NATIONAL LAMPOON

National Lampoon Inc. (NLI) is engaged in publishing National Lampoon Magazine. Its other activities included radio, stage shows and the development and production of motion pictures. The Company develops, produces and distributes National Lampoon branded comedic content through a range of media platforms. In December 2008, the Company acquired JerkassClothing.com, a company specializing in youth and college oriented t-shirts. Motion Picture Production and Distribution The Company is engaged i... n producing feature films. It develops, produces and distributes motion pictures under the National Lampoon name in order to control both the creative process and the distribution of the films and also to build a film library. In October 2006, the Company invested in the Red Rock Pictures Holdings, Inc. (Red Rock). NLI has completed production on two films in partnership with Red Rock, National Lampoon’s Bag Boy and National Lampoon’s Ratko, the Dictator’s Son. The Company has acquired distribution rights for seven films produced by unrelated third parties. During the fiscal year ended July 31, 2008 (fiscal 2008), the Company released five motion pictures. The motion picture production and distribution revenues made up approximately 24% of the revenues in fiscal 2008. Licensing NLI licenses the National Lampoon trademark for use in the titles of the films. The Company is a party to approximately 30 feature film branding agreements. Pursuant to these agreements, once the film is released and begins earning revenues, the studio or distributor is entitled to recoup any licensing fee, minimum guarantee or advance it paid to the Company under the agreement and, if included in the agreement, interest. National Lampoon Networks National Lampoon Networks, Inc. (NLN) includes the Internet, television and field marketing activities. NLN’s Internet properties comprise Internet destination sites, including NationalLampoon.com, DrunkUniversity.com, TOGATV.com, and KnuckleheadVideo.com. These destination sites are also part of the National Lampoon Humor Network, an aggregated network of humor destinations on the Internet. NLN's television activities include delivering programming during the standard academic school year to more than 200 affiliated college and other television stations, reaching nearly two million college students in their dormitories and other places of residence. Publishing During the fiscal year ended July 31, 2006 (fiscal 2006), the Company began publishing its books. In fiscal 2008, the Company released 12 books including National Lampoon's Saddam Dump [Saddam Hussein's Trial Blog] , National Lampoon's Magazine Rack, National Lampoon's Jokes Jokes Jokes , National Lampoon's Not Fit For Print , National Lampoon's Favorite Cartoons of the 21 st Century, National Lampoon's Van Wilder Guide to Graduating College In Eight Years or More, National Lampoon's Road Trip , National Lampoon's Animal House, National Lampoon's Help!, National Lampoon's Jokes Jokes Jokes 2, National Lampoon's Balls! and National Lampoon's Pimp it Yourself. The publishing activities accounted for approximately 1% of the total revenues in fiscal 2008. Radio In March 2005 NL Radio, LLC was formed. The Company holds a 25% interest in this entity. NL Radio, LLC launched an entertainment radio format under the Company’s brand. NLI has licensed the content of the radio library, as well as certain domain names, urls and websites, to NL Radio, LLC for this purpose. NL Radio, LLC used samples of the programming, called pilot programming, to introduce the format and content to radio networks and local stations. If the programming is sold to a network it may be syndicated, meaning that it would be distributed to stations affiliated with the network. Purchasers of the programming may broadcast segments of the programming at their discretion, such as during drive time or as late night programming. The radio library includes approximately 80 hours of National Lampoon radio programming consisting of 1 to 2 minute short comedy routines and one hour comedy sketches and parodies. In fiscal 2008, revenues from NL Radio, LLC made up less than 1% of the Company’s revenues. Travel Services Revenues The Company has discontinued offering travel services. In fiscal 2008, the venues from the travel services made up to 1.5% of the Company’s revenues.More