fun and archer capital terminate discussions

ASX ANNOUNCEMENT

FUNTASTIC AND ARCHER CAPITAL
TERMINATE DISCUSSIONS

Further to Funtastic's announcement of 8 August 2008, Funtastic advises
that discussions with the Archer Consortium in relation to the Consortium's
non-binding indicative proposal to acquire all of the issued shares in
Funtastic under a scheme of arrangement have terminated, following
extended discussions and negotiations failing to reach agreement. The
Archer Consortium members remain substantial holders in Funtastic, but we
understand no decision has been made by Archer Capital in respect of its
interest in Funtastic.
The company re-affirms its guidance of approximately $31m EBITA for the
financial year ending 31 December 2008. The Company expects that full
year trading in FY2008 will be affected by the following influences:
�� Positive Gross Margin initiatives, including inventory reduction, are
anticipated to have the greatest effect in the second half of FY2008;
�� Increased input costs from China are having a detrimental impact on
margins, especially in apparel;
�� Consumer sentiment in discretionary spending is of concern and it is
imperative we maintain a vigilant watch on costs and inventory in order
to protect margins.
�� The Company remains cautious of the current retail environment and the
state of consumer demand in the lead up to the pivotal Christmas period.
The company will release half year results on Thursday 21st August at which
time we will provide an update on our progress in relation to strategic
initiatives.
For more information on Funtastic, visit the web site at
www.funtastic.com.au and for comment contact Anna Kirby, Public Relations
for Funtastic Limited Ph: 03 9486 9357.