10-Q: LFC Reports Wider Q2 Loss Amid Rising Derivative Costs
Quarterly Report
Lingerie Fighting Championships, Inc. reported a significant increase in net loss for the second quarter and first half of 2025, primarily driven by a substantial loss on derivative liabilities, despite improved gross profit.
Summary
- Net loss for the three months ended June 30, 2025, increased to $2,925,223, a 311% increase from a net income of $1,389,365 in the same period of 2024.
- For the six months ended June 30, 2025, net loss widened to $1,645,715, up 96% from $840,435 in the prior year period.
- Revenue decreased by 26% to $25,551 for the three months ended June 30, 2025, and by 33% to $53,038 for the six months ended June 30, 2025, primarily due to a decrease in advertising and sponsorship revenue.
- Gross profit increased by 16% to $12,901 for the three months and by 34% to $29,324 for the six months, driven by a significant decrease in cost of services.
- Operating expenses rose by 7% to $119,620 for the three months and by 31% to $210,513 for the six months, mainly due to increased travel costs for UK shows.
- A substantial loss on change in fair value of derivative liabilities of $2,688,197 for the three months and $1,225,884 for the six months significantly impacted the net loss.
- The company's cash and cash equivalents increased to $113,148 as of June 30, 2025, from $2,193 at December 31, 2024.
- Working capital deficiency worsened to $7,563,858 as of June 30, 2025, from $5,933,668 at December 31, 2024.
- Total current liabilities increased to $7,718,126 from $5,935,861 over the same period.
- As of June 30, 2025, the company had $1,225,474 in promissory and convertible notes in default.
- The company's social media reach nearly doubled in the past three months, from 1 million to nearly 2 million followers.
- LFC43: Sindependence Day 2 in London was reported as the best-selling LFC event to date.
Sentiment
Score: 2
Explanation: The company faces severe financial distress, evidenced by a widening net loss, increasing working capital deficiency, substantial debt in default, and an explicit 'going concern' warning. While there are minor operational positives, they are overshadowed by the significant financial instability and the risk of massive share dilution.
Positives
- Gross profit increased by 16% for the three months and 34% for the six months ended June 30, 2025, primarily due to a decrease in production costs.
- Cash and cash equivalents significantly increased to $113,148 as of June 30, 2025, from $2,193 at December 31, 2024.
- The company's social media reach nearly doubled in the past three months, growing from 1 million to nearly 2 million followers.
- LFC43: Sindependence Day 2 in London was the best-selling LFC event to date.
- New broadcasters, Maybacks Global, MMATV, and ToroTV, have been added.
Negatives
- Net loss significantly increased by 311% for the three months ended June 30, 2025, to $2,925,223, and by 96% for the six months to $1,645,715.
- Total revenue decreased by 26% for the three months and 33% for the six months ended June 30, 2025, primarily due to declines in advertising and sponsorship revenue.
- Operating expenses increased by 7% for the three months and 31% for the six months, mainly due to higher travel costs for UK shows.
- A substantial loss on change in fair value of derivative liabilities, totaling $2,688,197 for the three months and $1,225,884 for the six months, significantly contributed to the net loss.
- The working capital deficiency worsened by 27% to $7,563,858 as of June 30, 2025.
- Total current liabilities increased by 30% to $7,718,126 as of June 30, 2025.
- The company has $1,225,474 in promissory and convertible notes that are currently in default.
- Accumulated deficit increased to $12,816,510 as of June 30, 2025.
Risks
- Substantial doubt exists regarding the company's ability to continue as a going concern due to nominal revenues since inception, sustained operating losses, and ongoing funding requirements.
- The company is dependent on additional investment capital, with no assurance of financial viability.
- Significant derivative liabilities ($4,519,862 as of June 30, 2025) are sensitive to stock price changes, leading to large fair value losses.
- The number of authorized common shares is less than the dilutive shares from convertible notes and warrants, which could trigger further derivative treatment and massive dilution.
- A large portion of promissory and convertible notes are in default, totaling $1,225,474 as of June 30, 2025, indicating significant financial distress and potential legal repercussions.
- Disclosure controls and procedures were deemed not effective as of June 30, 2025, raising concerns about the reliability of financial reporting.
Future Outlook
Management is currently in discussions with several large potential sponsors and is working on a tour with a major music act to increase the popularity of the LFC league and brand. The company also recently uplisted to the newly created OTCID platform at OTC Markets.
Management Comments
- "LFCs unique content gives us a substantial competitive advantage to build the popularity of the league and the fighters."
Industry Context
Lingerie Fighting Championships operates in the niche sports entertainment industry, specifically focusing on wrestling and mixed martial arts featuring women. While the broader MMA and wrestling industries (e.g., UFC, WWE) are large and established, LFC occupies a very specific segment. The company's strategy involves leveraging live events, digital distribution, and social media to grow its brand, aligning with broader trends in content distribution and direct-to-consumer engagement within entertainment.
Comparison to Industry Standards
- Direct comparisons to major sports entertainment entities like UFC or WWE are not applicable due to LFC's significantly smaller scale, niche content, and precarious financial position.
- LFC's revenue figures ($53,038 for six months) are minuscule compared to established industry players, which generate hundreds of millions or billions in revenue annually.
- The company's substantial accumulated deficit ($12.8 million) and ongoing net losses are far from the profitability seen in successful, larger sports entertainment organizations.
- The high proportion of debt in default and reliance on convertible notes with significant derivative liabilities indicate a financial structure that is not comparable to healthy industry standards.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Disclosure Controls Effectiveness | Disclosure controls and procedures were evaluated and concluded to be not effective as of June 30, 2025. | 2025-06-30 | Raises concerns about the reliability and timeliness of information disclosed in SEC reports. |
| Voting Control | Series A preferred shares, held by the Chief Executive Officer, control approximately 51% of the total voting power of all issued and outstanding voting capital. | 2016-09-03 | Grants the CEO significant control over the board of directors and company decisions, including the ability to increase authorized shares to accommodate dilution. |
Legal Proceedings
- The company is not currently involved in any litigation that is believed to have a materially adverse effect on its financial condition or results of operations.
Related Party Transactions
- Accrued $60,000 of salary payable to the Director of the Company during the six months ended June 30, 2025.
- Paid $15,000 owing to the Director of the Company for accrued salaries during the three months ended June 30, 2025.
- Total amount due to the related party (Director) was $788,628 as of June 30, 2025, up from $743,628 at December 31, 2024.
- Terms and conditions of related party transactions are not necessarily indicative of what third parties would agree to.
Stakeholder Impact
- Shareholders face significant risk of value erosion due to substantial net losses, worsening working capital deficiency, and the explicit 'going concern' warning.
- Existing shareholders are exposed to massive potential dilution from convertible notes and warrants, with over 17 billion shares not included in diluted EPS due to anti-dilutive effects.
- Creditors, particularly Auctus Fund, face high risk due to over $1.2 million in promissory and convertible notes being in default.
- Employees, specifically management, are accruing salaries, indicating potential cash flow issues for compensation.
Next Steps
- Continue discussions with potential large sponsors.
- Work on a tour with a major music act.
- Raise additional funds through public or private placement offerings.
Key Dates
| Date | Description |
|---|---|
| 2006-11-29 | Company incorporated as Sparking Events, Inc. |
| 2009-06-01 | Company name changed to Xodtec Group USA, Inc. |
| 2010-05-01 | Company name changed to Xodtec LED, Inc. |
| 2013-09-01 | Company name changed to Cala Energy Corp. |
| 2015-04-01 | Company name changed to Lingerie Fighting Championships, Inc. |
| 2016-05-20 | Entered agreement for convertible promissory note (Auctus #1). |
| 2016-09-03 | Issued 51 Series A preferred shares to the Chief Executive Officer. |
| 2017-01-13 | Entered agreement for convertible promissory note with Power Up Lending Group (Auctus #3). |
| 2017-06-14 | Entered agreement for convertible promissory note with Power Up Lending Group. |
| 2017-11-27 | Auctus Fund, LLC bought out Power Up Lending Group notes. |
| 2018-03-07 | Entered agreement for convertible promissory note (Auctus #5). |
| 2018-07-09 | Entered agreement for convertible promissory note (Auctus #6). |
| 2019-03-22 | Entered agreement for convertible promissory note (Auctus #7). |
| 2019-10-23 | Entered agreement for convertible promissory note (Auctus #8). |
| 2020-08-04 | Entered agreement for convertible promissory note (Auctus #9). |
| 2020-11-02 | Entered agreement for convertible promissory note (Auctus #10). |
| 2021-03-04 | Entered agreement for senior secured promissory note with Auctus Fund, LLC. |
| 2021-12-06 | Entered agreement for senior secured promissory note with Auctus Fund, LLC. |
| 2022-05-12 | Entered agreement for convertible promissory note (Auctus #13). |
| 2022-10-31 | Entered agreement for convertible promissory note (Auctus #14). |
| 2023-07-18 | Entered agreement for convertible promissory note (Auctus #15). |
| 2023-10-10 | Entered agreement for convertible promissory note (Auctus #16). |
| 2024-05-22 | Entered agreement for convertible promissory note (Auctus #17). |
| 2024-08-08 | Amended principal amount for convertible note (Auctus #17). |
| 2024-09-03 | Entered agreement for convertible promissory note (Auctus #18). |
| 2024-12-13 | Entered agreement for convertible promissory note (Auctus #19). |
| 2025-02-04 | Issued 100,000,000 shares of common stock for the exercise of 150,000,000 units of share purchase warrants. |
| 2025-03-05 | Entered agreement for convertible promissory note (Auctus #20). |
| 2025-04-11 | Filed Annual Report on Form 10-K for fiscal year ended December 31, 2024. |
| 2025-04-30 | Entered agreement for convertible promissory note (Auctus #21). |
| 2025-06-24 | Entered agreement for convertible promissory note (Auctus #22). |
| 2025-06-30 | End of the quarterly period covered by this report. |
| 2025-07-01 | Issued 360,000,000 shares of common stock valued at $47,000 to consultants for services rendered. |
| 2025-07-01 | Issued 396,666,600 shares of common stock for the exercise of 594,999,900 units of purchase warrants (July to August 2025). |
| 2025-08-13 | Latest practicable date for common stock issued and outstanding count (5,361,510,636 shares). |
| 2025-08-14 | Date the Form 10-Q report was signed and filed. |
Recommendation
strong sellThe company is in severe financial distress, evidenced by a widening net loss, a substantial and increasing working capital deficiency, and over $1.2 million in debt currently in default. The explicit 'going concern' warning indicates a high risk of business failure. Furthermore, the significant derivative liabilities and the potential for massive share dilution from outstanding convertible notes and warrants pose an extreme threat to shareholder value. Ineffective disclosure controls add to the risk profile. Despite minor operational improvements like social media growth and a best-selling event, these are insufficient to offset the fundamental financial instability. A seasoned investor would view this filing as a strong signal to exit any position.
Keywords
Lingerie Fighting Championships, LFC, SEC filing, 10-Q, financial results, sports entertainment, MMA, derivative liabilities, convertible notes, going concern, working capital deficiency, share dilution
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