**UNITED STATES**

**SECURITIES AND EXCHANGECOMMISSION**

**WASHINGTON, D.C.20549**

**FORM 10-Q**
| ** ** | ** **                                                   |
|------------|--------------------------------------------------------------|
| **x**      | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
| ** ** | **SECURITIES  EXCHANGE ACT OF 1934**                         |

** **

**For thequarterly period ended June30, 2007**

**OR**
| ** **** ** | ** **                                                         |
|----------------------|--------------------------------------------------------------------|
| **o**                | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
| ** **           | **SECURITIES  EXCHANGE ACT OF 1934**                               |

** **

**For thetransition period from               to               .**

**Commissionfile number****:  000-21134**

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**InternationalFight League, Inc.**

(Exact name ofRegistrant as specified in its charter)
| **Delaware**                                                         | ** ** | **04-2893483**                               |
|----------------------------------------------------------------------|------------|----------------------------------------------|
| (State or Other   Jurisdiction of   Incorporation or   Organization) | * *   | (I.R.S. Employer    Identification   Number) |
|                                                                 |       |                                         |
| **424  West 33****rd Street, Suite 650   New York, New York**   |       | **10001**                                    |
| (Address of  Principal Executive Offices)                            |       | (ZIP Code)                                   |

 

**212.356.4000**

(Registrant’s telephonenumber,including area code)

(Former name, former addressand former fiscal year, if changed since last report)

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports) and (2) has been subject to such filing requirements for the past90 days. Yes x No o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)
| Large accelerated filer o |   | Accelerated Filer o |   | Non-accelerated filer x |
|---------------------------|--------|---------------------|--------|-------------------------|

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).Yes  o           No  x

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

At August 10, 2007, therewere 78,931,233 shares of Common Stock, par value $0.01 per share, outstanding.

 

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INTERNATIONALFIGHT LEAGUE, INC.

INDEX
|           |   | PART  I - FINANCIAL INFORMATION                                                             |   |   |
|-----------|--------|---------------------------------------------------------------------------------------------|--------|--------|
| Item 1.   |   | Financial Statements                                                                        |   |   |
|      |   | Condensed  Consolidated Balance Sheets                                                      |   |   |
|      |   | June 30, 2007  (unaudited) and December 31, 2006                                            |   |   |
|      |   | Condensed  Consolidated Statements of Operations (unaudited)                                |   |   |
|      |   | Three and six  months ended June 30, 2007 and 2006                                          |   |   |
|      |   | Condensed  Consolidated Statements of Cash Flows (unaudited)                                |   |   |
|      |   | Six months  ended June 30, 2007 and 2006                                                    |   |   |
|      |   | Notes to  Condensed Consolidated Financial Statements                                       |   |   |
|      |   |                                                                                        |   |   |
| Item 2.   |   | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |   |
| Item 3.   |   | Quantitative  and Qualitative Disclosure About Market Risk                                  |   |   |
| Item 4T.  |   | Controls and  Procedures                                                                    |   |   |
|      |   |                                                                                        |   |   |
|      |   | 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                                                                                    |   |   |

 

2

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**PART I.**

**FINANCIALINFORMATION**

**Item 1. *Financial Statements***

Certain information andfootnote disclosures required under generally accepted accounting principleshave been condensed or omitted from the following consolidated financialstatements pursuant to the rules and regulations of the Securities and ExchangeCommission. International Fight League, Inc. (the “registrant”, the “Company”, “IFL”,“we”, “us”, or “our”) believes that the disclosures are adequate to assure thatthe information presented is not misleading in any material respect. Thefollowing condensed consolidated financial statements should be read inconjunction with the year-end consolidated financial statements and notesthereto included in our Annual Report on Form 10-K for the year ended December31, 2006.

The results of operationsfor the interim periods presented herein are not necessarily indicative of theresults to be expected for the entire fiscal year, or any other period.

When we refer to ourfiscal year in this report, we are referring to the fiscal year ended onDecember 31 of that year. Thus, we are currently operating in our fiscal 2007year, which commenced on January 1, 2007. Unless the context expresslyindicates a contrary intention, all references to years in this filing are toour fiscal years.

“InternationalFight League,” “IFL,” “Bulldogs,” “Condors,” “Red Bears,” “The Scorpions,” “TheRazorclaws,” “Toronto Dragons,” “The Tigersharks,” “The Pitbulls,” “TheSilverbacks,” “The Wolfpack,” “The Sabres” and “The Anacondas” are trademarksof IFL.  Each trademark, trade name orservice mark of any other company appearing in this report belongs to itsholder.

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**INTERNATIONALFIGHT LEAGUE, INC.**

**andSubsidiary (formerly International Fight League, LLC)**

**CONDENSED CONSOLIDATEDBALANCE SHEETS**
| ** **                                                                                                                                                                              | ** ** | **June 30, 2007** | ** ** | **December 31, 2006** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|---------------------------------|------------|
| ** **                                                                                                                                                                              | ** ** | **(unaudited)**             | ** ** | ** **                      | ** ** |
| **ASSETS**                                                                                                                                                                              |       |                        |       |                            |       |
| Current assets:                                                                                                                                                                         |       |                        |       |                            |       |
| Cash and cash  equivalents                                                                                                                                                              |       | $                           | 2,526,465  |                            | $          | 16,623,159 |   |
| Accounts  receivable, net of allowance for doubtful accounts                                                                                                                            |       | 230,623                     |       | 108,104                         |       |
| Merchandise  inventory                                                                                                                                                                  |       | 96,979                      |       | 25,843                          |       |
| Prepaid expenses                                                                                                                                                                        |       | 186,933                     |       | 245,316                         |       |
| Total current  assets                                                                                                                                                                   |       | 3,041,000                   |       | 17,002,422                      |       |
|                                                                                                                                                                                    |       |                        |       |                            |       |
| Property and equipment,  net of accumulated depreciation and amortization                                                                                                               |       | 324,074                     |       | 303,869                         |       |
| Other assets                                                                                                                                                                            |       | 113,295                     |       | 121,346                         |       |
| Total assets                                                                                                                                                                            |       | $                           | 3,478,369  |                            | $          | 17,427,637 |   |
|                                                                                                                                                                                    |       |                        |       |                            |       |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**                                                                                                                                          |       |                        |       |                            |       |
| Current liabilities:                                                                                                                                                                    |       |                        |       |                            |       |
| Accounts payable                                                                                                                                                                        |       | $                           | 1,915,184  |                            | $          | 1,036,444 |   |
| Accrued  commission on private placement                                                                                                                                                |       | —                      |       | 1,645,400                       |       |
| Accrued expenses  and other current liabilities                                                                                                                                         |       | 692,915                     |       | 1,110,341                       |       |
| Total current  liabilities                                                                                                                                                              |       | 2,608,099                   |       | 3,792,185                       |       |
|                                                                                                                                                                                    |       |                        |       |                            |       |
| Commitments                                                                                                                                                                             |       |                        |       |                            |       |
|                                                                                                                                                                                    |       |                        |       |                            |       |
| Stockholders’ equity:                                                                                                                                                              |       |                        |       |                            |       |
| Common stock,  $0.01 par value per share; 150,000,000 shares authorized; 53,549,614 and  53,500,448 shares issued and outstanding at June 30, 2007 and December 31,  2006, respectively |       | 535,496                     |       | 535,004                         |       |
| Additional  paid-in capital                                                                                                                                                             |       | 23,820,185                  |       | 23,996,851                      |       |
| Subscriptions  receivable                                                                                                                                                               |       | —                      |       | (1,250,000                      | )          |
| Accumulated  deficit                                                                                                                                                                    |       | (23,485,411                 | )          | (9,646,403                      | )          |
| Total  stockholders’ equity                                                                                                                                                        |       | 870,270                     |       | 13,635,452                      |       |
| Total liabilities and  stockholders’ equity                                                                                                                                        |       | $                           | 3,478,369  |                            | $          | 17,427,637 |   |

 

Theaccompanying notes are an integral part of the condensed consolidated financialstatements.

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**INTERNATIONALFIGHT LEAGUE, INC.**

**andSubsidiary (formerly International Fight League, LLC)**

**CONDENSED CONSOLIDATED STATEMENTSOF OPERATIONS**

**(unaudited)**
| ** **                                                                       | ** ** | **Three months ended June 30,** | ** ** | **Six months ended June 30,** | ** ** |
|----------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                       | ** ** | **2007**                                            | ** ** | **2006**                                          | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Revenues:**                                                                    |       |                                                |       |                                              |       |   |   |   |   |
| Live and  television events:                                                     |       |                                                |       |                                              |       |   |   |   |   |
| Advertising – sponsorships                                                  |       | $                                                   | 74,178     |                                              | $          | 234,310 |   | $ | 141,224 |   | $ | 234,310 |   |
| Live events – box office receipts                                           |       | 891,721                                             |       | 127,142                                           |       | 1,405,563 |   | 127,142 |   |
| Television rights                                                                |       | 1,672,500                                           |       | 375,000                                           |       | 2,632,500 |   | 375,000 |   |
| Branded  merchandise                                                             |       | 34,831                                              |       | 1,342                                             |       | 54,302 |   | 1,342 |   |
|                                                                             |       |                                                |       |                                              |       |   |   |   |   |
| **Total revenues**                                                               |       | 2,673,230                                           |       | 737,794                                           |       | 4,233,589 |   | 737,794 |   |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| **Costs  of revenues:**                                                          |       |                                                |       |                                              |       |   |   |   |   |
| Live and  televised events:                                                      |       |                                                |       |                                              |       |   |   |   |   |
| Advertising – sponsorships                                                  |       | 22,274                                              |       | 102,280                                           |       | 55,308 |   | 102,280 |   |
| Live events costs                                                                |       | 6,402,754                                           |       | 1,513,422                                         |       | 12,001,730 |   | 1,513,422 |   |
| Distribution fees                                                                |       | 1,000,555                                           |       | 375,000                                           |       | 1,750,556 |   | 375,000 |   |
| Branded  merchandise                                                             |       | 16,682                                              |       | 680                                               |       | 24,425 |   | 680 |   |
|                                                                             |       |                                                |       |                                              |       |   |   |   |   |
| **Total costs of revenues**                                                      |       | 7,442,265                                           |       | 1,991,382                                         |       | 13,832,019 |   | 1,991,382 |   |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| **Selling,  general and administrative expenses**                                |       | 2,164,012                                           |       | 504,773                                           |       | 4,442,946 |   | 1,069,963 |   |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| **Stock-based  compensation expense**                                            |       | 14,469                                              |       | 15,546                                            |       | 29,677 |   | 25,128 |   |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| **Operating loss**                                                               |       | (6,947,516                                          | )          | (1,773,907                                        | )          | (14,071,053 | ) | (2,348,679 | ) |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| **Other  income (expense):**                                                     |       |                                                |       |                                              |       |   |   |   |   |
| Dividend expense                                                                 |       | —                                              |       | (45,167                                           | )          | — |   | (72,617 | ) |
| Interest expense                                                                 |       | (928                                                | )          | —                                            |       | (2,094 | ) | — |   |
| Interest income                                                                  |       | 71,644                                              |       | 11,248                                            |       | 234,139 |   | 22,771 |   |
|                                                                             |       |                                                |       |                                              |       |   |   |   |   |
| **Total other income (expense)**                                                 |       | 70,716                                              |       | (33,919                                           | )          | 232,045 |   | (49,846 | ) |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| **Net loss**                                                                     |       | $                                                   | (6,876,800 | )                                                 | $          | (1,807,826 | ) | $ | (13,839,008 | ) | $ | (2,398,525 | ) |
| ** **                                                                       |       |                                                |       |                                              |       |   |   |   |   |
| Net loss per  common share – basic and diluted                              |       | $                                                   | (0.13      | )                                                 | $          | (0.10 | ) | $ | (0.26 | ) | $ | (0.14 | ) |
|                                                                             |       |                                                |       |                                              |       |   |   |   |   |
| Weighted average number  of common shares   outstanding – basic and diluted |       | 53,543,351                                          |       | 18,582,722                                        |       | 53,522,018 |   | 17,556,052 |   |

 

The accompanying notes are an integral part of the condensedconsolidated financial statements.

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**INTERNATIONALFIGHT LEAGUE, INC.**

**andSubsidiary (formerly International Fight League, LLC)**

**CONDENSED CONSOLIDATED STATEMENTSOF CASH FLOWS**

**(unaudited)**
| ** **                                                                   | ** ** | **For the Six Months Ended** | ** **  |
|------------------------------------------------------------------------------|------------|--------------------------------------------------|-------------|
| ** **                                                                   | ** ** | **June 30, 2007**                      | ** **  | **June 30, 2006** | ** ** |
| Cash flows from  operating activities:                                       |       |                                             |        |   |   |
| Net loss                                                                     |       | $                                                | (13,839,008 | ) | $ | (2,398,525 | ) |
| Adjustments to reconcile net loss to net cash used  in operating activities: |       |                                             |        |   |   |
| Depreciation and amortization                                                |       | 53,838                                           |        | 4,991 |   |
| Stock-based compensation expense                                             |       | 29,677                                           |        | 25,128 |   |
| Changes in operating assets and liabilities:                                 |       |                                             |        |   |   |
| Accounts receivable                                                          |       | (122,519                                         | )           | (203,459 | ) |
| Merchandise inventory                                                        |       | (71,136                                          | )           | — |   |
| Prepaid expenses                                                             |       | 58,383                                           |        | (8,581 | ) |
| Accounts payable                                                             |       | 878,740                                          |        | 391,125 |   |
| Accrued expenses and other current liabilities                               |       | (627,628                                         | )           | 185,579 |   |
| Net cash used in operating activities                                        |       | (13,639,653                                      | )           | (1,903,742 | ) |
|                                                                         |       |                                             |        |   |   |
| Cash flows from  investing activities:                                       |       |                                             |        |   |   |
| Payment (repayment) of security deposits                                     |       | 8,051                                            |        | (2,500 | ) |
| Purchase of property and equipment                                           |       | (74,043                                          | )           | (41,190 | ) |
| Net cash used in investing activities                                        |       | (65,992                                          | )           | (43,690 | ) |
|                                                                         |       |                                             |        |   |   |
| Cash flows from  financing activities:                                       |       |                                             |        |   |   |
| Receipt of subscription receivable                                           |       | 1,250,000                                        |        | — |   |
| Issuance of common stock from exercise of stock  options                     |       | 4,351                                            |        | — |   |
| Issuance of Series A preferred stock                                         |       | —                                           |        | 2,525,000 |   |
| Payment of accrued commission on private placement                           |       | (1,645,400                                       | )           | — |   |
| Conversion of investor advances to Series A  preferred stock                 |       | —                                           |        | (1,175,000 | ) |
| Net cash (used in) provided by financing activities                          |       | (391,049                                         | )           | 1,350,000 |   |
|                                                                         |       |                                             |        |   |   |
| Net decrease in  cash and cash equivalents                                   |       | (14,096,694                                      | )           | (597,432 | ) |
| Cash and cash  equivalents at beginning of period                            |       | 16,623,159                                       |        | 1,136,960 |   |
| Cash and cash  equivalents at end of period                                  |       | $                                                | 2,526,465   |   | $ | 539,528 |   |

 

**Theaccompanying notes are an integral part of the condensed consolidated financialstatements.**

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**INTERNATIONALFIGHT LEAGUE, INC.**

**andSubsidiary (formerly International Fight League, LLC)**

**NOTES TO CONDENSED CONSOLIDATED FINANCIALSTATEMENTS**

**(Unaudited)**

**NOTE 1 – BASIS OF PRESENTATION AND CONSOLIDATION AND BUSINESSDESCRIPTION**

Priorto November 29, 2006, we were known as Paligent Inc., a Delaware corporation (“Paligent”). On November 29, 2006, we acquired International Fight League, Inc., a privatelyheld Delaware corporation (“Old IFL”), pursuant to an agreement and plan ofmerger, dated as of August 25, 2006, as amended (the “Merger Agreement”), byand among us, IFL Corp., a Delaware corporation and our wholly owned subsidiary(“Merger Sub”), and Old IFL, providing for the merger of Merger Sub and OldIFL, with Old IFL being the surviving corporation and becoming our wholly ownedsubsidiary (the “Merger”).  Immediately following the Merger, we changedour name to International Fight League, Inc. (“IFL” or collectively, the “Company”),and Old IFL changed its name to IFL Corp. and continued to operate Old IFL’sbusiness of organizing and promoting a mixed martial arts (“MMA”) sportsleague.

Theaccompanying unaudited condensed consolidated financial statements representthe accounts of IFL and IFL Corp.  Allintercompany accounts and transactions have been eliminated inconsolidation.  These unaudited condensedconsolidated financial statements reflect all adjustments (consisting of normalrecurring accruals) that are considered necessary for a fair presentation of consolidatedfinancial position and results of operations as of and for the periodspresented.  We are required to makeestimates and assumptions that affect the amounts reported in the unauditedfinancial statements and footnotes. Estimates and assumptions are periodically reviewed and the effects ofany material revisions are reflected in the period that they are determined tobe necessary.

Weorganize, host and promote a significantly greater number of live and televisedMMA sporting events during the first half of our fiscal year than during thesecond half of our fiscal year.  Since wegenerally incur most of our costs in connection with such events, our expensesgenerally increase during the first half of our fiscal year and decline in thesecond half.  This seasonality is likelyto cause fluctuations in our financial results. Therefore, the results of operations for the periods presented are notnecessarily indicative of the results of operations for the full year andshould be read in conjunction with the audited consolidated financial statementsfor the year ended December 31, 2006 in our Annual Report on Form 10-K.

**NOTE 2 – LIQUIDITY**

Sinceinception, the Company has incurred losses and has an accumulated deficit of$23.5 million at June 30, 2007. During 2006, the Company raised$2.5 million from the issuance of preferred stock (which was converted tocommon stock at the time of the Merger) and received $22.2 million in netproceeds from the sale of common stock in a private placement. At June 30,2007, the Company’s cash balance was $2.5 million.  In August 2007, the Company completed anotherprivate placement from which the Company received $11.7 million in net proceeds(see Note 11 – Subsequent Event).

Basedupon management’s current forecast of future revenues and expenses, the Companybelieves its cash resources will likely be sufficient to fund operations into thesecond quarter of 2008.  This assumesthat the Company’s live event expenses continue to decrease as a result of theCompany’s increased production efficiencies and that the Company realizesadditional cash from the following: (i) the distribution of IFL mixed martialarts content via DVD, electronic sell through and similar media pursuant to ourletter of intent with Warner Home Video; (ii) the distribution of programming internationallypursuant to our exclusive relationship with Alfred Haber Distribution, Inc.;(iii) the continuation of television rights consistent with terms contemplatedby the Letter of Intent with the Fox Entities (see Note 8); and (iv) anincrease in sponsorship and licensing revenue. The Company is also evaluating the profitability of other revenuesources, such as franchise or team sales, digital rights and pay-per-viewbroadcasts. If the Company can successfully generate revenue from additionalsources, the Company’s cash resources could last beyond the second quarter of2008.  There can be no assurance,however, that the Company will generate 

7

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sufficient cash fromany of such sources or continue to realize decreases in its live eventexpenses.  If the Company is not able togenerate sufficient cash from operations or if the Company is unable to securesufficient debt or equity financing for operations, the Company will experiencea cash shortage, the effect of which could result in the discontinuance ofoperations.  If additional funds areraised by issuing equity securities, further dilution to existing stockholderswill result and future investors may be granted rights superior to those ofexisting stockholders.

**NOTE 3 – LOSS PER SHARE**

The Company complieswith the accounting and reporting requirements of Statement of FinancialAccounting Standards No. (“FAS”) 128, “Earnings Per Share.”  Basicearnings per share (“EPS”) excludes dilution and is computed by dividing income(loss) applicable to common stockholders by the weighted average number ofcommon shares outstanding for the period.  Diluted EPS is based upon theweighted average number of common shares outstanding during the period plus theadditional weighted average common equivalent shares during the period.  Common equivalent shares result from theassumed exercises of outstanding stock options and warrants, the proceeds ofwhich are then assumed to have been used to repurchase outstanding shares ofcommon stock (the “treasury stock method”).  Common equivalent shares are not included inthe per share calculations where the effect of their inclusion would beanti-dilutive.  Inherently, stock optionsand warrants are deemed to be anti-dilutive when the average market price ofthe common stock during the period exceeds the exercise price of the stockoptions or warrants.

AtJune 30, 2007, the Company’s common stock equivalents include stock optionsoutstanding for 2,088,031 shares of our common stock and warrants exercisablefor 1,288,987 shares of our common stock.  These common stock equivalentsare not included in the diluted EPS calculations because the effect of theirinclusion would be anti-dilutive or would decrease the loss per common share.

**NOTE 4 – INCOME TAXES**

OnJanuary 1, 2007, the Company adopted the provisions of Financial AccountingStandards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty inIncome Taxes – an interpretation of FAS 109” (“FIN 48”).  As of January 1 and June 30, 2007, there wereno unrecognized tax benefits.  FIN 48prescribes a recognition threshold and a measurement attribute for thefinancial statement recognition and measurement of tax positions taken orexpected to be taken in a tax return. For those benefits to be recognized, a tax position must bemore-likely-than-not to be sustained upon examination by taxingauthorities.  The Company recognizesaccrued interest and penalties related to unrecognized tax benefits as incometax expense.  No amounts were accrued forthe payment of interest and penalties at January 1, 2007.  There was not change to this balance at June30, 2007.  Management is currentlyunaware of any issues under review that could result in significant payments,accruals or material deviations from its position.  The adoption of the provisions of FIN 48 didnot have a material impact on the Company’s financial position, results ofoperations and cash flows.

8

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**NOTE 5 – RELATED PARTYTRANSACTIONS**

***Transactionswith Entities Controlled by Our Chief Executive Officer***

Certain business transactionsare transacted among the Company and two business ventures that are controlledby the Company’s Chief Executive Officer.  Typically, the Companyreimburses these related companies for charges incurred and advances made onthe Company’s behalf. Further, the Company purchases certain goods and servicesfrom these related companies.  As of June 30, 2007, approximately $58,000was owed to these related companies, which is included in accounts payable,relating to transactions aggregating $230,000 and $580,000 for the threeand six months ended June 30, 2007 and $123,000 and $162,000 for the three andsix months ended June 30, 2006.  As ofDecember 31, 2006, approximately $166,000 was owed to these related companies,of which $119,000 is included in accounts payable and $47,000 is included inaccrued expenses.

***Leaseand Other Guaranty Arrangements***

Inconnection with Old IFL’s lease of our New York City headquarters in August2006, our Chief Executive Officer executed an unconditional and irrevocableguaranty of Old IFL’s obligations under the lease.  This lease commencedon September 1, 2006 and expires on August 31, 2010.  Rent expenseinitially is $13,394 per month (not including escalations) commencing onNovember 1, 2006 and payable in advance. In addition, our Chief Executive Officer has, on occasion, providedpersonal guarantees relating to performance bonds required by certain stateathletic commissions.

OnMarch 29, 2007, the Company’s Board of Directors passed a resolutionauthorizing the Company to enter into an indemnification agreement with ourChief Executive Officer relating to these personal guarantees.  On March 30, 2007, the Company executed anindemnity agreement with our Chief Executive Officer.

**NOTE6 – STOCK OPTION PLAN**

Accountingfor stock options issued to employees follows the provisions of FAS 123(R), “Share-BasedPayment” and the SEC’s SAB 107, “Valuation of Share-Based Payment Arrangementsfor Public Companies.”  This statement requires an entity to measure thecost of employee services received in exchange for an award of equityinstruments based on the grant-date fair value of the award. That cost will berecognized over the period during which an employee is required to provideservice in exchange for the award.

TheCompany uses the Black-Scholes option pricing model to measure the fair valueof options granted to employees.

Duringthe year ended December 31, 2006, the Company adopted the new 2006 EquityIncentive Plan (the “Plan”), which permits the grant of share options and otherforms of share-based awards to its employees, directors and service providersfor up to 5,000,000 shares of the Company’s common stock. Option awardsgenerally vest based on 3 years of continuous service and have 10-yearcontractual terms. Certain option and share awards provide for acceleratedvesting if there is a change in control (as defined in the Plan). As part ofthe Merger (see Note 1), in exchange for options to purchase 1,865,000 sharesof Old IFL common stock, we issued to the holders thereof options to purchasean aggregate of 1,925,376 shares of our common stock under the Plan which hassubstantially the same terms and conditions as the Old IFL options.

9

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Thefair value of each option award is estimated on the date of grant using theBlack-Scholes option valuation model that used the assumptions noted in thefollowing table. Expected volatilities are estimated based on the volatility ofother entities in similar businesses. The expected term of options granted toemployees is 3 years and is derived from the option agreement and representsthe vesting period, since there is no employment history to consider. Theexpected term of options granted to non-employees is 2 to 5 years and isderived from the agreements with the parties. The risk-free rate for theexpected term of the options is based on the U.S. Treasury yield curve ineffect at the time of grant. 
|                           | ** ** | **June 30, 2007** | ** ** |
|---------------------------|------------|-----------------------------|------------|
| Expected  volatility      |       | 33                          | %          |
| Expected  dividends       |       | 0                           |       |
| Expected term  (in years) |       | 2-5                         |       |
| Risk-free rate            |       | 4.7                         | %          |

 

Asummary of option activity under the Plan for the six months ended June 30,2007 is presented below:
| **Options**                    | ** ** | **Shares** | ** ** | **Weighted   Average Exercise   Price** | ** ** | **Weighted Average   Remaining   Contractual Term** | ** ** |
|--------------------------------|------------|------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|
| Outstanding at January 1, 2007 |       | 1,925,376  |       | $                                                      | 0.20       |                                                                    |       |   |
| Exercised on April 5, 2007     |       | 43,333     |       | $                                                      | 0.06       |                                                                    |       |   |
| Exercised on June 8, 2007      |       | 5,833      |       | $                                                      | 0.30       |                                                                    |       |   |
| Cancelled                      |       | (50,947    | )          | $                                                      | 0.30       |                                                                    |       |   |
| Outstanding at June 30, 2007   |       | 1,825,263  |       | $                                                      | 0.16       |                                                                    |       |   |
| Exercisable at  June 30, 2007  |       | 482,847    |       | $                                                      | 0.12       |                                                                    | 8.9 years  |   |

 

Inconnection with grants of options issued under the Plan, compensation costs of$14,469 and $29,677, respectively, were charged against operations for thethree and six months ended June 30, 2007. For the three and six months ended June 30, 2006, respectively,compensation costs of $15,546 and $25,128 were charged against operations.

**NOTE7 – COMMITMENTS**

InApril 2007 the Company entered into an agreement with one of its executiveofficers under which the Company is obligated to make special payments and providebenefits subsequent to the effective date of the executive’s resignation (seeNote 9).

**NOTE8 – TELEVISION RIGHTS AGREEMENTS**

Onvarious dates during the year ended December 31, 2006, the Company entered intoagreements with National Sports Programming, owner and operator of Fox SportsNet (“FSN”) regarding IFL’s series of team mixed martial arts matches heldduring the year ended December 31, 2006. The agreements grant FSN certainrights to the telecasts and, in return, FSN agrees to broadcast the seriesunder specified conditions.

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Theagreements with FSN provide that there shall be no payment of any distributionfees by the Company to FSN.  The Company treats the arrangements as bartertransactions in accordance with FAS 153 “Exchanges of Nonmonetary Assets,an amendment of APB Opinion No. 29.” Under the proposed terms of the Letter of Intent (as hereinafterdefined), FSN would retain exclusive distribution rights to all IFL regularseason, playoff and championship events. The provision of the Letter of Intent relating to FSN provides thatthere shall continue to be no payment of any distribution fee by IFL toFSN.  For the three and six monthsperiods ended June 30, 2007, the Company recognized $1,000,000 and $1,750,000of television rights revenue and corresponding charges to costs of revenuesrelating to the telecast of events on FSN.

OnJanuary 15, 2007, the Company entered into a letter of intent (the “Letter ofIntent”) with Fox Cable Networks, Inc. (“Fox”) and MyNetworkTV, Inc. (“MNTV”and, together with Fox, the “Fox Entities”), which set forth certain terms andconditions under which the Fox Entities and IFL propose to create, promote anddistribute IFL MMA content through a three-tier television and new mediaprogramming alliance.  The Letter ofIntent contains provisions requiring good faith negotiation of definitiveagreements and exclusive negotiation by the Company. These terms expired onMay 31, 2007, and have not been extended beyond that date.  Accordingly, the parties are no longer obligatedto negotiate definitive documents, nor is the Company bound by the exclusivenegotiation terms contained in the Letter of Intent.

Theparties have also been operating under the terms of the Letter of Intent withrespect to the telecasting of IFL events by FSN and MNTV and the Companyintends to continue negotiating definitive documents with the Fox Entities fortelecasting IFL events.  During the threeand six month periods ended June 30, 2007, the Company recorded $683,000 and$883,000 of television rights revenue relating to the telecast of events onMNTV.

TheLetter of Intent also contemplated Fox making an equity investment in IFL andFox and IFL establishing a joint venture to own, manage and distribute IFLrelated digital media rights including online/Internet, broadband andmobile/wireless.  IFL expects thatdiscussions will continue on these proposed transactions in the future,however, no assurance can be given that a transaction will be consummated.

TheCompany has also entered into an agreement for exclusive internationaldistribution of its television shows. Under the agreement, the Company is required to deliver certainprogramming and will receive 75% of the revenue received from distribution witha guaranteed minimum of $1 million.  Duringthe six months ended June 30, 2007, the Company received an advance payment of$200,000, which is reflected in other liabilities.  The Company will first record revenue underthe arrangement when it completes the delivery of the minimum required programming.

**NOTE9 – ARRANGEMENTS WITH CERTAIN OFFICERS**

OnApril 2, 2007, we entered into an agreement and general release (the “OriginalAgreement”), pursuant to which Salvatore A. Bucci, our Chief Financial Officer,Executive Vice President and Treasurer voluntarily resigned effective at theclose of business on June 30, 2007 (the “Separation Date”).  Mr. Bucci was to continue to serve as ourChief Financial Officer, Executive Vice President and Treasurer and as one ofour directors through the Separation Date. As provided for under the Original Agreement we paid Mr. Bucci hisregular gross salary plus benefits and reimbursed Mr. Bucci for out-of-pocketexpenses incurred by him in connection with the performance of his duties andobligations.  The 

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Original Agreement hadalso required us to make a one-time payment of $40,000 to Mr. Bucci on June 29,2007 and that we pay Mr. Bucci six monthly payments of $15,000 from July toDecember 2007.

OnJune 19, 2007, the Company and Mr. Bucci amended the Original Agreement byentering into an Amended and Restated Agreement and General Release (the “AmendedAgreement”).  Under the AmendedAgreement, Mr. Bucci will continue in his positions of Chief Financial Officer,Executive Vice President and Treasurer of the Company through September 30,2007, unless the Company requests Mr. Bucci to resign before that date.  Mr. Bucci will be paid a salary of $20,000per month from July 1 to September 30, 2007, regardless of whether Mr. Bucci’sresignation becomes effective prior to September 30, 2007.  Further, in lieu of the one-time payment of$40,000 due to Mr. Bucci on June 29, 2007 and the six monthly payments of$15,000 that were payable from July to December 2007, Mr. Bucci was paid onespecial payment of $60,000 on June 29, 2007 and is to receive a second specialpayment of $70,000 on September 28, 2007. The Company also made a $10,000 payment directly to Mr. Bucci’s law firmfor services rendered to Mr. Bucci in connection with these agreements.  The remaining terms of the Original Agreementare substantially unchanged.

Mr. Bucci served as a director of the Company until the June 28, 2007annual stockholders meeting, at which time he resigned from the board.

**NOTE10 – RECENT ACCOUNTING PRONOUNCEMENTS**

In September 2006, the FASB issued FAS 157, “Fair ValueMeasurements.”  This Statement definesfair value, establishes a framework for measuring fair value in generallyaccepted accounting principles, expands disclosures about fair value measurements,and applies under other accounting pronouncements that require or permit fairvalue measurements.  FAS 157 does notrequire any new fair value measurements. However, the FASB anticipates that for some entities, the application ofFAS 157 will change current practice. FAS 157 is effective for financial statements issued for fiscal yearsbeginning after November 15, 2007, which for the Company would be its fiscalyear beginning January 1, 2008.  TheCompany is currently evaluating the impact of FAS 157 but does not expect thatit will have a material impact on its condensed consolidated interim financialstatements.

In September 2006, the Securities and Exchange Commission issued StaffAccounting Bulletin No. 108, “Considering the Effects of Prior YearMisstatements when Quantifying Misstatements in Current Year FinancialStatements” (“SAB 108”).  SAB 108provides guidance on how prior year misstatements should be considered whenquantifying misstatements in the current year financial statements.  The SAB requires registrants to quantify misstatementsusing both a balance sheet and an income statement approach and evaluatewhether either approach results in quantifying a misstatement that, when allrelevant quantitative and qualitative factors are considered, is material. SAB108 does not change the guidance in SAB 99, “Materiality,” when evaluating themateriality of misstatements.  SAB 108 iseffective for fiscal years ending after November 15, 2006.  Upon initial application, SAB 108 permits aone-time cumulative effect adjustment to beginning retained earnings.  The Company is currently evaluating thepotential impact, if any, that the adoption of SAB 108 will have on itscondensed consolidated interim financial statements. 

In February 2007, the FASB issued FAS 159, “The Fair Value Option forFinancial Assets and Financial Liabilities.” This Statement permits entities to choose to measure many financialinstruments at fair value. Unrealized gains and losses on items for which thefair value option has been elected are reported in earnings.  FAS 159 is effective for fiscal yearsbeginning after November 15, 2007.  TheCompany is currently assessing the impact of FAS 159 on its condensedconsolidated interim financial position and results of operations.

**NOTE 11– SUBSEQUENT EVENT**

OnAugust 6, 2007, the Company completed a private offering for the sale of atotal of 25,330,000 shares of common stock at a price of $0.50 per share forgross proceeds of $12,665,000 and issued five year warrants to acquire up to12,665,000 shares of common stock at an exercise price $1.05 per share fromwhich the Company received net proceeds of $11.7 million.

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**Item 2.     Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

*The following discussion andanalysis of our financial condition and results of operations should be read inconjunction with our condensed consolidated financial statements and relatednotes appearing elsewhere in this Quarterly Report on Form 10-Q and our AnnualReport on Form 10-K filed on April 2, 2007. In addition to historicalinformation, this discussion and analysis contains forward-looking statements**that are based on current expectations, estimates, forecasts andprojections about us, our future performance and the industries in which weoperate as well as on our management’s assumptions.  Theseforward-looking statements that involve risks and uncertainties. When used inthis 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-lookingstatements.  While we believe our plans,intentions and expectations reflected in those forward-looking statements arereasonable, we cannot assure you that these plans, intentions or expectationswill be achieved.  Other than as requiredby applicable securities laws, we are under no obligation to update anyforward-looking statement, whether as result of new information, future events orotherwise.  Our actual results may differmaterially from those anticipated in these forward-looking statements as aresult of certain factors, including but not limited to, those set forth underItem 1A, “Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Qand in our Annual Report on Form 10-K for the year ended December 31, 2006.*

**Our Company**

We are the world’s first professional mixed martial arts (or MMA)sports league.  In MMA matches, athletescombine a variety of fighting styles, such as boxing, judo, jiu jitsu, karate,kickboxing, muy thai, tae kwon do and/or wrestling, in each fight.  Our business was founded in 2005 to organize,host and promote live and televised MMA sporting events and to capitalize onthe growing popularity of MMA in the United States and around the world. At thecore of our business are our twelve MMA teams, which comprise some of the world’smost highly regarded athletes and coaches. Our sporting events typically showcase four teams, in two-teammatch-ups, with athletes competing in one-on-one matches across five weightdivisions.  These events create a body oftelevision programming content that we currently distribute through anarrangement with both Fox Sports Net (“FSN”), a national sports cable networkavailable to over 80 million households across the U.S., MyNetworkTV, Inc. (“MNTV”),a broadcast network available to over 100 million homes across the U.S., andinternationally through our arrangement with Alfred Haber Distribution, Inc., aninternational distributor of U.S. television programming. We earn revenue fromlive event ticket sales, sponsorships and promotions and licensing of ourintellectual property.  We have heldsixteen live events, the first of which took place during the second quarter of2006, the first period in which we recognized revenues.

**Corporate History**

Prior to November 29, 2006, we were known as Paligent Inc., a Delawarecorporation (“Paligent”).  On November 29, 2006, we acquired InternationalFight League, Inc., a privately held Delaware corporation (“Old IFL”), pursuantto an agreement and plan of merger, dated as of August 25, 2006, as amended(the “Merger Agreement”), by and among us, IFL Corp., a Delaware corporationand our wholly owned subsidiary (“Merger Sub”), and Old IFL, providing for themerger of Merger Sub and Old IFL, with Old IFL being the surviving corporationand becoming our wholly owned subsidiary (the “Merger”).  Immediatelyfollowing the Merger, we changed our name to International Fight League, Inc. (“IFL”or collectively, the “Company”), and Old IFL changed its name to IFL Corp. andcontinued to operate Old IFL’s business of organizing and promoting a mixedmartial arts sports league.

The Merger has been accounted for as a reverse acquisition under thepurchase method of accounting for business combinations in accordance withgenerally accepted accounting principles in the United States of America.  Reported results of operations of thecombined group reflect the operations of Old IFL and IFL.

Old IFL’s predecessor, International Fight League, LLC (the “LLC”), wasorganized on March 29, 2005 as a New Jersey limited liability company.  On January 11, 2006, the LLC merged into OldIFL, whereupon the existence of the LLC ceased, and at which time the membersof the LLC received an aggregate of 18,000,000 shares 

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of Old IFL common stock, par value $0.0001 per share,in exchange for their membership interests in the LLC.  Old IFL operated as a development stageenterprise through March 31, 2006.

During the first quarter of 2007, we launched our first full season,which consisted of a nine event regular season, which concluded in the secondquarter, plus a two event post-season, which will occur in the thirdquarter.  In addition, during the fourthquarter of 2007, we will hold our “grand prix,” a two event tournament in whichthe four top athletes in each weight class will compete for the title belt tobe awarded to the champion of each weight class.

**CompanyFilings**

We make availablethrough our internet website free of charge our annual report on Form 10-K,quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to suchreports and other filings made by us with the SEC, as soon as practicable afterwe electronically file such reports and filings with the SEC. Our website addressis www.ifl.tv.  The information containedin this website is not incorporated by reference in this report.

**Results of Operations**

From inception through June 30, 2007, we have incurred costs andexpenses significantly in excess of revenues. As we pursue our goals andcontinue to build out our organization and business, we expect to increaserevenues and control costs and maximize value to existing stockholders, thoughwe expect to incur additional losses.

Through March 31, 2006, we were a development stage company withinsignificant operations.  We held ourfirst event on April 29, 2006 and first reported revenues and costs of revenuesduring the three months ended June 30, 2006. Accordingly, comparative information relating to revenues and costs ofrevenues for the three and six month periods ended June 30, 2006 are identical.

***Threeand Six Months Ended June 30, 2007 as compared to the Three and Six MonthsEnded June 30, 2006***

Duringthe three month period ended June 30, 2007, we held five live events.  In addition, during this period, we createdtelevision content for twelve original episodes for broadcast on FSN and ninefor MNTV.  During the six months endedJune 30, 2007, we held nine live events and created eighteen original episodesfor broadcast on FSN and  twelve forMNTV.

Forthe three months ended June 30, 2007, we incurred a net loss of $6.9 million,or $0.13 per share, as compared to a net loss of $1.8 million, or $0.10 pershare during the comparable period in 2006. For the six months ended June 30, 2007, we incurred a net loss of $13.8million, or $0.26 per share, as compared to a net loss of $2.4 million, or$0.14 per share, during the comparable period in 2006.

Revenues for the three and six months ended June 30, 2007 were $2.7million and $4.2 million, respectively. During 2006, revenues for the comparable periods were $738,000.  The principal components of revenue for thereferenced periods in 2007 and 2006, respectively, include:

·                  televisionrights of $1.7 million and $2.6 million, respectively, during the three and sixmonths ended June 30, 2007, consisting of $1.0 million and $1.75 million,respectively, relating to IFL’s agreements with FSN and $683,000 and $883,000,respectively, relating to our agreement with MNTV.  During 2006, we recognized $375,000 oftelevision rights relating to our agreement with FSN;

·                  boxoffice receipts and related revenue of $892,000 and $1.4 million, respectively,during the three and six month periods ended June 30, 2007 as compared to$127,000 during 2006; and

·                  sponsorshipsof $74,000 and $141,000, respectively, during the three and six month periodsended June 30, 2007 as compared to $234,000 during 2006.

During 2006, IFL entered into agreements with National SportsProgramming, owner and operator of Fox Sports Net (“FSN”).  The agreements with FSN granted FSN exclusiverights to broadcast episodes of IFL’s 2006 events through June 30, 2007.  In January 2007, we entered into a Letter ofIntent  with Fox Cable Networks, Inc. (“Fox”)

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and MyNetworkTV, Inc. (“MNTV” and, together with Fox, the “Fox Entities”)(the “Letter of Intent”), which set forth certain terms and conditions underwhich the Fox Entities and IFL proposed to create, promote and distribute IFLMMA content. Under the proposed terms, FSN would retain exclusive distributionrights to all IFL regular season, playoff and championship events.  The provision of the Letter of Intentrelating to FSN provides that there shall be no payment of any distribution feeby IFL to FSN.  Accordingly, we havetreated the transaction as a barter transaction in accordance with FAS 153, “Exchangesof Nonmonetary Assets, an amendment of APB Opinion No. 29. The provision of theLetter of Intent relating to the broadcasts on MNTV provide for MNTV to pay IFL$50,000 for each initial telecast, $20,000 for each second telecast and $12,500for each third telecast.  During thesecond quarter ended June 30, 2007, MNTV broadcast nine first run telecasts,seven second run telecasts and five third run telecasts.  During the six months ended June 30, 2007,MNTV broadcast twelve first run telecasts, ten second run telecasts and fivethird run telecasts.

During the three and six months ended June 30, 2007, costs of revenueswere $7.4 million and $13.8 million, respectively.  During 2006, costs of revenues for thecomparable periods were $2.0 million. The principal components of costs of revenues for the referenced periodsconsists of the following:

·                  distributionfees of $1.0 million and $1.75 million, respectively, during the three and sixmonths ended June 30, 2007 relating to the FSN agreement.  During 2006, we recorded $375,000 ofdistribution fees relating to our agreement with FSN;

·                  liveevents costs of $6.4 million and $12.0 million, respectively, during the threeand six months ended June 30, 2007. During 2006, we recorded $1.5 million of live events costs; and

·                  sponsorshipcosts of $22,000 and $55,000, respectively, during the three and six monthended June 30, 2007 as compared to $102,000 recorded in 2006.

Componentsof live event costs for the quarterly and six month periods ended June 30,2007, respectively, include $1.7 million and $3.4 million of talent costs ascompared to $387,000 in 2006, $1.4 million and $2.5 million of event travel andother event costs as compared to $522,000 in 2006, $2.8 million and $5.0million of television production costs as compared to $435,000 in 2006 and$500,000 and $1.1 million of advertising expenses as compared to $170,000 in2006.

During the three and six month periods ended June 30, 2007, selling,general and administrative expenses were $2.2 million and $4.4 million,respectively, as compared to $505,000 and $1.1 million during the comparableperiods in 2006.  The primary componentsof selling, general and administrative expenses for the three and six monthperiods ended June 30, 2007 and 2006 were, respectively, professional fees of$300,000 and $1.0 million in 2007 as compared to $119,000 and $457,000 in 2006,payroll and benefits expenses of $1.3 million and $2.3 million in 2007 as comparedto $174,000 and $282,000, advertising expenses of $140,000 and $340,000 in 2007as compared to $0 and $58,000 in 2006 and travel and entertainment of $100,000and $200,000 as compared to $36,000 and $68,000.  In addition, office and facilities costs of$270,000 and $570,000 were recorded during the quarterly and six month periodsin 2007.

Stock-based compensation expenses relating to option grants of $14,000and $30,000, respectively, were recorded to the statement of operations for thequarterly and six month periods ended June 30, 2007 as compared to charges of$16,000 and $25,000 for the similar periods in 2006.

During the quarterly and six month periods ended June 30, 2007,interest income of $72,000 and $234,000, respectively, was earned on availablecash balances as compared to $11,000 and $23,000 during the comparable periodin 2006.

During 2006, $45,000 and $72,000 of dividend expense relating topreferred stock of Old IFL was recorded. All preferred stock of Old IFL, including accrued dividends, wasexchanged for common stock of Old IFL at the time of the Merger.

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**Liquidity and CapitalResources**

At June 30, 2007, our cash and cash equivalents were $2.5 million, adecrease of $14.1 million from the end of the prior year.  During the six months ended June 30, 2007, wereceived $1.2 million from the receipt of the remaining subscription receivablerelating to the December 2006 private placement of common stock and used $13.6million to fund operating activities and $1.6 million to pay accrued commissionson the private placement that was completed in December 2006.

***Future Capital Requirements***

Since inception, our MMA operations have incurred losses, and we havefunded these operating deficits through proceeds of $2.5 million from the 2006issuance of preferred stock and from net proceeds of approximately $22.2million from our December 2006 private placement.  During August 2007, we completed a secondprivate placement, from which we received net proceeds of approximately $11.7million.  Based upon management’s currentforecast of future revenues and expenses, the Company believes its cashresources will likely be sufficient to fund operations into the second quarterof 2008.  This assumes that the Company’slive event expenses continue to decrease as a result of the Company’s increasedproduction efficiencies and that the Company realizes additional cash from thefollowing: (i) the distribution of IFL mixed martial arts content via DVD,electronic sell through and similar media pursuant to our letter of intent withWarner Home Video; (ii) the distribution of programming internationallypursuant to our exclusive relationship with Alfred Haber Distribution, Inc.;(iii) the continuation of television rights consistent with terms contemplatedby the Letter of Intent with the Fox Entities (see Note 8); and (iv) anincrease in sponsorship and licensing revenue. The Company is also evaluating the profitability of other revenuesources, such as franchise or team sales, digital rights and pay-per-viewbroadcasts. If the Company can successfully generate revenue from additionalsources, the Company’s cash resources could last beyond the second quarter of2008. There can be no assurance, however, that the Company will generatesufficient cash from any of such sources or continue to realize decreases inits live event expenses.  If the Companyis not able to generate sufficient cash from operations or if the Company isunable to secure sufficient debt or equity financing for operations, theCompany will experience a cash shortage, the effect of which could result inthe discontinuance of operations.  Ifadditional funds are raised by issuing equity securities, further dilution toexisting stockholders will result and future investors may be granted rightssuperior to those of existing stockholders.

**Changes in Directors andOfficers**

On April 2, 2007, and as amended on June 19, 2007, weentered into agreements pursuant to which Salvatore A. Bucci, our ChiefFinancial Officer, Executive Vice President and Treasurer voluntarily resignedeffective at the close of business on September 30, 2007 (the “Separation Date”).  Mr. Bucci is to continue to serve as ourChief Financial Officer, Executive Vice President and Treasurer through theSeparation Date (see Note 9 to the Condensed Consolidated Financial Statementsincluded in this report).  Mr. Bucciresigned as one of our directors upon the election of directors at the annualmeeting of stockholders on June 28, 2007.

On April 25, 2007, Mr. Kurtz voluntarily resigned asone of our directors.

**On May 1, 2007, our Board of Directors electedJeffrey M. Jagid to fill the vacancy created by Mr. Kurtz’s resignation.**

**On June 11, 2007, our Board of Directors electedKevin Waldman as one of our directors.**

**On June 30, 2007, Joel Ehrlich, our Chief MarketingOfficer and President of Sales, resigned from the Company.**

**Off-Balance SheetArrangements**

As of June 30, 2007, we had no off-balance sheetarrangements.

****CriticalAccounting Policy****

For the six monthsended June 30, 2007, there were no significant changes to our criticalaccounting policies as identified in our Annual Report on Form 10-K for theyear ended December 31, 2006.

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**Seasonality**

We organize, host andpromote a significantly greater number of live and televised MMA sportingevents during the first half of our fiscal year than during the second half ofour fiscal year.  Since we generallyincur most of our costs in connection with such events, our expenses generallyincrease during the first half of our fiscal year and decline in the secondhalf.  This seasonality is likely tocause fluctuations in our financial results.

In 2007, we held allnine of our regular season events during the six months ended June 30, 2007, ofwhich five events occurred during the second quarter.  During the third and fourth quarters of 2007,we are scheduled to hold a total of four additional events, with two eventsoccurring in each quarter.  During 2006,we held a total of six events, of which two were held in the second quarter,which was the first quarter of our operations.

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**Item 3. *Quantitative andQualitative Disclosure About Market Risk***

Not applicable.

**Item 4. *Controls and Procedures***

***Evaluation of Disclosure Controls and Procedures*** - Under the supervisionand with the participation  of our  management, including our Chief ExecutiveOfficer and Chief Financial Officer, we have evaluated the effectiveness of thedesign and operation of our disclosure controls and procedures as of June 30,2007.  Based upon this evaluation, ourChief  Executive Officer and ChiefFinancial Officer have concluded that our disclosure controls and proceduresare adequate and effective to ensure that information we are required todisclose in reports that we file or submit under the  Securities Exchange  Act of 1934 is (1)  recorded, processed,  summarized and reported  within the time  periods specified in SEC rules  and  forms and (2) is  accumulated  and communicated  to ourmanagement,  including our principal  executive and principal financial officers asappropriate to allow timely decisions regarding required disclosures.  Due to the inherent limitations of controlsystems, not all misstatements may be detected. These inherent limitations include the realities that judgments indecision-making can be faulty and that breakdowns can occur because of simpleerror or mistake.  Any system of controlsand procedures, no matter how well designed and operated, can at best provideonly reasonable assurance that the objectives of the system are met andmanagement necessarily is required to apply its judgment in evaluating the costbenefit relationship of possible controls and procedures.  Additionally, controls can be circumvented bythe individual acts of some persons, by collusion of two or more people, or bymanagement override of the control.  Ourcontrols and procedures are intended to provide only reasonable, not absolute,assurance that the above objectives have been met.

***Changes in Internal Control Over Financial Reporting*** - There have been nochanges in our internal control over financial reporting that occurred duringthe last fiscal quarter to which this report relates that have materiallyaffected, or are reasonably likely to materially affect, our internal controlover financial reporting.

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**PART II –OTHER INFORMATION**

**Item 1.  *LegalProceedings***

Not Applicable.

**Item1A.  *RiskFactors***

Aside from therisk factor(s) noted below, there have been no material changes to the riskfactors previously disclosed in “Risk Factors” under Item 1A, Part I of theCompany’s Annual Report on Form 10-K for the year ended December 31, 2006 orItem 1A, Part II of the Company’s Quarterly Report on Form 10-Q for the threemonths ended March 31, 2007.

On January 15, 2007, International Fight League, Inc. (“IFL” orthe “company”) entered into a binding letter of intent (the “Letter of Intent”)with Fox Cable Networks, Inc. and MyNetworkTV, Inc. (collectively, the “FoxEntities”) which sets forth certain terms and conditions under which thecompany and the Fox Entities propose to create, promote and distribute IFLmixed martial arts content through a three-tier television and new mediaprogramming alliance.  The Letter ofIntent contains provisions requiring good faith negotiation of definitiveagreements and exclusive negotiation by the company.  These terms originally expired onMarch 15, 2007 and were extended several times, the latest throughMay 31, 2007, but have not been extended beyond that date. Accordingly,the parties are no longer obligated to negotiate definitive documents, nor isthe company bound by the exclusive negotiation terms contained in the Letter ofIntent.  Notwithstanding this expiration,the company and the Fox Entities are continuing to negotiate definitiveagreements with respect to television distribution and are continuing totelecast IFL programs.  However, noassurance can be given that definitive agreements will be executed, and eitherparty can terminate the negotiations at any time for any reason or no reason.  Furthermore, the Fox Entities are requestingcustomary cancellation and cutback rights for the TV distributionagreements.  In that case, the FoxEntities could cancel broadcasting IFL programming at anytime, regardless ofterm of the television broadcast distribution agreements.

The Letter of Intent also contemplated the Fox Entities making anequity investment in IFL and the Fox Entities and IFL establishing a jointventure to own, manage and distribute IFL related digital media rights,including online/Internet, broadband and mobile/wireless. IFL expects thatdiscussions will continue on these proposed transactions in the future, however,no assurance can be given that a transaction will be consummated.

**Item 2.  *UnregisteredSales of Equity Securities and Use of Proceeds***

We did not repurchase anyof our equity securities during the quarter ended June 30, 2007.

The following are all ofour unregistered sales of our equity securities during the quarter ended June30, 2007:

·                  OnJune 1, 2007, we issued a warrant to purchase 160,000 shares of our commonstock at an exercise price of $1.25 per share, with an expiration date of April2, 2012, in a private placement exempt under Section 4(2) of the Securities Actof 1933 (the “Securities Act”).  Thewarrant was issued in consideration of consulting services provided to theCompany. No cash consideration was received by the Company and no underwriterswere involved in this transaction.

·                  Throughoutthe quarter, we issued 49,166 shares of our common stock upon the exercise ofstock options issued under our 2006 Equity Incentive Plan (the “Plan”).  The total cash compensation received was$4,350 and was used for general corporate purposes.  The Company has not yet registered sharesissued under the Plan pursuant to the Securities Act, and therefore thesetransactions were completed as a private placement exempt under Section 4(2) ofthe Securities Act of 1933.  Nounderwriters were involved in the transactions.

**Item3.  *DefaultsUpon Senior Securities***

Not Applicable.

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**Item4.  *Submissionof Matters to a Vote of Security Holders***

We held our 2007 annualstockholders meeting on June 28, 2007. At that meeting, stockholders elected Jeffrey M. Jagid, Kurt Otto, GarebShamus and Kevin Waldman as directors of the Company.  The terms of these directors will expire atthe 2008 annual stockholders meeting.  Inaddition, stockholders approved both of the two company proposals.  The persons elected and the results of thevoting are as follows:
| ** **       | ** ** | **Votes For** | ** ** | **Votes  Withheld** | ** ** |
|------------------|------------|--------------------|------------|---------------------|------------|
| Jeffrey M. Jagid |       | 29,846,304         |       | 22,983              |       |
| Kurt Otto        |       | 29,846,304         |       | 22,983              |       |
| Gareb Shamus     |       | 29,845,238         |       | 24,049              |       |
| Kevin Waldman    |       | 29,845,118         |       | 24,169              |       |

                                                                                                         

| ** **                                                                                                                                                                                                                      | ** ** | **For**    | ** ** | **Against** | ** ** | **Abstain** | ** ** | **Broker  Non-Vote** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|-------------|------------|-------------|------------|----------------------|------------|
| Board of  Directors’ proposal to ratify appointment of Rothstein, Kass & Company,  P.C. as independent accountants                                                                                                     |       | 29,830,493 |       | 24,168      |       | 14,624      |       |                 |       |
|                                                                                                                                                                                                                            |       |       |       |        |       |        |       |                 |       |
| Board of Directors’  proposal to approve an amendment to the certificate of incorporation to  increase the number of authorized shares of common stock the Company is  authorized to issue from 75 million to 150 million. |       | 28,647,067 |       | 270,811     |       | 644         |       | 950,765              |       |

 

**Item5.  *OtherInformation***

Notapplicable.

**Item 6.  *Exhibits***

See Exhibit Index onpage 22 for a description of the documents that are filed as Exhibits to thisreport on Form 10-Q or incorporated by reference herein.

20

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
|        |   |   | INTERNATIONAL FIGHT LEAGUE, INC. |
|--------|--------|--------|----------------------------------|
|   |   |   |                             |   |
|   |   |   |                             |   |
|   |   |   | By:                              | /s/ Gareb Shamus |
|   |   |   |                             | Gareb Shamus |
|   |   |   |                             | President and Chief Executive Officer |

 

Date: August 14, 2007

21

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**EXHIBIT INDEX**

| Exhibits | ** ** | ** **                                                                                                                                                                                                                                 |
|----------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |       |                                                                                                                                                                                                                                       |
| 3.1(i)   |       | Certificate of Amendment to the Registrant’s Amended  and Restated Certificate of Incorporation, filed with the Secretary of State  of Delaware on June 28, 2007.                                                                     |
| 3.1(ii)  |       | Amended  and Restated By-Laws of the Registrant (incorporate by reference to Exhibit  3.1(ii) of Registrant’s Form 8-K filed on May 22, 2007).                                                                                        |
| 4.1      |       | Warrant, dated June 1, 2007, issued to consultant to  Registrant.                                                                                                                                                                          |
| 4.2      |       | Form of Coach’s Warrant.                                                                                                                                                                                                              |
| 10.1     |       | Amended and Restated Agreement and General Release,  dated June 19, 2007, between Salvatore A. Bucci and International Fight  League, Inc. (incorporated by reference to Exhibit 99.1 to Registrant’s Form  8-K filed June 22, 2007). |
| 31.1     |       | Certification of the Chief Executive Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                   |
|     |       |                                                                                                                                                                                                                                       |
| 31.2     |       | Certification of the Chief Financial Officer  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                   |
|     |       |                                                                                                                                                                                                                                       |
| 32.1     |       | Certification of the Chief Executive Officer  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                   |
|     |       |                                                                                                                                                                                                                                       |
| 32.2     |       | Certification of the Chief Financial Officer  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                                   |

 

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