From www.gurufocus.com- Private Media Group Inc. (PRVT) filed Quarterly Report for the period ended 2009-03-31.

Private Media Group Inc. is engaged in the acquisition refinement and delivery of adult feature products and services including a range of proprietary websites digital versatile discs unrated and adult feature magazines videos and CD-Roms the distribution and licensing of its proprietary products and services on the Internet including magazines videos interactive services adult novelty products and the PrivateCircle fashion line and TV Home Shopping for its proprietary and licensedproducts and other products all oriented to adult entertainment markets. Private Media Group Inc. has a market cap of $41.3 million; its shares were traded at around $0.77 with and P/S ratio of 1.4.
Highlight of Business Operations:

Internet sales increased EUR 1.9 million to EUR 3.0 million, which represents an increase of 162% compared to the same period last year. The increase in Internet sales was the result of the acquisition of GameLink.

DVD & Magazine sales decreased EUR 0.8 million, or 38%, to EUR 1.4 million. The reduction in DVD & Magazine sales was primarily attributable to an industry wide decrease in DVD sales (see discussion under Outlook below). Broadcasting sales decreased EUR 0.4 million, or 28%, to EUR 0.9 million primarily as a result of a decrease in title sales, offset by increases in TV-channel sales and video on demand sales via IPTV. Wireless sales decreased by EUR 0.1 million to EUR 0.5 million in the period.

In the period was 34% compared to 17% in the same period last year. The increase was primarily the result of an increase in Internet cost of EUR 1.3 million as a result of the acquisition of GameLink, offset by lower wireless and broadcasting cost as result of more cost efficient content delivery. Printing, processing and duplication cost was EUR 0.6 million for the three months ended March 31, 2009 compared to EUR 1.3 million for the three months ended March 31, 2008, a decrease of EUR 0.7 million, or 50%.

Printing, processing and duplication cost as a percentage of DVD & Magazine sales was 45% for the three months ended March 31, 2009 compared to 56% in the same period last year. Amortization of library was EUR 1.4 million for the three months ended March 31, 2009 compared to EUR 1.6 million for the three months ended March 31, 2008, which represents a decrease of EUR 0.2 million. Amortization of library does not vary with sales since it reflects the amortization of our investments in content which has been available for sale for a period of three to five years.

Gross Profit. In the three months ended March 31, 2009, we realized a gross profit of EUR 2.2 million, or 39% of net sales compared to EUR 1.9 million, or 35% of net sales for the three months ended March 31, 2008. The increase in gross profit as a percentage of sales was primarily the result of reduced margins on DVD & Magazine sales.

full of all outstanding principal and interest under the Note. The Company continued to make regular payments on the Note, including principal and accrued interest, through February 2008. In April 2008 Consipio requested Private to pay the remaining balance of the Note, without indicating the amount due. Private in turn requested that Consipio provide a statement of the amount due and the basis for its calculation. In response, Consipio demanded payment of $3,194,000 as settlement in full of the Note, to be received by May 9, 2008. This calculation was made using an interest rate of 9.9%, as opposed to the 7% rate provided under the original terms of the Note. Consipio also advised that if payment was not received on such date it would institute litigation, in which event Consipio would claim that the amount due under the Note should be denominated in Euro, rather than U.S. dollars. In August 2008 Consipio notified Private that the Note was in default and that it intended to exercise its rights under the Note and the pledge of shares by Slingsby of Private Common Stock. Private believes that the amount due under the Note at May 9, 2008, including accrued interest, was no more than $2.4 million, utilizing an interest rate of 7%. Private also believes it has valid claims and defenses against Consipio and its affiliates which may ultimately reduce all or a portion of its obligations relating to the Note. However, there are no assurances that either Private will be able to reach agreement with Consipio or that Private will ultimately prevail on its claims and defenses. In any event, the Company does not believe that the Note obligations will have a material adverse effect on the liquidity of the Company, as the Note is fully collateralized by 4,950,000 shares of Private Media Group, Inc. Common Stock pursuant to the guaranty agreement from Slingsby Enterprises Limited to the holder of the Note.