Overview

Lingerie Fighting Championships, Inc. (LFC) is a media company focused on the development, production, promotion, and distribution of original entertainment through live entertainment events, digital home videos, broadcast television networks, video-on-demand, and digital media channels. The company changed its name from Sparking Events, Inc. in 2015 to reflect its new business focus on wrestling and mixed martial arts fights featuring women under the LFC brand name.

Results of Operations

Year ended December 31, 2024 compared to Year ended December 31, 2023

LFC’s revenue increased by 13% to $132,978 in 2024 from $117,722 in 2023, driven by higher sponsorship and advertising revenue. However, the company’s cost of services also increased by 23% to $84,995 in 2024 from $68,917 in 2023, mainly due to higher subcontractor and material costs. As a result, gross profit decreased by 2% to $47,983 in 2024 from $48,805 in 2023.

Operating expenses increased by 44% to $392,454 in 2024 from $272,377 in 2023, primarily due to higher stock-based compensation, auditing fees, advertising, and listing fees. The company also incurred a significant increase in other expenses, including a $1,132,816 loss on changes in fair value of derivatives and higher interest expense from increased amortization of debt discount.

Overall, LFC reported a net loss of $1,868,186 in 2024 compared to net income of $308,452 in 2023, a decrease of 706%. The decline was mainly attributed to the increase in operating expenses and the loss on changes in fair value of derivatives.

Liquidity and Capital Resources

As of December 31, 2024, LFC had a working capital deficiency of $5,933,668 and an accumulated deficit of $11,170,795. The company intends to fund future operations through equity financing, which may be insufficient to cover its capital expenditures, working capital, and other cash requirements for 2024.

The increase in working capital deficiency was due to a decrease in cash, as well as increases in derivative liabilities, accrued interest, convertible notes, and accounts payable to related parties. LFC’s ability to realize its business plan is dependent on obtaining additional financing and developing its business. These factors raise substantial doubt about the company’s ability to continue as a going concern.

LFC used $161,529 in cash from operating activities in 2024, compared to $150,158 in 2023. The company also used $2,573 in cash for investing activities in 2024 for the purchase of equipment. Financing activities provided $161,000 in 2024 and $145,444 in 2023 from the issuance of convertible notes.

Critical Accounting Policies

LFC’s critical accounting policies include revenue recognition, intangible assets, and derivatives. The company analyzes the conversion options in its convertible notes and accounts for warrants as derivative liabilities due to the lack of an explicit limit on the number of shares to be delivered upon settlement. LFC also measures the cost of stock-based compensation based on the fair value of the awards on the grant date.

Overall, LFC’s financial performance in 2024 was significantly weaker than the prior year, with a substantial net loss driven by increased operating expenses and losses on derivative liabilities. The company’s liquidity position remains a concern, and its ability to continue as a going concern is dependent on securing additional financing.