Based in Boca Raton, Florida FriendFinder Network (proposed FFN) is scheduling a $55 million IPO with a market capitalization of $289 million at a price-range mid-point of $11 for Thursday March 12, 2011

SUMMARY

FFN is the result of a leverage buyout of Penthouse properties.

For 2010 versus 2009 . Sales grew 5% to $345mm . Gross profit declined to 68% from 72% . Operating income declined to 47% form 54% . Interest expense was 26% of revenue & 123% of operating income . Net loss increased 5% to $43mm from $41mm

VALUATION & CONCLUSION

. FFN continues to generate poor financials and is burdened with a very high interest expense.

. Only 5% sales growth . Stay away from this IPO

Valuation Ratios	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
Dec 2010 year	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
FriendFinder (FFN)	$289	2.4	19	-2.6	-0.5	19%

BUSINESS

. One of the most heavily visited social networking websites in the world. . Through an extensive network of websites has a base of over 270 million members in 170 countries offering a wide variety of online services . FFN’s websites are intended to appeal to members of diverse cultures and interest groups and include social networking, live interactive video and premium content websites.

HISTORY

FFN had an aborted IPO in January 2010. Here is the January 2010 IPO Preview

DIVIDENDS

FFN is prohibited by the provisions in Indentures, on declaring dividends. FFN expects that any future credit facility will contain terms prohibiting or limiting the amount of dividends FFN can pay.

USE OF IPO PROCEEDS

Of $49.4 million to repay debt

FriendFinder Network	FFN, C, 6					Post IPO shares: 26mm
'Penthouse" social networking					% change
Boca Raton, FL		2008	2009	2010	2010 vs 2009	IPO Mkt
Revenues ($mm)		$331	$328	$345	5%	Cap (mm)
Gross profit %		71%	72%	68%		$289
Operating income %		69%	54%	47%		@$11
Interest exp % of revnue		24%	28%	26%
Interest exp % of operating rev		1133%	158%	123%
Net loss		-$46	-$41	-$43	5%
Net loss % of revenue		-14%	-13%	-12%
Adj EBITDA		$91	$102	$105
Adj EBITDA % of revenue		27%	31%	30%
Valuation Ratios	IPO Mrkt	Price /	Price /	Price /	Price /	% offered
Dec 2010 year	Cap (mm)	Sales	Earnings	BookValue	TangibleBV	in IPO
FriendFinder (FFN)	$289	2.4	19	-2.6	-0.5	19%
P/E based on annualizing Dec qtr
SCORECARD		Mgt	Market	Market Do-	Proprie-	Total
1-5, 5 is high			Growth	mination	tary	rating
20 is perfect		2	2	1	1	6