BOTY 10-Q
Lingerie Fighting Championships, Inc. (BOTY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| For the quarterly period ended |
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or | |
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| For the transition period from ____________ to ____________ |
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Commission File Number | |
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code) |
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N/A |
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
None | None | None |
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. ☐ Yes ☒
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). ☐ Yes ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES ☐ NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
BALANCE SHEETS
(UNAUDITED)
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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Prepaid expenses |
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Total Current Assets |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Accounts payable - related party |
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Accrued interest payable |
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Promissory notes, net of $ |
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Convertible notes, net of $ |
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Derivative liabilities |
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Total Current Liabilities |
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STOCKHOLDERS’ DEFICIT |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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The accompanying notes are an integral part of these unaudited financial statements.
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| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
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Revenue |
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Cost of services |
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GROSS PROFIT |
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OPERATING EXPENSES |
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Selling, general and administrative expenses |
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Professional fees |
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Management salaries |
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Total Operating Expenses |
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OPERATING LOSS |
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OTHER INCOME (EXPENSE) |
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Interest expense |
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Gain (Loss) on change in fair value of derivative liabilities |
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Total Other Income (Expense) |
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NET INCOME (LOSS) |
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Basic and Diluted Income (Loss) per Common Share |
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Diluted Earnings (Loss) per Common Share |
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Basic and Diluted Weighted Average Shares of Common Stock Outstanding |
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Diluted Weighted Average Shares of Common Stock Outstanding |
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The accompanying notes are an integral part of these unaudited financial statements.
| 4 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(UNAUDITED)
Three Months and Nine Months Ended September 30, 2022
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| Additional |
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| Total |
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Balance - December 31, 2021 |
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Net income |
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Balance - March 31, 2022 |
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Net income |
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Balance - June 30, 2022 |
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Net loss |
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Balance - September 30, 2022 |
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Three Months and Nine Months Ended September 30, 2021
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Balance - December 31, 2020 |
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Shares of common stock issued for conversion of debts and accrued interest |
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Shares of common stock issued for exercise of warrants |
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Write off of convertible notes and accrued interest |
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Derivative liabilities reclass to additional paid-in capital due to note conversion, warrant exercise and note written off |
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Net loss |
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Balance - March 31, 2021 |
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Shares of common stock issued for conversion of debts and accrued interest |
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Shares of common stock issued for exercise of warrants |
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Derivative liabilities reclass to additional paid-in capital due to note conversion, warrant exercise and note written off |
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Net income |
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Balance - June 30, 2021 |
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Shares of common stock issued for conversion of debts and accrued interest |
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Derivative liabilities reclass to additional paid-in capital due to note conversion, warrant exercise and note written off |
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Net loss |
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Balance - September 30, 2021 |
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The accompanying notes are an integral part of these unaudited financial statements
| 5 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income (loss) |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Loss (Gain) on change in fair value of derivative liabilities |
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Note conversion fee |
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Changes in operating assets and liabilities: |
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Accounts payable - related party |
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Accounts payable and accrued liabilities |
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Accrued interest payable |
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Net cash used in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from convertible debts |
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Proceeds from promissory notes |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents |
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Cash and cash equivalents - end of period |
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Supplemental Cash Flow Disclosures |
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Cash paid for interest |
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Cash paid for income taxes |
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NON-CASH INVESTING AND FINANCING ACTIVITIES |
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Debt discount from derivative liabilities |
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Derivative liabilities reclass to additional paid-in capital due to note conversion, warrant exercise and note written off |
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Shares of common stock issued for conversion of debt and accrued interest |
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Shares of common stock issued for exercise of warrants |
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Write off of convertible notes and accrued interest |
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The accompanying notes are an integral part of these unaudited financial statements.
| 6 |
| Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 accompanying unaudited interim financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2021 have been omitted. These interim financial statements are condensed and should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 31, 2022.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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.
Reclassifications
Certain prior period amounts have been reclassified to conform with the current year presentation.
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 recognizes revenue from the sale of products and services in accordance with 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
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. For the nine months ended September 30, 2022 and 2021, the Company recognized revenue of $78,831 and $
| 7 |
| Table of Contents |
Earnings (Loss) per Share
The Company computes basic and diluted net loss 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 loss of the Company.
For the nine months and three months ended September 30, 2022 and 2021, convertible notes and warrants were dilutive instruments and were included in the calculation of diluted earnings per share.
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Convertible notes payable |
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Warrants |
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Related Party Balances and Transactions
The Company follows 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 evaluates and account for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities.”
Share-Based Compensation
The Company measures the cost of services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. Employee awards are accounted for under ASC 718 - where the awards are valued at grant date. Awards given to nonemployees are accounted for under ASC 505 where the awards are valued at earlier of commitment date or completion of services. Compensation cost for employee awards is recognized over the vesting or requisite service period. The Black-Scholes option-pricing model is used to estimate the fair value of options or warrants granted.
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 receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our 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.
| 8 |
| Table of Contents |
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) |
The derivative liability in connection with the conversion feature of the convertible debt, classified as a level 3 liability, is the only financial liability measured at fair value on a recurring basis. (See Note 8)
The following table summarizes fair value measurement by level at September 30, 2022 and December 31, 2021, measured at fair value on a recurring basis:
September 30, 2022 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
None |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
December 31, 2021 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
None |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||
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, 2021 and the adoption of this guidance to have a material impact on our financial statements.
In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12), which simplifies the accounting for income taxes. This guidance will be effective for entities for the fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 on a prospective basis, with early adoption permitted. For the Company, the new standard was effective on January 1, 2021 and the adoption of this guidance to 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.
| 9 |
| Table of Contents |
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has generated nominal revenues since inception, has sustained 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
There were
Common Stock
The Company has authorized
During the nine months ended September 30, 2021, the Company issued
During the nine months ended September 30, 2021, the Company issued
As of September 30, 2022 and December 31, 2021, the shares of common stock issued and outstanding was
NOTE 5 – WARRANTS
The below table summarizes the activity of warrants exercisable for shares of common stock during the nine months ended September 30, 2022 and year ended December 31, 2021:
|
| Number of Shares |
|
| Weighted- Average Exercise Price |
| ||
Balances as of December 31, 2020 |
|
|
|
| $ |
| ||
Granted |
|
|
|
|
|
| ||
Redeemed |
|
| - |
|
|
|
| |
Exercised |
|
| ( | ) |
|
|
| |
Forfeited |
|
| - |
|
|
|
| |
Balances as of December 31, 2021 |
|
|
|
| $ |
| ||
Granted |
|
|
|
|
|
| ||
Redeemed |
|
| - |
|
|
|
| |
Exercised |
|
| - |
|
|
|
| |
Forfeited |
|
| - |
|
|
|
| |
Balances as of September 30, 2022 |
|
|
|
| $ |
| ||
| 10 |
| Table of Contents |
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 nine months ended September 30, 2022 and 2021:
|
| Nine Months Ended |
| |||||
|
| September 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
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 September 30, 2022:
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 September 30, 2022 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of September 30, 2022, 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 September 30, 2022 and December 31, 2021, the Company valued the fair value on the
NOTE 6 – PROMISSORY NOTES
The Company had the following promissory notes payable as at September 30, 2022 and December 31, 2021:
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
|
|
|
|
|
|
| ||
Promissory Notes to Auctus Fund |
| $ |
|
| $ |
| ||
Less Debt Discount |
|
| ( | ) |
|
| ( | ) |
Total Promissory Notes |
| $ |
|
| $ |
| ||
On
| 11 |
| Table of Contents |
On December 6, 2021, the Company entered into an agreement with Auctus Fund, LLC to issue a senior secured promissory note of $
During the nine months ended September 30, 2022 and 2021, interest expense of $
NOTE 7 - CONVERTIBLE NOTES
The Company had the following unsecured convertible notes payable as at September 30, 2022 and December 31, 2021:
|
| September 30, 2022 |
|
| December 31, 2021 |
| ||
|
|
|
|
|
|
| ||
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 $67,750 with a $
During the year ended December 31, 2017, principal of $
During the year ended December 31, 2018, accrued interest of $
During the year ended December 31, 2019, principal of $
During the year ended December 31, 2020, accrued interest of $
During the year ended December 31, 2021, principal of $
As of September 30, 2022, the note is presented net of a debt discount of $
This note is currently in default.
| 12 |
| Table of Contents |
Auctus #2
On September 20, 2016, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $
On July 7, 2017, note amendment was executed with $
During the year ended December 31, 2021, principal of $
As of September 30, 2022, the notes were fully paid off through the issuance of common stock.
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 $
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 $50,774.54. The note bears interest at
As of September 30, 2022, the note is presented net of a debt discount of $
This note is currently in default.
| 13 |
| Table of Contents |
Auctus #4
On November 2, 2017, the Company entered into an agreement to issue a convertible promissory note of $
During the year ended December 31, 2021, principal of $58,636 and accrued interest of $
As of September 30, 2022, the notes were fully paid off through the issuance of common stock.
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 September 30, 2022, the note is presented net of a debt discount of $
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 September 30 2022, the note is presented net of a debt discount of $
This note is currently in default.
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 September 30, 2022, the note is presented net of a debt discount of $
This note is currently in default.
| 14 |
| Table of Contents |
Auctus#8
On October 23, 2019, the Company entered into an agreement to issue a convertible promissory note of $
As of September 30, 2022, the note is presented net of a debt discount of $
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 September 30, 2022, the note is presented net of a debt discount of $
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 $225,000 to the unrelated party, which bears interest at
As of September 30, 2022, the note is presented net of a debt discount of $
This note is currently in default.
| 15 |
| Table of Contents |
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 September 30, 2022, the note is presented net of a debt discount of $
Accrued interest on convertible notes
During the nine months ended September 30, 2022 and 2021, interest expense of $
Summary of Conversions
During the nine months ended September 30, 2021, the Company issued
NOTE 8 - DERIVATIVE LIABILITY
The Company analyzed the conversion options for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability when the conversion option becomes effective.
The following table summarizes the derivative liabilities included in the balance sheet at September 30, 2022:
Balance - December 31, 2021 |
| $ |
| |
Addition of new derivative liabilities upon issuance of convertible notes as debt discount |
|
| ( | ) |
Addition of new derivative liabilities upon issuance of warrants as debt discount |
|
|
| |
Addition of new derivatives liabilities recognized as day one loss on warrants |
|
|
| |
Loss (Gain) on change in fair value of the derivative |
|
| ( | ) |
Balance - September 30, 2022 |
| $ |
|
The following table summarizes the loss (gain) on derivative liability included in the income statement for the nine months ended September 30, 2022 and 2021, respectively.
|
| Nine Months Ended |
| |||||
|
| September 30, |
|
| September 30, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Day one loss due to derivative liabilities on convertible notes and warrants |
| $ |
|
| $ |
| ||
Loss (Gain) on change in fair value of derivative liabilities on convertible notes and warrants |
|
| ( | ) |
|
|
| |
Loss (Gain) on change in fair value of derivative liabilities |
| $ | ( | ) |
| $ |
| |
| 16 |
| Table of Contents |
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:
|
| Nine Months Ended |
| |||||
|
| September 30, |
|
| September 30, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Expected term |
| |
|
| |
| ||
Expected average volatility |
| % |
| % | ||||
Expected dividend yield |
|
| - |
|
|
| - |
|
Risk-free interest rate |
| % |
| % | ||||
NOTE 9 - RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2022, the Company accrued $
During the nine months ended September30, 2021, the Company accrued $
As of September 30, 2022 and December 31, 2021, amount due to the related party was $
NOTE 10 - RISKS AND UNCERTAINTIES
In early 2020, the World Health Organization declared the rapidly spreading coronavirus disease (COVID-19) outbreak a pandemic. This pandemic has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no retroactive material adverse impacts on the Company’s results of operations and financial position at September 30, 2022. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company in the future. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change, as new events occur and additional information is obtained.
NOTE 11 - SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to the September 30, 2022 to the date these financial statements were issued and has determined that it has the below subsequent events:
On October 10, 2022, Company issued
On October 31, 2022, the Company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $
| 17 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Lingerie Fighting Championships, Inc., unless otherwise indicated.
General Overview
We were incorporated under the laws of the State of Nevada on November 29, 2006 under the name “Sparking Events, Inc.”. Our 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.
We are 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.
Our business and corporate address is 6955 North Durango Drive, Suite 1115-129, Las Vegas NV 89149. Our corporate website is http://LFCfights.com/.
We do not have any subsidiaries.
We have never declared bankruptcy nor have we ever been in receivership.
Our Current 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 a 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.
| 18 |
| Table of Contents |
Recent Business Development
On May 5, 2021, we have been booked to perform three events at the Sturgis Buffalo Chip during the closing weekend of the 2021 Sturgis Motorcycle Rally in Sturgis, SD.
On May 17, 2021, we have inked a deal with Johnny Cafarella who will oversee the creation of a brand new television series about the controversial MMA league. Cafarella is best known as the co-founder and producer of GLOW which saw a resurgence in popularity recently with the success of the GLOW series on Netflix.
On June 15, 2021, we have added Christopher Crotte (aka The SuperBeast) to their ranks as a trainer and coach for the upcoming events at the Sturgis Motorcycle Rally.
On June 21, 2021, we have partnered with Agape Impetus Dunamis Ministries (AIDM) as one of the league’s principal sponsors at their 3 upcoming events at the Sturgis Motorcycle Rally. The California-based ministry created an inspirational design which will adorn the LFC ring during the league’s events on the closing weekend of the Rally which is expected to draw as many as 750,000 bike enthusiasts.
In July 2021, we were approached by a company called Scuffle LLC who specialize in launching Roku channels. We have partnered with them to launch our own channel we’ll be calling “LFC Network”. The channel will carry our past events, our reality series and several new series we plan to create. It will be similar in scope to WWE Network. It will be funded by a combination of subscription fees, advertisers and sponsors, both self generated and placed by Roku itself.
On August 27, 2021, we announced LFC35: Booty Camp 3D which would take place Halloween in Las Vegas and would be shot using 360 degree virtual reality cameras.
On September 1, 2021, we announced the launch of LFC Madness 2, a follow-up to our first LFC Madness bracket style virtual tournament. Once again the two prospects with the most votes would fight each other at LFC35 and each would receive a $1200 diamond bracelet courtesy Boston Diamonds & Bling.
On October 1, 2021, LFC Network was launched on schedule on Roku.
On October 19, 2021, we launched our own branded CBD pain relief cream called ‘LFC True Relief’. The product is available for sale on our site.
Results of Operations
Three months ended September 30, 2022 as compared to the three months ended September 30, 2021
Our operating results for the three months ended September 30, 2022 and 2021, and the changes between those periods for the respective items are summarized as follows:
|
| Three Months Ended |
|
|
|
|
|
| |||||||
|
| September 30, |
|
| Changes | ||||||||||
Statement of Operations Data: |
| 2022 |
|
| 2021 |
|
| Amount |
|
| % | ||||
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 25,393 |
|
| $ | 41,837 |
|
| $ | (16,444 | ) |
| (39 | %) |
Cost of Services |
|
| (9,700 | ) |
|
| (40,628 | ) |
|
| 30,928 |
|
| (76 | %) |
Total operating expenses |
|
| (73,728 | ) |
|
| (83,782 | ) |
|
| 10,054 |
|
| (12 | %) |
Other income (expense) |
|
| (613,243 | ) |
|
| (4,523,635 | ) |
|
| 3,910,392 |
|
| (86 | %) |
Net Income (loss) |
| $ | (671,278 | ) |
| $ | (4,606,208 | ) |
| $ | 3,934,930 |
|
| (85 | %) |
Revenues
We generated revenues of $25,393 and $41,837 for the three ended September 30, 2022 and 2021, respectively. The Company’s revenue derives from the development, promotion and distribution of our live events, televised entertainment programming and site subscription. The decrease in revenues was attributed to an decrease in live event revenue during the quarter.
| 19 |
| Table of Contents |
Cost of Services
We incurred total cost of services of $9,700 and $40,628 for the three months ended September 30, 2022 and 2021, respectively. The cost of services incurred consist of labor, material, equipment and subcontractor expenses.
Operating Expenses
We incurred total operating expenses of $73,728 and $83,782 for the three months ended September 30, 2022 and 2021, respectively. The decrease in operating expenses was primarily due to the decrease in e-commerce, taxes, license and travel expense.
Other Income (Expenses)
We recognized total other expense of $613,243 and $4,523,635 for the three months ended September 30, 2022 and 2021, respectively. The increase in other expense was mainly attributed to an decrease in loss on changes in fair value of derivatives from the convertible notes and warrants and a decrease in accrued interest expenses from convertible notes and promissory notes during the three months ended September 30, 2022.
Net Income (Loss)
We recognized net loss of $671,278 and $4,606,208 during the three months ended September 30, 2022 and 2021, respectively. The decrease in our net loss was mainly attributed to the decrease in other expense and the decrease in operating expense during the three months ended September 30, 2022.
Nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021
Our operating results for the nine months ended September 30, 2022 and 2021, and the changes between those periods for the respective items are summarized as follows:
|
| Nine Months Ended |
|
|
|
|
|
|
| |||||||
|
| September 30, |
|
| Changes |
| ||||||||||
Statement of Operations Data: |
| 2022 |
|
| 2021 |
|
| Amount |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 78,831 |
|
| $ | 76,339 |
|
| $ | 2,492 |
|
|
| 3 | % |
Cost of services |
|
| (24,657 | ) |
|
| (66,660 | ) |
|
| 42,003 |
|
| (63 | %) | |
Gross profit (loss) |
|
| 54,174 |
|
|
| 9,679 |
|
|
| 44,495 |
|
|
| 460 | % |
Total operating expenses |
|
| (204,240 | ) |
|
| (216,486 | ) |
|
| 12,246 |
|
| (6 | %) | |
Other income (expense) |
|
| 1,223,095 |
|
|
| (11,291,887 | ) |
|
| 12,514,982 |
|
| (111 | %) | |
Net income (loss) |
| $ | 1,073,029 |
|
| $ | (11,498,694 | ) |
| $ | 12,571,723 |
|
| (109 | %) | |
Revenues
We generated revenues of $78,831 and $76,339 for the nine months ended September 30, 2022 and 2021, respectively. The Company’s revenue derives from the development, promotion and distribution of our live events, televised entertainment programming and site subscription. The increase in revenues was attributed to an increase in live event revenue.
Cost of Services
We incurred total cost of services of $24,657 and $66,660 for the nine months ended September 30, 2022 and 2021, respectively. The cost of services incurred consist of labor, material, equipment and subcontractor expenses. The decrease in cost of services during the nine months ended September 30, 2022 was due to a decrease in cost of subcontractors.
| 20 |
| Table of Contents |
Operating Expenses
We incurred total operating expenses of $204,240 and $216,486 for the nine months ended September 30, 2022 and 2021, respectively. The decrease in operating expenses was primarily due to the decrease in e-commerce, taxes and travel expense.
Other Income (Expenses)
We recognized total other income of $1,223,095 and incurred other expenses of $11,291,887 for the nine months ended September 30, 2022 and 2021, respectively. The increase in other income was mainly attributed to an increase in gain on changes in fair value of derivatives during the nine months ended September 30, 2022.
Net Income (Loss)
We recognized net income of $1,073,029 and incurred net loss of $11,498,694 during the nine months ended September 30, 2022 and 2021, respectively. The increase in our net income was mainly attributed to an increase in gross profit, the decrease in operating expense and the increase in other income during the nine months ended September 30, 2022.
Liquidity and Capital Resources
|
| September 30, |
|
| December 31, |
|
| Changes |
| |||||||
Working Capital Data: |
| 2022 |
|
| 2021 |
|
| Amount |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current Assets |
| $ | 20,086 |
|
| $ | 41,981 |
|
| $ | (21,895 | ) |
|
| (52 | %) |
Current Liabilities |
| $ | 5,745,865 |
|
| $ | 6,840,790 |
|
|
| (1,094,925 | ) |
| (16 | %) | |
Working Capital Deficiency |
| $ | (5,725,779 | ) |
| $ | (6,798,809 | ) |
|
| 1,073,030 |
|
| (16 | %) | |
At September 30, 2022 we had a working capital deficiency of $5,725,779 and an accumulated deficit of $10,648,112. 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, 2022.
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 nine months ended September 30, 2022 and 2021:
|
| Nine Months Ended |
|
|
|
|
|
|
| |||||||
|
| September 30, |
|
| Changes |
| ||||||||||
Cash Flows Data: |
| 2022 |
|
| 2021 |
|
| Amount |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash Flows used in Operating Activities |
| $ | (66,895 | ) |
| $ | (203,013 | ) |
| $ | 136,118 |
|
|
| (67 | %) |
Cash Flows provided by Financing Activities |
|
| 45,000 |
|
|
| 265,000 |
|
|
| (220,000 | ) |
| (83 | %) | |
Net increase (decrease) in cash during period |
| $ | (21,895 | ) |
| $ | 61,987 |
|
| $ | (83,882 | ) |
| (135 | %) | |
| 21 |
| Table of Contents |
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities.
During the nine months ended September 30, 2022, net cash flows used in operating activities was $66,895, consisting of a net income of $1,073,029, decreased by gain on change in fair value of derivative liabilities of $1,480,510, increased by amortization of debt discount of $100,669 and net changes in operating assets and liabilities of $239,917.
During the nine months ended September 30, 2021, net cash flows used in operating activities was $170,513, consisting of a net loss of $11,498,694, decreased by loss on change in fair value of derivative liabilities of $10,821,246, amortization of debt discount of $359,470, note conversion fee of $1,500 and net changes in operating assets and liabilities of $145,956.
Cash Flows from Investing Activities
There were no investing activities during the nine months ended September 30, 2022 and 2021.
Cash Flows from Financing Activities
During the nine months ended September 30, 2022, net cash provided by financing activities was $45,000 through proceeds from issuance of a convertible note.
During the nine months ended September 30, 2021, net cash provided by financing activities was $265,000 through the proceeds from issuance of promissory notes.
Off-Balance Sheet Arrangements
As of September 30, 2022, we had no off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer (our principal executive officer, principal financial officer and principal accounting officer), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our Chief Executive Officer has concluded that as of such date, our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 22 |
| Table of Contents |
PART II - OTHER INFORMATION
Item 1. 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.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
As of September 30, 2022, total note payable amount of $549,010 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#4 |
| 11/2/2017 |
| 8/2/2018 |
| $ | 0 |
|
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 |
|
|
|
|
|
|
| $ | 549,010 |
|
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
| 23 |
| Table of Contents |
Item 6. Exhibits
Exhibit Number |
| Description |
(31) |
| Rule 13a-14 (d)/15d-14d) Certifications |
| ||
(32) |
| Section 1350 Certifications |
| ||
101* |
| Interactive Data File |
101.INS |
| XBRL Instance Document |
101.SCH |
| XBRL Taxonomy Extension Schema Document |
101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF |
| XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
______________
* Filed herewith.
| 24 |
| 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 thereunto duly authorized.
| LINGERIE FIGHTING CHAMPIONSHIPS, INC. |
| |
| (Registrant) |
| |
|
|
|
|
Dated: January 11, 2023 |
| /s/ Shaun Donnelly |
|
| Shaun Donnelly |
| |
| Chief Executive Officer, Chief Financial Officer and Director |
| |
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting 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 |
| October 12, 2022 |
Shaun Donnelly |
| Officer (Principal Financial and Accounting Officer), and Director |
25 |