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LINGERIE FIGHTING CHAMPIONSHIPS, INC.

(BOTY)
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LINGERIE FIGHTING CHAMPIONSHIPS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/27/2021 | 03:02pm EST

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://lingeriefc.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.




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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



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.




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Results of Operations


Three months ended September 30, 2021 as compared to the three months ended September 30, 2020

Our operating results for the three months ended September 30, 2021 and September 30, 2020, and the changes between those periods for the respective items are summarized as follows:



                                    Three Months Ended
                                       September 30,                    Changes
Statement of Operations Data:       2021            2020           Amount          %

Revenue                         $     41,837     $   14,661     $     27,176        185 %
Cost of Services                     (40,628 )      (23,552 )        (17,076 )       73 %
Total operating expenses             (83,782 )      (73,972 )         (9,810 )       13 %
Other income (expense)            (4,523,635 )      (81,562 )     (4,442,073 )     5446 %
Net Income (loss)               $ (4,606,208 )   $ (164,425 )   $ (4,441,783 )     2701 %




Revenues


We generated revenues of $41,837 and $14,661 for the three months ended September 30, 2021 and 2020, respectively. The Company's revenue derives from the development, promotion and distribution of our live events and televised entertainment programming and sponsorship.



Cost of Services


We incurred total cost of services of $40,628 and $23,552 for the three months ended September 30, 2021 and 2020, respectively. The cost of services incurred consist of labor, material, equipment and subcontractor expenses.



Operating Expenses


We incurred total operating expenses of $83,782 and $73,972 for the three months ended September 30, 2021 and 2020, respectively. The increase in operating expenses was primarily due to the increase in general and administrative expenses.




Other Income (Expenses)



We incurred total other expenses of $4,523,635 and $81,562 for the three months ended September 30, 2021 and 2020, respectively. The increase in other expenses was mainly attributed to $4,348,651 loss on change in fair value of derivative liabilities from the convertible notes and warrants during the three months ended September 30, 2021 as compared to loss on change in fair value of derivative liabilities of $24,499 incurred during the three months ended September 30, 2020.




Net Income (Loss)



We recognized net loss of $4,606,208 and $164,425 during the three months ended September 30, 2021 and 2020, respectively. The increase in our net loss was mainly attributed to the loss on change in fair value of derivative liability during the three months ended September 30, 2021.

Nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020




Our operating results for the nine months ended September 30, 2021 and September
30, 2020, and the changes between those periods for the respective items are
summarized as follows:



                                      Nine Months Ended
                                        September 30,                      Changes
Statement of Operations Data:       2021             2020            Amount            %

Revenue                         $      76,339     $    22,021     $      54,318         247 %
Cost of Services                      (66,660 )       (25,852 )         (40,808 )       158 %
Total operating expenses             (216,486 )      (169,341 )         (47,145 )        28 %
Other income (expense)            (11,291,887 )     1,245,574       (12,537,461 )     (1007 )%
Net Income (loss)               $ (11,498,694 )   $ 1,072,402     $ (12,571,096 )     (1172 )%





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Revenues


We generated revenues of $76,339 and $22,021 for the nine months ended September 30, 2021 and 2020, respectively. The Company's revenue derives from the development, promotion and distribution of our live events and televised entertainment programming and sponsorship.



Cost of Services


We incurred total cost of services of $66,660 and $25,852 for the nine months ended September 30, 2021 and 2020, respectively. The cost of services incurred consist of labor, material, equipment and subcontractor expenses.



Operating Expenses


We incurred total operating expenses of $216,486 and $169,341 for the nine months ended September 30, 2021 and 2020, respectively. The increase in operating expenses was primarily due to the increase in general and administrative expenses.




Other Income (Expenses)



We incurred total other expense of $11,291,887 and recognized other income of $1,245,574 for the nine months ended September 30, 2021 and 2020, respectively. The increase in other expense was mainly attributed to $10,821,246 loss on change in fair value of derivative liabilities from the convertible notes and warrants during the nine months ended September 30, 2021 as compared to gain on change in fair value of derivative liabilities of $1,455,931 recognized during the nine months ended September 30, 2020.



Net Income (Loss)


We incurred net loss of $11,498,694 and recognized net income of $1,072,402 during the nine months ended September 30, 2021 and 2020, respectively. The increase in our net loss was mainly attributed to the increase in operating expenses and other expense the nine months ended September 30, 2021.

Liquidity and Capital Resources



                            September 30,        December 31,                Changes
Working Capital Data:           2021                 2020              Amount            %

Current Assets            $         66,129     $          4,142     $     61,987          1497 %
Current Liabilities       $     15,353,060     $      5,883,009        9,470,051           161 %
Working Capital
Deficiency                $    (15,286,931 )   $     (5,878,867 )     (9,408,064 )         160 %



At September 30, 2021 we had a working capital deficiency of $15,286,931 and an accumulated deficit of $19,696,282. 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, 2021.

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.




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The following table sets forth certain information about our cash flow during the nine months ended September 30, 2021 and 2020:



                                           Nine Months Ended
                                              September 30,                  Changes
Cash Flows Data:                           2021          2020          Amount           %

Cash Flows used in Operating
Activities                              $ (170,513 )   $ (43,919 )   $ (126,594 )         288 %
Cash Flows provided by Financing
Activities                                 232,500         1,000        231,500         23150 %
Net increase (decrease) in cash
during period                           $   61,987     $ (42,919 )   $  104,906          (244 )%



Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities.

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 $359,479, note conversion fee of $1,500 and net changes in operating assets and liabilities of $145,956.

During the nine months ended September 30, 2020, net cash flows used in operating activities was $43,919, consisting of a net income of $1,072,402, increased by amortization of debt discount of $79,065 and net changes in operating assets and liabilities of $260,545 ,and decreased by gain on change in fair value of derivative liabilities of $1,455,931.

Cash Flows from Investing Activities

There were no investing activities during the nine months ended September 30, 2021 and 2020.

Cash Flows from Financing Activities

During the nine months ended September 30, 2021, net cash provided by financing activities was $232,500 compared to $1,000 during the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, we received proceeds from a promissory note of $265,000 and made repayment to the Director of the Company of $32,500.

During the nine months ended September 30, 2020, we received proceeds from a promissory note of $25,000 and made repayment to the Director of the Company of $24,000.

Off-Balance Sheet Arrangements

As of September 30, 2021, we had no off-balance sheet arrangements.

Significant Accounting Estimates and Policies

The preparation of financial statements in 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 the reported amounts of revenues and expenses during the reporting period. A change in managements' estimates or assumptions could have a material impact on our financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. Our financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.




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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

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."



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.

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.

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. The Company is currently assessing the impact of the adoption of this standard on its financial statements.




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Financials (USD)
Sales 2020 0,03 M - -
Net income 2020 -2,41 M - -
Net Debt 2020 0,53 M - -
P/E ratio 2020 -0,32x
Yield 2020 -
Capitalization 3,03 M 3,03 M -
EV / Sales 2019 31,9x
EV / Sales 2020 40,8x
Nbr of Employees 1
Free-Float 99,7%
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