Common use of 1Working Capital Clause in Contracts

1Working Capital. The historical working capital of Optimal and its level of cash are presented below: Prior to the acquisition of WowWee in November 2007, Optimal earned significant revenues from the payment processing of online gaming activities and accumulated a considerable amount of cash. When the US authorities established that online gaming transactions were deemed illegal, Optimal ceased the payment processing related to these operations and invested the unrestricted cash balance in other businesses. As a result of the WowWee acquisition, the cash balance decreased by $46M. WowWee did not require significant levels of working capital. As a result of good relationships with its suppliers, WowWee was able to use them as a financing source. WowWee orders the suppliers to manufacture the products only when it receives orders from clients. According to the agreement with the suppliers, WowWee is billed only when the products leave China’s port; WowWee was able to ask the suppliers to hold that inventory until it receives a firm order from its clients. Except for certain US sales, WowWee does not hold significant inventory. The cash levels and working capital did not change noticeably between the acquisitions of WowWee and Sablon.