[totaltec]

Looking in /include/func/func.category.php:

function func_get_categories_list($cat = 0, $short_list = TRUE, $need_sublevel = FALSE, $max_level = 0)

See that $max_level = 0 in the function arguments above? Looks to me like you are calling this function with this code:

$extended_categories = func_get_categories_list(0, true, true, 1);

So the last parameter you are feeding it is a 1, $maxlevel = 1. Try increasing it and see what you get.