ProElite LogoWe all know how serious of financial trouble ProElite is in. They’re $55 million in the hole and according to their last SEC filing, they need $3.5 million in financing in the near future to stay afloat. Considering how screwed up our economy is right now, it would seem like a miracle that anybody would be investing anymore money into the fledgling promotion.

Well, according to ProElite’s latest SEC filings, it looks like Showtime has stepped up to the plate once again by investing $1 million into ProElite, far short of the $3.5 million needed. There’s a catch too. Should ProElite fail to repay the loan including interest by June 18, 2009, Showtime will have “first priority interest on the assets of the Company.”

And that wasn’t even the worst part of the filing. Even with the $1 million from Showtime, ProElite no longer believes they will be able to secure the remaining funds they need to continue.

The Company previously reported in its most recent quarterly report on Form 10-Q (and an immediately preceding current report on Form 8-K) that the Company was actively negotiating to consummate a financing of approximately $3.5 million in secured debt (with a funded amount of $3.0 million after an original issue discount of $0.5 million) and believed a successful closing was reasonably likely, but there was no assurance that it would be successful in doing so at all or on a timely basis. Such reports further stated, among other things, that any failure to obtain the needed financing in the immediate future would also have a material adverse effect on the Company’s liquidity and capital resources and ability to continue as a going concern.

The Company no longer believes that a successful closing of the $3.5 million secured debt (with a funded amount of $3.0 million) will occur. Although the Company has received $1 million pursuant to the Note, such funds are less than the $3.0 million needed to avoid the consequences described in the preceding paragraph and in the Company’s prior reports filed with the Securities and Exchange Commission. The $1 million funding defers such consequences only for a brief period of time while the Company continues to evaluate its options on how to respond to its severe liquidity problem.

It’s pretty obvious which direction this is going for ProElite, and I don’t think the government is going to come knocking on their door to bail them out. The question now seems to be whether or not CBS/Showtime decides to buy them out. If so, go ahead and grab your peanuts and cotton candy, ’cause I suspect the circus has only just begun.

[UPDATE 9/18/08 4:01PM ET] – It looks like the million dollar infusion from above was a tactical move to get in position to purchase ProElite. According to this report from Sherdog, Showtime is entering into talks to buy ProElite.

Showtime Networks filed public notice with the U.S. Securities and Exchange Commission Thursday announcing its intention to enter preliminary negotiations for the purchase of Pro Elite Inc.

Showtime, a subsidiary of the parent conglomerate CBS Corporation, already enjoys broadcasting deals with the Los Angeles-based company on both its premium cable channel and CBS. Showtime also has a 20% ownership stake in Pro Elite.

The potential acquisition could not come at a more opportune time for the fledging company, as Pro Elite faces a $55 million deficit accrued during its two years of operation.

If Showtime’s ‘Hits & Chicks’ video is any indication of what Showtime plans to do with ProElite, then I feel absolutely 100% confident that EliteXC is never going to go anywhere but down. Queue the elephants and acrobats.