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, 2009. 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, 2008. Overview, Discontinued Operations and Sale of Assets Our business was founded in 2005 to organize, host and promote live and televised professional mixed martial arts ("MMA") sporting events under the name "International Fight league" or "IFL" and to capitalize on the growing popularity of MMA in the United States and around the world. In June 2008, we announced that our event scheduled for August 15, 2008 had been canceled and on September 15, 2008, our wholly-owned subsidiary IFLC, through which we conducted our operations and which held substantially all of our assets, voluntarily filed a petition for reorganization relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the "Court"). IFLC's bankruptcy case is docketed as In re IFL Corp., Case No. 08-13589 (MG). IFLC is operating its business and managing its assets as a "debtor in possession" pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On November 17, 2008, IFLC sold substantially all of its assets to HDNet LLC ("HDNet") for $650,000 cash and the assumption by HDNet of certain obligations, pursuant to a sale under Section 363 of the Bankruptcy Code which was approved by the Court on October 28, 2008. IFLC plans to file a plan of liquidation with the Court to pay off creditors and to orderly wind down its affairs.
With the sale of substantially all of our assets to HDNet and with no active business operations or business assets, we are a "shell company" as defined by the rules of the SEC under the Securities Exchange Act of 1934. Our Board of Directors, on a time available basis, will search for, review and engage in due diligence for potential merger or acquisition proposals for which the Board of Directors would deem to be suitable acquisition candidates. To date, no such acquisition or merger proposal has been identified. If our Board of Directors is able to identify a potential merger or acquisition candidate, we cannot predict in what industry or business this candidate may operate.
We will continue to incur ongoing losses, which are expected to be greatly reduced due to the inactive nature of our business following the sale of our assets to HDNet and the winding down of IFLC. However, losses will be incurred to pay ongoing reporting expenses, including legal and accounting, as necessary to maintain the Company as a public entity, as well as some minimal operating expenses and insurance premiums for directors' and officers' liability and other insurance, while searching for merger or acquisition candidates. In addition, we will incur costs related to the termination of employees and satisfying our pre-existing severance obligations with these employees.
In connection with the sale of substantially all of our assets to HDNet, the assets sold to HDNet included the name "International Fight League," our corporate name. We have entered into a name use agreement with HDNet which permits us to use "International Fight League" for general corporate purposes until the earlier of (a) two years or (b) becoming involved in any active trade or business (other than the use of the name for general

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corporate purposes). The only assets we currently have are cash and cash equivalents, prepaid expenses (consisting of prepaid insurance premiums), and miscellaneous computer equipment.
Due to the September 15, 2008 bankruptcy filing by IFLC, IFLC ceased being a consolidated subsidiary as of that date. As a result, our balance sheets as of March 31, 2009 and December 31, 2008 include only the assets and liabilities of International Fight League, Inc., the parent company, and our statement of operations for the three months ended March 31, 2009 excludes the results of operations of IFLC. The results of IFLC prior to the bankruptcy filing are consolidated in our financial statements and are shown as discontinued operations.
Corporate History
Prior to November 29, 2006, we were known as Paligent Inc., a Delaware corporation ("Paligent"). On November 29, 2006, we acquired IFLC, then known as International Fight League, Inc., a privately held Delaware corporation, by a merger (the "Merger") pursuant to an agreement and plan of merger (the "Merger Agreement"). Immediately following the Merger, we changed our name to International Fight League, Inc. and IFLC changed its name to IFL Corp. and continued to operate the business of organizing and promoting a mixed martial arts sports league under the name "International Fight League." The Merger has been accounted for as a reverse acquisition under the purchase method of accounting for business combinations in accordance with generally accepted accounting principles in the United States. Reported results of operations of the combined group reflect the operations of the Company and IFLC. Results of Operations
We had a loss of $333,960 for the three months ended March 31, 2009, less than $0.01 per share, as compared to a loss of $2,311,598, or $0.03 per share in the first quarter of 2008, of which $240,411 was from continuing operations and $2,071,187 was from discontinued operations. Because we have no operations, no revenues were generated in the quarter ended March 31, 2009. Selling, general and administrative expenses were significantly lower in the first quarter of 2009, $47,000, versus $202,000 in 2008, due to cost reductions and reductions in staff beginning in the second quarter of 2008, and the Company still having operations in the first quarter of 2008. Share-based compensation expense for the first quarter of 2009 was $127,000, of which $95,000 was attributable to the final vesting of restricted stock. Share-based compensation expense for the first quarter of 2008 was $167,000. During the three months ended March 31, 2009, interest income of $190 was earned on available cash balances compared to $43,295 in 2008, a significant decrease due to the significantly lower cash balances.
Liquidity, Capital Resources and Going Concern At March 31, 2009, our consolidated cash and cash equivalents were $78,600. We are exploring options to realize value for our stockholders, which may include seeking a reverse merger transaction with a party having ongoing operations. We have no present avenues of financing, no source of revenues and no present plans to obtain interim financing while continuing to explore our options.
As a result of the foregoing, our lack of liquidity and funding sources pose a substantial risk to our ongoing viability. The condensed consolidated financial statements in this report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The forgoing conditions raise substantial doubt about our ability to continue as a going concern. Off-Balance Sheet Arrangements
As of March 31, 2009, we had no off-balance sheet arrangements.

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