IFL Quarterly Report: First Quarter 08

May 21, 2008

View the Entire Quarterly report Here.

Analysis: It was a bit hard to judge how they did 07 vs 08, since they only put on one event in the first quarter of 08 vs four in 07. The company recorded a loss of $2.3 million for the Qtr, which would seem to be an improvement over 07 but the lack of events helped keep the losses lower. Live event costs have been a main driver of deficits for the company. Running a full slate of events would have generated a loss somewhere in the neighborhood of about $5 million in my estimation. Over the past year they have been able to pare down live event costs (some 300k to 400k on a per show basis) to some degree but the generally anemic box office receipt numbers don’t come anywhere close to making the company solvent in this respect.

Television: The 10-Q did shed some light on the new television agreement the IFL has with HDNet and the renegotiated contract with FSN. The deal with HDNet calls for the TV company to air three events in exchange for covering “some production costs.” No explicit figure is mentioned, but it seems the IFL is able to deflect some of these costs and gets finished product it can then repackage and sell to FSN and internationally. HDNet is seemingly shouldering a sizable portion of the cost of televising the event, mainly due to the cost of broadcasting in High Definition and specialized equipment needed to do so. This would be a much better TV situation for the IFL, whose production costs for the MyNetworkTv shows out-stripped their license fee. The FSN deal has been amended and 9 one hour shows were added for which they will receive $20,000 per show.

Future Capital requirements: “Based upon management’s current forecast of future revenues and expenses, we believe our cash resources will likely be sufficient to fund operations into the third quarter of 2008.” At that time they will need to have successfully partnered with another company or they would need to seek another round of funding.

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