BOTY 10-K
Lingerie Fighting Championships, Inc. (BOTY)
U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM
For the fiscal year ended
Commission File No.
(Name of small business issuer as in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
(Address of principal executive offices, Zip Code)
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(Registrant's telephone number, including area code)
Securities Registered under Section 12(b) of the Exchange Act: None
Securities Registered under Section 12(g) of the Exchange Act:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
Indicate by check mark if the registrant is not required to file reports pursuant Section 13 or 15(d) of the Exchange Act. ☐ Yes ☒
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
The aggregate market value of registrant’s voting and non-voting common equity held by non-affiliates (as defined by Rule 12b-2 of the Exchange Act) computed by reference to the average bid and asked price of such common equity on June 30, 2023 was $
The number of shares of registrant's common stock outstanding as of July 6, 2024 was
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
2023 ANNUAL REPORT ON FORM 10-K
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FORWARD LOOKING STATEMENTS
This annual report on Form 10-K contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this annual report on Form 10-K. Additionally, statements concerning future matters are forward-looking statements.
Although forward-looking statements in this annual report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward- looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risks Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. We file reports with the SEC. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. You can also read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You can obtain additional information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this annual report on Form 10-K, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this annual report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
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PART I
ITEM 1. BUSINESS
As used in this Annual Report, “we,” “us,” “our,” “LFC,” “Company” or “our Company” refers to Lingerie Fighting Championships, Inc.
History
We were incorporated in Nevada on November 29, 2006 under the name Sparking Events, Inc., and on September 16, 2013 our corporate name was changed to Cala Energy Corp., (formally, Xodtec LED, Inc.) under which we were engaged in the business of offering services, such as enhanced oil recovery and material supplies, to gas and oil fields predominantly located in Southeast Asia. We were not successful in our efforts and discontinued this line of business.
On March 31, 2015, the Company, pursuant to a share exchange agreement (the "Share Exchange Agreement"), among the Company, Lingerie Fighting Championships, Inc. (“LFC”), and the holders of all of the outstanding common stock and convertible notes of LFC exchanged their common stock and convertible notes of LFC for a total of 16,750,000 shares of common stock, which represented 84.70% of the Company's common stock after giving effect to the issuance of the shares pursuant to the Share Exchange Agreement and the shares of common stock issued in the private placement described in the following paragraph. The issuance of the 16,750,000 shares of common stock to the former holders of LFC's common stock and convertible notes in exchange for the capital stock of LFC is referred to as the reverse acquisition transaction. The sole director and chief executive officer of LFC became a director and the chief executive officer of the Company. As a result of the reverse acquisition, the Company's business has become the business of LFC.
As a result of the reverse acquisition with LFC, we ceased to be a shell company on March 31, 2015.
Effective as of April 1, 2015, we changed our name to “Lingerie Fighting Championships, Inc.” a name which more accurately represents our new business. We effected the name change by virtue of a short form merger, pursuant to which LFC (our wholly owned subsidiary after the LFC Acquisition) merged with and into the Company, with the Company remaining as the surviving parent corporation. In connection with the name change, we submitted to FINRA a voluntary request for the change of our OTC trading symbol. Our Common Stock now trades under the symbol “BOTY”.
As a result of, and in connection with, the reverse acquisition, the Company changed its fiscal year to December 31, which was LFC’s fiscal year, from a fiscal year ending February 28.
On April 20, 2015, the Company effected a one-for-800 reverse split, pursuant to which each share of common stock was converted into, and became 1/800 of a share of common stock, with fractional shares being rounded up to the next higher whole number of shares. As a result of the reverse split, the 339,757,357 shares of common stock, then outstanding, became and were converted into 424,977 shares. All references to shares of common stock and per share information retroactively reflect the reverse split.
On September 14, 2016, Lingerie Fighting Championships, Inc., a Nevada Corporation (the “Company”) filed an amendment to its articles of incorporation (the “Amendment”) with the Secretary of State of the State of Nevada, which, among other things, established the designation, powers, rights, privileges, preferences and restrictions of the Series A Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”).
Among other provisions, each one (1) share of the Series A Preferred Stock shall have voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) / 0.49) - (0.019607 x 5,000,000) = 102,036).
Fifty-one (51) shares of Series A Preferred Stock were authorized and fifty-one (51) shares of Series A Preferred Stock were issued to Shaun Donnelly, the Company’s Chief Executive Officer and a director of the Company.
On November 22, 2016, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from four hundred million (400,000,000) shares to one billion (1,000,000,000) shares.
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On January 23, 2017, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from one billion (1,000,000,000) shares to one billion two hundred million (1,200,000,000) shares. The Company did not timely comply with the requirements of Regulation 14C under the Exchange Act for the above referenced increases in the Company’s authorized common shares. This would have required us to circulate an information statement describing the corporate actions taken above by the written consent of a majority of our shareholders at least 20 days prior to the effective date of the corporate action. We did however have super majority shareholder consent as required for amending the articles of incorporation. The failure to initially comply with Regulation 14C in a timely manner was inadvertent, and while not probable, could cause the SEC to bring an enforcement action or commence litigation against us for failure to comply with Regulation 14C. Such enforcement could subject us to penalties including the payment of fines or damages. Any such claims or actions could cause us to expend financial resources to defend ourselves, and could divert the attention of our management from our core business.
On November 2, 2017, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from one billion two hundred million (1,200,000,000) shares to five billion (5,000,000,000) shares.
Our Business
Our LFC business and brand is focused on building and establishing a sports entertainment league that utilizes wrestling and mixed martial arts (“MMA”) fighting techniques for purposes of providing entertainment. We seek to promote and market our brand, our programming, our events and our products.
Our mission is to establish the popularity of our LFC league and brand based on holding live events and to promote our athletes via a reality series and merchandise such as t-shirts and calendars. Our uniqueness is derived from our predominantly all female league structure, where a vast array of beautiful, attractive and unique women engage in wrestling and MMA fighting techniques against one another for purposes of delivering high quality entertainment to mature audiences.
Our management believes that the LFC league and our unique approach in applying a predominantly all female league structure to wrestling and mixed martial arts gives us a substantial competitive advantage to build the popularity of the LFC league in general.
Recent Business Development
Over the past couple years we have seen a massive increase in the popularity of our YouTube Channel, which now has more than 700,000 subscribers and is approaching a quarter billion views. Recent events have been viewed nearly 4 million times on average.
On July 4, 2024, we did our most recent live event, LFC40: Booty Camp 5. LFC41: Lingerie Fight Club will be held August 15, 2024.
On August 12, 2024, LFC’s first feature film, Gladiatrix, begins shooting. It is a female gladiator movie set in the 3rd Century AD.
We have partnered with one of LFC’s biggest sponsors, Healthy Male, to launch our own online pharmacy called KnockoutRx.
We are currently in talks with two of the most famous WWE wrestlers of all time about partnering with LFC.
We have been approached to do a show Super Bowl weekend in New Orleans.
On February 14, 2024, we did LFC38: Angels & Lil Devils in Las Vegas and followed that up just 10 days later with LFC39: Goddess Among Us in Kissimmee, FL. We are on pace to do more events this year than any other year.
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Our Events
Our operations seek to be organized around the development, promotion and distribution of our live events and televised entertainment programming. We also seek to develop branding and merchandising avenues for revenues.
Live Events
Our live events are a unique mix of MMA and professional wrestling performed before a live audience and recorded and edited by our in-house production team.
To date, we have hosted 21 live events across the U.S. and Europe as well as more than 120 episodes of a reality series which are normally 30 minutes each. Our brand is growing on social media where our content has been viewed by more than 180 million people.
Video Programming
We are an independent producer of video programming for digital home video and intend to develop such video programming for broadcast television, cable television, pay-per-view and video-on-demand markets. We produce scripted style fights featuring attractive and athletic females of the LFC league clothed in lingerie. Our featured episodes, called the Lingerie Fighting Championships, include live action content stylized and modeled in the format of a reality television series.
Television Programming; Pay-Per View Programming
We will produce and own our television programming and video library and believe that pay-per-view and video-on- demand television distribution presents opportunities to generate revenue for our business. In an effort to build our LFC brand, we plan to distribute our live event programming through pay-per-view and video-on-demand television outlets in the future.
Home Video
We expect to pursue opportunities in the home video market by licensing, on a distribution fee and/or royalty basis, our growing video library to third parties to develop, produce, manufacture, and sell DVDs for the home video market. We hope to develop a video library with proprietary material from our live events, television broadcasts, special events and behind the scenes content of live events. To date, we have developed and produced an LFC DVD entitled “Lingerie Fighting Championships: Lace vs Leather” which is currently being sold on the LFC official website (www.lingeriefc.com) as well as Amazon.com.
It is intended that we will continue to produce and develop our video programming to be sold in DVD volume installments in retail stores and on-line via such e-commerce platforms such as the LFC official site (www.lingeriefc.com) and other third party retailers including, but not limited to, Amazon® and iTunes®. We are currently in discussion with various other retailers specializing in home video distribution. All references herein to Amazon®, iTunes®, YouTube® or Facebook® are to websites operated by such entities and we do not have any rights, affiliation or license with them other than the presence of our media or products on such media platforms as set forth herein.
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Online Programming
We utilize the Internet to communicate with our fans and market and distribute our various programming. Through our network of websites and social media, our fans and customers can obtain the latest news and information on LFC, purchase our live event tickets, home video programming, and purchase our branded merchandise. Our main site is www.lingeriefc.com.
Branded Merchandise
Licensing and Direct Sales. We believe that licensing of LFC names, logos and copyrighted works on a variety of retail products presents a further opportunity to generate revenues. As our brand grows, we expect to pursue greater opportunities to expand our licensing efforts through a more comprehensive licensing program.
Competition
Competition for Viewers. The entertainment market in which we operate has a limited fan base and is highly competitive. We must compete for the time and attention of viewers with more established content programming and entertainment value. We compete on the basis of a number of factors, including quality of experience, relevance, accessibility, perceptions of ad load, brand awareness and reputation.
List of Competitors. Our events, we anticipate, caters to a niche audience. Our audience, we anticipate, will consist primarily of a mature audience with an appreciation of MMA and contact sports and professional wrestling. We compete with athletic events as well as mature audience entertainment. While we do pride our business model on having an athletic appeal, we do not deem ourselves as a conventional full contact sport, and our events are designed as scripted fictional entertainment. For additional details on risks related to competition for listeners, please refer to the section entitled “Risk Factors.”
Our competitors include among others:
| · | Sports Entertainment Providers. We compete on a national basis primarily with World Wrestling Entertainment, Inc., and its subsidiaries (collectively, the “WWE”) and Zuffa, LLC, the American sports promotion company specializing in mixed martial arts and parent company of the Ultimate Fighting Championship league (collectively, the “UFC”). We will have to compete with WWE and the UFC in many aspects of our business, including viewership, application of mixed martial arts, access to arenas, the sale and licensing of branded merchandise and distribution channels for our televised programs. We also directly compete to find, hire and retain talented performers. WWE and UFC has substantially greater financial resources than we do, and already has an established fan base and following, and are affiliated with television cable networks on which WWE’s and UFC’s programs are aired. Other sources of competition in our sports entertainment market are regional promoters of wrestling events. |
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| · | Television Network Scheduling. Conventional sports channels may not accept us or may limit us to less popular time slots. Because we are not a conventional sports league, and due to the mature target audience for our events, mainstream sporting channels may not accept us or may limit our events to mid-day, late night or "half time" type channel slots, as opposed to prime-time televised scheduling. |
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| · | Other Forms of Media. We compete for the time and attention of our listeners with providers of other forms of in- home and mobile entertainment. We rely on having a modest but growing YouTube® following. To the extent existing or potential viewers choose to watch cable television, stream video from on-demand services such as Netflix, Hulu, VEVO or YouTube or play interactive video games on their home-entertainment system, computer or mobile phone rather than view our LFC programming or attend our live events, these content services pose a competitive threat. |
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Government Regulation
Live Events. In various states in the United States and some foreign jurisdictions, athletic commissions and other applicable regulatory agencies require fighting leagues to obtain licenses for promoters, medical clearances and/or other permits or licenses for performers and/or permits for events in order for us to promote and conduct live events. Since we are scripted and not a full contact competitive sport, we are not subject to such regulation. If rules change or if our business structure changes or if we are perceived as being an athletic full contact sport, we could become subject to such regulation. In the event that we fail to comply with the regulations of a particular jurisdiction, we may be prohibited from promoting and conducting our live events in that jurisdiction. The inability to present our live events over an extended period of time or in a number of jurisdictions could lead to a decline in the various revenue streams generated from our live events, which could adversely affect our operating results.
Television Programming. The production of television programming by independent producers is not directly regulated by the federal or state governments, but the marketplace for television programming in the United States and internationally is substantially affected by government regulations applicable to, as well as social and political influences on, television stations, television networks and cable and satellite television systems and channels. We voluntarily designate the suitability of each of our television shows using standard industry ratings. Changes in governmental policy and private- sector perceptions could further restrict our program content and adversely affect our levels of viewership and operating results.
Online Programming. The Company intends to conduct business on the internet and will be subject to a number of foreign and domestic laws and regulations relating to consumer protection, information security, data protection and privacy, among other things. Many of these laws and regulations are still evolving and could be interpreted in ways that could harm our business. In the area of information security and data protection, the laws in several states require companies to implement specific information security controls to protect certain types of information. Likewise, all but a few states have laws in place requiring companies to notify users if there is a security breach that compromises certain categories of their information. Any failure on our part to comply with these laws may subject us to significant liabilities.
Intellectual Property
Trademarks and Copyrights. We believe that intellectual property and merchandising will be material to our business and we will expend cost and effort in an attempt to develop and protect our intellectual property and to maintain compliance vis-à-vis other parties' intellectual property. A principal focus of our efforts is to protect the intellectual property relating to our originally created characters portrayed by our performers, which encompasses images, likenesses, names and other identifying indicia of these characters. We have registered the domain name www.lingeriefc.com as our website. We currently do not have any registered trademarks. We may, however, seek to register or assert common law rights with respect to the names, terms, slogans, titles and event names we have been using to date.
We anticipate some revenues from branding merchandise, apparel, and particularly lingerie and swimwear using both our and other licensed brands. To accomplish this, we will have to rely on a combination of intellectual property rights, including trade secrets, copyrights, trademarks, contractual restrictions, technological measures and other methods. Further, we seek to enforce our intellectual property rights by, among other things, searching the internet to ascertain unauthorized use of our intellectual property, seizing goods that feature unauthorized use of our intellectual property and seeking restraining orders and/or damages in court against individuals or entities infringing our intellectual property rights. Our failure to curtail piracy, infringement or other unauthorized use of our intellectual property rights effectively, or our infringement of others' intellectual property rights, could adversely affect our operating results. We may be the subject of trademark and copyright infringements suits from other companies that seek to protect their names or marks on the basis of similarity or dilution, and no assurance can be made that we will be able to defend such actions.
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Employees
The Company has one employee, Shaun Donnelly, our Chief Executive Officer and Chief Financial Officer. Cast and crew are hired on a contract basis for each live event.
Available Information
Our website address is www.LFCfights.com. We do not intend our website address to be an active link or to otherwise incorporate by reference the contents of the website into this Report. The public may read and copy any materials the Company files with the U.S. Securities and Exchange Commission (the “SEC”) at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0030. The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
ITEM 1A. RISK FACTORS
We are not required to provide this information as we are a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
We do not own or lease any property. Our mailing address is 6955 North Durango, Suite 1115-129, Las Vegas, NV, 89149, telephone (702) 505-0743. Our website is www.LFCfights.com.
ITEM 3. LEGAL PROCEEDINGS
Other than described below, we are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
(a) Market Information.
Our common stock trades on the OTC Pink under the symbol BOTY. The former symbol for our common stock was OILL and, after the reverse stock split, OILLD. The symbol was changed to BOTY on April 29, 2015.
(b) Holders
As of July 06, 2024, we had approximately 251 shareholders of our common stock. Such number of record holders was derived from the records maintained by our transfer agent, VStock Transfer. This figure does not include those shareholders whose certificates are held in the name of broker-dealers or other nominees.
(c) Dividends
We have never paid any cash dividends on our common shares, and we do not anticipate that we will pay any dividends with respect to those securities in the foreseeable future. Our current business plan is to retain any future earnings to finance the expansion development of our business. The payment of future cash dividends is subject to the discretion of the Board of Directors and will depend upon the Company's earnings (if any), general financial condition, cash flows, capital requirements and other considerations deemed relevant by the Board of Directors.
(d) Securities Authorized for Issuance under Equity Compensation Plan
At December 31, 2023, we did not have any equity compensation plans that were not approved by stockholders.
Transfer Agent
Our transfer agent is VStock Transfer, LLC., 18 Lafayette Place Woodmere, NY 11598. Their telephone number is (212) 828-8436.
Recent Sales of Unregistered Securities
During the year ended December 31, 2023, the Company issued 185,214,500 shares of common stock for the exercise of 227,308,705 units of share purchase warrants.
Rule 10B-18 Transactions
During the year ended December 31, 2023, there were no repurchases of the Company’s common stock by the Company.
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ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the results of our operations and financial condition should be read in conjunction with our financial statements and the related notes, which appear elsewhere in this report. The following discussion includes forward-looking statements. For a discussion of important factors that could cause actual results to differ from results discussed in the forward-looking statements, see "Forward Looking Statements."
Overview
LFC is a media company focused on the development, production, promotion and distribution of original entertainment which we plan to make commercially available predominantly through live entertainment events, as well as through digital home video, broadcast television networks, video-on-demand and digital media channels. As a result, we have ceased to be a shell company. Effective as of April 1, 2015, we changed our name to "Lingerie Fighting Championships, Inc.," (by virtue of the short form merger with our new LFC subsidiary) to reflect our new business focus.
Results of Operations
Year ended December 31, 2023 as compared to the Year ended December 31, 2022
Our operating results for the years ended December 31, 2023 and December 31, 2022, and the changes between those periods for the respective items are summarized as follows:
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Statement of Operations Data: |
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Revenue |
| $ | 117,722 |
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| $ | 113,802 |
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| $ | 3,920 |
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| 3 | % |
Cost of services |
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| (68,917 | ) |
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| (33,831 | ) |
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| 35,086 |
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| 104 | % | |
Gross profit |
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| 48,805 |
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| 79,971 |
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| (31,166 | ) |
| (39%) |
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Total operating expenses |
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| (272,377 | ) |
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| (269,212 | ) |
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| 3,165 |
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| 1 | % | |
Other income (expense) |
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| 532,024 |
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| 1,869,200 |
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| (1,337,176 | ) |
| (72%) |
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Net income (loss) |
| $ | 308,452 |
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| $ | 1,679,959 |
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| $ | (1,371,507 | ) |
| (82%) |
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Revenues
We generated revenues of $117,722 and $113,802 for the years ended December 31, 2023 and 2022, respectively. The Company’s revenue derives from the development, promotion and distribution of our live events, televised entertainment programming, sponsorship and site subscription. The increase in revenues was attributed to an increase in live event revenue and advertising revenue.
Cost of Services
We incurred total cost of services of $68,917 and $33,831 for the years ended December 31, 2023 and 2022, respectively. The cost of services incurred consist of labor, material, equipment and subcontractor expenses. The increase in cost of services was mainly due to an increase in subcontractor cost and supplies and material costs.
Gross Profit
We recognized gross profit of $48,805 and $79,971 for the years ended December 31, 2023 and 2022, respectively. The decrease in gross profit was due to higher cost of sales incurred to achieve similar level of revenue during year ended December 31, 2023.
Operating Expenses
We incurred total operating expenses of $272,377 and $269,212 for the years ended December 31, 2023 and 2022, respectively. The increase in operating expenses was primarily due to the increase in auditing fees.
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Other Income (Expense)
We recognized other income of $532,024 and $1,869,200 for the years ended December 31, 2023 and 2022, respectively. The decrease in other income was mainly attributed to a decrease in gain on changes in fair value of derivatives from the convertible notes and warrants. During the years ended December 31, 2023 and 2022, the Company recognized gain on changes in fair value of derivative liabilities of $819,489 and $2,205,153, respectively.
Net Income (Loss)
We recognized net income of $308,452 and $1,679,959 during the years ended December 31, 2023 and 2022, respectively. The decrease in our net income was mainly attributed to the decrease in gross profit, the increase in operating expenses and the decrease in other income.
Liquidity and Capital Resources
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Working Capital Data: |
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Current Assets |
| $ | 5,295 |
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| $ | 10,009 |
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| $ | (4,714 | ) |
| (47 | %) |
Current Liabilities |
| $ | 4,204,402 |
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| $ | 4,582,251 |
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| $ | (377,849 | ) |
| (8 | %) |
Working Capital Deficiency |
| $ | (4,199,107 | ) |
| $ | (4,572,242 | ) |
| $ | (373,135 | ) |
| (8 | %) |
At December 31, 2023, we had a working capital deficiency of $4,199,107 and an accumulated deficit of $9,302,609. The Company intends to fund future operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2024.
The ability of the Company to realize its business plan is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The following table sets forth certain information about our cash flow during the years ended December 31, 2023 and December 31, 2022:
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Cash Flows Data: |
| 2023 |
|
| 2022 |
|
| Amount |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash Flows used in Operating Activities |
| $ | (150,158 | ) |
| $ | (87,992 | ) |
| $ | 62,166 |
|
| 71 | % | |
Cash Flows provided by Financing Activities |
|
| 145,444 |
|
|
| 63,520 |
|
|
| 81,924 |
|
|
| 129 | % |
Net decrease in cash during period |
| $ | (4,714 | ) |
| $ | (24,472 | ) |
| $ | (19,758 | ) |
| (81 | %) | |
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities.
| 12 |
| Table of Contents |
During the year ended December 31, 2023, net cash flows used in operating activities was $150,158, consisting of a net income of $308,452, decreased by gain on change in fair value of derivative liabilities of $819,489 and increased by amortization of debt discount of $61,894 and net changes in operating assets and liabilities of $298,985.
During the year ended December 31, 2022, net cash flows used in operating activities was $87,992, consisting of a net income of $1,679,959, decreased by gain on change in fair value of derivative liabilities of $2,205,153 and increased by amortization of debt discount of $124,904 and net changes in operating assets and liabilities of $312,298.
Cash Flows from Investing Activities
There were no investing activities during the years ended December 31, 2023 and December 31, 2022.
Cash Flows from Financing Activities
During the years ended December 31, 2023 and December 31, 2022, net cash provided by financing activities was $145,444 and $63,520 attributed to proceeds from the issuance of convertible notes, respectively.
Off-Balance Sheet Arrangements
As of December 31, 2023, we had no off-balance sheet arrangements.
Critical Accounting Policies
Critical Accounting Policies and Significant Judgments and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of income and expense during the reporting periods presented.
Our critical estimates include revenue recognition, intangible assets and derivatives. Although we believe that these estimates are reasonable, actual results could differ from those estimates given a change in conditions or assumptions that have been consistently applied. We also have other policies that we consider key accounting policies, such as our policy for revenue recognition, however, the application of these policies does not require us to make significant estimates or judgments that are difficult or subjective.
The critical accounting policies used by management and the methodology for its estimates and assumptions are as follows:
Convertible Financial Instruments
We bifurcate conversion options from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.
When we have determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying Common Stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We do not hold any derivative instruments and do not engage in any hedging activities.
| 13 |
| Table of Contents |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
| F-1 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Lingerie Fighting Championships, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lingerie Fighting Championships, Inc. (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for each of the years in the two-year period ended December 31, 2023, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company has generated nominal revenues since inception and has sustained operating losses. These factors, and the need for additional financing in order for the Company to meet its business plans raises substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified with respect to that matter.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-2 |
| Table of Contents |
Derivatives
As described in Note 2 to the Company’s consolidated financial statements, during the years ended December 31, 2023 and 2022, the Company analyzes the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance, resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the conversion options. The Company also accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.
We identified the Company’s application of the accounting for convertible notes and warrants as a critical audit matter. The principal considerations for our determination of this critical audit matter related to the high degree of subjectivity in the Company’s judgments in determining the qualitative factors. Auditing these judgments and assumptions by the Company involves auditor judgment due to the nature and extent of audit evidence and effort required to address these matters.
The primary procedures we performed to address these critical audit matters included the following:
| · | We obtained debt and warrant related agreements and performed the following procedures: |
| - | Reviewed agreements for all relevant terms. |
|
|
|
| - | Tested management’s identification and treatment of agreement terms. |
|
|
|
| - | Engaged an outside specialist to aid in the review of management’s calculations and perform independent calculations using multiple methods. |
|
|
|
| - | Recalculated the fair value based on the terms in the agreements. |
|
|
|
| - | Assessed the terms and evaluated the appropriateness of management’s application of their accounting policies, along with their use of estimates, in the determination of the amortization of the debt discount. |
We have served as the Company’s auditor since 2024. | |
|
|
|
|
July 15, 2024 |
|
| F-3 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
BALANCE SHEETS
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Total Current Assets |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
| $ |
|
| $ |
| ||
Accounts payable - related party |
|
|
|
|
|
| ||
Accrued interest payable |
|
|
|
|
|
| ||
Promissory notes, net |
|
|
|
|
|
| ||
Convertible notes, net of $ |
|
|
|
|
|
| ||
Derivative liabilities |
|
|
|
|
|
| ||
Total Current Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Preferred stock, par value $ |
|
|
|
|
|
| ||
Common stock, par value $ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total stockholders' deficit |
|
| ( | ) |
|
| ( | ) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these audited financial statements.
| F-4 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF OPERATIONS
|
| Year Ended |
| |||||
|
| December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
Revenue |
| $ |
|
| $ |
| ||
Cost of services |
|
|
|
|
|
| ||
GROSS PROFIT |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
Management salaries |
|
|
|
|
|
| ||
Professional fees |
|
|
|
|
|
| ||
Selling, general and administrative expenses |
|
|
|
|
|
| ||
Total Operating Expenses |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
OPERATING LOSS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest expense |
|
| ( | ) |
|
| ( | ) |
Gain on change in fair value of derivative liabilities |
|
|
|
|
|
| ||
Total Other Income |
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
Income before taxes |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Provision for income taxes |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET INCOME |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Basic Income per Common Share |
| $ |
|
| $ |
| ||
Diluted Earnings per Common Share |
| $ |
|
| $ |
| ||
Basic Weighted Average Shares of Common Stock Outstanding |
|
|
|
|
|
| ||
Diluted Weighted Average Shares of Common Stock Outstanding |
|
|
|
|
|
| ||
The accompanying notes are an integral part of these audited financial statements.
| F-5 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
| Total |
| |||||||
|
| Preferred Stock |
|
| Common Stock |
|
| Paid-in |
|
| Accumulated |
|
| Stockholders' |
| |||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Deficit |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance - December 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||
Shares of common stock issued for exercise of warrants |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||
Net income |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance - December 31, 2022 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||
Shares of common stock issued for exercise of warrants |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
|
| |||||
Net income |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance - December 31, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||
The accompanying notes are an integral part of these audited financial statements
| F-6 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF CASH FLOWS
|
| Year Ended |
| |||||
|
| December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net income |
| $ |
|
| $ |
| ||
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Gain on change in fair value of derivative liabilities |
|
| ( | ) |
|
| ( | ) |
Amortization of debt discount |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Prepaid expense |
|
|
|
|
|
| ||
Accounts payable and accrued liabilities |
|
| ( | ) |
|
| |
|
Accounts payable - related party |
|
|
|
|
|
| ||
Accrued interest payable |
|
|
|
|
|
| ||
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from convertible debts |
|
|
|
|
|
| ||
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
| ( | ) |
|
| ( | ) |
Cash and cash equivalents - beginning of period |
|
|
|
|
|
| ||
Cash and cash equivalents - end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosures |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ |
|
| $ |
| ||
Cash paid for income taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Debt discount from derivative liabilities |
| $ |
|
| $ |
| ||
Shares of common stock issued for exercise of warrants |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these audited financial statements.
| F-7 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2023 AND 2022
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
Lingerie Fighting Championships, Inc. (the “Company”) is a Nevada corporation incorporated on November 29, 2006 under the name Sparking Events, Inc. The Company’s corporate name was changed to Xodtec Group USA, Inc. in June 2009, Xodtec LED, Inc. in May 2010, Cala Energy Corp. in September 2013 and Lingerie Fighting Championships, Inc. on April 1, 2015.
The Company focuses on developing, producing, promoting, and distributing entertainment through live entertainment events, digital home videos, broadcast television networks, video on demand, and digital media channels in the United States. It offers wrestling and mixed martial arts fights featuring women under the LFC brand name.
NOTE 2 – BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and are presented in US dollars. The Company uses the accrual basis of accounting and has adopted a December 31 fiscal year end.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company continually evaluates its estimates and judgments. The Company bases its estimates and judgments on historical experience and other factors that it believes to be reasonable under the circumstances. Materially different results can occur as circumstances change and additional information becomes known, even for estimates and judgments that are not deemed critical.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. The Company had $
Revenue Recognition
The Company’s revenue derives from the development, promotion and distribution of live events and televised entertainment programming and also through sponsorship and site subscription.
The Company recognizes revenue from the sale of products and services in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue Recognition” following the five steps procedure:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
Live Events (booking fees)
1. Identify the contract
The Company has entered into agreement with event organizers
2. Identify performance obligations
The type and nature of the shows are stated in the agreement
3. Determine transaction price
The pricing of the shows (transaction price as a whole) is stated in the agreement
4. Allocate transaction price
The transaction price is allocated to each standalone performance obligation when applicable
5. Recognize revenue
Revenue is recognized when the Company has satisfied all of the obligations upon completion of the shows. The Company is paid by checks following the events.
Live Events (on-line PPV)
1. Identify the contract
The Company stated in the Company website the pricing of the on-line PPV live events
2. Identify performance obligations
The type and details of the on-line PPV live events are stated in the Company website
3. Determine transaction price
The pricing of the on-line PPV events (transaction price as a whole) are stated in the Company website
4. Allocate transaction price
The transaction price is allocated to each standalone performance obligation when applicable
5. Recognize revenue
Revenue is recognized when the Company has satisfied all of the obligations upon completion of the on-line PPV shows. The Company provided the customers with options to pay via PayPal or credit cards. The former goes into the Company’s PayPal account and the latter is handled by the Company’s CC processor (Stripe) and deposited into their account at the end of the month along with all other credit card purchase at the Company websiite.
Sponsorship
1. Identify the contract
The Company has entered into agreement with the sponsors
2. Identify performance obligations
The type and details of the sponsorship are stated in the contract
3. Determine transaction price
The pricing of the sponsorship (transaction price as a whole) is stated in the contract
4. Allocate transaction price
The transaction price is allocated to each standalone performance obligation when applicable
5. Recognize revenue
Revenue is recognized when the Company has satisfied all of the obligations when they have performed the sponsorship services. Funds are paid via check or wire.
Site Subscriptions
1. Identify the contract
The Company stated in their website the site subscription fees.
2. Identify performance obligations
The benefits and features of the subscription are stated in the Company website
3. Determine transaction price
The pricing of the subscription (transaction price as a whole) is stated in the Company website
4. Allocate transaction price
The transaction price is allocated to each standalone performance obligation when applicable
5. Recognize revenue
Revenue is recognized when the Company confirms member subscription after payment is made. The customers pay through credit card on recurring monthly basis through Stripe.
The below table shows the revenue by revenue stream for the years ended December 31, 2023 and 2022:
|
| Year Ended |
| |||||
|
| December 31, |
| |||||
Revenue stream |
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
Live events and site subscriptions |
| $ |
|
| $ |
| ||
Sponsorship |
|
|
|
|
|
| ||
Advertising |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
Earnings (Loss) per Share
The Company computes basic and diluted net income per share amounts in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted loss per share reflects the potential dilution that could occur if convertible notes to issue common stock were converted resulting in the issuance of common stock that could share in the income (loss) of the Company.
| F-8 |
| Table of Contents |
For the years ended December 31, 2023 and 2022, convertible notes and warrants were dilutive instruments and were included in the calculation of diluted earnings per share.
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
|
| (Shares) |
|
| (Shares) |
| ||
Convertible notes payable |
|
|
|
|
|
| ||
Warrants |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Related Party Balances and Transactions
The Company follows Financial Accounting Standards Board ("FASB") ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transaction. (See Note 9)
Convertible Instruments and Derivatives
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.
Fair Value Measurement
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures,” which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 – | quoted prices in active markets for identical assets or liabilities |
Level 2 – | quoted prices for similar assets and liabilities in active markets or inputs that are observable |
Level 3 – | inputs that are unobservable (for example cash flow modeling inputs based on assumptions) |
| F-9 |
| Table of Contents |
The derivative liability in connection with the conversion feature of the convertible debts and warrants, classified as a level 3 liability, are the only financial liabilities measured at fair value on a recurring basis. (See Note 8)
The following table summarizes fair value measurement by level at December 31, 2023 and December 31, 2022, measured at fair value on a recurring basis:
December 31, 2023 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
December 31, 2022 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Income Taxes
The Company accounts for income taxes pursuant to FASB ASC 740 “Income Taxes”. Pursuant to ASC 740 deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with Conversion and Other Options”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. For the Company, the new standard was effective on January 1, 2022 and the adoption of this guidance did not have a material impact on our financial statements.
Management has considered all other recent accounting pronouncements issued. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
| F-10 |
| Table of Contents |
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with US GAAP, which contemplates continuation of the Company as a going concern. The Company has generated nominal revenues since inception, has sustained operating losses since its organization and requires funding to generate revenue. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company can give no assurances that it can or will become financially viable and continue as a going concern.
NOTE 4 – STOCKHOLDERS' DEFICIT
Preferred Stock
The authorized preferred stock consists of
On September 3, 2016, the Company issued
Common Stock
The Company has authorized
During the year ended December 31, 2023, the Company issued
During the year ended December 31, 2022, the Company issued
NOTE 5 – WARRANTS
The below table summarizes the activity of warrants exercisable for shares of common stock during the years ended December 31, 2023 and December 31, 2022:
|
| Number of Shares |
|
| Weighted- Average Exercise Price |
| ||
Balances as of December 31, 2021 |
|
|
|
| $ |
| ||
Granted |
|
|
|
|
|
| ||
Redeemed |
|
| - |
|
|
| - |
|
Exercised |
|
| ( | ) |
|
|
| |
Forfeited |
|
| - |
|
|
| - |
|
Balances as of December 31, 2022 |
|
|
|
| $ |
| ||
Granted |
|
|
|
|
|
| ||
Redeemed |
|
| - |
|
|
| - |
|
Exercised |
|
| ( | ) |
|
|
| |
Forfeited |
|
| - |
|
|
| - |
|
Balances as of December 31, 2023 |
|
|
|
| $ |
| ||
| F-11 |
| Table of Contents |
During the year ended December 31, 2023, the Company issued
During the year ended December 31, 2022, the Company issued
The fair value of each warrant on the date of grant is estimated using the Black-Scholes option valuation model. The following weighted-average assumptions were used for warrants granted during the years ended December 31, 2023 and 2022:
|
| Year Ended |
| |||||
|
| December 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Exercise price |
| $ |
|
| $ |
| ||
Expected term |
|
|
|
| ||||
Expected average volatility |
| % |
| % | ||||
Expected dividend yield |
|
| - |
|
|
| - |
|
Risk-free interest rate |
| % |
| % | ||||
The following table summarizes information relating to outstanding and exercisable warrants as of December 31, 2023:
Warrants Outstanding |
|
| Warrants Exercisable |
| ||||||||||||||
|
|
| Weighted Average |
|
|
|
|
|
|
|
|
|
| |||||
Number |
|
| Remaining Contractual |
|
| Weighted Average |
|
| Number |
|
| Weighted Average |
| |||||
of Shares |
|
| life (in years) |
|
| Exercise Price |
|
| of Shares |
|
| Exercise Price |
| |||||
|
|
|
|
|
| $ |
|
|
|
|
| $ |
| |||||
Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at December 31, 2023 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of December 31, 2023, the aggregate intrinsic value of warrants outstanding was approximately $
The Company determined that the warrants qualify for derivative accounting as a result of the related issuance of the convertible notes. As of December 31, 2023 and December 31, 2022, the Company valued the fair value on the
| F-12 |
| Table of Contents |
NOTE 6 – PROMISSORY NOTES
The Company had the following promissory notes payable as at December 31, 2023 and December 31, 2022:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Promissory Notes to Auctus Fund |
| $ |
|
| $ |
| ||
Total Promissory Notes |
| $ |
|
| $ |
| ||
On March 4, 2021, the Company entered into an agreement with Auctus Fund, LLC to issue a senior secured promissory note of $
On December 6, 2021, the Company entered into an agreement with Auctus Fund, LLC to issue a senior secured promissory note of $
During the years ended December 31, 2023 and 2022, interest expense of $
NOTE 7 - CONVERTIBLE NOTES
The Company had the following unsecured convertible notes payable as at December 31, 2023 and December 31, 2022.
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
|
|
|
|
|
|
| ||
Convertible Promissory Notes to Auctus Fund |
| $ |
|
| $ |
| ||
Total Convertible Debts |
| $ |
|
| $ |
| ||
Promissory Notes Payable to Auctus Fund
Auctus #1
On May 20, 2016, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $
From year ended December 31, 2017 to year ended December 31, 2021, total principal of $
| F-13 |
| Table of Contents |
As of December 31, 2023 and December 31, 2022, the principal due on the note is $
This note is currently in default.
Auctus #3
On January 13, 2017, the Company entered into an agreement with Power Up Lending Group to issue a convertible promissory note of $
During the year ended December 31, 2017, principal of $
On June 14, 2017, the Company entered into an agreement with Power Up Lending Group to issue a convertible promissory note of $
| F-14 |
| Table of Contents |
On November 27, 2017, Auctus Fund, LLC entered into an agreement with Power Up Lending Group Ltd. to buy out the total outstanding principal amount and accrued interest of the two convertible promissory notes at $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus #5
On March 7, 2018, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $
During the year ended December 31, 2021, accrued interest of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus #6
On July 9, 2018, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
| F-15 |
| Table of Contents |
Auctus #7
On March 22, 2019, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus#8
On October 23, 2019, the Company entered into an agreement to issue a convertible promissory note of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus#9
On August 4, 2020, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus#10
On November 2, 2020, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
| F-16 |
| Table of Contents |
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus#13
On May 12, 2022, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus#14
On October 31, 2022, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
As of December 31, 2023 and December 31, 2022, the principal amount due on the note is $
This note is currently in default.
Auctus#15
On July 18, 2023, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
As of December 31, 2023 and December 31, 2022, the note is presented net of a debt discount of $
| F-17 |
| Table of Contents |
Auctus#16
On October 10, 2023, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
As of December 31, 2023 and December 31, 2022, the note is presented net of a debt discount of $
Accrued interest on convertible notes
During the years ended December 31, 2023 and 2022, interest expense of $
NOTE 8 - DERIVATIVE LIABILITY
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, “Derivatives and Hedging,” and determined that the convertible notes should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.
The Company determined its derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2023 and 2022. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.
The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability for convertible notes at each measurement date:
|
| Year Ended |
| |||||
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Expected term |
| |
|
| |
| ||
Expected average volatility |
| | % |
| | % | ||
Expected dividend yield |
|
| - |
|
|
| - |
|
Risk-free interest rate |
| | % |
| | % | ||
The following table summarizes the derivative liabilities included in the balance sheets at December 31, 2023 and 2022:
Balance - December 31, 2021 |
| $ |
| |
Addition of new derivative liabilities upon issuance of convertible notes as debt discount |
|
|
| |
Reduction of derivative liabilities from exercise of warrants |
|
| ( | ) |
Addition of new derivative liabilities upon issuance of warrants as debt discount |
|
|
| |
Addition of new derivatives liabilities recognized as day one loss on convertible notes and warrants |
|
|
| |
Gain on change in fair value of the derivative |
|
| ( | ) |
Balance - December 31, 2022 |
| $ |
| |
Addition of new derivative liabilities upon issuance of convertible notes as debt discount |
|
|
| |
Reduction of derivative liabilities from exercise of warrants |
|
| ( | ) |
Addition of new derivative liabilities upon issuance of warrants as debt discount |
|
|
| |
Addition of new derivatives liabilities recognized as day one loss on convertible notes and warrants |
|
|
| |
Gain on change in fair value of the derivative |
|
| ( | ) |
Balance - December 31, 2023 |
| $ |
|
| F-18 |
| Table of Contents |
The following table summarizes the loss (gain) on derivative liability included in the statements of operations for the year ended December 31, 2023 and 2022, respectively.
|
| Year Ended |
| |||||
|
| December 31, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Day one loss due to derivative liabilities on convertible notes and warrants |
| $ |
|
| $ |
| ||
Gain on change in fair value of derivative liabilities on convertible notes and warrants |
| $ | ( | ) |
| $ | ( | ) |
Loss (Gain) on change in fair value of derivative liabilities |
| $ | ( | ) |
| $ | ( | ) |
NOTE 9 - RELATED PARTY TRANSACTIONS
During the year ended December 31, 2023, the Company accrued $
During the year ended December 31, 2022, the Company accrued $
As of December 31, 2023 and December 31, 2022, the total amount due to the related party was $
The terms and conditions are not necessarily indicative of what third parties would be agree to.
NOTE 10 – COMMITMENTS AND CONTINGENCIES
There are no pending or threatened legal proceedings as of December 31, 2023. The Company has no non-cancellable operating leases.
NOTE 11 - INCOME TAX
The Company provides for income taxes under ASC 740, “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The components of the Company’s deferred tax asset and reconciliation of income taxes computed at the statutory rate to the income tax amount recorded as of December 31, 2023 and 2022, are as follows:
|
| December 31, 2023 |
|
| December 31, 2022 |
| ||
Net operating loss carryforward |
| $ |
|
| $ |
| ||
Statutory tax Rate |
|
| % |
|
| % | ||
Deferred tax asset |
|
|
|
|
|
| ||
Less: Valuation allowance |
|
| ( | ) |
|
| ( | ) |
Net deferred assets |
| $ |
|
| $ |
| ||
The valuation allowance increased by $
NOTE 12 - SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to the December 31, 2023 to the date these financial statements were issued and has determined that it has the below subsequent event:
On March 4, 2024, the Company issued
| F-19 |
| Table of Contents |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2023. This evaluation was carried out under the supervision and with the participation of our management, including our President and Chief Financial Officer (our principal executive officer and principal accounting officer).
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our President and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our President and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based on criteria established in Internal Control-Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, 2023, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2024: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm because as a smaller reporting company we are not subject to Section 404(b) of the Sarbanes‑Oxley Act of 2002.
| 14 |
| Table of Contents |
Changes in Internal Control Over Financial Reporting
There were no changes in our company’s internal control over financial reporting during the fiscal year ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Our management, which consists of our sole officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors or all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements, due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns may occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risk.
ITEM 9B. OTHER INFORMATION
None.
| 15 |
| Table of Contents |
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The Board of Directors and Executive Officers of the Company
The following table and text sets forth the names and ages of all our directors and executive officers and our key management personnel as of the date hereof. All of our directors serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Executive officers serve at the discretion of the Board of Directors.
Name |
| Age |
| Position |
Shaun Donnelly |
| 56 |
| Chief Executive Officer, Chief Financial Officer and Director |
Set forth below is a brief description of the background and business experience of our sole officer and director.
Shaun Donnelly, Chief Executive Officer, Director
Mr. Donnelly is an entertainment industry veteran who has created, produced and directed television series for such networks as Starz, AMI, ITV, Playboy TV, UKTV and YouToo. Mr. Donnelly served as LFC’s chief executive officer and sole director of LFC since its inception on July 21, 2014, and from April 2013 to July 2014, Mr. Donnelly operated a business similar to LFC's as a sole proprietorship, during which time he produced two events. Since 2005, Mr. Donnelly has served as the head of Canada’s Mind Engine Entertainment, where he has produced several feature films including the recently completed “Gone By Dawn.” Prior to getting into TV and film, Mr. Donnelly worked in the advertising industry where, in 1993, he founded Stormedia Communications, an Edmonton-based ad agency that specialized in oil and gas clients. He also published the literary digest Writer's Block Magazine for seven years and has worked as a writer and columnist for numerous magazines and newspapers. Mr. Donnelly attended Grant MacEwan University where he earned diplomas in Advertising & Public Relations and Audio Visual Communications. Mr. Donnelly does not believe that his duties with Mind Engine Entertainment will interfere with his duties as our chief executive officer.
Family Relationships
Since Mr. Donnelly is our sole officer and director, there are no family relationships between any of our officers or directors.
| 16 |
| Table of Contents |
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2023, were timely.
Board Committees
We have no audit, compensation or nominating committee. The functions of these committees are performed by our sole director. We do not have any independent directors.
Code of Ethics
We have not adopted a code of ethics as of the date of this report.
Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
| · | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
|
|
|
| · | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
|
|
|
| · | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
| · | been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
|
|
|
| · | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
|
|
|
| · | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
| 17 |
| Table of Contents |
Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table indicates the cash and non-cash compensation earned during the years ended December 31, 2023 and 2022 by each person who served as chief executive officer and chief financial officer during the years ended December 31, 2023 and 2022.
SUMMARY COMPENSATION TABLE
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Shaun Donnelly, Chief Executive Officer, |
| 2023 |
| $ | 120,000 |
|
| $ | - |
|
| $ | - |
|
| $ | 120,000 |
|
Chief Financial Officer and Director (1) |
| 2022 |
| $ | 120,000 |
|
| $ | -- |
|
| $ | -- |
|
| $ | 120,000 |
|
____________
| 1. | Mr. Donnelly accrued compensation at the rate of $10,000 per month. |
Executive Employment Contracts
The Company entered into an employment agreement dated October 1, 2016 with Shaun Donnelly. Pursuant to the agreement, Mr. Donnelly will continue to be employed as Chief Executive Officer of the Company. The initial term of the Employment Agreement is for a period of twelve (12) months (the “Initial Term”).
During the Initial Term, the Company will pay Mr. Donnelly a monthly base compensation of $10,000. The base salary shall accrue each month when due to Mr. Donnelly pursuant to the terms as stated in the Employment Agreement, it being understood that the Company may refrain from making cash payment of the base salary to Mr. Donnelly for those months in which the Company does not have the cash and/or funds available to satisfy the base salary obligation to Mr. Donnelly. All amounts of base salary that remain unpaid but due and owing to Mr. Donnelly at the end of each calendar month shall accrue or may be converted into shares of the Company’s common stock.
Effective September 30, 2017, the Company and Mr. Donnelly entered into an amendment to the Employment Agreement. Pursuant to the terms of the amendment, the employment contact term is for a twelve month term, which term shall automatically renew yearly for an additional twelve (12) month term unless agreement is terminated in writing by Company within thirty (30) days of expiration of term. In addition, the amendment also adds the responsibility and duty of Chief Financial Officer to Mr. Donnelly.
Compensation of Directors
Currently, members of our Board of Directors receive no compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of July 6, 2024, certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than 5% of our Common Stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of Common Stock, except as otherwise indicated.
Under the rules of the Securities and Exchange Commission, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest.
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Shares of Common Stock which an individual or group has a right to acquire within 60 days pursuant to the exercise or conversion of options are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table below.
Name of Beneficial Owner (1) |
| Shares of Series A Preferred (3) |
|
| Percent of Series A Preferred (2) |
|
| Shares of Common Stock |
|
| Percent of Common Stock (2) |
| ||||
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Shaun Donnelly |
|
| 51 |
|
|
| 100 | % |
|
| 9,350,000 |
|
|
| 0.236 | % |
Chief Executive Officer, Chief Financial Officer |
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All officers and directors as a group (1 person) |
|
| 51 |
|
|
| 100 | % |
|
| 9,350,000 |
|
|
| 0.236 | % |
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Name of beneficial owner (5%) |
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None
(1) | Beneficial ownership is determined in accordance with Rule 13D-3(a) of the Exchange Act and generally includes voting or investment power with respect to securities. |
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(2) | The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse. Based on 3,954,844,036 share equivalents of common stock as of July 6, 2024. |
(3) | Each one share of the Series A Preferred Stock has voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) / 0.49) - (0.019607 x 5,000,000) = 102,036). The Series A Preferred Stock has no dividend rights, no liquidation rights and no redemption rights, and was created primarily to be able to obtain a quorum and conduct business at shareholder meetings. |
The address for Mr. Donnelly is c/o Lingerie Fighting Championships, Inc., 6955 North Durango Drive, Suite 1115-129, Las Vegas 89149.
Changes in Control
We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.
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| Table of Contents |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
None of our officers, directors, proposed director nominees, beneficial owners of more than 10% of our shares of common stock, or any relative or spouse of any of the foregoing persons, or any relative of such spouse who has the same house as such person or who is a director or officer of any parent or subsidiary of our Company, has any direct or indirect material interest in any transaction to which we are a party since our incorporation or in any proposed transaction to which we are proposed to be a party other than described below.
During the year ended December 31, 2023, the Company accrued $120,000 of salary payable to the Director of the Company and paid $20,540 owing to him for the accrued salaries.
During the year ended December 31, 2022, the Company accrued $120,000 of salary payable to the Director of the Company and paid $42,500 owing to him for the accrued salaries.
Director Independence
Since our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship that, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be considered independent if:
| · | the director is, or at any time during the past three years was, an employee of the company; |
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|
|
| · | the director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service); |
| · | a family member of the director is, or at any time during the past three years was, an executive officer of the company; |
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| · | the director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions); |
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| · | the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or |
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| · | The director or a family member of the director is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit. |
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| · | Based upon the above criteria, we have no independent directors. |
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
On May 6, 2024, the Company dismissed its independent registered auditor, B.F. Borgers. The decision to dismiss B.F. Borgers was recommended and approved by the Board of Directors of the Company and was made after learning that the auditor is not currently permitted to appear or practice before the Commission. In May 2024, the Company has engaged
The following table sets forth the fees billed by our principal independent accountants for each of our last two fiscal years for the categories of services indicated.
| 20 |
| Table of Contents |
BF Borgers.CPA PC
|
| Year Ended December 31, |
| |||||
Category |
| 2023 |
|
| 2022 |
| ||
Audit Fees (1) |
| $ | - |
|
| $ | 33,000 |
|
Audit Related Fees (2) |
| $ | 33,000 |
|
| $ | 21,500 |
|
Tax Fees (3) |
| $ | -- |
|
| $ | -- |
|
All Other Fees (4) |
| $ | -- |
|
| $ | -- |
|
Astra Audit & Advisory, LLC
|
| Year Ended December 31, |
| |||||
Category |
| 2023 |
|
| 2022 |
| ||
Audit Fees (1) |
| $ | 30,000 |
|
| $ | 40,000 |
|
Audit Related Fees (2) |
| $ | - |
|
| $ | - |
|
Tax Fees (3) |
| $ | -- |
|
| $ | -- |
|
All Other Fees (4) |
| $ | -- |
|
| $ | -- |
|
__________________
(1) | Consists of fees billed for the audit of our annual financial statements, review of our Form 10-K and services that are normally provided by the accountant in connection with year-end statutory and regulatory filings or engagements. |
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(2) | Consists of fees billed for the review of our quarterly financial statements, review of our forms 10-Q and 8-K and services that are normally provided by the accountant in connection with non-year end statutory and regulatory filings on engagements. |
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(3) | Consists of professional services rendered by a company aligned with our principal accountant for tax compliance, tax advice and tax planning. |
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(4) | The services provided by our accountants within this category consisted of advice and other services relating to SEC matters, registration statement review, accounting issues and client conferences. |
ITEM 15. OTHER INFORMATION
Legal Proceedings
We are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
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| Table of Contents |
Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Unregistered Sales of Equity Securities and Use of Proceeds
None.
Defaults Upon Senior Securities
As of December 31, 2023, total note payable amount of $619,530 in default as follows:
|
| Issuance date |
| Expire date |
| Amount at default |
| |
Auctus#1 |
| 5/20/2016 |
| 2/20/2017 |
| $ | 1,265 |
|
Auctus#3 |
| 11/27/2017 |
| 3/20/2018 |
| $ | 50,745 |
|
Auctus#5 |
| 3/7/2018 |
| 12/7/2018 |
| $ | 30,000 |
|
Auctus#6 |
| 7/9/2018 |
| 4/9/2019 |
| $ | 48,500 |
|
Auctus#7 |
| 3/22/2019 |
| 12/22/2019 |
| $ | 62,500 |
|
Auctus#8 |
| 10/23/2019 |
| 7/23/2020 |
| $ | 100,000 |
|
Auctus#9 |
| 8/11/2020 |
| 8/11/2021 |
| $ | 31,000 |
|
Auctus#10 |
| 11/9/2020 |
| 11/9/2021 |
| $ | 225,000 |
|
Auctus#11 |
| 3/4/2021 |
| 3/4/2022 |
| $ | 300,000 |
|
Auctus#12 |
| 12/6/2021 |
| 12/6/2022 |
| $ | 40,000 |
|
Auctus#13 |
| 5/16/2022 |
| 5/16/2023 |
| $ | 52,000 |
|
Auctus#14 |
| 10/31/2022 |
| 10/31/2023 |
| $ | 18,520 |
|
|
|
|
|
|
| $ | 959,530 |
|
Mine Safety Disclosures
Not Applicable.
Other Information
None.
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| Table of Contents |
PART IV
ITEM 16. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibits |
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10.1 |
| Board Consent Auctus BOTY 2022-05-12 |
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10.2 |
| Disbursement Auth Auctus BOTY 2022-05-12 |
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10.6 |
| Officer's Certificate Auctus BOTY 2022-05-12 |
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10.8 |
| SPA Auctus BOTY 2022-05-12 |
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101.INS* |
| XBRL Instance Document |
101.SCH* |
| XBRL Taxonomy Schema |
101.CAL* |
| XBRL Taxonomy Calculation Linkbase |
101.DEF* |
| XBRL Taxonomy Definition Linkbase |
101.LAB* |
| XBRL Taxonomy Label Linkbase |
101.PRE* |
| XBRL Taxonomy Presentation Linkbase |
___________
* Filed herewith.
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| Table of Contents |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LINGERIE FIGHTING CHAMPIONSHIPS, INC. | ||
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| |
Date: July 15, 2024 | By: | /s/ Shaun Donnelly | |
| Shaun Donnelly | ||
| Chief Executive Officer and Chief Financial Officer | ||
Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
Signature |
| Title |
| Date |
|
| |||
/s/ Shaun Donnelly |
| Chief Executive Officer (Principal Executive Officer), Chief Financial |
| July 15, 2024 |
Shaun Donnelly |
| Officer (Principal Financial and Accounting Officer), and Director |
| 24 |