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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
|
|
For the quarterly period ended March 31, 2022
|
|
|
or
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|
☐
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
|
|
|
For the transition period from ____________ to ____________
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Commission File Number 000-55498
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LINGERIE FIGHTING
CHAMPIONSHIPS, INC.
|
(Exact name of registrant as specified in its charter)
|
Nevada
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|
20-8009362
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(State or other jurisdiction
of incorporation or organization)
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|
(IRS Employer
Identification No.)
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|
6955 North Durango Drive, Suite 1115-129, Las Vegas,
NV
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|
89149
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(Address of principal executive offices)
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|
(Zip Code)
|
(702)
5277-2942
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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
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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 ☒ No
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 ☒ No
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
|
☐
|
Non-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) ☐ YES ☒ NO
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.
3,535,302,536 shares of common stock issued and outstanding as of
May 25, 2022.
TABLE OF CONTENTS
PART I - FINANCIAL
INFORMATION
Item 1. Financial Statements
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
BALANCE SHEETS
(UNAUDITED)
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2022
|
|
|
2021
|
|
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ASSETS
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|
|
|
|
|
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Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ |
14,797 |
|
|
$ |
34,481 |
|
Prepaid expenses
|
|
|
7,500 |
|
|
|
7,500 |
|
Total Current Assets
|
|
|
22,297 |
|
|
|
41,981 |
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|
|
|
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current Liabilities
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|
|
|
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|
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Accounts payable and accrued liabilities
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|
$ |
43,314 |
|
|
$ |
20,849 |
|
Accounts payable - related party
|
|
|
482,668 |
|
|
|
465,168 |
|
Accrued interest payable
|
|
|
282,544 |
|
|
|
231,839 |
|
Promissory notes, net of $27,397 and $89,183 debt discount,
respectively
|
|
|
312,603 |
|
|
|
250,817 |
|
Convertible notes, net of $0 debt discount
|
|
|
549,010 |
|
|
|
549,010 |
|
Derivative liabilities
|
|
|
4,346,984 |
|
|
|
5,323,107 |
|
Total Current Liabilities
|
|
|
6,017,122 |
|
|
|
6,840,790 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
Preferred stock, par value $0.001 per share, 10,000,000 shares
authorized, 51 shares issued and outstanding
|
|
|
- |
|
|
|
- |
|
Common stock, par value $0.001 per share, 5,000,000,000 shares
authorized, 3,535,302,536 shares issued and outstanding
|
|
|
3,535,303 |
|
|
|
3,535,303 |
|
Additional paid-in capital
|
|
|
1,387,030 |
|
|
|
1,387,030 |
|
Accumulated deficit
|
|
|
(10,917,157 |
) |
|
|
(11,721,142 |
) |
Total stockholders' deficit
|
|
|
(5,994,824 |
) |
|
|
(6,798,809 |
) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$ |
22,297 |
|
|
$ |
41,981 |
|
The accompanying notes are an integral part of these unaudited
financial statements.
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
21,165 |
|
|
$ |
7,076 |
|
Cost of services
|
|
|
- |
|
|
|
21,005 |
|
GROSS PROFIT (LOSS)
|
|
|
21,165 |
|
|
|
(13,929 |
) |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
14,912 |
|
|
|
24,557 |
|
Professional fees
|
|
|
35,900 |
|
|
|
5,250 |
|
Management salaries
|
|
|
30,000 |
|
|
|
30,000 |
|
Total Operating Expenses
|
|
|
80,812 |
|
|
|
59,807 |
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS
|
|
|
(59,648 |
) |
|
|
(73,736 |
) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(112,491 |
) |
|
|
(117,810 |
) |
Gain (Loss) on change in fair value of derivative liabilities
|
|
|
976,124 |
|
|
|
(7,355,494 |
) |
Total Other Income (Expense)
|
|
$ |
863,633 |
|
|
$ |
(7,473,304 |
) |
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
$ |
803,985 |
|
|
$ |
(7,547,040 |
) |
|
|
|
|
|
|
|
|
|
Basic and Diluted Income (Loss) per Common Share
|
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
Basic and Diluted Weighted Average Shares of Common Stock
Outstanding
|
|
|
3,535,302,536 |
|
|
|
2,612,776,754 |
|
The accompanying notes are an integral part of these unaudited
financial statements.
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021
(UNAUDITED)
Three Months Ended March 31, 2022
|
|
Common Stock
|
|
|
Preferred Shares
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders'
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2021
|
|
|
3,535,302,536 |
|
|
$ |
3,535,303 |
|
|
|
51 |
|
|
$ |
- |
|
|
$ |
1,387,030 |
|
|
$ |
(11,721,142 |
) |
|
$ |
(6,798,809 |
) |
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
803,985 |
|
|
|
803,985 |
|
Balance - March 31, 2022
|
|
|
3,535,302,536 |
|
|
$ |
3,535,303 |
|
|
|
51 |
|
|
$ |
- |
|
|
$ |
1,387,030 |
|
|
$ |
(10,917,157 |
) |
|
$ |
(5,994,824 |
) |
Three Months Ended March 31, 2021
|
|
Common Stock
|
|
|
Preferred Shares
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Number of Shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Stockholders'
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2020
|
|
|
2,339,101,663 |
|
|
$ |
2,339,102 |
|
|
|
51 |
|
|
$ |
- |
|
|
$ |
(20,381 |
) |
|
$ |
(8,197,588 |
) |
|
$ |
(5,878,867 |
) |
Shares of common stock issued for conversion of debts and accrued
interest
|
|
|
239,246,512 |
|
|
|
239,247 |
|
|
|
- |
|
|
|
- |
|
|
|
(229,676 |
) |
|
|
- |
|
|
|
9,571 |
|
Shares of common stock issued for exercise of warrants
|
|
|
65,483,870 |
|
|
|
65,484 |
|
|
|
|
|
|
|
|
|
|
|
(65,484 |
) |
|
|
- |
|
|
|
(0 |
) |
Write off of convertible notes and accrued interest
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
110,076 |
|
|
|
- |
|
|
|
110,076 |
|
Derivative liabilities reclass to additional paid-in capital due to
note conversion, warrant exercise and note written off
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
346,640 |
|
|
|
- |
|
|
|
346,640 |
|
Net loss
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(7,547,040 |
) |
|
|
(7,547,040 |
) |
Balance - March 31, 2021
|
|
|
2,643,832,045 |
|
|
$ |
2,643,833 |
|
|
|
51 |
|
|
$ |
- |
|
|
$ |
141,175 |
|
|
$ |
(15,744,628 |
) |
|
$ |
(12,959,620 |
) |
The accompanying notes are an integral part of these unaudited
financial statements
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net income (loss)
|
|
$ |
803,985 |
|
|
$ |
(7,547,040 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Loss (Gain) on change in fair value of derivative liabilities
|
|
|
(976,124 |
) |
|
|
7,355,494 |
|
Amortization of debt discount
|
|
|
61,786 |
|
|
|
85,376 |
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable - related party
|
|
|
17,500 |
|
|
|
30,000 |
|
Accounts payable and accrued liabilities
|
|
|
22,464 |
|
|
|
(54,669 |
) |
Accrued interest payable
|
|
|
50,705 |
|
|
|
32,435 |
|
Net cash used in operating activities
|
|
|
(19,684 |
) |
|
|
(98,404 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Repayment to related party
|
|
|
- |
|
|
|
(7,500 |
) |
Proceeds from promissory notes
|
|
|
- |
|
|
|
265,000 |
|
Net cash provided by financing activities
|
|
|
- |
|
|
|
257,500 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(19,684 |
) |
|
|
159,096 |
|
Cash and cash equivalents - beginning of period
|
|
|
34,481 |
|
|
|
4,142 |
|
Cash and cash equivalents - end of period
|
|
$ |
14,797 |
|
|
$ |
163,238 |
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosures
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$ |
- |
|
|
$ |
- |
|
Cash paid for income taxes
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Debt discount from derivative liabilities
|
|
$ |
- |
|
|
$ |
265,000 |
|
Derivative liabilities reclass to additional paid-in capital due to
note conversion, warrant exercise and note written off
|
|
$ |
- |
|
|
$ |
346,640 |
|
Shares of common stock issued for conversion of debt and accrued
interest
|
|
$ |
- |
|
|
$ |
9,571 |
|
Shares of common stock issued for exercise of warrants
|
|
$ |
- |
|
|
$ |
65,484 |
|
Write off of convertible notes and accrued interest
|
|
$ |
- |
|
|
$ |
110,076 |
|
The accompanying notes are an integral part of these unaudited
financial statements.
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 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 three months ended March 31, 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 $14,797 and $34,481 in cash and cash equivalents as
at March 31, 2022 and December 31, 2021, respectively.
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 three
months ended March 31, 2022 and 2021, the Company recognized
revenue of $21,165 and $7,076 and incurred cost of sales of $0 and
$21,005, resulting in gross loss and of $21,165 and gross loss of
$13,929, respectively.
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 three months ended March 31, 2022 and 2021, convertible
notes and warrants were dilutive instruments and were not included
in the calculation of diluted loss per share as their effect would
be antidilutive.
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
(Shares)
|
|
|
(Shares)
|
|
Convertible notes payable
|
|
|
1,704,957,556 |
|
|
|
610,683,219 |
|
Warrants
|
|
|
4,428,333,333 |
|
|
|
5,100,561,403 |
|
|
|
|
6,133,290,889 |
|
|
|
5,711,244,622 |
|
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.
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
March 31, 2022 and December 31, 2021, measured at fair value on a
recurring basis:
March 31, 2022
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
|
- |
|
|
|
- |
|
|
|
4,346,984 |
|
|
|
4,346,984 |
|
December 31, 2021
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
|
- |
|
|
|
- |
|
|
|
5,323,107 |
|
|
|
5,323,107 |
|
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.
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 10,000,000 shares with a
par value $0.001 per share. The board of directors has broad
discretion in setting the rights, preferences and privileges of one
or more series of preferred stock.
On September 3, 2016, the Company issued 51 Series A preferred
shares to the Chief Executive Officer. The Series A preferred
shares have voting rights, resulting in the Series A stockholder
holding in aggregate approximately 51% of the total voting power of
all issued and outstanding voting capital of the Company. The
valuation of the preferred shares was completed by the Company
based on the change in voting percentage rights before and after
the Series A shares were issued. The value of the Series A shares
is $42,669 and was expensed.
There were 51 and 51 preferred shares issued and outstanding as at
March 31, 2022 and December 31, 2021, respectively.
Common Stock
The Company has authorized 5,000,000,000 shares with a par value
$0.001 per share.
During the year ended December 31, 2021, the Company issued
862,061,953 shares of common stock for the conversion of
convertible note of $139,132 and accrued interest of $167,920.
During the year ended December 31, 2021, the Company issued
267,438,920 shares of common stock for the exercise of 281,500,000
units of share purchase warrants.
During the year ended December 31, 2021, the Company issued
66,700,000 shares of common stock as commitment stock to a
noteholder under registration rights agreement in relations to the
filing of S-1.
As of March 31, 2022 and December 31, 2021, the shares of common
stock issued and outstanding was 3,535,302,536.
NOTE 5 – WARRANTS
The below table summarizes the activity of warrants exercisable for
shares of common stock during the three months ended March 31, 2022
and year ended December 31, 2021:
|
|
Number of Shares
|
|
|
Weighted- Average Exercise Price
|
|
Balances as of December 31, 2020
|
|
|
5,438,166,666 |
|
|
$ |
0.0001 |
|
Granted
|
|
|
400,000,000 |
|
|
|
0.0002 |
|
Redeemed
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
(281,500,000 |
) |
|
|
0.0003 |
|
Forfeited
|
|
|
- |
|
|
|
- |
|
Balances as of December 31, 2021
|
|
|
5,556,666,666 |
|
|
$ |
0.0001 |
|
Granted
|
|
|
- |
|
|
|
- |
|
Redeemed
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
Forfeited
|
|
|
- |
|
|
|
- |
|
Balances as of March 31, 2022
|
|
|
5,556,666,666 |
|
|
$ |
0.0001 |
|
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 options granted during
the three months ended March 31, 2022 and 2021:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Exercise price
|
|
$0.0001 - $0.0008
|
|
|
$ |
0.0002 |
|
Expected term
|
|
3.55 years
|
|
|
5 years
|
|
Expected average volatility
|
|
245% - 365
|
%
|
|
|
337 |
% |
Expected dividend yield
|
|
|
- |
|
|
|
- |
|
Risk-free interest rate
|
|
2.28% - 2.45
|
%
|
|
|
0.77 |
% |
The following table summarizes information relating to outstanding
and exercisable warrants as of March 31, 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
|
|
|
5,556,666,666 |
|
|
|
3.55 |
|
|
$ |
0.0001 |
|
|
|
5,556,666,666 |
|
|
$ |
0.0001 |
|
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 March 31, 2022 for those warrants for
which the quoted market price was in excess of the exercise price
(“in-the-money” warrants). As of March 31, 2022, the aggregate
intrinsic value of warrants outstanding was approximately
$2,657,000 based on the closing market price of $0.0006 on March
31, 2022.
The Company determined that the warrants qualify for derivative
accounting as a result of the related issuance of the convertible
notes. As of March 31, 2022 and December 31, 2021, the Company
valued the fair value on the 5,556,666,666 units and 5,556,666,666
units of common stock purchase warrants granted at $3,324,010 and
$4,444,017 based on Black-Scholes option valuation model,
respectively.
NOTE 6 – PROMISSORY NOTES
The Company had the following promissory notes payable as at March
31, 2022 and December 31, 2021:
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
|
|
|
|
|
|
|
Promissory Notes to Auctus Fund
|
|
$ |
340,000 |
|
|
$ |
340,000 |
|
Less Debt Discount
|
|
|
(27,397 |
) |
|
|
(89,183 |
) |
Total Promissory Notes
|
|
$ |
312,603 |
|
|
$ |
250,817 |
|
On March 4, 2021, the Company entered into an agreement with Auctus
Fund, LLC to issue a senior secured promissory note of $300,000 to
the unrelated party, which bears interest at 12% of the principal
amount. The promissory note matures on March 4, 2022. In
conjunction with the convertible note, the Company issued warrants
to purchase 150,000,000 shares of common stock, exercisable for
five years from issuance at $0.002 per share and returnable
warrants to purchase 150,000,000 shares of common stock,
exercisable for five years form issuance at $0.002 per share which
will be automatically expired in the event that the Company repays
the convertible promissory notes prior to its maturity date. (See
Note 5) The note was discounted for original issued discount of
$35,000 and a derivative on warrants of $265,000 for an aggregate
discount of $300,000, which is being amortized over the life of the
note using the effective interest method resulting in $248,077 of
debt discount amortization for the year ended December 31, 2021. As
of March 31, 2022, the note is presented at $300,000, net of debt
discount of $0.
On December 6, 2021, the Company entered into an agreement with
Auctus Fund, LLC to issue a senior secured promissory note of
$40,000 to the unrelated party, which bears interest at 12% of the
principal amount. The promissory note matures on December 6, 2022.
In conjunction with the convertible note, the Company issued first
common stock purchased warrants to purchase 50,000,000 shares of
common stock, exercisable for five years from issuance at $0.0008
per share and second common stock purchased warrants to purchase
50,000,000 shares of common stock, exercisable for five years form
issuance at $0.0008 per share which will be automatically expired
in the event that the Company repays the convertible promissory
notes prior to its maturity date. (See Note 5) The note was
discounted for original issued discount of $9,000 and a derivative
on warrants of $31,000 for an aggregate discount of $40,000, which
is being amortized over the life of the note using the effective
interest method resulting in $2,740 of debt discount amortization
for the year ended December 31, 2021. As of March 31, 2022, the
note is presented at $12,603, net of debt discount of $27,397.
During the three months ended March 31, 2022 and 2021, interest
expense of $13,019 and $2,663 was incurred on the promissory notes.
As of March 31, 2022 and December 31, 2021, accrued interest
payable on the promissory note was $46,027 and $33,008,
respectively.
NOTE 7 - CONVERTIBLE NOTES
The Company had the following unsecured convertible notes payable
as at March 31, 2022 and December 31, 2021:
|
|
March 31, 2022
|
|
|
December 31, 2021
|
|
|
|
|
|
|
|
|
Convertible Promissory Notes to Auctus Fund
|
|
$ |
549,010 |
|
|
$ |
549,010 |
|
Total Convertible Notes
|
|
$ |
549,010 |
|
|
$ |
549,010 |
|
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 $7,750 original issue discount. The convertible
promissory note bears interest at 10% per annum and matures nine
months from issue date. The conversion price is 50% of the lowest
trading price 25 days prior to conversion. The note was discounted
for a derivative and the discount of $60,000 is being amortized
over the life of the note using the effective interest method
resulting in $0 and $14,542 of interest expense for the year ended
December 31, 2018 and December 31, 2017, respectively.
During the year ended December 31, 2017, principal of $15,278 nd
accrued interest of $5,975 were converted into111,460,000 shares of
common stock.
During the year ended December 31, 2018, accrued interest of $2,494
were converted into 133,258,300 shares of common stock.
During the year ended December 31, 2019, principal of $40,241 and
accrued interest of $1,153 were converted into 1,066,179,950 shares
of common stock.
During the year ended December 31, 2020, accrued interest of
$12,717 were converted into 317,919,774 shares of common stock.
During the year ended December 31, 2021, principal of $3,746 and
accrued interest of $5,834 were converted into 239,266,512 shares
of common stock.
As of March 31, 2022, the note is presented net of a debt discount
of $1,265.
This note is currently in default.
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 $56,750 with a $6,750 original issue discount. The
convertible promissory note bears interest at 10% per annum and
matures nine months from issue date. The conversion price is 50% of
the lowest trading price 25 days prior to conversion. The note was
discounted for a derivative and the discount of $50,000 is being
amortized over the life of the note using the effective interest
method resulting in $0 and $35,607 of interest expense for the year
ended December 31, 2018 and year ended December 31, 2017,
respectively.
On July 7, 2017, note amendment was executed with $20,000 increase
in principal of the note and the note principal increased to
$76,750. The Company received $20,000 cash proceeds from the note
amendment on the same date.
During the year ended December 31, 2021, principal of $76,750 and
accrued interest of $83,128 were converted into 288,590,075 shares
of common stock.
As of March 31, 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
45,000 with a $2,500 original issue discount to the unrelated
party, which bears interest at 8% of the principal amount. The
promissory note matures on January 13, 2018. The conversion price
shall be equal to 57.5% of the lowest trading price of the
Company’s common stock during the 20 consecutive trading days prior
to the date on which the unrelated party elects to convert all or
part of the note. The note was discounted for a derivative and the
discount of $45,000 is being amortized over the life of the note
using the effective interest method. Total of $0 and $40,843 of the
discount was recorded as interest expense for the year ended
December 31, 2018 and the year ended December 31, 2017.
During the year ended December 31, 2017, principal of $6,700 was
converted into 30,455,486 shares of common stock.
On June 14, 2017, the Company entered into an agreement with Power
Up Lending Group to issue a convertible promissory note of $7,500
to the unrelated party, which bears interest at 12% of the
principal amount. The promissory note matured on March 20, 2018.
The conversion price shall be equal to 50% of the lowest trading
price of the Company’s common stock during the 20 consecutive
trading days prior to the date on which the unrelated party elects
to convert all or part of the note. The note was discounted for a
derivative and the discount of $7,500 is being amortized over the
life of the note using the effective interest method. Total of $0
and $4,462 of the discount was recorded as interest expense for the
year ended December 31, 2018 and the year ended December 31,
2017.
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 12% of
the principal amount and matured on March 20, 2018. The conversion
price shall be equal 57.5% of the lowest trading price of the
Company’s common stock during the 20 consecutive trading days prior
to the date on which the unrelated party elects to convert all or
part of the note. During the year ended December 31, 2018 and the
year ended December 31, 2017, interest expense of $5,030 and $2,165
was recorded over the remaining note discount transferred the two
convertible notes of $7,195.
As of March 31, 2022, the note is presented net of a debt discount
of $50,745.
This note is currently in default.
Auctus #4
On November 2, 2017, the Company entered into an agreement to issue
a convertible promissory note of $53,000 to the unrelated party,
which bears interest at 12% of the principal amount. The promissory
note matures on August 2, 2018. The conversion price shall be equal
to 50% of the lowest trading price of the Company’s common stock
during the 25 consecutive trading days prior to the date on which
the unrelated party elects to convert all or part of the note. The
note was discounted for a derivative and the discount of $53,000 is
being amortized over the life of the note using the effective
interest method. Total of $41,546 and $11,454 of the discount was
recorded as interest expense for the year ended December 31, 2018
and the year ended December 31, 2017. On February 23, 2018, EMA
Financial LLC and Auctus Fund, LLC each made repayment to Crown
Bridge Partners, LLC on behalf of the Company at $5,636.04 to
settle the total outstanding principal and accrued penalty amount
at $11,272.08 of the $40,000 convertible note. As a result, the
principal amount of the $53,000 convertible note increased to
$58,636.04.
During the year ended December 31, 2021, principal of $58,636 and
accrued interest of $52,583 were converted into 166,178,366 shares
of common stock.
As of March 31, 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
$30,000 with a $5,000 original issue discount. The convertible
promissory note bears interest at 12% per annum and matures nine
months from issue date. The conversion price is 50% of the lowest
trading price 25 days prior to conversion. The note was discounted
for a derivative and the discount of $30,000 is being amortized
over the life of the note using the effective interest method
resulting in $30,000 of interest expense for the year ended
December 31, 2018.
During the year ended December 31, 2021, accrued interest of
$26,384 were converted into 168,027,000 shares of common stock.
As of March 31, 2022, the note is presented net of a debt discount
of $30,000.
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
$43,500 with a $5,000 original issue discount. On July 25, 2018,
the convertible promissory note was further amended with principal
increased to $48,500. The convertible promissory note bears
interest at 12% per annum and matures nine months from issue date.
The conversion price is 50% of the lowest trading price 25 days
prior to conversion. The note was discounted for a derivative and
the discount of $48,500 is being amortized over the life of the
note using the effective interest method resulting in $17,524 and
$30,976 of interest expense for the year ended December 31, 2019
and the year ended December 31, 2018, respectively. In conjunction
with the convertible note, the Company issued warrants to purchase
72,500,000 shares of common stock, exercisable for five years from
issuance at $0.0003 per share.
As of March 31, 2022, the note is presented net of a debt discount
of $48,500.
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
$62,500 with a $9,000 original issue discount. The convertible
promissory note bears interest at 12% per annum and matures nine
months from issue date. The conversion price is 50% of the lowest
trading price 25 days prior to conversion. The note was discounted
for a derivative and the discount of $62,500 is being amortized
over the life of the note using the effective interest method
resulting in $62,500 of interest expense for the year ended
December 31, 2019. In conjunction with the convertible note, the
Company issued warrants to purchase 209,000,000 shares of common
stock, exercisable for five years from issuance at $0.0003 per
share.
As of March 31, 2022, the note is presented net of a debt discount
of $62,500.
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 $100,000 to the unrelated party,
which bears interest at 12% per annum and matures nine months from
issue date. The conversion price shall be equal to the lesser of
(i) 50% multiplied by the lowest Trading Price during the previous
twenty-five Trading Day period ending on the latest complete
Trading Day prior to the date of this Note and (ii) the Variable
Conversion Price, that is 50% multiplied by the Market Price, being
the lowest Trading Price for the Common Stock during the
twenty-five Trading Day period ending on the latest complete
Trading Day prior to the Conversion Date. The note was discounted
for a derivative and the discount of $100,000 is being amortized
over the life of the note using the effective interest method
resulting in $25,182 of interest expense for the year ended
December 31, 2019. In conjunction with the convertible note, the
Company issued warrants to purchase 50,000,000 shares of common
stock, exercisable for five years from issuance at $0.0001 per
share.
As of March 31, 2022, the note is presented net of a debt discount
of $100,000.
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 $31,000
to the unrelated party, which bears interest at 12% of the
principal amount. The promissory note matures on August 4, 2021.
The note is to be repaid by six equal payments commencing on the
sixth month anniversary of issuance and due monthly thereafter. The
conversion price shall be equal to the lesser of (i) the lowest
Trading Price during the previous five trading date period ending
on the latest completed trading Day prior to the date of this Note
and (ii) Variable Conversion Price, that is Market Price being the
volume weighted average price (VWAP) for the Common Stock during
the five trading day period ending on the latest complete trading
day prior to the conversion date. The note was discounted for a
derivative and the discount of $31,000 is being amortized over the
life of the note using the effective interest method. In
conjunction with the convertible note, the Company issued warrants
to purchase 206,666,666 shares of common stock, exercisable for
five years from issuance at $0.0003 per share.
As of March 31, 2022, the note is presented net of a debt discount
of $31,000.
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 12% of the
principal amount. The promissory note matures on November 2, 2021.
The note is to be repaid by six equal payments commencing on the
sixth month anniversary of issuance and due monthly thereafter. The
conversion price shall be equal to the lesser of (i) the lowest
Trading Price and (ii) Variable Conversion Price, that is Market
Price being the lowest trading price for the common stock during
the one trading day period ending on the latest complete trading
day prior to the conversion date. The note was discounted for a
derivative and the discount of $225,000 is being amortized over the
life of the note using the effective interest method. In
conjunction with the convertible note, the Company issued warrants
to purchase 2,225,000,000 shares of common stock, exercisable for
five years from issuance at $0.0001 per share and returnable
warrants to purchase 2,225,000,000 shares of common stock,
exercisable for five years form issuance at $0.0001 per share which
will be automatically expired in the event that the Company repays
the convertible promissory notes prior to its maturity date.
As of March 31, 2022, the note is presented net of a debt discount
of $225,000.
This note is currently in default.
Accrued interest on
convertible notes
During the three months ended March 31, 2022 and 2021, interest
expense of $37,686 and $29,771 was incurred on convertible notes,
respectively. As of March 31, 2022 and December 31, 2021, accrued
interest payable on convertible notes was $236,517 and $198,831,
respectively.
Summary of
Conversions
During the three months ended March 31, 2021, the Company issued
239,246,512 shares of common stock for the conversion of
convertible note of $3,746 and accrued interest of $5,824.
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 March 31, 2022:
Balance - December 31, 2021
|
|
$ |
5,323,107 |
|
Gain on change in fair value of the derivative
|
|
|
(976,124 |
) |
Balance - March 31, 2022
|
|
$ |
4,346,983 |
|
The following table summarizes the loss on derivative liability
included in the income statement for the three months ended March
31, 2022 and 2021, respectively.
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Day one loss due to derivative liabilities on warrants
|
|
$ |
- |
|
|
$ |
(346,970 |
) |
Loss on change in fair value of derivative liabilities on
convertible notes and warrants
|
|
|
(976,124 |
) |
|
|
(7,008,524 |
) |
Loss on change in fair value of derivative liabilities
|
|
$ |
(976,124 |
) |
|
$ |
(7,355,494 |
) |
The table below shows the Black-Scholes option-pricing model inputs
used by the Company to value the derivative liability at each
measurement date:
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2022
|
|
|
2021
|
|
Expected term
|
|
|
- |
|
|
0.49 years
|
|
Expected average volatility
|
|
|
- |
|
|
337% - 472%
|
|
Expected dividend yield
|
|
|
- |
|
|
|
- |
|
Risk-free interest rate
|
|
|
- |
|
|
0.03% - 0.05%
|
|
NOTE 9 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2022, the Company accrued
$30,000 of salary payable to the Director of the Company and paid
$12,500 owing to him for the accrued salaries.
During the three months ended March 31, 2021, the Company accrued
$30,000 of salary payable to the Director of the Company and paid
$7,500 owing to him for the accrued salaries.
As of March 31, 2022 and December 31, 2021, amount due to the
related party was $482,668 and $465,168, respectively.
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
March 31, 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 March 31, 2022 to the date these
financial statements were issued and has determined that it has the
following material subsequent events:
On May 12, 2022, the Company entered into an agreement with Auctus
Fund, LLC to issue a convertible promissory note of $52,000 to the
unrelated party, which bears interest at 12% of the principal
amount. The convertible promissory note matures on May 12, 2023.
The note is convertible into common shares of $0.0005 per share.
The note was discounted for a derivative and the discount of $7,000
is being amortized over the life of the note using the effective
interest method. In conjunction with the convertible note, the
Company issued warrants to purchase 104,000,000 shares of common
stock (“First Warrant”), exercisable for five years from issuance
at $0.0005 per share and warrants to purchase 104,000,000 shares of
common stock (“Second Warrant”), exercisable for five years form
issuance at $0.0005 per share which will be automatically expired
in the event that the Company repays the convertible promissory
notes prior to its maturity date.
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://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.
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.
Results of Operations
Three months ended March 31, 2022 as compared to the three
months ended March 31, 2021
Our operating results for the three months ended March 31, 2022 and
2021, and the changes between those periods for the respective
items are summarized as follows:
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Changes
|
|
Statement of Operations Data:
|
|
2022
|
|
|
2021
|
|
|
Amount
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$ |
21,165 |
|
|
$ |
7,076 |
|
|
$ |
14,089 |
|
|
|
199 |
% |
Cost of services
|
|
|
- |
|
|
|
(21,005 |
) |
|
|
21,005 |
|
|
(100
|
%)
|
Gross profit (loss)
|
|
|
21,165 |
|
|
|
(13,929 |
) |
|
|
35,094 |
|
|
(252
|
%)
|
Total operating expenses
|
|
|
(80,812 |
) |
|
|
(59,807 |
) |
|
|
(21,005 |
) |
|
|
35 |
% |
Other expense
|
|
|
863,633 |
|
|
|
(7,473,304 |
) |
|
|
8,336,937 |
|
|
(112
|
%)
|
Net loss
|
|
$ |
803,958 |
|
|
$ |
(7,547,040 |
) |
|
$ |
8,386,119 |
|
|
(111
|
%)
|
Revenues
We generated revenues of $21,165 and $7,076 for the three ended
March 31, 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 $0 and $21,005 for the three
months ended March 31, 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 $80,812 and $59,807 for the
three months ended March 31, 2022 and 2021, respectively. The
increase in operating expenses was primarily due to the increase in
professional fees.
Other Income (Expenses)
We recognized total other income of $863,633 and incurred other
expenses of $7,473,304 for the three months ended March 31, 2022
and 2021, respectively. The increase in other income was mainly
attributed to an increase in gain 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 March 31, 2022.
Net Income (Loss)
We recognized net income of $863,633 and incurred $7,547,040 during
the three months ended March 31, 2022 and 2021, respectively. The
increase in our net income was mainly attributed to other income
during the three months ended March 31, 2022.
Liquidity and Capital Resources
|
|
March 31,
|
|
|
December 31,
|
|
|
Changes
|
|
Working Capital Data:
|
|
2022
|
|
|
2021
|
|
|
Amount
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$ |
22,297 |
|
|
$ |
41,981 |
|
|
$ |
(19,684 |
)
|
(47
|
%)
|
Current Liabilities
|
|
$ |
6,017,122 |
|
|
$ |
6,840,790 |
|
|
|
(823,668 |
)
|
(12
|
%)
|
Working Capital Deficiency
|
|
$ |
(5,994,824 |
) |
|
$ |
(6,798,809 |
) |
|
|
803,985 |
|
(12
|
%)
|
At March 31, 2022 we had a working capital deficiency of $5,994,824
and an accumulated deficit of $10,917,157. 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 three months ended March 31, 2022 and 2021:
|
|
Three Months Ended
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
Changes
|
|
Cash Flows Data:
|
|
2022
|
|
|
2021
|
|
|
Amount
|
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows used in Operating Activities
|
|
$ |
(19,684 |
) |
|
$ |
(98,404 |
) |
|
$ |
78,720 |
|
|
(80
|
%) |
Cash Flows provided by Financing Activities
|
|
|
- |
|
|
|
257,500 |
|
|
|
(257,500 |
) |
|
(100
|
%) |
Net increase (decrease) in cash during period
|
|
$ |
(19,684 |
) |
|
$ |
159,096 |
|
|
$ |
(178,780 |
) |
|
(112
|
%) |
Cash Flows from Operating Activities
We have not generated positive cash flows from operating
activities.
During the three months ended March 31, 2022, net cash flows used
in operating activities was $19,684, consisting of a net income of
$803,985, decreased by gain on change in fair value of derivative
liabilities of $976,124, increased by amortization of debt discount
of $61,786 and net changes in operating assets and liabilities of
$90,669.
During the three months ended March 31, 2021, net cash flows used
in operating activities was $98,404, consisting of a net loss of
$7,547,040, decreased by loss on change in fair value of derivative
liabilities of $7,355,494, amortization of debt discount of $85,376
and net changes in operating assets and liabilities of
$7,766.
Cash Flows from Investing Activities
There was no investing activities during the three months ended
March 31, 2022 and 2021.
Cash Flows from Financing Activities
During the three months ended March 31, 2022, there was no
financing activities.
During the three months ended March 31, 2021, net cash provided by
financing activities was $257,500 compared to net cash used in
financing activities was $5,000.
Off-Balance Sheet
Arrangements
As of March 31, 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.
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 March 31, 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#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.
Item 6. Exhibits
______________
* Filed herewith.
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: June 3, 2022
|
|
/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
|
|
June 3, 2022
|
Shaun Donnelly
|
|
Officer (Principal Financial and Accounting Officer), and
Director
|
|
|
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