtful accounts of $345,875 1,165,526 -
Prepaid expenses and other 2,626,135 -
-----------------------------------------------------------------------
25,064,495 1
Capital assets, net of accumulated
depreciation (note 4) 3,434,903 -
Intangibles, net of accumulated
amortization (note 5) 91,524,315 -
Goodwill (notes 3 and 6) 259,603,182 -
Investments and other 3,216,600 -
-------------------------------------------------------------------------
$ 382,843,495 $ 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 6,149,781 $ -
Customer deposits 2,002,251 -
Income taxes payable 236,697 -
Deferred revenue 3,508,395 -
-----------------------------------------------------------------------
11,897,124 -
Future income taxes (note 3) 33,974,089 -
Long-term obligations and other 680,316 -
Shareholders' equity:
Share capital:
Common shares (note 7) 346,276,814 1
Foreign currency translation adjustment (58,657) -
Deficit (9,926,191) -
-----------------------------------------------------------------------
336,291,966 1
Basis of presentation (note 2(a))
Commitments and contingencies (note 11)
-------------------------------------------------------------------------
$ 382,843,495 $ 1
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
FUN TECHNOLOGIES INC.
Consolidated Statements of Operations
(Expressed in U.S. dollars)
-------------------------------------------------------------------------
Three months Six months
ended ended
June 30, June 30,
2006 2006
-------------------------------------------------------------------------
(Unaudited)
Revenue $ 10,107,883 $ 12,372,698
Cost of sales 3,011,170 3,773,467
-------------------------------------------------------------------------
Gross profit 7,096,713 8,599,231
Operating expenses:
Software development 2,443,895 2,817,323
Selling, general and administrative 7,726,717 9,102,826
Depreciation and amortization 5,631,986 7,067,582
-----------------------------------------------------------------------
15,802,598 18,987,731
-------------------------------------------------------------------------
Loss from operations (8,705,885) (10,388,500)
Other items:
Interest income 22,722 48,851
Impairment of investments (1,955,231) (1,955,231)
-----------------------------------------------------------------------
(1,932,509) (1,906,380)
-------------------------------------------------------------------------
Loss before income taxes (10,638,394) (12,294,880)
Future income tax recovery (1,850,401) (2,368,689)
-------------------------------------------------------------------------
Loss for the period $ (8,787,993) $ (9,926,191)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Loss per common share (note 12):
Basic and diluted $ (0.14) $ (0.16)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
FUN TECHNOLOGIES INC.
Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
-------------------------------------------------------------------------
Three months Six months
ended ended
June 30, June 30,
2006 2006
-------------------------------------------------------------------------
(Unaudited)
Cash flows from (used in) operating
activities:
Loss for the period $ (8,787,993) $ (9,926,191)
Adjustments to reconcile earnings to cash
provided by (used in) operating
activities:
Depreciation and amortization 5,631,986 7,067,582
Impairment of investments 1,955,231 1,955,231
Future income taxes (1,850,401) (2,368,689)
Other (83,886) (58,879)
-----------------------------------------------------------------------
(3,135,063) (3,330,946)
Change in non-cash operating working
capital:
Restricted cash (47,094) (47,094)
Accounts receivable 194,485 305,426
Prepaid expenses and other (740,114) (606,026)
Accounts payable and accrued liabilities (1,850,184) (2,582,989)
Customer deposits (386,475) 222,826
Income taxes payable (1,251,402) (4,243,590)
Deferred revenue (336,412) (375,120)
-----------------------------------------------------------------------
(7,552,259) (10,657,513)
Cash flows from financing activities:
Issuance of capital stock 2,034,653 199,695,011
Long-term obligations and other 571,992 571,992
-----------------------------------------------------------------------
2,606,645 200,267,003
Cash flows from (used in) investing
activities:
Acquisitions, net of cash acquired (3,818,995) (168,270,390)
Purchase of capital assets (670,840) (835,622)
Redemption of short-term investments 203,890 209,012
-----------------------------------------------------------------------
(4,285,945) (168,897,000)
-------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents (9,231,559) 20,712,490
Cash and cash equivalents, beginning of
period 29,944,050 1
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 20,712,491 $ 20,712,491
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplemental cash flow information (note 10)
See accompanying notes to unaudited consolidated financial statements.
1. Nature of business:
The primary operation of FUN Technologies Inc. and its subsidiaries
(the "Company") is the provision of online and interactive game
services. The Company provides the game services through its FUN
Games and FUN Sports operating segments. The Company's FUN Games
segment operates its skill games business, operating and licensing a
skill games offering which includes pay-for-play person-to-person and
tournament-based interactive skill games, free games, downloadable
games and subscription games. The Company's FUN Sports segment
operates its fantasy sports services which includes editorial
content, sports data, games and leagues to consumers and corporate
distributors.
2. Significant accounting policies:
The consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles ("GAAP"). The
Company has considered The Committee of European Securities
Regulators' ("CESR") technical advice issued in June 2005 on
equivalence of certain third country GAAP, including Canadian GAAP,
to International Financial Reporting Standards ("IFRS"), and
determined there are no additional disclosures or information in
respect of these consolidated financial statements, other than the
additional disclosures below that would be required to satisfy the
recommendations set out in the CESR advice, if that advice were to be
applied.
Under IFRS, but not Canadian GAAP, the allocation of purchase price
to specific intangibles and goodwill includes estimated deferred
consideration payable that is not yet due. The estimated deferred
consideration payable but not yet due and, therefore, not recognized
under Canadian GAAP, at June 30, 2006, is $12.6 million. However, in
respect of the acquisitions made by the Company, this would not
impact the amount attributable to specific intangibles, which would,
therefore, be materially the same under IFRS as under Canadian GAAP
and, accordingly, the Company does not consider that there is any
material difference in the amortization charge under IFRS and
Canadian GAAP.
The following accounting policies have been applied consistently in
dealing with items which are considered material in relation to the
consolidated financial statements.
(a) Basis of presentation:
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
The Company was incorporated on November 18, 2005 and by virtue
of a Scheme of Arrangement (the "Scheme") under Section 425 of
the UK Companies Act 1985 sanctioned by the High Court of Justice
in England and Wales, it acquired all the issued and outstanding
shares of FUN Technologies plc ("Old FUN") on March 10, 2006
whereby Old FUN became a wholly-owned subsidiary of the Company.
The acquisition has been accounted for using the purchase method
of accounting, effective March 10, 2006. Prior to the acquisition
of Old FUN, the Company had no operations.
(b) Use of estimates:
The preparation of financial statements requires management to
make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses
during the periods. Actual amounts could differ from those
estimates.
(c) Revenue recognition:
Revenue from skill games operations is generally recognized net
of prizes and other promotions paid. Revenue from tournaments
where the Company guarantees the prize pool is recognized as
gross entry fees with the related prize expenses included in cost
of sales. In either case, fees are recognized as revenue at the
conclusion of the participants' game play. In addition, the
Company may periodically host tournaments for promotion purposes
and such costs are included in selling, general and
administrative.
Fees for subscription services are generally received in advance
and recognized as revenue rateably over the terms of the
subscription. Advertising revenue is recognized over the period
in which the ad is displayed. Advance payments for subscriptions
and advertising are classified as deferred revenue at each period
end.
The Company also derives revenue from third-party companies by
providing the customers with games or websites for end users,
which are then customized to reflect the look and feel of each
third-party customer. Revenue from these items is unbundled and
recognized according to the relative fair value as each
contractual element is delivered. If the fair value of the
contractual elements is not available, revenue is recognized on a
straight-line basis over the life of the contract.
(d) Cash and Cash Equivalents
Cash and cash equivalents include cash and highly liquid
investments with original maturities of less than three months.
Included in cash and cash equivalents are $2,002,251 of user
funds held on deposit.
(e) Investments:
Investments include long-term investments that are stated at cost
less any provision for impairment. During the six months ended
June 30, 2006, the Company recorded an impairment on long-term
investments of $1,955,231.
(f) Intangibles:
Intangibles consist of customer relationships, trade names,
technology and customer agreements and other intangibles and are
amortized over their useful lives, ranging from one to ten years.
(g) Goodwill:
Goodwill is the residual amount that results when the purchase
price of an acquired business exceeds the sum of the amounts
allocated to the assets acquired, less liabilities assumed, based
on their fair values.
Goodwill is not amortized and is tested for impairment annually,
or more frequently, if events or changes in circumstances
indicate that the asset might be impaired. The impairment test is
carried out in two steps. In the first step, the carrying amount
is compared with its fair value. When the fair value exceeds its
carrying amount, goodwill is considered not to be impaired and
the second step of the impairment test is unnecessary. The second
step is carried out when the carrying amount exceeds its fair
value, in which case, the implied fair value of the goodwill is
compared with its carrying amount to measure the amount of the
impairment loss, if any. The implied fair value of goodwill is
determined in the same manner as the value of goodwill is
determined in a business combination described in the preceding
paragraph, using the fair value as if it was the purchase price.
If the carrying amount of goodwill exceeds its implied fair
value, an impairment loss is recognized in an amount equal to the
excess and is presented as a separate line item in the
consolidated statements of operations.
(h) Capital assets:
Capital assets are stated at cost less accumulated depreciation.
Depreciation, based on the estimated useful lives of the assets,
is provided on a straight-line basis as follows:
-----------------------------------------------------------------
Furniture and equipment and
leasehold improvements 5 years
Computer hardware 3 years
Computer software and other 1 year
-----------------------------------------------------------------
Under Canadian GAAP, long-lived assets, including capital assets
and intangibles with finite useful lives, are amortized over
their useful lives. The Company reviews the useful lives and the
carrying values of its long-lived assets for continued
appropriateness. The Company performs an impairment assessment of
long-lived assets held for use whenever events or changes in
circumstances indicate that the carrying amount of the assets may
not be recoverable. If the sum of the undiscounted expected
future cash flows expected to result from the use and eventual
disposition of an asset is less than its carrying amount, it is
considered to be impaired. An impairment loss is measured at the
amount by which the carrying amount of the asset exceeds its fair
value, which is estimated as the expected future cash flows
discounted at a rate commensurate with the risks associated with
the recovery of the asset.
(i) Software development expenditures:
Costs related to the development of software, including games,
websites and support platforms, are expensed as incurred unless
such costs meet the criteria for deferral and amortization under
Canadian GAAP. Under The Canadian Institute of Chartered
Accountants' ("CICA") Handbook Section 3450, Research and
Development Costs, the Company capitalizes certain computer
software development costs incurred subsequent to establishing
technological feasibility; the Company will be amortizing the
capitalized software development costs using the straight-line
method over the estimated useful life of the software once the
software is available for general release. To date, no software
development costs have been capitalized.
(j) Income taxes:
The Company uses the asset and liability method of accounting for
income taxes. Future income tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases
and operating loss carryforwards. Future income tax assets and
liabilities are measured using enacted or substantively enacted
tax rates expected to apply to the taxable income in the periods
in which those temporary differences are expected to be recovered
or settled. The effect on future income tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment or substantive enactment
date.
(k) Foreign currencies:
Monetary items denominated in other than U.S. dollars are
translated into U.S. dollars at the exchange rates in effect at
the consolidated balance sheets dates, and non-monetary items are
translated at rates of exchange in effect when the assets were
acquired or obligation incurred. Revenue and expenses are
translated at rates in effect at the time of the transactions.
Foreign exchange gains and losses are included in the
consolidated statements of operations.
(l) Loss per share:
The Company uses the treasury stock method in computing diluted
loss per common share. The treasury stock method is a method of
recognizing the use of proceeds that could be obtained upon the
exercise of options and warrants in computing diluted loss per
common share. It assumes that any proceeds would be used to
purchase its common shares at the average market price during the
period being reported on. At June 30, 2006, 2,821,200 potential
common shares were outstanding. Potential common shares have been
excluded from the calculation of diluted earnings per share
because their inclusion would be anti-dilutive.
3. Business combinations:
-------------------------------------------------------------------------
Fantasy
WorldWinner.com, Sports
Old FUN(a) Inc.(b) Inc.(c) Total
-------------------------------------------------------------------------
Assets acquired:
Current assets,
net of cash $ 5,365,819 $ 592,976 $ 33,951 $ 5,992,746
Capital assets 2,724,229 288,422 3,858 3,016,509
Investments 5,134,219 - - 5,134,219
Intangibles 74,100,000 20,148,620 3,926,050 98,174,670
Goodwill 245,813,747 13,096,602 692,833 259,603,182
Other assets 243,380 - 682 244,062
-----------------------------------------------------------------------
333,381,394 34,126,620 4,657,374 372,165,388
Liabilities
assumed:
Current
liabilities 15,598,241 2,694,733 790,758 19,073,732
Other 101,886 - - 101,886
Future income
tax liabilities 28,490,000 8,059,448 - 36,549,448
-----------------------------------------------------------------------
44,180,127 10,754,181 790,758 55,725,066
-------------------------------------------------------------------------
Total
consideration $289,201,267 $ 23,372,439 $ 3,866,616 $316,440,322
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(a) As of November 21, 2005, Old FUN entered into a share purchase
agreement with Liberty Media Corporation ("Liberty") and others
pursuant to which Liberty was to acquire a majority indirect
interest in Old FUN. The transaction was structured as the Scheme
and became effective on March 10, 2006. Liberty subscribed, via
its wholly-owned subsidiary, Liberty Freedom, Inc. ("Liberty
Freedom"), for approximately 33.8 million common shares of the
Company for aggregate consideration of approximately $50 million,
less share registration fees of approximately $1.2 million
(Cdn. $58.6 million) plus approximately $146.8 million, payable
in cash. Pursuant to the Scheme, the Company acquired all of the
issued and outstanding ordinary shares in Old FUN (the "Ordinary
Shares") in exchange for aggregate consideration consisting of
approximately $146.8 million in cash and approximately
27.9 million common shares of the Company. The cash consideration
of approximately $146.8 million paid by the Company under the
Scheme was funded from the proceeds of the Liberty Freedom
subscription for the Company's shares. On February 17, 2006, the
Scheme received approval from shareholders of Old FUN. The Scheme
was sanctioned by the High Court of Justice in England and Wales
on March 9, 2006. This transaction has been accounted for as a
purchase transaction, with the Company identified as the acquirer
and Old FUN as the acquiree.
(b) On March 17, 2006, the Company acquired 100% of the shares of
WorldWinner.com, Inc. for cash consideration of $22.5 million
plus transaction costs of $0.9 million. The acquisition has been
accounted for by the purchase method with the results of
operations included in these financial statements from the date
of acquisition.
(c) On April 7, 2006, the Company acquired the net assets of Fantasy
Sports, Inc. for cash consideration of $3.9 million. The
acquisition has been accounted for by the purchase method with
the results of operations included in these financial statements
from the date of acquisition.
The above preliminary purchase price allocations for the acquisitions
of Old FUN, Worldwinner and Fantasy Sports are based on management's
best estimates of fair value. The preliminary allocations are subject
to adjustments based on the final fair value determinations upon
completion of certain third party valuation reports.
In conjunction with the preparation of the second quarter results,
the Company revised its preliminary purchase accounting which
resulted in an increase in intangible assets of $2.7 million,
increase in goodwill of $1.2 million, increase in future income taxes
of $1.0 million and a decrease in the loss for the six months ended
June 30, 2006 of $1.2 million.
In connection with the above acquisitions, the Company is required
under Canadian GAAP to recognize future income tax liabilities of
$36,549,448 that will be reduced over the life of the intangible
assets.
4. Capital assets:
-------------------------------------------------------------------------
June 30, December 31,
2006 2005
-------------------------------------------------------------------------
Accumulated Net book Net book
Cost depreciation value value
-------------------------------------------------------------------------
Furniture
and equipment $ 521,848 $ 58,191 $ 463,657 $ -
Leasehold
improvements 379,697 11,569 368,128 -
Computer hardware 2,710,448 336,432 2,374,016 -
Computer software
and other 240,137 11,035 229,102 -
-------------------------------------------------------------------------
$ 3,852,130 $ 417,227 $ 3,434,903 $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
5. Intangibles:
-------------------------------------------------------------------------
June 30, December 31,
2006 2005
-------------------------------------------------------------------------
Accumulated Net book Net book
Cost depreciation value value
-------------------------------------------------------------------------
Customer
relationships $ 22,052,053 $ 1,594,875 $ 20,457,178 $ -
Trade names 9,986,696 437,623 9,549,073 -
Technology 35,472,016 2,338,496 33,133,520 -
Customer
agreements and
other intangibles 30,663,906 2,279,362 28,384,544 -
-------------------------------------------------------------------------
$ 98,174,671 $ 6,650,356 $ 91,524,315 $ -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
6. Goodwill:
---------------------------------------------------------------------
Balance, December 31, 2005 $ -
Acquisitions 258,620,871
---------------------------------------------------------------------
Balance, March 31, 2006 258,620,871
Acquisitions and other 982,311
---------------------------------------------------------------------
Balance, June 30, 2006 $259,603,182
---------------------------------------------------------------------
---------------------------------------------------------------------
7. Share capital:
(a) Authorized:
Unlimited common shares
Unlimited preference shares, issuable in series
(b) Issued and outstanding:
-----------------------------------------------------------------
Common shares
---------------------
Number Amount
-----------------------------------------------------------------
Balance, December 31, 2005 1 $ 1
Shares issued 61,632,270 342,151,828
Exercise of stock options 650,200 2,090,334
-----------------------------------------------------------------
Balance, March 31, 2006 62,282,471 344,242,163
Exercise of stock options 1,102,114 2,034,651
-----------------------------------------------------------------
Balance, June 30, 2006 63,384,585 $346,276,814
-----------------------------------------------------------------
-----------------------------------------------------------------
Six months ended June 30, 2006 share capital transactions:
(i) During the period, the Company issued 33,764,972 common
shares to Liberty Freedom for aggregate proceeds of
$196,786,712.
(ii) During the period, the Company issued 27,867,298 common
shares in exchange for all the issued and outstanding
shares of Old FUN at a value of $5.16 (pnds sterling 2.94)
per share pursuant to the Scheme for aggregate value of
$143,762,319.
(iii) The Company issued 1,752,314 common shares as a result of
the exercise of outstanding stock options for proceeds of
$4,124,985.
8. Stock-based compensation and other stock-based payments:
Pursuant to Old FUN's Employee Share Option Scheme, which has been
assumed by the Company, there are outstanding fully vested stock
options to certain employees, officers and directors of the Company.
As the stock options are all fully vested, there is no compensation
expense to be recorded.
Details of stock option transactions are as follows:
---------------------------------------------------------------------
Weighted
average
Number of strike
shares price per
under option share
---------------------------------------------------------------------
Balance, December 31, 2005 - $ -
Old FUN options assumed 4,573,514 2.90
Exercised 650,200 3.07
---------------------------------------------------------------------
Balance, March 31, 2006 3,923,314 2.87
Exercised 1,102,114 1.85
---------------------------------------------------------------------
Balance, June 30, 2006 2,821,200 3.27
---------------------------------------------------------------------
---------------------------------------------------------------------
The options outstanding at June 30, 2006 expire in March 2009.
9. Segmented information:
The Company's operations fall into two industry segments: FUN Games
and FUN Sports. The Company manages its operations, and accordingly
determines its operating segments, on a line-of-business basis. The
performance of each line of business is monitored on earnings/loss
before interest, taxes, depreciation of capital assets, amortization
of intangible assets ("EBITDA"), and other charges related to the
Liberty transaction. Inter-segment transactions are reflected at
market value. The following is a breakdown by reporting segment:
---------------------------------------------------------------------
Three months ended FUN FUN
June 30, 2006 Games Sports Total
---------------------------------------------------------------------
Revenue:
United Kingdom $ 135,801 $ 28,151 $ 163,952
United States 5,707,064 4,236,867 9,943,931
---------------------------------------------------------------------
$ 5,842,865 $ 4,265,018 $ 10,107,883
---------------------------------------------------------------------
---------------------------------------------------------------------
EBITDA:
United Kingdom $ (277,795) $ (268,917) $ (546,712)
United States (1,224,716) 669,561 (555,155)
-------------------------------------------------------------------
$ (1,502,511) $ 400,644 (1,101,867)
------------- ------------
------------- ------------
Corporate and other EBITDA (1,695,830)
-------------
Total EBITDA (2,797,697)
Net interest 22,722
Depreciation and amortization (5,631,986)
Impairment of investments (1,955,231)
Other (276,202)
---------------------------------------------------------------------
Loss before income taxes $(10,638,394)
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
Six months ended FUN FUN
June 30, 2006 Games Sports Total
---------------------------------------------------------------------
Revenue:
United Kingdom $ 182,007 $ 28,151 $ 210,158
United States 6,944,962 5,217,578 12,162,540
---------------------------------------------------------------------
$ 7,126,969 $ 5,245,729 $ 12,372,698
---------------------------------------------------------------------
---------------------------------------------------------------------
EBITDA:
United Kingdom $ (314,299) $ (259,728) $ (574,027)
United States (1,509,911) 1,064,350 (445,561)
-------------------------------------------------------------------
$ (1,824,210) $ 804,622 (1,019,588)
------------- ------------
------------- ------------
Corporate and other EBITDA (1,996,127)
-------------
Total EBITDA (3,015,715)
Net interest 48,451
Depreciation and amortization (7,067,582)
Impairment of investments (1,955,231)
Other (304,803)
---------------------------------------------------------------------
Loss before income taxes $(12,294,880)
---------------------------------------------------------------------
---------------------------------------------------------------------
-------------------------------------------------------------------------
FUN FUN
June 30, 2006 Games Sports Corporate Total
-------------------------------------------------------------------------
Total assets:
Canada $ - $ - $ 20,704,365 $ 20,704,365
United Kingdom 464,234 106,594 2,292,446 2,863,274
United States 164,914,872 194,360,984 - 359,275,856
-------------------------------------------------------------------------
$165,379,106 $194,467,578 $ 22,996,811 $382,843,495
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Goodwill:
United States $105,996,541 $153,306,641 $ - $259,303,182
-------------------------------------------------------------------------
-------------------------------------------------------------------------
10. Supplemental cash flow information:
---------------------------------------------------------------------
Three months Six months
ended ended
June 30, June 30,
2006 2006
---------------------------------------------------------------------
Supplemental cash flow information:
Interest received $ 22,722 $ 48,851
Income taxes paid - 3,011,000
Supplemental disclosure of non-cash
financing activities:
Shares issued for acquisition of Old FUN - 143,762,319
---------------------------------------------------------------------
---------------------------------------------------------------------
11. Commitments and contingencies:
Included in certain partner agreements, the Company has guaranteed
revenue and marketing commitments totalling $4.3 million which
amounts are primarily due in the next two years.
Pursuant to acquisition transactions structured with earn-out
consideration, FUN is contingently obligated to pay up to
$12.6 million in additional purchase consideration over the next year
to the extent the acquired businesses attain certain performance
thresholds.
12. Loss per common share:
Basic and diluted loss per common share were calculated using the
weighted average common shares and weighted average potential common
shares.
---------------------------------------------------------------------
Three months Six months
ended ended
June 30, June 30,
2006 2006
---------------------------------------------------------------------
Weighted average number of common
shares outstanding:
Basic 62,883,527 62,661,425
---------------------------------------------------------------------
---------------------------------------------------------------------
Loss for the period $ (8,787,993) $ (9,926,191)
---------------------------------------------------------------------
---------------------------------------------------------------------
Loss per common share:
Basic $ (0.14) $ (0.16)
---------------------------------------------------------------------
---------------------------------------------------------------------