RE: Financials At June 30, 2012, the Company had negative working capital of $5.7 million compared to positive working capital of $24.9 million
at June 30, 2011. The Company is anticipating being able to fund the working capital deficit through additional financing in the
near term. The Company expects to obtain short term financing to settle its short term obligations and will obtain more
significant financing over a longer period of time, in which the Company anticipates it will return to a positive working capital
position.
Since May 2011, the Company has averaged an approximate monthly cash burn rate of a range of $850,000 to $1,400,000
comprised of operational sales, marketing, promotional and advertising, research and development as well as general and
administration and expects the monthly burn to continue throughout Fiscal 2013. The execution of the Company's business plan
includes a focus on marketing and sales efforts, extensive research and development (both internal and acquired) for wholly
owned companies. The significant efforts in sales, marketing and research and development will require time as well as
additional resources. The Company estimates monthly operating expenses will decrease by approximately $300,000 per month
by December 2012. When cash resources are available, the Company will continue to invest and incubate new and emerging
technology companies. Investments may range in size from $50,000 to $2,000,000.
In the event direct financing into Ortsbo is available through the US markets, and the Company completes a spin-out of Ortsbo,
the Company may retain a portion of the shares of the resulting entity. The potential source of funds from the shares of the
resulting entity and the reduced burn from the operations of Ortsbo will potentially reduce the amount of financing directly
required by the Company. The expected cash burn of the Company in the absence of Ortsbo would be substantially reduced
and based on current activities would range between $250,000 to $500,000 per month. The Company could also generate
additional cash inflows from the sale of the shares in the resulting entity in the event such entity is publicly traded.
As of October 23, 2012, the Company has potential cash inflows from in-the-money common stock options and warrants of
approximately $1,947,087 which will expire on or before April 2013.
It should also be noted that to date, Intertainment has generated limited consistent positive cash flow from operating activities
and the Company remains dependent on financing activities. The Company expects to raise additional funds for working capital,
capital expenditures and portfolio investment purposes during fiscal 2013, based on current cash and cash equivalents balances.
Based on its historical financial performance and the current condition of the credit and capital markets, financing may not be
available on terms acceptable to the Company or at all. If adequate funds are not available on acceptable terms, the Company’s
ability to fund future operations, make investments or take advantage of opportunities could be limited without an increase in
sales. The impact of expenditures for investments in the Company’s infrastructure or capital equipment and potential portfolio
companies on cash resources will be minimized by attempting to align spending.