##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number: 000-21134
 
 International Fight League, Inc.
  
 Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    04-2893483
(I.R.S. Employer
Identification Number)38 Park Avenue 
Rutherford, New Jersey
(Address of Principal Executive Offices)
    
    07070
(ZIP Code)
 201-635-1799
  
  rd
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



PageNumberPART IFINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets
June 30, 2008 (unaudited) and December 31, 2007
    
    
    4Condensed Consolidated Statements of Operations (unaudited)
Three and six months ended June 30, 2008 and 2007
    
    
    5Condensed Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, 2008 and 2007
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 3. Quantitative and Qualitative Disclosure About Market Risk
    
    
    20Item 4. Controls and Procedures
    
    
    20PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    21EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION
  2




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PART I.
 FINANCIAL INFORMATION
 
 Item 1. Financial Statements
     3




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INTERNATIONAL FIGHT LEAGUE, INC.
and Subsidiary (formerly International Fight League, LLC)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,012,766
    
    
    $
    6,120,500Accounts receivable, net of allowance for doubtful accounts
    
    
    289,498
    
    
    
    670,990Prepaid expenses
    
    
    276,992
    
    
    
    457,361Total current assets
    
    
    1,579,256
    
    
    
    7,248,851Property and equipment, net of accumulated depreciation and amortization
    
    
    198,304
    
    
    
    266,967Other assets
    
    
    110,052
    
    
    
    113,295Total assets
    
    $
    1,887,612
    
    
    $
    7,629,113LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    287,509
    
    
    $
    845,197Accrued liquidated damages
    
    
    
    
    
    
    456,045Accrued expenses and other current liabilities
    
    
    299,435
    
    
    
    504,915Total current liabilities
    
    
    586,944
    
    
    
    1,806,157Commitments
and ContingenciesStockholders equity:Common stock, $0.01 par value per share; 150,000,000 shares authorized;
79,058,509 shares issued and outstanding at June 30, 2008 and December 31,
2007, respectively
    
    
    790,562
    
    
    
    790,562Additional paid-in capital
    
    
    36,172,700
    
    
    
    35,936,112Accumulated deficit
    
    
    (35,662,594
    )
    
    
    (30,903,718
    )Total stockholders equity
    
    
    1,300,668
    
    
    
    5,822,956Total liabilities and stockholders equity
    
    $
    1,887,612
    
    
    $
    7,629,113
  4




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INTERNATIONAL FIGHT LEAGUE, INC.
and Subsidiary (formerly International Fight League, LLC)
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Live and television events:Advertisingsponsorships
    
    $
    182,956
    
    
    $
    74,178
    
    
    $
    338,681
    
    
    $
    141,224Live eventsbox office receipts
    
    
    317,904
    
    
    
    891,721
    
    
    
    396,729
    
    
    
    1,405,563Television rights
    
    
    355,677
    
    
    
    672,500
    
    
    
    394,954
    
    
    
    882,500Branded merchandise
    
    
    46,378
    
    
    
    34,831
    
    
    
    54,882
    
    
    
    54,302Total revenues
    
    
    902,915
    
    
    
    1,673,230
    
    
    
    1,185,246
    
    
    
    2,483,589Costs of revenues:Live and televised events:Advertisingsponsorships
    
    
    17,295
    
    
    
    22,274
    
    
    
    63,137
    
    
    
    55,308Live events costs
    
    
    1,765,420
    
    
    
    6,403,309
    
    
    
    2,717,142
    
    
    
    12,002,286Television distribution fees and production
    
    
    78,392
    
    
    
    
    
    
    
    86,299
    
    
    
    Branded merchandise
    
    
    13,073
    
    
    
    16,682
    
    
    
    27,412
    
    
    
    24,425Total costs of revenues
    
    
    1,874,180
    
    
    
    6,442,265
    
    
    
    2,893,990
    
    
    
    12,082,019Selling, general and administrative expenses
    
    
    1,322,491
    
    
    
    2,164,012
    
    
    
    2,774,735
    
    
    
    4,442,946Share-based compensation expense
    
    
    165,242
    
    
    
    14,469
    
    
    
    331,900
    
    
    
    29,677Operating loss
    
    
    (2,458,998
    )
    
    
    (6,947,516
    )
    
    
    (4,815,379
    )
    
    
    (14,071,053
    )Other income (expense):Interest expense
    
    
    (1,286
    )
    
    
    (928
    )
    
    
    (2,718
    )
    
    
    (2,094
    )Interest income
    
    
    13,006
    
    
    
    71,644
    
    
    
    59,221
    
    
    
    234,139Total other income
    
    
    11,720
    
    
    
    70,716
    
    
    
    56,503
    
    
    
    232,045Net loss
    
    $
    (2,447,278
    )
    
    $
    (6,876,800
    )
    
    $
    (4,758,876
    )
    
    $
    (13,839,008
    )Net loss per common sharebasic and diluted
    
    $
    (0.03
    )
    
    $
    (0.13
    )
    
    $
    (0.06
    )
    
    $
    (0.26
    )Weighted-average number of common shares outstandingbasic and
diluted
    
    
    79,058,509
    
    
    
    53,543,351
    
    
    
    79,058,509
    
    
    
    53,522,018
  5




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INTERNATIONAL FIGHT LEAGUE, INC.
and Subsidiary (formerly International Fight League, LLC)
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 For the Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (4,758,876
    )
    
    $
    (13,839,008
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    55,051
    
    
    
    53,838Loss on disposal of property and equipment
    
    
    13,612
    
    
    
    Share-based compensation expense
    
    
    331,900
    
    
    
    29,677Changes in operating assets and liabilities:Accounts receivable, net
    
    
    381,492
    
    
    
    (122,519
    )Merchandise inventory
    
    
    
    
    
    
    (71,136
    )Prepaid expenses
    
    
    85,057
    
    
    
    58,383Accounts payable
    
    
    (557,688
    )
    
    
    878,740Accrued liquidated damages
    
    
    (456,045
    )
    
    
    Accrued expenses and other current liabilities
    
    
    (205,480
    )
    
    
    (627,628
    )Net cash used in operating activities
    
    
    (5,110,977
    )
    
    
    (13,639,653
    )Cash flows from investing activities:Refund of security deposits
    
    
    3,243
    
    
    
    8,051Purchase of property and equipment
    
    
    
    
    
    
    (74,043
    )Net cash provided by (used in) investing activities
    
    
    3,243
    
    
    
    (65,992
    )Cash flows from financing activities:Receipt of subscription receivable
    
    
    
    
    
    
    1,250,000Issuance of common stock from exercise of options
    
    
    
    
    
    
    4,351Payment of accrued commission on private placement
    
    
    
    
    
    
    (1,645,400
    )Net cash used in financing activities
    
    
    
    
    
    
    (391,049
    )Net decrease in cash and cash equivalents
    
    
    (5,107,734
    )
    
    
    (14,096,694
    )Cash and cash equivalents at beginning of period
    
    
    6,120,500
    
    
    
    16,623,159Cash and cash equivalents at end of period
    
    $
    1,012,766
    
    
    $
    2,526,465Supplemental disclosure of cash flow information:Cash payments for interest
    
    $
    2,718
    
    
    $
    2,094
  6




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 1SUSPENSION OF OPERATIONS AND GOING CONCERN UNCERTAINTY
    NOTE
2BASIS OF PRESENTATION AND CONSOLIDATION
    7




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE
2BASIS OF PRESENTATION AND CONSOLIDATION (continued)
  NOTE 3 RECENT ACCOUNTING PRONOUNCEMENTS
     The
Meaning of
 8




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 3 RECENT ACCOUNTING PRONOUNCEMENTS (continued)
 The Meaning of
 NOTE 4LOSS PER SHARE
   NOTE 5INCOME TAXES
  NOTE 6RELATED PARTY TRANSACTIONS
  9




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE
6RELATED PARTY TRANSACTIONS (continued)
   NOTE 7STOCK OPTION PLAN
      February 8,2008Expected volatility
    
    
    187.96
    %Expected dividends
    
    
    0Expected term (in years)
    
    
    3Risk-free rate
    
    
    3.6
    %
 10




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE
7STOCK OPTION PLAN (continued)
  WeightedAverageWeighted
    
    
    RemainingAverage
    
    
    ContractualOptions
    
    
    Exercise Price
    
    
    TermOutstanding at January 1, 2008
    
    
    2,637,919
    
    
    $
    0.32Granted
    
    
    270,000
    
    
    $
    0.12Cancelled
    
    
    (190,988
    )
    
    $
    0.26Outstanding at June 30, 2008
    
    
    2,716,931
    
    
    $
    0.30
    
    
    8.0 yearsExercisable at June 30, 2008
    
    
    1,248,511
    
    
    $
    0.20
    
    
    6.9 years
   Restricted Stock
   NOTE 8 WARRANTS
  NOTE
9TELEVISION RIGHTS AGREEMENTS
  11




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE
9TELEVISION RIGHTS AGREEMENTS (continued)
    NOTE
10 TERMINATION OF CONTRACTS
  NOTE
11TERMINATION OF EMPLOYEES AND DIRECTORS
   NOTE 12COMMITMENTS AND CONTINGENCIES
  12




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INTERNATIONAL FIGHT LEAGUE, INC
and Subsidiary (formerly International Fight League, LLC)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 NOTE 13SUBSEQUENT EVENTS
       13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis of our financial condition and results of operations
should be read in conjunction with our condensed consolidated financial statements and related
notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K
filed on April 15, 2008. In addition to historical information, this discussion and analysis
contains forward-looking statements that are based on current expectations, estimates, forecasts
and projections about us, our future performance and the industries in which we operate as well as
on our managements assumptions. These forward-looking statements involve risks and uncertainties.
When used in this Quarterly Report on Form 10-Q the words anticipate, objective, may,
might, should, could, can, intend, expect, believe, estimate, predict, targets,
goals, projects, seeks, potential, plan, is designed to or the negative of these and
similar expressions identify forward-looking statements. While we believe our plans, intentions and
expectations reflected in those forward-looking statements are reasonable, we cannot assure you
that these plans, intentions or expectations will be achieved. Other than as required by applicable
securities laws, we are under no obligation to update any forward-looking statement, whether as
result of new information, future events or otherwise. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of certain factors,
including but not limited to, those set forth under Item 1A, Risk Factors, and elsewhere in this
Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended
December 31, 2007.
 Our Company and Suspension of Operations
  Corporate History
    14




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Results
of Operations
  Three Months Ended June 30, 2008 Compared To Three Months Ended June 30, 2007
  Revenues:
  
    
    Revenue from live events of $318,000 in 2008 versus $892,000 for 2007,
a decrease of $574,000, or 64%. The decrease is due in large part to
the reduction in the number of events from five in 2007 to two in
2008;
    
    Television rights of $356,000 in 2008 versus $672,000 in 2007, a
decrease of $316,000 or 47%. The decrease is due revenue recognized
in 2007 from MyNetworkTV, which we do not have in 2008;
    
    Advertising revenues of $183,000 in 2008 versus $74,000 in 2007, an
increase of $109,000, or 147%, representing an increase in sponsorship
revenue resulting from the continuing development of our sponsorship
program (which has been terminated as a result of the cancellation of
our events); and
    
    Branded merchandise revenues of $46,000 in 2008 versus $35,000 in
2007, an increase of $11,000 or 31%, resulting from an increase in
the popularity of the IFL brand.
 Cost of Revenues:
  
    
    Live event costs of $1,765,000 in 2008 versus
$6,403,000 in 2007, a decrease of $4,638,000,
or 72%, with the decrease being primarily the
result of holding two events in 2008 versus
five in 2007:
 15




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
    
    Talent costs
decreased
$1,144,000, to
$539,000 in 2008 as
compared to
$1,683,000 in 2007,
a decrease of 68%,
due to the decrease
in the number of
events from five in
2007 to two in
2008;
    
    Travel, facility
rental and other
event costs
decreased from
$772,000 in 2007 to
$206,000 in 2008, a
decrease of
$566,000, or 73%,
due to fewer events
in 2008; and
    
    Television
production costs
decreased
$2,405,000, or 85%,
with the 2008 cost
being $411,000
compared to
$2,816,000 in 2007,
due to the decrease
in the number of
shows produced
because of fewer
events and a
general decrease in
our per event and
per show production
costs as a result
of our cost
reduction efforts;
    
    Advertising costs of $322,000 in 2008 versus
$466,000 in 2007, a decrease of $144,000, or
31%, due to fewer events being held in 2008;
    
    Television distribution fees and production costs were
$78,000 in 2008 and none in 2007. The increase is due
to the commission and other costs related to our
international television rights.
 Selling, General and Administrative Expenses:
  
    
    Advertising and promotion of $17,000 in 2008 versus $152,000 in 2007,
a decrease of $135,000, or 89%, due to cost reduction efforts and
fewer events in 2008;
    
    Conventions and trade shows of $0 in 2008 versus $66,000 in 2007 due
to elimination of attending these events in 2008;
    
    Professional fees of $285,000 in 2008 versus $300,000 in 2007, a
decrease of $15,000 or 5% due to cost reductions and reduced use of
outside consultants
    
    Payroll and benefits expense of $860,000 in 2008 versus $1,283,000 in
2007, a decrease of $423,000, or 33%, due a decrease in the number of
employees; and
    
    Travel expense of $17,000 in 2008 versus $94,000 in 2007, a decrease
of $77,000, or 82%, due to cost reduction efforts and cut backs in
travel.
 Share-based Compensation:
  Other Income (Expense):
  16




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Six Months Ended June 30, 2008 Compared To Six Months Ended June 30, 2007
  Revenues:
  
    
    Revenue from live events of $397,000 in 2008 versus $1,406,000 for
2007, a decrease of $1,009,000, or 72%. The decrease is due in large
part to the reduction in the number of events from nine in 2007 to
three in 2008;
    
    Television rights of $395,000 in 2008 versus $883,000 in 2007, a
decrease of $488,000 or 55%. The decrease is due revenue recognized
in 2007 from MyNetworkTV, which we do not have in 2008;
    
    Advertising revenues of $338,000 in 2008 versus $141,000 in 2007, an
increase of $197,000, or 140%, representing an increase in sponsorship
revenue resulting from the continuing development of our sponsorship
program (which has been terminated as a result of the cancellation of
our events); and
    
    Branded merchandise revenues of $55,000 in 2008 versus $54,000 in
2007, an increase of $1,000 or 2%, resulting from an increase in the
popularity of the IFL brand, offset buy fewer events in 2008.
    Cost of Revenues:
  
    
    Live event costs of $2,717,000 in 2008 versus $12,002,000 in 2007, a
decrease of $9,285,000, or 77%, with
 17




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the decrease being primarily the
result of holding three events in 2008 versus nine in 2007:
    
    Talent costs decreased $2,428,000, to $943,000 in 2008 as compared to
$3,371,000 in 2007, a decrease of 72%, due to the decrease in the
number of events from nine in 2007 to three in 2008;
    
    Travel, facility rental and other event costs decreased from
$2,562,000 in 2007 to $711,000 in 2008, a decrease of $1,851,000, or
72%, due to the decreased number of events; and
    
    Television production costs decreased $4,322,000, or 87%, with the
2008 cost being $665,000 compared to $4,987,000 in 2007, due to the
decrease in the number of shows produced because of fewer events and a
general decrease in our per event and per show production costs as a
result of our cost reduction efforts;
    
    Advertising costs of $398,000 in 2008 versus $1,081,000 in 2007, a
decrease of $683,000, or 63%, due to fewer events in 2008;
 
    
    Television distribution fees and production costs were $86,000 in 2008
and none in 2007. The increase is due to the commission and other
costs related to our international television rights.
 Selling, General and Administrative Expenses:
  
    
    Advertising and promotion of $99,000 in 2008 versus $343,000 in 2007,
a decrease of $244,000, or 71%, due to cost reduction efforts and
reductions in non-event advertising and promotion in 2008;
    
    Professional fees of $515,000 in 2008 versus $1,000,000 in 2007, a
decrease of $485,000, or 49%, primarily resulting from additional
costs incurred in 2007 related to our becoming a public company and a
reduction in 2008 in the use of consultants;
    
    Payroll and benefits expense of $1,831,000 in 2008 versus $2,321,000
in 2007, a decrease of $490,000, or 21%, due a decrease in the number
of employees; and
    
    Travel expense of $23,000 in 2008 versus $204,000 in 2007, a decrease
of $181,000, or 89%, due to cost reduction efforts and cut backs in
travel.
 Share-based Compensation:
  Other Income (Expense):
  18




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Liquidity and Capital Resources
  Going
Concern and Suspension of Operations
  Future Capital Requirements
   Off-Balance Sheet Arrangements
  Seasonality
  19




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Item 3. Quantitative and Qualitative Disclosure About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedure
 Changes in Internal Control Over Financial Reporting
 20




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PART IIOTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
  21




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##### Table of Contents



SIGNATURES
  INTERNATIONAL FIGHT LEAGUE, INC.By:
    /s/ Michael C. KeefeMichael C. KeefeExecutive Vice President
Acting Chief Financial Officer  22




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##### Table of Contents



EXHIBIT INDEX
 Exhibits31.1
    
    Certification of the Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Principal Executive Officer and Principal
Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 23