MyPhotoAlbum Inc.
FortuneCity.com Inc. Sells Shareholding in US Affiliate…
Ad-hoc-announcement processed and transmitted by DGAP.
The issuer is solely responsible for the content of this announcement.
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FortuneCity.com Inc. Sells Shareholding in US Affiliate “Hosted Solutions”
for $692,000 Cash and Finalizes Closure of Its British Subsidiary for a Gain
of $1.1 million.
New York, October 5, 2004 – FortuneCity.com Inc. announced today that it has
sold its shareholding in US affiliate Hosted Solutions (formerly known as
Springboard Managed Hosting) and agreed to liquidate its UK subsidiary which
ceased trading in 2002.
Following a strategic review of its business, FortuneCity has sold 100% of
its shareholding in Hosted Solutions for $692,000 in cash. This transaction
represents a 246% return on FortuneCity’s original investment of $200,000
made in August 2001. The sale increases FortuneCity’s cash balance by
approximately 70% to $1.6 million at September 30,2004, and provides
additional security for the growth of its core business.
FortuneCity invested in Hosted Solutions as part of an arrangement to
co-locate its web infrastructure in Hosted Solution’s first data center.
Earlier this year the Company transferred its hosted infrastructure to
another co-location data center facility thereby eliminating any operational
relationship with Hosted Solutions.
Peter Macnee stated “Our original investment in Hosted Solutions was
operational in nature as we agreed to co-locate our hosting infrastructure
in their data center. Once we decided to transfer to a new data center, we
became a non-strategic minority investor in a privately held firm. This
transaction provides us a tremendous return on our investment, and the
ability to put additional capital to work to grow our core businesses while
improving our longer term financial viability and security.”
The investment had been accounted for under the equity method which required
the Company to record its pro-rata share of gains and losses and to eliminate
inter-company profits. Just prior to the sale the investment was valued at
$12,000 on the Company’s books resulting in a gain on the transaction of
$680,000.
In September 2004, agreement was reached with the court appointed liquidator
to liquidate the Company’s UK subsidiary. A final payment of approximately
$14,000 will be made by the Company in final settlement of other current
liabilities on the Company’s books in excess of $1.1 million. A gain of
approximately of $1.1 million will be recorded on this transaction.
As a result of these two transactions, working capital will increase by
approximately $1.7 million from $(1.1) million at June 30, 2004 to
approximately $600,000 at September 30th 2004.
end of ad-hoc-announcement (c)DGAP 05.10.2004
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WKN: 919383; ISIN: US34969P1021; Index:
Listed: Geregelter Markt in Frankfurt (General Standard); Freiverkehr in
Düsseldorf, Hannover und Stuttgart
050757 Okt 04
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