Art In Motion Income Fund
TSX : AIM.UN

Art In Motion Income Fund

August 07, 2008 08:00 ET

Art In Motion Income Fund Announces 2008 Second Quarter Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 7, 2008) - Art In Motion Income Fund (the "Fund") (TSX:AIM.UN) today announced that the Fund has reported its financial results for the quarter ended June 30, 2008. The Fund's unaudited interim financial statements are included in this news release. The Fund's financial statements and Management's Discussion and Analysis are being concurrently filed on the SEDAR website and on the Fund's investor website at www.aimincomefund.com.

Highlights for the Quarter

- The Fund's revenue was $5.6 million

- Gross profit was $1.1 million

- The Fund posted a net loss of $1.1 million

- Basic and diluted loss per unit was $0.14

- The Fund had total assets of $17.6 million and $6.0 million in current and long-term liabilities

On July 30, 2008, the Fund announced that it had entered into a Support Agreement with its largest Unitholder, Clarke Inc., in connection with the proposed acquisition by Clarke of all of the units of the Fund. Under the terms of the Agreement, Clarke will offer to acquire, by way of a take-over bid, all of the issued and outstanding units of the Fund (excluding the units currently held by Clarke) at a purchase price of C$0.75 per unit in cash (the "Offer"). The full details of the news release can be found on SEDAR or the Fund's website at www.aimincomefund.com.

"Rising energy costs, the uncertainty of the U.S. economy and housing market continue to have a negative impact on sales and margins," stated Allan Achtemichuk, Chief Executive Officer. "While a select number of our customers are in fact growing their sales year over year, current consumer trends in North America and internationally do not provide any signs of marked improvement in the near term. A number of our customers maintain that they are carrying significant inventory and have limited dollars available to purchase new products or new lines.

In the second quarter we successfully shut down operations of our warehouse in Ferndale, WA and will see the benefits of reduced overhead costs going forward. In July we released our new imagery and product collection at industry tradeshows. The new collection was well received by our customers but sales were lower than prior tradeshows. The overall economy and market remains difficult and we expect there may be more fallout in the industry, with both retailers and suppliers, before the situation improves. We are aware of certain of our competitors having to significantly downsize or close their business and believe there are others that may be in financial difficulty. We have made significant progress in reducing costs and attaining a more competitive cost structure. Our balance sheet remains strong and will allow us to manage through the next few challenging quarters. We will continue to look at all opportunities to improve our sales as well as reduce our costs," concluded Achtemichuk.

Forward Looking Statements and Risks

This document may contain forward-looking statements that reflect our current internal projections, expectations or beliefs and are based on information currently available to us. Although we believe that the forward-looking statements contained herein are based on reasonable assumptions, you cannot be assured that actual results will be consistent with such statements. Forward-looking statements are made as of the date hereof and we assume no obligation to update or revise them to reflect new events or circumstances.

We are subject to a number of risks and uncertainties relating to our business and operations. These risks and uncertainties include but are not limited to: dependence on key personnel, our ability to renew contracts with existing artists or to secure contracts with new artists, our ability to anticipate consumer preferences and market trends and to create leading-edge products, sustaining our level of sales or EBITDA margins, loss of customers, seasonal and other fluctuations in our sales, decreases in the demand for wall decor, competition in our markets, failure to protect our intellectual property, labour disruptions, currency fluctuations, energy cost increases, dependence on key suppliers, the ability to fund future capital requirements, dependence on our management information systems, our ability to obtain insurance, exposure to foreign, political and economic instability, losses related to credit provided to our customers, failure to comply with regulatory requirements, and we may become involved in litigation.

The risks and uncertainties described above are not the only risks and uncertainties we face. Additional risks and uncertainties not currently known to us or that we currently deem immaterial also may impair our business operations.

Notice of Disclosure of Non-Auditor Review of Interim Financial Statements for the Three and Six months ended June 30, 2008

Pursuant to National Instrument 51-102, Part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, the interim financial statements must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor if the auditor has not performed a review of the interim financial statements.

The accompanying interim financial statements of the Fund for the three months ended March 31, 2007 and 2008 have been prepared in accordance with Canadian generally accepted accounting principles and are the responsibility of the Company's management.

The Company's independent auditors, KPMG have not performed a review of these interim consolidated financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of the interim financial statements by an entity's auditor.



ART IN MOTION INCOME FUND
Consolidated Balance Sheet
(in thousands of dollars)
(Unaudited)

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June 30, December 31,
2008 2007
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Assets

Current assets:
Cash and cash equivalents $ 130 $ 221
Accounts receivable 2,959 4,675
Forward foreign exchange contracts 72 1,295
Inventories (note 6) 2,654 3,506
Prepaid expenses 643 427
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6,458 10,124

Property, plant and equipment 10,968 11,159

Intangible assets 150 1,047

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$ 17,576 $ 22,330
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Liabilities and Unitholders' Equity

Current liabilities:
Bank indebtedness $ 526 $ 215
Accounts payable and accrued liabilities 2,006 2,541
Long-term debt, current portion (note 5) - 3,500
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2,532 6,256

Long-term debt (note 5) 3,500 -

Non-controlling interest 8,536 9,629

Unitholders' equity 3,008 6,445

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$ 17,576 $ 22,330
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See accompanying notes to consolidated financial statements.


ART IN MOTION INCOME FUND
Consolidated Statement of Operations and Comprehensive Income
(in thousands of dollars, except unit and per unit amounts)
(Unaudited)

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Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2008 2007 2008 2007
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Revenue:
Sales $ 5,352 $ 7,845 $ 11,523 $ 21,938
Royalties 254 584 654 1,198
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5,606 8,429 12,177 23,136

Cost of goods sold 4,510 6,434 9,513 16,817
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1,096 1,995 2,664 6,319

Expenses:
Amortization 509 1,225 1,018 2,458
General and
administrative
(note 7) 792 897 2,826 1,947
Image and product
development 247 304 514 647
Interest and bank
charges 86 132 169 290
Selling (note 7) 1,005 1,128 2,400 2,557
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2,639 3,686 6,927 7,899
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Loss before undernoted
items (1,543) (1,691) (4,263) (1,580)

Other earnings
(expenses):
Foreign exchange gain 34 1,509 (29) 1,591
Gain on disposal of
property, plant and
equipment (note 4) 9 - 7 3,267
Interest and
miscellaneous
(note 8) - 28 (186) 61
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43 1,537 (208) 4,919
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Earnings (loss) before
non-controlling
interest and income
taxes (1,500) (154) (4,471) 3,339

Non-controlling
interest (355) (30) (1,093) 853

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Net earnings (loss)
before income taxes (1,145) (124) (3,378) 2,486

Income tax (recovery)
(note 9) - (1,300) 59 (1,300)
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Net earnings (loss)
and comprehensive
income (loss) $ (1,145) $ 1,176 $ (3,437) $ 3,786
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Basic and diluted
earnings (loss) per
unit (note 3) $ (0.14) $ 0.15 $ (0.43) $ 0.47
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Weighted average
number of units
outstanding 8,030,070 8,030,070 8,030,070 8,030,070
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See accompanying notes to consolidated financial statements.


ART IN MOTION INCOME FUND
Consolidated Statement of Unitholders' Equity
(in thousands of dollars)
(Unaudited)

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Unitholders' Accumulated
capital loss Distributions Total
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Balance, December 31,
2007 $ 72,714 $ (46,783) $ (19,486) $ 6,445

Activity for the period - (2,292) - (2,292)
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Balance, March 31, 2008 72,714 (49,075) (19,486) 4,153

Activity for the period - (1,145) - (1,145)

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Balance, June 30, 2008 $ 72,714 $ (50,220) $ (19,486) $ 3,008
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See accompanying notes to consolidated financial statements.


ART IN MOTION INCOME FUND
Consolidated Statement of Cash Flows
(in thousands of dollars)
(Unaudited)

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Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2008 2007 2008 2007
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Cash provided by
(used in):

Operations:
Net earnings (loss)
for the period $ (1,145) $ 1,176 $ (3,437) $ 3,786
Items not involving
cash:
Amortization 694 1,362 1,322 2,724
Gain on disposal of
property, plant and
equipment (note 4) (9) - (7) (3,267)
Future income taxes
(note 9) - (1,300) - (1,300)
Non-controlling
interest (355) (30) (1,093) 853
Net change in forward
foreign exchange
contracts 403 (1,426) 1,223 (1,129)
Change in non-cash
operating working
capital (note 14) (969) (2,428) 1,817 1,041
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(1,381) 2,210 (175) 2,708

Investments:
Purchase of property,
plant and equipment (100) (31) (246) (265)
Proceeds on disposal
of property, plant
and equipment (note 4) 15 13 19 9,473
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(85) (18) (227) 9,208

Financing:
Bank indebtedness 526 (508) 311 -
Distributions paid or
due to unitholders - (602) - (1,606)
Distributions paid or
due to non-controlling
interest - (40) - (107)
Repayment of long-term
debt (note 4) - - - (8,000)
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526 (1,150) 311 (9,713)
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Increase (decrease) in
cash and cash
equivalents (940) 1,042 (91) 2,203

Cash and cash
equivalents,
beginning of period 1,070 1,783 221 622

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Cash and cash
equivalents, end
of period $ 130 $ 2,825 $ 130 $ 2,825
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Supplementary
information:
Interest received $ 1 $ 17 $ 8 $ 28
Interest paid 55 67 92 265
Taxes paid - - 59 -
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See accompanying notes to consolidated financial statements.


Notes to Consolidated Financial Statements

(Tabular amounts in thousands of Canadian Dollars)

(Unaudited)

Six months ended June 30, 2008

1. Basis of presentation:

These interim consolidated financial statements have been prepared using Canadian generally accepted accounting principles (Canadian GAAP). The interim consolidated financial statements include normal recurring adjustments, which in management's opinion, are necessary for a fair presentation of the financial results of the interim period presented.

The disclosures in these consolidated financial statements do not conform in all aspects to the requirements of Canadian GAAP for annual financial statements. These consolidated financial statements follow the same accounting policies and methods of their application as the most recent annual financial statements, except as noted below regarding the adoption of certain new handbook sections. These consolidated financial statements should be read in conjunction with the significant accounting policies and other information in the most recent annual financial statements of Art In Motion Income Fund (the "Fund").

2. Changes in accounting policies:

Effective January 1, 2008, the Fund adopted CICA Handbook Sections 3031 Inventories, Section 3862 Financial Instruments-Disclosures, Section 3863 Financial Instruments-Presentation Disclosures, and Section 1535 Capital Disclosures. The Fund has evaluated its operations in connection with the adoption of these sections and has determined that they have no material impact on the financial statements other than expanded disclosure and no restatement of prior period financial statements was required as a result of adopting any of the new standards.

3. Earnings per share:

Diluted earnings per share are equal to basic earnings per share as the conversion of the Class B LP units is antidilutive.

4. Property, plant and equipment:

On January 18, 2007, the Fund sold its Brigantine Drive facility for gross proceeds of $9.6 million (net proceeds of $9.4 million) as part of a plan to consolidate operations into its Hartley Avenue facility. The Fund realized a net gain of approximately $3.3 million after closing costs and the disposal of the related land and buildings, which had a net book value of approximately $6.1 million. The Fund used $8.0 million of the proceeds to reduce its long-term debt.

5. Long-term debt:

The capital loan was renewed in February 2008 resulting in a 0.15% increase to the effective interest rate and an extension of the loan's maturity to August 2009. As such the loan has been reclassified to long-term. Interest only is payable on a monthly basis.

6. Inventories:



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Jun 30, Dec 31,
2008 2007
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Artprints $ 1,179 $ 1,455
Framing materials 1,238 1,508
Finished goods 237 543
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$ 2,654 $ 3,506
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Inventories are valued at the lower of cost and net realizable value. Cost is based on the standard cost method, which approximates weighted average cost, and includes expenditures directly attributable to their acquisition and delivery to our facility. In utilizing this method, the Fund regularly reviews the standard costs and makes the necessary adjustments in light of current conditions. The Fund immediately expenses consumables as they are made up of several small items, which are considered immaterial to maintain as inventory. In the case of manufactured inventories, including work in progress, cost also includes an appropriate share of the production overhead based on normal capacity.

The Fund periodically reviews its inventories for potential slow-moving or obsolete items and records inventories net of any obsolescence provisions. In establishing the value of provisions, the Fund estimates the portion of raw materials that will likely not be consumed into products or products that will likely not sell through normal sales channels.

During the six months ended June 30, 2008, changes in inventory, including the change in finished goods and work in progress recognized in cost of sales was $3,266,000 (2007 - $6,151,000). In 2008, the write-down of inventories due to anticipated obsolescence, and included in cost of sales, is $245,000 (2007 - $272,000). A reversal of previous write-downs of $28,000 (2007 - nil) is included in cost of sales and relates to recent programs that focused on using slow moving materials that were being phased out.

7. General and administrative (G&A) and selling expenses:

Included in G&A for the quarter ended March 31, 2008 is approximately $1,100,000 in settlement charges for the CEO and CFO due to the change in control that occurred when Clarke Inc. purchased the Class B and C LP units of Art In Motion Limited Partnership.

Included in selling expense for the quarter ended March 31, 2008 was approximately $200,000 in severance charges related to restructuring the sales department.

8. Interest and miscellaneous expenses:

Included in interest and miscellaneous for the quarter ended March 31, 2008 is an accrual of approximately $193,000 to cover expected closure costs of the Fund's warehousing operations located in Ferndale, Washington, which is expected to be complete by July, 2008. A remaining balance of approximately $172,000 is included in accounts payable as at June 30, 2008.

9. Income taxes:

Generally, the Fund allocates all of its taxable income and taxable capital gains to unitholders such that the Fund will not be subject to tax. However, the sale of its Brigantine Drive real estate in January 2007 (see note 4), resulted in a significant capital gain which triggered an alternative minimum tax payable by AIM Holdings Trust, a wholly owned subsidiary of the Fund. Although, this is a refundable tax, the recovery of this amount is considered unlikely and therefore has been recognized as an expense in the first quarter of 2008.

As of June 12, 2007, certain changes in the Income Tax Act affecting income trusts passed a third reading in the House of Commons and became substantively enacted, which would make the Fund subject to income taxes starting in 2011.

Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.

As a result of above noted legislation, the Fund recorded a related future income tax asset and income tax recovery during the quarter ended June 30, 2007. However, based on projected future taxable income, it was later deemed that the existing tax assets will likely not be realized and a complete allowance was provided against the assets resulting in a reversal of this asset in the quarter ending September 30, 2007.

10. Financial risk management:

The Fund adopted Handbook Section 3862 which requires an entity to disclose information that enables users of its financial statements to evaluate the nature and extent of risks arising from financial instruments to which the entity is exposed at the reporting date. Those risks typically include, but are not limited to, credit risk, liquidity risk and market risk.

The Fund has established certain policies to identify and analyze the risks faced by the Fund; sets risk limits and controls, and monitors risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Fund's activities. The Fund's Board and Audit Committee oversee how management monitors compliance with the Fund's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Fund.

Credit risk:

Credit risk is the risk of financial loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Fund's receivables from customers and investment securities.

The Fund's exposure to credit risk for trade and other accounts receivable is influenced mainly by the individual characteristics of each customer. During the previous year ended December 31, 2007, no one customer accounted for more than 10% percent of the Fund's gross sales.

The Fund has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Fund's standard payment and delivery terms and conditions are offered. The Fund's review includes external ratings, where available. Purchase limits are established for each customer and represent the maximum open amount without requiring further approval from Management; these limits are reviewed at least annually. The Fund utilizes credit insurance in certain circumstances to back stop the credit risk. Customers that fail to meet the Fund's benchmark for creditworthiness may transact with the Fund only on a prepayment basis.

The Fund establishes an allowance for impairment ($163,000 as at June 30, 2008) that represents its estimate of incurred losses in respect of trade receivables. The main components of this allowance are a specific loss component for customers that are at least 90 days past due and a second component, if necessary, for customers known to be bankrupt or are in process of filing for bankruptcy.

Included in receivables is a reserve for sales returns, credits and compliance fines that are likely to be recognized in the month following the recognition of the related revenue. Additionally, included in receivables are reserves for sales allowances based on individual customer sales agreements.

The Fund accrues revenue on its royalty income. The final value of this revenue for any one quarter is not known until approximately two months after the quarter end. As at June 30, 2008, the full amount of this accrual was approximately $232,000. This amount is included in accounts receivable.

The carrying amount of financial assets represents the maximum credit exposure.

Substantially all of the Fund's cash and cash equivalents, as well as the forward foreign exchange contracts, are held with Canadian Financial institutions. The cash and cash equivalents represent general deposits only. As such, the Fund does not believe there is any significant credit risk associated with these financial instruments.

Impairment losses:

The aging of trade receivables at the reporting date was:



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Gross Impairment
Amount Allowance
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Not past due 2,370 -
Past due 0-90 days 371 80
Past due greater than 90 days 83 83
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Total 2,824 163
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Liquidity risk:

Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they come due. The Fund's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Fund's reputation.

In order to meet operational expenses and discharge current liabilities, the Fund maintains a $5,000,000 CAD ($4,000,000 USD) Operating Loan that can be drawn down to meet short-term financing needs, should existing cash balances not be sufficient. The facility is limited to certain margining requirements that may limit the extent to which the facility can be drawn. If drawn, the facility would bear interest at our lenders prime rate plus 0.25% (Lenders US base rate + 0.25% if drawn in USD).

The following are the anticipated maturities of financial liabilities, including interest payments as at June 30, 2008:



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Antici-
pated greater
Carrying cash 1 mth 2-3 4-12 than
amount flows or less mths mths 1 year
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Financial liabilities

Long-term debt 3,500 (3,715) (16) (32) (141) (3,526)
Trade and other
payables 2,006 (2,006) (1,357) (424) (184) (41)
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5,506 (5,721) (1,373) (456) (325) (3,567)
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Market risk:

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect the Fund's income or the value of its holdings of financial instruments.

Foreign exchange risk:

The Fund is exposed to currency risk on sales and purchases that are denominated in USD.

The Fund uses forward foreign exchange contracts to help manage its currency risk. In respect of other cash and cash equivalents denominated in USD, the Fund ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.

The following table indicates the periods in which the cash flows associated with foreign exchange contracts are expected to occur.



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Contr-
actual greater
Carrying cash 1 mth 2-3 4-12 than
amount flows or less mths mths 1 year
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Foreign exchange
contracts 72 73 73 - - -
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The Fund's exposure to foreign currency risk as at the balance sheet date was as follows:



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Canadian Dollar Equivalent of USD based Financial Instruments
June 30, 2008
--------------------------------------------------------------------------

Trade receivables 2,486
Cash and equivalents 90
Trade payables (565)
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Gross balance sheet exposure 2,011
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Forward exchange contracts (72)
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Net exposure 1,939
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The following significant exchange rates applied during the period:



Daily Closing rate - Bank of Canada

Dec 31/07 Jun 30/08
--------- ---------
CAD to USD 0.9913 1.0197


A 15 percent strengthening of the USD against CAD would have decreased the net loss for the period by approximately $287,000. This analysis assumes that all other variables, in particular interest rates, remain constant. This analysis assumes the exchange rate was 15 percent higher for the entire six month period, and that the net effect on unrealized gains and losses, other than the effect on the forward exchange contracts is immaterial.

A 15 percent weakening of the USD against CAD would have had the equal but opposite effect of the amounts shown above, on the basis that all other variables remain constant.

Interest rate risk:

The Fund is exposed to changes in interest rates as the interest rate on its long-term debt is variable. An increase of 100 basis points in interest rates over the period would have increased interest expense by approximately $18,000 for the six month period. A decrease of 100 basis points in interest rates over the period would have an equal but opposite effect on interest expense.

11. Financial instruments:

Classification and measurement:

The following table outlines the classification and measurement of the Fund's financial instruments:



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Classification Measurement
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Cash & Bank indebtedness(i) Held for trading Fair value
Accounts receivable(i) Loans & receivables Amortized cost,
less allowances
Prepaids(i) Loans & receivables Amortized cost
Accounts payable(i) Other financial Amortized cost
Liabilities
Long-term debt(ii) Loans & receivables Amortized cost
Foreign exchange contracts(iii) Held for trading Fair value
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(i) carrying values approximate fair values given they mature currently
&/or provisions are made for estimated uncollectible amounts.
(ii) carrying values approximate fair value as the related interest rate is
variable and approximates prime.
(iii) carrying value is provided by lending institution and is based on
prevailing exchange rates.


Financial income and expense:

The Fund has adopted a policy of expensing immediately all transactions costs related to debt.

All of the income or expense related to the Fund's financial instruments is recorded in the consolidated statement of operations.

The breakdown of income and expense for the period related to the Fund's financial instruments is as follows:



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Six months ended June 30, 2008
--------------------------------------------------------------------------

Foreign exchange gain on financial assets
held for trading 1,137
Foreign exchange gain on loans and receivables 84

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Financial income 1,221
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Interest expense on financial liabilities
measured at amortized cost (106)
Other net expense on financial instruments (82)
Impairment of Loans and receivables (123)
Net change in fair value of Foreign exchange
contracts (1,223)

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Financial expenses (1,534)
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Net finance costs (313)
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12. Capital Management:

The Fund's objectives and procedures for managing capital include:

- Providing for the Fund's ability to continue as a going concern and to providing unitholders an adequate return. Given that the current economic environment under which our customers operate has lead to a significant decline in sales, the Fund has taken aggressive measures to cut and control costs during this economic downturn.

- Maintaining a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. As such, distributions have been suspended since July 2007.

The Fund includes non-controlling interest and unitholder's equity in its definition of capital.

The Fund's capital has the following externally imposed capital requirements:

- If unitholder distributions are to be reinstated, the Fund must achieve a fixed coverage ratio (proceeding 12 months rolling earnings before income taxes, interest, depreciation and amortization (EBITDA) / (12 months rolling distributions + 12 months rolling interest)), of no less than one to one.

- In absence of the fixed coverage ratio, the Fund has to maintain a monthly debt to equity ratio, as defined in its facility letter with its Lender, of no more than one to one.

- The Fund is on side with the monthly debt to equity ratio.

13. Segmented information:

The Fund operates in a single reportable operating segment as a publisher, framer and licensor of images and fine art reproductions.

The Fund's gross sales are derived from four main categories as follows:



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Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2008 2007 2008 2007
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Artprints $ 755 $ 1,104 $ 1,635 $ 2,620
Framed and other 2,512 3,695 5,639 11,122
Decographs 1,949 2,727 4,194 7,946
Transfers 228 807 349 2,272
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Gross sales 5,444 8,333 11,817 23,960
Discounts and allowances (92) (488) (294) (2,022)
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Sales 5,352 7,845 11,523 21,938
Royalties 254 584 654 1,198

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$ 5,606 $ 8,429 $ 12,177 $ 23,136
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The Fund sells to customers located in the following regions:



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Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2008 2007 2008 2007
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Canada $ 902 $ 1,220 $ 1,932 $ 2,697
United States 3,892 6,094 8,396 18,788
Europe 511 842 1,203 2,111
Other 139 177 286 364
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Gross sales 5,444 8,333 11,817 23,960
Discounts and allowances (92) (488) (294) (2,022)

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Sales $ 5,352 $ 7,845 $ 11,523 $ 21,938
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Royalty income is earned almost entirely from customers located in the United States.

As at June 30, 2008, $222,000 of the Fund's capital assets were located in the United States and the remainder of the assets were located in Canada.

14. Supplemental information:



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Three months ended June 30 Six months ended June 30
-------------------------- ------------------------
2008 2007 2008 2007
--------------------------------------------------------------------------

Change in non-cash
operating working
capital:
Accounts receivable $ 362 $ 4,659 $ 1,716 $ 2,065
Inventories 329 (232) 852 659
Prepaid expenses (97) (116) (216) (83)
Accounts payable and
accrued liabilities (1,563) (1,883) (535) (1,386)
Distributions payable - - - (214)

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$ (969) $ 2,428 $ 1,817 $ 1,041
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The Fund has suspended distributions since July 2007 and all distributions were discretionary, subject to maintaining its debt covenants.

Contact Information

  • Art In Motion Income Fund - Investor Information
    Allan Achtemichuk
    Chief Financial Officer
    1-877-AIM-3233 (1-877-246-3233)
    Website: www.aimincomefund.com