10-Q: Lingerie Fighting Championships Reports Increased Net Loss in Q3 2024 Amidst Rising Expenses
Sentiment:
Quarterly Report
Lingerie Fighting Championships, Inc. reported a net loss of $770,144 for the third quarter of 2024, a significant increase compared to the $559,840 loss in the same period of 2023, driven by higher operating and other expenses.
Capital raiseThe company intends to fund future operations through equity financing arrangements.The company is dependent on additional investment capital to fund operating expenses.Management intends to raise additional funds through public or private placement offerings.
Worse than expectedThe company's net loss increased significantly compared to the same period last year.The company's revenue decreased in Q3 2024 compared to Q3 2023.The company's operating expenses increased substantially in Q3 2024.The company incurred significant losses due to changes in the fair value of derivative liabilities.
Summary
- Lingerie Fighting Championships, Inc. reported a net loss of $770,144 for the three months ended September 30, 2024, compared to a net loss of $559,840 for the same period in 2023.
- The company's revenue decreased to $23,533 in Q3 2024 from $32,455 in Q3 2023, primarily due to a decrease in live events.
- Operating expenses increased significantly to $169,120 in Q3 2024 from $92,225 in Q3 2023, driven by higher stock-based compensation, accounting fees, and advertising costs.
- Other expenses also rose to $612,048 in Q3 2024 from $489,621 in Q3 2023, mainly due to losses on changes in the fair value of derivative liabilities.
- For the nine months ended September 30, 2024, the company's net loss was $1,610,579, compared to a net income of $235,871 for the same period in 2023.
- The company's revenue for the nine months ended September 30, 2024, was $103,041, an increase from $88,758 in the same period of 2023, due to increased sponsorship and advertising revenue.
- The company's working capital deficiency increased to $5,673,702 as of September 30, 2024, from $4,199,107 at the end of 2023.
- The company has a significant amount of debt in default, including convertible notes and promissory notes totaling $1,045,974.
Sentiment
Score: 3
Explanation: The document indicates a negative outlook due to increased losses, decreased revenue, high operating expenses, and a significant amount of debt in default. The company's ability to continue as a going concern is also in doubt. While there are some positive developments in terms of digital reach and partnerships, the financial situation is concerning.
Positives
- Revenue for the nine months ended September 30, 2024, increased by 16% compared to the same period in 2023, reaching $103,041.
- The company's YouTube channel has seen a massive increase in popularity, with nearly 800,000 subscribers and over a quarter billion views.
- The company has partnered with Healthy Male to launch an online pharmacy called KnockoutRx.
- The company's new Facebook page has reached 320,000 followers since its launch in October 2024.
- LFC content is expected to air on Toro TV in 2025, and discussions are underway with a new streaming platform for an LFC channel.
Negatives
- The company experienced a significant increase in net loss for both the three and nine months ended September 30, 2024.
- The company's revenue decreased in Q3 2024 compared to Q3 2023.
- Operating expenses increased substantially in Q3 2024.
- The company incurred significant losses due to changes in the fair value of derivative liabilities.
- The company has a substantial working capital deficiency.
- The company has a significant amount of debt in default.
- The company's Facebook page was compromised in June 2024, forcing the launch of a new one.
Risks
- The company's ability to continue as a going concern is in doubt due to its history of losses and need for additional funding.
- The company is dependent on additional investment capital to fund operating expenses.
- The company's financial statements do not include any adjustments that might result from the outcome of the uncertainty about its ability to continue as a going concern.
- The company's disclosure controls and procedures were deemed not effective as of the end of the reporting period.
- The company is involved in various lawsuits and legal proceedings which arise in the ordinary course of business.
- The company has a significant amount of debt in default, which could lead to further financial difficulties.
Future Outlook
The company anticipates doing at least 6 events in 2025 and is in discussions with a new streaming platform interested in launching an LFC channel. The company also intends to fund future operations through equity financing arrangements.
Management Comments
- 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.
- Over the past couple years we have seen a massive increase in the popularity of our YouTube Channel, which now has nearly 800,000 subscribers and has surpassed a quarter billion views.
Industry Context
The company operates in the sports entertainment industry, specifically focusing on wrestling and mixed martial arts with a unique all-female league structure. The company is leveraging digital platforms like YouTube and social media to expand its reach and brand recognition. The company is also exploring partnerships with streaming platforms to further distribute its content.
Comparison to Industry Standards
- The company's financial performance is significantly below industry standards for established sports entertainment leagues, which typically generate substantial revenue from live events, broadcasting rights, and merchandise sales.
- The company's reliance on convertible debt and equity financing is not typical for mature companies in the sports entertainment industry, which often have access to more traditional forms of financing.
- The company's high operating expenses and losses are not sustainable in the long term and indicate a need for significant improvements in cost management and revenue generation.
- Compared to companies like World Wrestling Entertainment (WWE) or Ultimate Fighting Championship (UFC), LFC's revenue is very low, and its financial structure is much more precarious.
- The company's focus on digital content and social media is in line with industry trends, but its ability to monetize these platforms effectively remains a challenge.
Related Party Transactions
- During the nine months and three months ended September 30, 2024, the Company accrued $90,000 and $30,000 of salary payable to the Director of the Company, respectively.
- As of September 30, 2024, the total amount due to the related party was $721,128.
Stakeholder Impact
- Shareholders are negatively impacted by the increased net loss and the company's going concern issues.
- Employees may be concerned about the company's financial stability and future prospects.
- Customers may be affected by potential changes in the company's operations or service offerings.
- Creditors face increased risk due to the company's significant debt in default.
Next Steps
- The company anticipates doing at least 6 events in 2025.
- The company is in discussions with a new streaming platform interested in launching an LFC channel.
- The company intends to fund future operations through equity financing arrangements.
Key Dates
| Date | Description |
|---|---|
| November 29, 2006 | The company was incorporated as Sparking Events, Inc. |
| September 3, 2016 | The company issued 51 Series A preferred shares to the Chief Executive Officer. |
| 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. |
| January 13, 2017 | The company entered into an agreement with Power Up Lending Group to issue a convertible promissory note of $45,000. |
| June 14, 2017 | The company entered into an agreement with Power Up Lending Group to issue a convertible promissory note of $7,500. |
| November 27, 2017 | Auctus Fund, LLC bought out the outstanding principal and interest of two convertible promissory notes from Power Up Lending Group for $50,774. |
| 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. |
| 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, later amended to $48,500 on July 25, 2018. |
| 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. |
| October 23, 2019 | The company entered into an agreement to issue a convertible promissory note of $100,000 to an unrelated party. |
| August 4, 2020 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $31,000. |
| November 2, 2020 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $225,000. |
| March 4, 2021 | The company entered into an agreement with Auctus Fund, LLC to issue a senior secured promissory note of $300,000. |
| December 6, 2021 | The company entered into an agreement with Auctus Fund, LLC to issue a senior secured promissory note of $40,000. |
| May 12, 2022 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $52,000. |
| October 31, 2022 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $18,520. |
| July 18, 2023 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $86,444. |
| October 10, 2023 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $62,000. |
| May 22, 2024 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $101,000, later amended to $117,500 on August 8, 2024. |
| September 3, 2024 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $33,500. |
| September 30, 2024 | End of the reporting period for the financial statements. |
| December 9, 2024 | The company entered into an agreement with Auctus Fund, LLC to issue a convertible promissory note of $20,000. |
| January 7, 2025 | The company had 4,504,844,036 shares of common stock issued and outstanding. |
| January 8, 2025 | Date of the report. |
Keywords
Lingerie Fighting Championships, LFC, financial results, net loss, revenue, operating expenses, derivative liabilities, convertible notes, promissory notes, going concern, warrants, stock-based compensation, working capital, debt default
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