Adrenalina,  the start-up action sports store, posted a net loss from operations in the first quarter of $2.2 million versus a loss of $1.2 million a year ago. The wider loss is primarily due to a change in focus on retail sales which have lower margins and increases in costs related to operating additional stores during 2007.

In a filing with the SEC, the company said it currently does not believe that it will be able to generate any significant cash flow during the coming year to fund its planned expansion or to fund its current operations. However, under its current model of funding operations through capital contributions and debt it believes it can sustain itself for the next twelve months. Currently, Adrenalina said it seeking additional outside funding to keep the business operational beyond 2008; however it offered no assurance additional debt or capital will be available on acceptable terms.

Net revenues in the quarter increased 28% to $1,1 million, primarily due to increased volume in retail operations During December 2007, it opened its second store in Miami, Florida. Revenues from retail stores amounted to $1,065,200 compared to $452,000. Revenues from entertainment and publishing amounted to $16,600 and $34,900 for the three months as compared to $364,100 and $56,400 for the three months ended March 31, 2007. This decrease is attributable to a shift in corporate strategy from a film based entertainment company to one focused on expanding its revenue base primarily through merchandise sales and entertainment via retail operations nationwide.

Gross profits increased $260,800 from $154,900 principally due to a greater volume of retail sales as media entertainment activity decreased. Payroll and employee benefits increased from $452,800 to $505,700 due to the additional employees to support the to $638,300 from $360,100 primarily due to the increase in rent expense.