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« | Home | »

IFL business data now publicly available

By Zach Arnold | October 31, 2006

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The folks at The Underground Forum made a pretty interesting discovery. Mainly, the IFL’s financial statements in preparation of their upcoming stock merger to be a publicly traded company. The method the IFL is choosing to get onto the stock market through Paligent Inc. is called a reverse stock merger. Once the move happens, a reverse stock split (more information here) will occur. This is generally considered very risky.

What makes the reverse merger eye-opening is that the reverse stock split is at a 1-to-20 ratio. Meaning, for example, if I had a company with 100,000 outstanding common stock shares, a 1-to-20 ratio would widdle that number down to 5,000. Reverse mergers are considered to be short-term plays only.

This post is a very important one for everyone reading this site. I encourage all of the site readers (especially financial experts) to analyze the IFL report very closely and to come up with some information that everyone can understand. I was only able to take a brief look at the data (not doing it fair justice) and like all start up companies in the entertainment field, the IFL is bleeding some significant money. Please read the financials and post information in the comments section.

The one line that will obviously stock out the most from the document:

During the first six months of 2006, IFL recognized a net loss of approximately $2.4 million. … At June 30, 2006, IFL had a stockholders’ deficit of $2.4 million. During the six months ended June 30, 2006, IFL incurred losses and negative operating cash flows of approximately $2.4 million and $1.9 million, respectively. During the third quarter of 2006, these trends have continued. These conditions raise substantial doubt about IFL’s ability to continue as a going concern.

And…

IFL treated its arrangement with Fox Sports Net as a barter transaction.

Topics: All Topics, IFL, Media, MMA, Zach Arnold | 4 Comments » | Permalink | Trackback |

4 Responses to “IFL business data now publicly available”

  1. KennyP says:

    “These conditions raise substantial doubt about IFL’s ability to continue as a going concern.”

    That line is typical of any money-losing publicly traded corporation. If management doesn’t include that kind of line, then they are leaving themselves open to possible shareholder lawsuits.

    That said, the numbers aren’t great. But they seem to have lost their $2.4 million in a more intelligent way than others (WFA, Bodog) have lost money in the MMA business.

  2. Zach Arnold says:

    That said, the numbers aren’t great. But they seem to have lost their $2.4 million in a more intelligent way than others (WFA, Bodog) have lost money in the MMA business.

    I’ll certainly grant you it’s better than WFA, but BoDog has tens of millions (USD) to spend on this side project. The IFL start-up capital, after reading the report, sounded much smaller.

  3. Tim Ryan says:

    I am a finance student at CSUS and this is especially interesting to me. They havent borrowed excessively. They have about 1 dollar of equity for every borrowed dollar. They are about 2 mil in the hole, but Im sure they had to anticipate something close to this for their first year.

    On a side note, I feel that the IFL is going to do the best out of the WFA and Bodog. Their product is the most remarkable of the three.

  4. KennyP says:

    My guess is that both Shamus/Otto and Calvin Ayre have plenty of money in their other companies and personal fortunes. Whether that money is in their MMA organizations is unknown. But smart businessmen rarely overfund money-losing ventures from the start. They prefer to fund them on an as-needed basis. They can keep writing checks, but if they ever decide to call it a day, they don’t have to forfeit as much cash to pay off the creditors (if they so choose).

    An excellent example of this, albeit in another field, was telecom billionaire Bruce McCaw’s PacWest Racing CART team. Unable to secure sufficient sponsorship in its later years, McCaw tired of underwriting high seven figure losses each year. When he shut down the team (renamed PWR Racing), he did so at midseason. And, McCaw’s other entities were the largest secured creditors. So McCaw got back much of the money from the liquidation of assets. Now McCaw could have kept funding his raceteam for decades. And no billionaire should ever need to close shop _in the middle_ of the season. But McCaw hit his breaking point, took his ball and went home.

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