UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMForm 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 333-205944
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2022 | |
or | |
☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________ to ____________ | |
Commission File Number 000-55498 |
LINGERIE FIGHTING CHAMPIONSHIPS, INC. |
(Exact name of |
Nevada |
| 20-8009362 |
(State or other jurisdiction of incorporation |
| ( Identification No.) |
6955 North Durango Drive, Suite 1115-129, Las Vegas, NV | 89149 | |
(Address of principal executive offices) | (Zip Code) |
6955 North Durango Drive
Suite 1115-129
Las Vegas, NV 89149
(Address of principal executive offices)
(702) 527-2942
(702) 5277-2942 |
(Registrant’s telephone number, including area code) |
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 | 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 ¨ ☒ Nox
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ☐ Yes ¨ ☒ Nox
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”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| Accelerated filer |
|
Non-accelerated |
| 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 x☐ 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. As of March 5, 2018, there was 576,193,639
3,535,302,536 shares of common stock issued and outstanding.outstanding as of October 11, 2022.
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
FORM 10-Q
September 30, 2017
2 |
Table of Contents |
PART I - FINANCIAL INFORMATION
PART I. - FINANCIAL INFORMATION
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
(Unaudited)(UNAUDITED)
|
| September 30, |
| December 31, |
|
| June 30, |
| December 31, |
| ||||||
|
| 2017 |
|
| 2016 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
| ||||||
Current Assets |
|
|
|
|
|
|
|
|
|
| ||||||
Cash and cash equivalents |
| $ | - |
|
| $ | 57,630 |
|
| $ | 25,670 |
| $ | 34,481 |
| |
Prepaid expenses |
|
| 7,500 |
|
|
| 7,500 |
| ||||||||
Total Current Assets |
| - |
|
| 57,630 |
|
|
| 33,170 |
|
|
| 41,981 |
| ||
|
|
|
|
|
|
|
|
|
|
| ||||||
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
| ||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
| ||||||
Bank indebtedness |
| $ | 235 |
| $ | - |
| |||||||||
Accounts payable and accrued liabilities |
| 90,531 |
| 35,214 |
|
| $ | 24,069 |
| $ | 20,849 |
| ||||
Accounts payable - related party |
| 94,680 |
| 23,500 |
|
| 500,168 |
| 465,168 |
| ||||||
Stock payable |
| 30,000 |
| - |
| |||||||||||
Convertible notes, net of $25,048 and $215,721 debt discount as of September 30, 2017 and December 31, 2016, respectively |
| 369,726 |
| 225,595 |
| |||||||||||
Derivative liability |
|
| 1,005,161 |
|
|
| 1,005,378 |
| ||||||||
Accrued interest payable |
| 334,777 |
| 231,839 |
| |||||||||||
Promissory notes, net of $17,424 and $89,183 debt discount, respectively |
| 322,576 |
| 250,817 |
| |||||||||||
Convertible notes, net of $45,589 debt discount |
| 555,421 |
| 549,010 |
| |||||||||||
Derivative liabilities |
|
| 3,350,662 |
|
|
| 5,323,107 |
| ||||||||
Total Current Liabilities |
| 1,590,333 |
| 1,289,687 |
|
| 5,087,672 |
| 6,840,790 |
| ||||||
|
|
|
|
|
|
|
|
|
|
| ||||||
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
| ||||||
Preferred stock, par value $0.001 per share, 10,000,000 shares authorized, 51 and 51 shares issued and outstanding, respectively |
| - |
| - |
| |||||||||||
Common stock, par value $0.001 per share, 5,000,000,000 shares authorized, 576,193,639 and 87,676,435 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively |
| 576,194 |
| 87,677 |
| |||||||||||
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 |
| 525,366 |
| 681,867 |
|
| 1,387,030 |
| 1,387,030 |
| ||||||
Accumulated deficit |
|
| (2,691,893 | ) |
|
| (2,001,601 | ) |
|
| (9,976,835 | ) |
|
| (11,721,142 | ) |
Total stockholders' deficit |
|
| (1,590,333 | ) |
|
| (1,232,057 | ) |
|
| (5,054,502 | ) |
|
| (6,798,809 | ) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ | - |
|
| $ | 57,630 |
|
| $ | 33,170 |
|
| $ | 41,981 |
|
SeeThe accompanying notes toare an integral part of these unaudited financial statementsstatements.
3 |
Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF OPERATIONS
(Unaudited)(UNAUDITED)
|
| Three Months Ended |
|
| Nine months ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 5,900 |
|
| $ | 14,963 |
|
| $ | 15,450 |
|
| $ | 19,137 |
|
Cost of Services |
|
| 18,843 |
|
|
| 11,395 |
|
|
| 45,673 |
|
|
| 52,469 |
|
GROSS PROFIT (LOSS) |
|
| (12,943 | ) |
|
| 3,568 |
|
|
| (30,223 | ) |
|
| (33,332 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 57,208 |
|
|
| 85,088 |
|
|
| 212,758 |
|
|
| 169,265 |
|
Total Operating Expenses |
|
| 57,208 |
|
|
| 85,088 |
|
|
| 212,758 |
|
|
| 169,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense |
|
| (76,936 | ) |
|
| (47,557 | ) |
|
| (279,904 | ) |
|
| (81,620 | ) |
Loss on derivative liabilities |
|
| (431,621 | ) |
|
| (127,032 | ) |
|
| (167,407 | ) |
|
| (180,000 | ) |
Total other expenses |
| $ | (508,557 | ) |
| $ | (174,589 | ) |
| $ | (447,311 | ) |
| $ | (261,620 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS |
|
| (578,708 | ) |
|
| (256,109 | ) |
|
| (690,292 | ) |
|
| (464,217 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
| $ | (578,708 | ) |
| $ | (256,109 | ) |
| $ | (690,292 | ) |
| $ | (464,217 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.00 | ) |
| $ | (0.02 | ) |
Basic and Diluted Weighted Average Common Shares Outstanding |
|
| 504,088,281 |
|
|
| 19,124,325 |
|
|
| 329,366,752 |
|
|
| 19,768,335 |
|
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2022 |
|
| 2021 |
|
| 2022 |
|
| 2021 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 32,273 |
|
| $ | 27,426 |
|
| $ | 53,438 |
|
| $ | 34,502 |
|
Cost of services |
|
| 14,957 |
|
|
| 5,027 |
|
|
| 14,957 |
|
|
| 26,032 |
|
GROSS PROFIT |
|
| 17,316 |
|
|
| 22,399 |
|
|
| 38,481 |
|
|
| 8,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
| 23,600 |
|
|
| 31,097 |
|
|
| 38,512 |
|
|
| 55,654 |
|
Professional fees |
|
| (3,900 | ) |
|
| 11,800 |
|
|
| 32,000 |
|
|
| 17,050 |
|
Management salaries |
|
| 30,000 |
|
|
| 30,000 |
|
|
| 60,000 |
|
|
| 60,000 |
|
Total Operating Expenses |
|
| 49,700 |
|
|
| 72,897 |
|
|
| 130,512 |
|
|
| 132,704 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING LOSS |
|
| (32,383 | ) |
|
| (50,498 | ) |
|
| (92,030 | ) |
|
| (124,234 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (68,617 | ) |
|
| (177,847 | ) |
|
| (181,108 | ) |
|
| (295,657 | ) |
Gain (Loss) on change in fair value of derivative liabilities |
|
| 1,041,322 |
|
|
| 882,899 |
|
|
| 2,017,446 |
|
|
| (6,472,595 | ) |
Total Other Income (Expense) |
| $ | 972,705 |
|
| $ | 705,052 |
|
| $ | 1,836,338 |
|
| $ | (6,768,252 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
| $ | 940,322 |
|
| $ | 654,554 |
|
| $ | 1,744,308 |
|
| $ | (6,892,486 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Income (Loss) per Common Share |
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | (0.00 | ) |
Diluted Earnings (Loss) per Common Share |
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | 0.00 |
|
| $ | (0.00 | ) |
Basic and Diluted Weighted Average Shares of Common Stock Outstanding |
|
| 3,535,302,536 |
|
|
| 2,829,327,630 |
|
|
| 3,535,302,536 |
|
|
| 2,693,377,804 |
|
Diluted Weighted Average Shares of Common Stock Outstanding |
|
| 10,102,741,582 |
|
|
| 8,565,256,473 |
|
|
| 10,102,741,582 |
|
|
| 8,429,306,647 |
|
SeeThe accompanying notes toare an integral part of these unaudited financial statementsstatements.
4 |
Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF CASH FLOWSSTOCKHOLDERS’ DEFICIT
(Unaudited)FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(UNAUDITED)
Nine months ended September 30, 2017 2016 CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash used in operating activities: Stock - based compensation Loss on derivative liability Amortization of debt discount Changes in operating assets and liabilities: Accounts payable - related party Accounts payable and accrued liabilities Net cash used in operating activities CASH FLOWS FROM FINANCING ACTIVITIES Advancement from related party Proceeds from convertible debt Proceeds from promissory notes Payment for cancellation of common shares Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning of period Cash and cash equivalents - end of period Supplemental Cash Flow Disclosures Cash paid for interest Cash paid for income taxes NON CASH INVESTING AND FINANCING ACTIVITIES Issuance of promissory note for equity purchase agreement Debt discount from derivative liability Derivative reclass to APIC due to conversion Common shares issued for conversion of debt and accrued interest Six Months Ended June 30, 2022$ (690,292 ) $ (464,217 ) 30,000 30,000 167,407 180,000 235,673 64,674 70,400 - 63,402 (5,679 ) (123,410 ) (195,222 ) 780 - 65,000 173,750 - 50,000 - (75 ) 65,780 223,675 (57,630 ) 28,453 57,630 21,683 $ - $ 50,136 $ - $ - $ - $ - $ - $ 100,000 $ 45,000 $ 173,750 $ 212,624 $ - $ 119,392 $ -
|
| 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 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 803,986 |
|
|
| 803,986 |
|
Balance - March 31, 2022 |
|
| 3,535,302,536 |
|
| $ | 3,535,303 |
|
|
| 51 |
|
| $ | - |
|
| $ | 1,387,030 |
|
| $ | (10,917,156 | ) |
| $ | (5,994,823 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 940,322 |
|
|
| 940,322 |
|
Balance - June 30, 2022 |
|
| 3,535,302,536 |
|
| $ | 3,535,303 |
|
|
| 51 |
|
| $ | - |
|
| $ | 1,387,030 |
|
| $ | (9,976,834 | ) |
| $ | (5,054,502 | ) |
See
Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
|
| |||||||
|
| Common Stock |
|
| Preferred Shares |
|
| Paid-in |
|
|
|
| Total |
| ||||||||||||||
|
| Number of Shares |
|
| Amount |
|
| Number of Shares |
|
| Amount |
|
| Capital (Deficiency) |
|
| 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 | ) |
|
| - |
|
|
| - |
|
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 | ) |
Shares of common stock issued for conversion of debts and accrued interest |
|
| 142,025,700 |
|
|
| 142,026 |
|
|
| - |
|
|
| - |
|
|
| (39,781 | ) |
|
| - |
|
|
| 102,245 |
|
Shares of common stock issued for exercise of warrants |
|
| 201,955,050 |
|
|
| 201,955 |
|
|
| - |
|
|
| - |
|
|
| (201,955 | ) |
|
| - |
|
|
| - |
|
Derivative liabilities reclass to additional paid-in capital due to note conversion, warrant exercise and note written off |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 474,581 |
|
|
| - |
|
|
| 474,581 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 654,554 |
|
|
| 654,554 |
|
Balance - June 30, 2021 |
|
| 2,987,812,795 |
|
| $ | 2,987,813 |
|
|
| 51 |
|
| $ | - |
|
| $ | 374,020 |
|
| $ | (15,090,074 | ) |
| $ | (11,728,241 | ) |
The accompanying notes toare an integral part of these unaudited financial statements
5 |
Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net income (loss) |
| $ | 1,744,308 |
|
| $ | (6,892,486 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Loss (Gain) on change in fair value of derivative liabilities |
|
| (2,017,446 | ) |
|
| 6,472,595 |
|
Amortization of debt discount |
|
| 78,170 |
|
|
| 224,201 |
|
Note conversion fee |
|
| - |
|
|
| 500 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts payable - related party |
|
| 35,000 |
|
|
| 37,500 |
|
Accounts payable and accrued liabilities |
|
| 3,219 |
|
|
| (53,359 | ) |
Accrued interest payable |
|
| 102,938 |
|
|
| 71,456 |
|
Net cash used in operating activities |
|
| (53,811 | ) |
|
| (139,593 | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from convertible debts |
|
| 45,000 |
|
|
| - |
|
Proceeds from promissory notes |
|
| - |
|
|
| 265,000 |
|
Net cash provided by financing activities |
|
| 45,000 |
|
|
| 265,000 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
| (8,811 | ) |
|
| 125,407 |
|
Cash and cash equivalents - beginning of period |
|
| 34,481 |
|
|
| 4,142 |
|
Cash and cash equivalents - end of period |
| $ | 25,670 |
|
| $ | 129,549 |
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Disclosures |
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | - |
|
| $ | - |
|
Cash paid for income taxes |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Debt discount from derivative liabilities |
| $ | 52,000 |
|
| $ | 265,000 |
|
Derivative liabilities reclass to additional paid-in capital due to note conversion, warrant exercise and note written off |
| $ | - |
|
| $ | 821,221 |
|
Shares of common stock issued for conversion of debt and accrued interest |
| $ | - |
|
| $ | 111,815 |
|
Shares of common stock issued for exercise of warrants |
| $ | - |
|
| $ | 267,439 |
|
Write off of convertible notes and accrued interest |
| $ | - |
|
| $ | 110,076 |
|
The accompanying notes are an integral part of these unaudited financial statements.
6 |
Table of Contents |
LINGERIE FIGHTING CHAMPIONSHIPS, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBERJUNE 30, 20172022
NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS
(a) Organization
Lingerie Fighting Championships, Inc. (the "Company"“Company”) is a Nevada corporation incorporated on November 29, 2006 under the name Sparking Events, Inc. The Company'sCompany’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 of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)GAAP for interim financial information and are presented in accordance with the requirements ofinstructions to Form 10-Q and Rule 10-01Article 8 of Regulation S-X. Accordingly, these interim financial statements do not include all of the information and notes required by GAAP for complete financial statements. These interim financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, all adjustments (consisting of normal recurring accruals)adjustments) considered necessary for a fair presentation have been included. Operating results for the ninesix months ended SeptemberJune 30, 20172022 are not necessarily indicative of the results that may be expected any other interim period or for the year ending December 31, 2017. At September2022. 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 $25,670 and $34,481 in cash and cash equivalents as at June 30, 20172022 and December 31, 2016,2021, respectively.
7 |
Table of Contents |
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 six months ended June 30, 2022 and 2021, the Company had no subsidiaries.recognized revenue of $53,438 and $34,502 and incurred cost of sales of $14,957 and $26,032, resulting in gross loss and of $38,481 and gross loss of $8,470, 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 sharesstock 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 ninesix months and three months ended SeptemberJune 30, 20172022 and 2016,2021, convertible notes and warrants were dilutive instruments and were not included in the calculation of diluted lossearnings per share as their effect would be antidilutive.share.
|
| June 30, |
|
| June 30, |
| ||
|
| 2022 |
|
| 2021 |
| ||
|
| (Shares) |
|
| (Shares) |
| ||
Convertible notes payable |
|
| 2,653,272,380 |
|
|
| 614,690,748 |
|
Warrants |
|
| 3,914,166,667 |
|
|
| 5,121,238,095 |
|
|
|
| 6,567,439,046 |
|
|
| 5,735,928,843 |
|
Related Party Balances and Transactions
The following is a reconciliationCompany 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 numerator and denominatoraward. 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 forto estimate the computationfair value of basic and diluted loss per common shares:options or warrants granted.
|
| Three Months Ended |
|
| Nine months ended |
| ||||||||||
|
| September 30, |
|
| September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
NET LOSS |
| $ | (578,709 | ) |
| $ | (256,109 | ) |
| $ | (690,293 | ) |
| $ | (464,217 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Loss per Common Share |
| $ | (0.00 | ) |
| $ | (0.01 | ) |
| $ | (0.00 | ) |
| $ | (0.02 | ) |
Basic and Diluted Weighted Average Common Shares Outstanding |
|
| 504,088,281 |
|
|
| 19,124,325 |
|
|
| 329,366,752 |
|
|
| 19,768,335 |
|
For the three months and nine months ended September 30, 2017, 2,303,136,941 common shares from convertible notes were excluded from the computation of diluted net loss per shares as the result of the computation was anti-dilutive.
Table of Contents |
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 change in the level 3 financial instrument is as follows:
Balance - December 31, 2016 |
| $ | 1,005,378 |
|
Derivative reclassed to APIC due to debt conversion |
|
| (212,624 | ) |
Addition of new derivative liabilities upon issuance of convertible notes as debt discount |
|
| 45,000 |
|
Addition of new derivatives liabilities recognized as day one loss |
|
| 78,616 |
|
Loss on change in fair value of the derivative |
|
| 88,791 |
|
Balance - September 30, 2017 |
| $ | 1,005,161 |
|
The following table summarizes fair value measurement by level at SeptemberJune 30, 20172022 and December 31, 2016,2021, measured at fair value on a recurring basis:
September 30, 2017 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||||||||||||||
June 30, 2022 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
None |
| - |
| - |
| - |
| - |
|
| - |
| - |
| - |
| - |
| ||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
Derivative liabilities |
| - |
| - |
| 1,005,161 |
| 1,005,161 |
|
| - |
| - |
| 3,350,662 |
| 3,350,662 |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
December 31, 2016 |
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
None |
| - |
| - |
| - |
| - |
| |||||||||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
Derivative liabilities |
| - |
| - |
| 1,005,378 |
| 1,005,378 |
|
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.
Table of Contents |
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 SeptemberJune 30, 20172022 and December 31, 2016.2021, respectively.
Common Stock
The Company has authorized 5,000,000,000 shares with a par value $0.001 per share.
During the ninesix months ended SeptemberJune 30, 2017,2021, the Company issued 488,517,204381,272,212 shares of common sharesstock for the conversion of debtconvertible note of $23,925 and accrued interest inof $87,390.
During the amountsix months ended June 30, 2021, the Company issued 267,438,920 shares of $119,392.common stock for the exercise of 281,500,000 units of share purchase warrants.
As of SeptemberJune 30, 20172022 and December 31, 2016,2021, the shares of common sharesstock issued and outstanding was 576,193,6393,535,302,536.
10 |
Table of Contents |
NOTE 5 – WARRANTS
The below table summarizes the activity of warrants exercisable for shares of common stock during the six months ended June 30, 2022 and 87,676,435,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 |
|
| 208,000,000 |
|
|
| 0.0005 |
|
Redeemed |
|
| - |
|
|
| - |
|
Exercised |
|
| - |
|
|
| - |
|
Forfeited |
|
| - |
|
|
| - |
|
Balances as of June 30, 2022 |
|
| 5,764,666,666 |
|
| $ | 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 six months ended June 30, 2022 and 2021:
Six Months Ended | ||||||||
June 30, | ||||||||
2022 | 2021 | |||||||
Exercise price | $0.0001 - $0.0008 | $0.0001 | ||||||
Expected term | 3.18 years | 4.28 years | ||||||
Expected average volatility | 180% - 365% | 359% - 417% | ||||||
Expected dividend yield | - | - | ||||||
Risk-free interest rate | 2.28% - 3.00% | 0.18% - 0.92% |
The following table summarizes information relating to outstanding and exercisable warrants as of June 30, 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 | 3.18 |
| $ | 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 June 30, 2022 for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of June 30, 2022, the aggregate intrinsic value of warrants outstanding was approximately $1,565,667 based on the closing market price of $0.0004 on June 30, 2022.
The Company determined that the warrants qualify for derivative accounting as a result of the related issuance of the convertible notes. As of June 30, 2022 and December 31, 2021, the Company valued the fair value on the 5,764,666,666 units and 5,556,666,666 units of common stock purchase warrants granted at $2,294,065 and $4,444,017 based on Black-Scholes option valuation model, respectively.
11 |
|
Table of Contents |
As of September 30, 2017, the Company recorded stock payable for 300,000 outstanding common shares of $30,000 not yet issued to the consultant for service performed.
NOTE 56 – PROMISSORY NOTES PAYABLE
The Company had the following unsecuredpromissory notes payable as at SeptemberJune 30, 20172022 and December 31, 2016:2021:
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
|
|
|
|
|
|
| ||
Convertible Promissory Note to Crown Bridge |
| $ | 2,404 |
|
| $ | 13,289 |
|
Convertible Promissory Notes to Auctus Fund |
|
| 122,002 |
|
|
| 68,226 |
|
Convertible Promissory Notes to EMA Financial |
|
| 27,463 |
|
|
| 11,667 |
|
Convertible Promissory Notes to Black Bridge Capital |
|
| 135,391 |
|
|
| 26,667 |
|
Convertible Promissory Notes to Tangiers |
|
| 23,801 |
|
|
| 100,000 |
|
Convertible Promissory Notes to Denali |
|
| 31,615 |
|
|
| 4,791 |
|
Convertible Promissory Notes to Tangiers |
|
| - |
|
|
| 955 |
|
Convertible Promissory Notes to Powerup |
|
| 27,050 |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
Total Convertible Debt |
| $ | 369,726 |
|
| $ | 225,595 |
|
Promissory Note Payable to Crown Bridge Partners
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
|
|
|
|
|
|
| ||
Promissory Notes to Auctus Fund |
| $ | 340,000 |
|
| $ | 340,000 |
|
Less Debt Discount |
|
| (17,424 | ) |
|
| (89,183 | ) |
Total Promissory Notes |
| $ | 322,576 |
|
| $ | 250,817 |
|
On April 1, 2016,March 4, 2021, the Company entered into an agreement with Auctus Fund, LLC to issue a convertiblesenior secured promissory note of $300,000 to anthe unrelated party, for an amount of $40,000 with a $6,000 original issue discount. The convertible promissory notewhich bears interest at 10% per annum and matures twelve months from issue date. The conversion price is 55%12% of the lowest trading price 25 daysprincipal 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 conversion.its maturity date. (See Note 5) The note was discounted for original issued discount of $35,000 and a derivative and theon warrants of $265,000 for an aggregate discount of $34,000$300,000, which is being amortized over the life of the note using the effective interest method resulting in $10,000$248,077 of interest expensedebt discount amortization for the nine monthsyear ended SeptemberDecember 31, 2021. As of June 30, 2017.
During the nine months ended September 30, 2017, principal of $20,885 was converted for 92,296,000 common shares.
As at September 30, 2017,2022, the note is presented at $300,000, net of a 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 currentlybeing amortized over the life of the note using the effective interest method resulting in default.$2,740 of debt discount amortization for the year ended December 31, 2021. As of June 30, 2022, the note is presented at $22,575, net of debt discount of $17,425.
During the six months ended June 30, 2022 and 2021, interest expense of $26,183 and $28,603 was incurred on the promissory notes. As of June 30, 2022 and December 31, 2021, accrued interest payable on the promissory note was $59,191 and $33,008, respectively.
NOTE 7 - CONVERTIBLE NOTES
The Company had the following unsecured convertible notes payable as at June 30, 2022 and December 31, 2021:
|
| June 30, 2022 |
|
| December 31, 2021 |
| ||
|
|
|
|
|
|
| ||
Convertible Promissory Notes to Auctus Fund |
| $ | 555,421 |
|
| $ | 549,010 |
|
Total Convertible Notes |
| $ | 555,421 |
|
| $ | 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 nine monthsyear ended September 30, 2017.December 31, 2018 and December 31, 2017, respectively.
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During the nine monthsyear ended September 30,December 31, 2017, principal of $15,278 and accrued interest of $5,975 were converted for 111,460,000into111,460,000 shares of common shares.stock.
TheDuring 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 June 30, 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 nine monthsyear ended September 30, 2017.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 principleprincipal increased to $76,750. The Company received $20,000 cash proceeds from the note amendment on the same date.
As of September 30, 2017, the notes are presented net of a debt discount of $0.
The note is currently in default.
Promissory Note Payable to EMA Financial
On September 7, 2016, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $35,000 with a $5,250 original issue discount. The convertible promissory note bears interest at 10% per annum and matures twelve 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 $29,750 is being amortized over the life of the note using the effective interest method resulting in $21,774 of interest expense for the nine months ended September 30, 2017.
During the nine months ended September 30, 2017, principal of $7,538 were converted for 123,242,000 common shares.
The note is currently in default.
Promissory Note Payable to EMA Financial, LLC
On November 3, 2016, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $60,000. The convertible promissory note bears interest at 8% per annum and matures on November 3, 2017. The conversion price is 50% of the lowest trading price 20 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 $45,000 of interest expense for the nine months ended September 30, 2017.
During the nine months ended September 30, 2017, principal of $10,810 were converted for 65,000,000 common shares.
As of September 30, 2017, the note is presented net of a debt discount of $5,465.
On September 27 2017, EMA Financial, LLC entered into an agreement with Blackbridge Capital Growth Funds, LLC to buy out the outstanding principal amount and accrued interest of the convertible promissory note at $53,367.22.
Promissory Note Payable to Blackbridge Capital Growth Fund, LLC
Commitment Note
On November 3, 2016, the Company entered into an investment agreement with Blackridge Capital Growth Fund, LLC. Per the investment agreement, the investor will invest up to $2,000,000 to purchase the Company’s common stock, par value of $.001 per share.
The Company issued a convertible promissory note for $100,000, as a commitment fee, which bears interest at 8% of the principle amount and matures on November 3, 2017. The commitment fee expense of $100,000 was recognized on November 3, 2016. The conversion price is equal to 57.5% of the lowest trading price during the 20 days prior to the conversion.
On November 3, 2016, a derivative debt discount of $100,000 was recorded. For the nine months ended September 30, 2017, an amount of $75,000 was amortized into interest expense in relation to the debt discount.
As of September 30, 2017, the note is presented net of a debt discount of $8,333.
Commitment Note Payable to Tangiers
On April 4, 2016, the Company entered into an investment agreement with an unrelated party. Per the investment agreement, the investor will invest up to $5,000,000 to purchase the Company’s common stock, par value of $.001 per share. In connection with the investment agreement, the Company entered into a registration rights agreement with the unrelated party which has been filed with the SEC. The maximum investment amount is equal to one hundred percent of the average of the daily trading volume of the common stock for the ten days prior to the put notice entered into by the unrelated party. The total purchase price to be paid in connection with the put notice, is calculated at eighteen percent discount of the lowest trading price of the common stock during the five consecutive trading days immediately succeeding the put notice date.
The Company issued a promissory note to the unrelated party for $100,000, as a commitment fee, which bears interest at 10% of the principle amount and matures seven months from April 4, 2016 with a possible extension to ten months based on whether the Company executes the related investment agreement within 180 days from April 4, 2016. If the registration statement is declared effective within 90 days of the execution of the investment agreement, the Company and the unrelated party agree the principal balance of the note will be immediately reduced by $40,000. The note payable will be available to be converted upon default. Per the agreement, default could occur based on: failure of payment on any outstanding amounts longer than five days after the due date, failure to issue shares after request, or failure to comply with all of the other material provisions included in the agreement. The conversion price is equal to the lower of: (a) 90% 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, or (b) 90% of the lowest trading price of the Company’s common stock during the 25 consecutive trading days prior to the effective date of April 4, 2016. At the election of the unrelated party, at each closing date (as defined in the investment agreement) after the date which is six months after April 4, 2016, the unrelated party shall retain (or the Company shall pay to the unrelated party) an amount equal to ten percent of each Put Amount (as defined in the agreement), and the amounts shall be applied by the unrelated party as follows: first against the amount of any unpaid interest or other fees, and second against any unpaid principal amounts, until all interest, fees, and principal have been paid.
On April 28, 2016, the Company filed a registration statement with the Securities and Exchange Commission to register 3,500,000 shares of common stock pursuant to the Investment Agreement and the Registration Rights Agreement. On May 24, 2016, the Company received a comment letter from the Securities and Exchange Commission regarding the registration statement. On March 3, 2017, the Company voluntarily withdrew the registration statement.
The Company expensed the $100,000 as commitment fee during the year ended December 31, 2016.
The note was discounted for a derivative and the discount of $65,238 is fully amortized into interest expense for the year ended December 31, 2016. As of September 30, 2017, the note is presented net of a debt discount of $0.
On January 10, 2017, the Company entered into an Assignment Agreement that Denali acquired $50,000 of the $100,000 note held by Tangiers. As at January 10, 2017, $50,000 of principal remained with Tangiers.
During the nine months ended September 30, 2017,2021, principal of $26,199 was converted for 49,905,893 common shares.
The note is currently in default.
Notes Payable to Denali
Denali #1
On December 5, 2016, the Company entered into an Assignment Agreement that Denali acquired $16,000 of the $57,500 note held by Tangiers.
During the nine months ended September 30, 2017, principal of $4,791$76,750 and accrued interest of $38 was$83,128 were converted for 3,974,519into 288,590,075 shares of common shares.stock.
The note has beenAs of June 30, 2022, the notes were fully converted and has no remaining balance aspaid off through the issuance of September 30, 2017.common stock.
Denali #2
On January 10, 2017, the Company entered into an Assignment Agreement that Denali acquired $50,000 of the $100,000 note held by Tangiers.
During the nine months ended September 30, 2017, principal of $18,385 was converted for 9,884,409 common shares.
The note is currently in default.
Note Payable to Tangiers
On April 4, 2016, the Company entered into a separate promissory note of $57,500 with a $7,500 original issue discount to the unrelated party, which bears interest at 10% of the principal amount. The $57,500 promissory note matures six months from the issue date. The note may be prepaid by the company, in whole, or part, as follows: (a) under thirty days, 105% of principal amount, (b) thirty one to sixty days, 110% of principal amount, (c) sixty one to ninety days, 115% of principal amount, (d) ninety one to one hundred and twenty days, 120% of principal amount, (e) one hundred twenty one to one hundred fifty one days, 125% of principal amount, and (f) one hundred and fifty one to one hundred and eighty days, 135% of principal amount. The note payable will be available to be converted upon default. Per the agreement, default could occur based on: failure of payment on any outstanding amounts longer than five days after the due date, failure to issue shares after request, or failure to comply with all of the other material provisions included in the agreement. The conversion price shall be equal to the lower of 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 $50,000 is being amortized over the life of the note using the effective interest method. Total of $57,500 of the discount was recorded as interest expense for the year ended December 31, 2016.
On December 5, 2016, Tangiers assigned $16,000 of the note payable to Denali.
During the nine months ended September 30, 2017, principal of $955 and interest of $1,838 was converted for 2,298,897 common shares.
The note has been fully converted and has no remaining balance as of September 30, 2017.
Note Payable to Power Up Lending GroupAuctus #3
On January 13, 2017, the Company entered into an agreement with Power Up Lending Group to issue a convertible promissory note of $45,00045,000 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 the lower of 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 $33,750$0 and $40,843 of the discount was recorded as interest expense for the nine monthsyear ended September 30,December 31, 2018 and the year ended December 31, 2017.
During the nine monthsyear ended September 30,December 31, 2017, principal of $6,700 was converted into 30,455,486 shares of common stock.
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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 30,455,486 common shares.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 June 30, 2022, the note is presented net of a debt discount of $11,250.$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 June 30, 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 June 30, 2022, the note is presented net of a debt discount of $30,000.
This note is currently in default.
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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 June 30 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 June 30, 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 June 30, 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.
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As of June 30, 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 June 30, 2022, the note is presented net of a debt discount of $225,000.
This note is currently in default.
Auctus#13
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 $52,000 is being amortized over the life of the note using the effective interest method. During the six months ended June 30, 2022, the amortization of note discount was $6,411. As of June 30, 2022, the unamortized note discount was $45,589. 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.
As of June 30, 2022, the note is presented net of a debt discount of $6,411.
Accrued interest on convertible notes
During the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, interest expense of $44,231$76,755 and $7,731$59,819 was incurred on convertible notes, respectively. As of SeptemberJune 30, 20172022 and December 31, 2016,2021, accrued interest payable on convertible notes was $54,094$275,586 and $20,214,$198,831, respectively.
Summary of Conversions
During the ninesix months ended SeptemberJune 30, 2017, $111,542 principal amount2021, the Company issued 381,272,212 shares of common stock for the conversion of convertible note of $23,925 and $7,850 accrued interest was converted for 488,517,204 common shares.of $87,390.
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NOTE 6 –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 effectiveeffective.
The following table summarizes the derivative liabilities included in the balance sheet at SeptemberJune 30, 2017:2022:
Balance - December 31, 2016 |
| $ | 1,005,378 |
|
Derivative reclassed to APIC due to debt conversion |
|
| (212,624 | ) |
Addition of new derivative liabilities upon issuance of convertible notes as debt discount |
|
| 45,000 |
|
Addition of new derivatives liabilities recognized as day one loss |
|
| 78,616 |
|
Loss on change in fair value of the derivative |
|
| 88,791 |
|
Balance - September 30, 2017 |
| $ | 1,005,161 |
|
Balance - December 31, 2021 |
| $ | 5,323,107 |
|
Addition of new derivative liabilities upon issuance of convertible notes as debt discount |
|
| (34,340 | ) |
Addition of new derivative liabilities upon issuance of warrants as debt discount |
|
| 79,340 |
|
Addition of new derivatives liabilities recognized as day one loss on warrants |
|
| 72,101 |
|
Loss (Gain) on change in fair value of the derivative |
|
| (2,089,547 | ) |
Balance - June 30, 2022 |
| $ | 3,350,661 |
|
|
|
| Six Months Ended |
| |||||
|
| June 30, |
|
| June 30, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Day one loss due to derivative liabilities on convertible notes and warrants |
| $ | 72,101 |
|
| $ | 346,970 |
|
Loss (Gain) on change in fair value of derivative liabilities on convertible notes and warrants |
|
| (2,089,547 | ) |
|
| 6,125,325 |
|
Loss (Gain) on change in fair value of derivative liabilities |
| $ | (2,017,446 | ) |
| $ | 6,472,295 |
|
The table below shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at each measurement date:
|
| Nine months ended |
| |||||
|
| September 30, |
|
| September 30, |
| ||
|
| 2017 |
|
| 2016 |
| ||
Expected term |
| 0.09 – 0.29 years |
|
| 0.39 – 0.94 years |
| ||
Expected average volatility |
| 207% - 407 | % |
| 140% - 220 | % | ||
Expected dividend yield |
|
| - |
|
|
| - |
|
Risk-free interest rate |
| 0.97 % -1.20 | % |
|
| 0.52 | % |
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2022 | 2021 | |||||||
Expected term | 0.88 years | 0.24 years | ||||||
Expected average volatility | 346% - 349% | 95% - 472% | ||||||
Expected dividend yield | - | - | ||||||
Risk-free interest rate | 2.07% - 2.99% | 0.03% - 0.16% |
NOTE 7 –9 - RELATED PARTY TRANSACTIONS
During the nine month periodsix months ended SeptemberJune 30, 2017,2022, the Company accrued $90,000$60,000 of salary payable to one related party,the Director of the Company and paid $19,600$25,000 owing to two related partieshim for the accrued salaries.
During the ninesix months ended SeptemberJune 30, 2017, a related party advanced $7802021, the Company accrued $60,000 of salary payable to the Company. TheDirector of the Company and paid $25,000 owing to him for the accrued salaries.
As of June 30, 2022 and December 31, 2021, amount due to the related party is unsecuredwas $500,168 and non-interest bearing with no set terms of repayment.$465,168, respectively.
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NOTE 10 - RISKS AND UNCERTAINTIES
AsIn 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 September 30, 2017the virus. The Company considered the impact of COVID-19 on the assumptions and December 31, 2016, amount due to related parties was $94,680estimates used and $23,500, respectively.
NOTE 8 – SUBSEQUENT EVENTS
Subsequent to September 30, 2017 and through the datedetermined that these financialsthere were made available, the Company had the following subsequent events:
On November 2, 2017, the Company filed a Certificate of Amendment tono retroactive material adverse impacts on the Company’s Articlesresults of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from one billion two hundred million (1,200,000,000) shares to five billion (5,000,000,000) shares.
On September 25, 2017, the Company entered into a Securities Purchase Agreement (“EMA SPA”) with EMA Financial LLC, providing for the purchase of a Convertible Redeemable Note in the aggregate principal amount of $53,000.operations and financial position at June 30, 2022. The note bears an interest rate of 12%, and is due and payable on September 25, 2018. The note may be converted by the Investor at any time into shares of Company’s common stock at a price at the lowerfull extent of the closing sale pricefuture impacts of COVID-19 on the Company’s stockoperations is uncertain. A prolonged outbreak could have a material adverse impact on the OTC Markets on the trading day immediately preceding the closing day of the note,financial results and 50% of either the lowest sale price of the Company’s common stock on the OTC Markets during the twenty five consecutive trading days including and immediately preceding the conversion date, or the closing bid price, whichever is lower, provided however, if the Company’s share price at any time loses the bid, then the Investor, at their sole discretion, can convert at a fixed conversion price of $0.00001. The Company received the cash proceed of $44,300, net of note discount and financing cost on October 31, 2017. On February 20, 2018, a note amendment was executed with $5,636.04 increase in the principal amount of the note for partial repayment made on behalfbusiness operations of the Company in the future. The Company is not aware of any specific event or circumstance that would require an update to settleits estimates or judgments or a convertible note originally issued to Crown Bridge Partners, LLCrevision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on April 1, 2016Form 10-Q. These estimates may change, as new events occur and the note principal subsequently increased to $58,636.04.additional information is obtained.
On October 18, 2017,NOTE 11 - SUBSEQUENT EVENTS
In accordance with ASC 855-10, the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC, providing forhas analyzed its operations subsequent to the purchase of a Convertible Redeemable Note inJune 30, 2022 to the aggregate principal amount of $53,000. The note bears an interest rate of 12%,date these financial statements were issued and is due and payable on July 18, 2018. The note may be converted by the Second Investor at any time into shares of Company’s common stock at a price at the lower of the closing sale price of the Company’s stock on the OTC Markets on the trading day immediately preceding the closing day of note, and 50% of either the lowest sale price of the Company’s common stock on the OTC Markets during the twenty five consecutive trading days including and immediately preceding the conversion date, or the closing bid price, whichever is lower, provided however, if the Company’s share price at any time loses the bid, then the Second Investor, at their sole discretion, can convert at a fixed conversion price of $0.00001. The Company received the cash proceed of $45,250, net of note discount and financing cost on November 2, 2017. On February 23, 2018, a note amendment was executed with $5,636.04 increase in the principal amount of the note for partial repayment made on behalf of the Companyhas determined that it has no material subsequent events to settle a convertible note originally issued to Crown Bridge Partners, LLC on April 1, 2016 and the note principal subsequently increased to $58,636.04.disclose.
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, totaling $11,272.08 to settle the total outstanding principal and accrued penalty amount at $11,272.08 of the $40,000 convertible note originally issued to Crown Bridge Partners, LLC on April 1, 2016.
On October 2, 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 convertible promissory notes at $50,774.54.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and other reports filed by Lingerie Fighting Championships, Inc. (“Lingerie”, “we”contains forward-looking statements. These statements relate to future events or the “Company”) from time to time with the SEC (collectively, the “Filings”) contain or may containour future financial performance. In some cases, you can identify forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s managementby terminology such as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,”“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 similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future eventsinvolve known and are subject tounknown risks, uncertainties assumptions, and other factors including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should onethat may cause our or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect,our industry’s actual results, may differ significantlylevels of activity, performance or achievements to be materially different from those anticipated, believed, estimated, expected, intended,any future results, levels of activity, performance or planned.
achievements expressed or implied by these forward-looking statements. Although the Company believeswe believe that the expectations reflected in the forward-looking statements are reasonable, the Companywe cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, the Company doeswe 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 accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result.Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes thereto appearingthat 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.
BusinessIn 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 inunder the laws of the State of Nevada on November 29, 2006 under the name Sparking“Sparking Events, Inc., and on September 16, 2013 our corporate”. Our name was changed to Xodtec Group USA, Inc. in June 2009, Xodtec LED, Inc. in May 2010, Cala Energy Corp., (formally, Xodtec LED, Inc.) under which we were engaged in the business of offering services, such as enhanced oil recoverySeptember 2013 and material supplies, to gas and oil fields predominantly located in Southeast Asia. We were not successful in our efforts and discontinued this line of business. Since that time, and prior to the “Exchange Agreement” (defined below) we have been a “shell company”, as such term is defined in Rule 12b-2 of the Exchange Act.
On March 31, 2015, the Company, pursuant to share exchange agreement (the “Share Exchange Agreement”), among the Company, Lingerie Fighting Championships, Inc. (“LFC”), and the holders of all of the outstanding common stock and convertible notes of LFC exchanged their common stock and convertible notes of LFC for a total of 16,750,000 shares of common stock, which represented 84.70% of the Company’s common stock after giving effect to the issuance of the shares pursuant to the Share Exchange Agreement and the shares of common stock issued in the private placement described in the following paragraph. The issuance of the 16,750,000 shares of common stock to the former holders of LFC’s common stock and convertible notes in exchange for the capital stock of LFC is referred to as the reverse acquisition transaction. The sole director and chief executive officer of LFC became a director and the chief executive officer of the Company. As a result of the reverse acquisition, the Company’s business has become the business of LFC.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.
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On March 31, 2015, contemporaneously with the closing pursuant to the Share Exchange Agreement, the Company issued 2,500,000 shares of common stock for a purchase price of $0.08 per share, for a total of $200,000. The proceeds from the private placement were held in escrow on March 31, 2015,Our business and were paid to the Company on April 2, 2015. Accordingly, on March 31, 2015, the proceeds from the private placement are reflected as a subscription receivable. None of the purchasers in the private placement are affiliates of the Company.
As a result of the reverse acquisition with LFC, we ceased to be a shell company on March 31, 2015.
Effective as of April 1, 2015, we changed our name to “Lingerie Fighting Championships, Inc.” a name which more accurately represents our new business. We effected the name change by virtue of a short form merger, pursuant to which LFC (our wholly owned subsidiary after the LFC Acquisition) merged with and into the Company, with the Company remaining as the surviving parent corporation. In connection with the name change, we submitted to FINRA a voluntary request for the change of our OTC trading symbol.corporate address is 6955 North Durango Drive, Suite 1115-129, Las Vegas NV 89149. Our Common Stock now trades under the symbol “BOTY”.
As a result of, and in connection with, the reverse acquisition, the Company changed its fiscal year to December 31, which was LFC’s fiscal year, from a fiscal year ending February 28.
On April 20, 2015, the Company effected a one-for-800 reverse split, pursuant to which each share of common stock was converted into, and became 1/800 of a share of common stock, with fractional shares being rounded up to the next higher whole number of shares. As a result of the reverse split, the 339,757,357 shares of common stock, then outstanding, became and were converted into 424,977 shares. All references to shares of common stock and per share information retroactively reflect the reverse split.
On September 14, 2016, Lingerie Fighting Championships, Inc., a Nevada Corporation (the “Company”) filed an amendment to its articles of incorporation (the “Amendment”) with the Secretary of State of the State of Nevada, which, among other things, established the designation, powers, rights, privileges, preferences and restrictions of the Series A Preferred Stock, $0.001 par value per share (the “Series A Preferred Stock”).
Among other provisions, each one (1) share of the Series A Preferred Stock shall have voting rights equal to (x) 0.019607 multiplied by the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective vote (the “Numerator”), divided by (y) 0.49, minus (z) the Numerator. For purposes of illustration only, if the total issued and outstanding shares of common stock of the Company eligible to vote at the time of the respective votecorporate website is 5,000,000, the voting rights of one share of the Series A Preferred Stock shall be equal to 102,036 (0.019607 x 5,000,000) http:/ 0.49) – (0.019607 x 5,000,000) = 102,036)/lingeriefc.com/.
Fifty-one (51) shares of Series A Preferred Stock were authorized and fifty-one (51) shares of Series A Preferred Stock were issued to Shaun Donnelly, the Company’s Chief Executive Officer and a director of the Company.
On November 22, 2016, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from four hundred million (400,000,000) shares to one billion (1,000,000,000) shares.
On January 23, 2017, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from one billion (1,000,000,000) shares to one billion two hundred million (1,200,000,000) shares.
On November 2, 2017, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada to increase the number of authorized shares of common stock, par value $0.001 per share, from one billion two hundred million (1,200,000,000) shares to five billion (5,000,000,000) shares.
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 office. Our mailing addresssponsors 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 6955 North Durango, Suite 1115-129,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 NV, 89149, telephone (702) 527-2942. Our website is www.lingeriefc.com. and would be shot using 360 degree virtual reality cameras.
On September 1, 2021, we announced the launch of LFC Madness 2, a follow-up to our first LFC Madness bracket style virtual tournament. Once again the two prospects with the most votes would fight each other at LFC35 and each would receive a $1200 diamond bracelet courtesy Boston Diamonds & Bling.
On October 1, 2021, LFC Network was launched on schedule on Roku.
On October 19, 2021, we launched our own branded CBD pain relief cream called 'LFC True Relief'. The product is available for sale on our site.
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Results of Operations
Three Monthsmonths ended SeptemberJune 30, 20172022 as compared to the Three Months Ended Septemberthree months ended June 30, 20162021
Our operating results for the three months ended SeptemberJune 30, 20172022 and 2016,2021, and the changes between those periods for the respective items are summarized as follows:
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| Three Months Ended |
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| Three Months Ended |
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| September 30, |
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| June 30, |
| Changes |
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Statement of Operations Data: |
| 2017 |
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| 2016 |
|
| Changes |
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| 2022 |
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| 2021 |
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| Amount |
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| % |
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Revenue |
| $ | 5,900 |
| $ | 14,963 |
| $ | (9,063 | ) |
| $ | 32,273 |
| $ | 27,426 |
| $ | 4,847 |
| 18 | % | ||||||
Cost of Services |
| (18,843 | ) |
| (11,395 | ) |
| (7,448 | ) |
| (14,957 | ) |
| (5,027 | ) |
| (9,930 | ) |
| 198 | % | |||||||
Total operating expenses |
| (57,208 | ) |
| (85,088 | ) |
| 27,880 |
|
| (49,700 | ) |
| (72,897 | ) |
| 23,197 |
| (32 | %) | ||||||||
Other expenses |
|
| (508,557 | ) |
|
| (174,589 | ) |
|
| (333,968 | ) | ||||||||||||||||
Net loss |
| $ | (578,708 | ) |
| $ | (256,109 | ) |
| $ | (322,599 | ) | ||||||||||||||||
Other income (expense) |
|
| 972,705 |
|
|
| 705,052 |
|
|
| 267,653 |
|
|
| 38 | % | ||||||||||||
Net Income (loss) |
| $ | 940,322 |
|
| $ | 654,554 |
|
| $ | 285,768 |
|
|
| 44 | % |
Revenues
We generated revenues of $5,900$32,273 and $14,963$27,426 for the three months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The decreaseCompany’s revenue derives from the development, promotion and distribution of our live events, televised entertainment programming and site subscription. The increase in revenuerevenues was primarily dueattributed to less LFC events being hosted during the three months ended September 30, 2017 as compared to the same period ended 2016.an increase in live event revenue.
Cost of Services
We incurred total cost of services of $18,843$14,957 and $11,395$5,027 for the three months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The increase was primarily due to increase in direct costscost of services incurred during the three months ended September 30, 2017 as compared to the same period ended 2016.consist of labor, material, equipment and subcontractor expenses.
Operating Expenses
We incurred total operating expenses of $57,208$49,700 and $85,088$72,897 for the three months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The decrease in operating expenses was primarily due to the decrease in professional feese-commerce and travel costsexpense.
Other Income (Expenses)
We recognized total other income of $972,705 and $705,052 for the three months ended June 30, 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 SeptemberJune 30, 2017 as compared to the same period ended 2016.2022.
Other ExpensesNet Income (Loss)
We incurred total other expensesrecognized net income of $508,557$940,322 and $174,589 for the three months ended September 30, 2017 and 2016, respectively. The increase in other expenses was mainly due to loss on derivative liabilities of $431,621 for the three months ended September 30, 2017, as compared to loss on derivative liabilities of $127,032 as compared to the same period ended 2016.
Net Loss
We incurred a net loss of $578,708 and $256,109$654,554 during the three months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The increase in our net lossincome was duemainly attributed to the increase in loss on derivative liabilitiesother income and the decrease in gross profitoperating expense during the three months ended SeptemberJune 30, 20172022.
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Six months ended June 30, 2022 as compared to the same periodsix months ended 2016.
Nine Months ended SeptemberJune 30, 2017 as compared to the Nine Months Ended September 30, 20162021
Our operating results for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, and the changes between those periods for the respective items are summarized as follows:
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| Nine Months Ended |
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| Six Months Ended |
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| September 30, |
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| June 30, |
| Changes |
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Statement of Operations Data: |
| 2017 |
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| 2016 |
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| Changes |
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| 2022 |
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| 2021 |
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| Amount |
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| % |
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Revenue |
| $ | 15,450 |
| $ | 19,137 |
| $ | (3,687 | ) |
| $ | 53,438 |
| $ | 34,502 |
| $ | 18,936 |
| 55 | % | ||||||
Cost of Services |
| (45,673 | ) |
| (52,469 | ) |
| 6,797 |
| |||||||||||||||||||
Cost of services |
| (14,957 | ) |
| (26,032 | ) |
| 11,075 |
| (43 | %) | |||||||||||||||||
Gross profit (loss) |
| 38,481 |
| 8,470 |
| 30,011 |
| 354 | % | |||||||||||||||||||
Total operating expenses |
| (212,758 | ) |
| (169,265 | ) |
| (43,493 | ) |
| (130,512 | ) |
| (132,704 | ) |
| 2,192 |
| (2 | %) | ||||||||
Other income (expenses) |
|
| (447,311 | ) |
|
| (261,620 | ) |
|
| (185,691 | ) | ||||||||||||||||
Net loss |
| $ | (690,292 | ) |
| $ | (464,217 | ) |
| $ | (226,075 | ) | ||||||||||||||||
Other income (expense) |
|
| 1,836,338 |
|
|
| (6,768,252 | ) |
|
| 8,604,590 |
|
| (127 | %) | |||||||||||||
Net income (loss) |
| $ | 1,744,308 |
|
| $ | (6,892,486 | ) |
| $ | 8,636,794 |
|
| (125 | %) |
Revenues
We generated revenues of $15,450$53,438 and $19,137$34,502 for the nine monthssix ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The decreaseCompany’s revenue derives from the development, promotion and distribution of our live events, televised entertainment programming and site subscription. The increase in revenuerevenues was primarily dueattributed to less LFC events being hosted during the nine months ended September 30, 2017 as compared to the same period ended 2016.an increase in live event revenue.
Cost of Services
We incurred total cost of services of $45,673$14,957 and $52,469$26,032 for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The decrease was primarily due to less LFC events being hosted during the nine months ended September 30, 2017, resulting in less additionalcost of services incurred consist of labor, material, equipment and subcontractor expenses as compared to the same period ended 2016.expenses.
Operating Expenses
We incurred total operating expenses of $212,758$130,512 and $169,265$132,704 for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The increasedecrease in operating expenses was primarily due to the increased payroll expenses as the monthly related party salary started to accruedecrease in October 2016.e-commerce and travel expense.
Other ExpensesIncome (Expenses)
We recognized total other income of $1,836,338 and incurred total other expenses of $447,311 and $261,620$6,768,252 for the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The increase in other expensesincome was duemainly attributed to interest expensean increase in gain on changes in fair value of $279,904, comprising of amortization of debt discount of $235,673 and interest expense on promissory notes of $44,231, incurredderivatives during ninethe six months ended SeptemberJune 30, 2017, as compared to $81,620 interest expense incurred as compared to the same period ended 2016..2022.
Net LossIncome (Loss)
We recognized net income of $1,744,308 and incurred a net loss of $690,292 and $464,217$6,892,486 during the ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The increase in our net lossincome was duemainly attributed to an increase in amortization of debt discountgross profit, the decrease in operating expense and the increase in payroll expenses as compared toother income during the same periodsix months ended 2016.June 30, 2022.
Liquidity and Capital Resources
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| June 30, |
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| December 31, |
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| Changes |
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Working Capital Data: |
| 2022 |
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| 2021 |
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| Amount |
| % |
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Current Assets |
| $ | 33,170 |
|
| $ | 41,981 |
|
| $ | (8,811 | ) |
| (21 | %) |
Current Liabilities |
| $ | 5,087,672 |
|
| $ | 6,840,790 |
|
|
| (1,753,118 | ) |
| (26 | %) |
Working Capital Deficiency |
| $ | (5,054,502 | ) |
| $ | (6,798,809 | ) |
|
| 1,744,307 |
|
| (26 | %) |
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Liquidity and Capital Resources
|
| September 30, |
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| December 31, |
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Balance Sheet Data: |
| 2017 |
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| 2016 |
| ||
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Cash (Bank Indebtedness) |
| $ | (235 | ) |
| $ | 57,630 |
|
Working capital deficiency |
| $ | (1,590,333 | ) |
| $ | (1,232,057 | ) |
Total assets |
| $ | - |
|
| $ | 57,630 |
|
Total liabilities |
| $ | 1,590,333 |
|
| $ | 1,289,687 |
|
Total stockholders' deficit |
| $ | (1,590,333 | ) |
| $ | (1,232,057 | ) |
At SeptemberJune 30, 2017,2022 we had a working capital deficiency of $1,590,333$5,054,502 and an accumulated deficit of $2,691,893.$9,976,835. 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, 2017.2022.
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 ninesix months ended SeptemberJune 30, 20172022 and 2016.2021:
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| Nine Months Ended |
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| Six Months Ended |
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| September 30, |
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| June 30, |
| Changes |
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Cash Flow Data: |
| 2017 |
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| 2016 |
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| Changes |
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Cash Flows Data: |
| 2022 |
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| 2021 |
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| Amount |
| % |
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Cash Flows used in Operating Activities |
| $ | (123,410 | ) |
| $ | (195,222 | ) |
| $ | 71,812 |
|
| $ | (53,811 | ) |
| $ | (139,593 | ) |
| $ | 85,782 |
| (61 | %) | |
Cash Flows provided by Financing Activities |
|
| 65,780 |
|
|
| 223,675 |
|
|
| (157,895 | ) |
|
| 45,000 |
|
|
| 265,000 |
|
|
| (220,000 | ) |
| (83 | %) |
Net Increase (decrease) in Cash During Period |
| $ | (57,630 | ) |
| $ | 28,453 |
|
| $ | (86,083 | ) | |||||||||||||||
Net increase (decrease) in cash during period |
| $ | (8,811 | ) |
| $ | 125,407 |
|
| $ | (134,218 | ) |
| (107 | %) |
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For
During the ninesix months ended SeptemberJune 30, 2017,2022, net cash flows used in operating activities was $123,410,$53,811, consisting of a net lossincome of $690,292 and was reduced$1,744,308, decreased by gain on change in fair value of derivative liabilities of $2,017,446, increased by amortization of debt discount of $235,673, loss on derivative liability of $167,407, stock based compensation of $30,000, an increase$78,170 and net changes in accounts payable to related party of $70,400operating assets and an increase in accounts payable and accrued liabilities of $63,402. For$141,157.
During the ninesix months ended SeptemberJune 30, 2016,2021, net cash flows used in operating activities was $195,222,$139,593, consisting of a net loss of $464,217 and was reduced$6,892,486, decreased by loss on change in fair value of derivative liabilities of $180,000 and$6,472,595, amortization of debt discount of $64,674, stock based compensation$224,201, note conversion fee of $30,000,$500 and was increased by a decreasenet changes in accounts payableoperating assets and accrued liabilities of $5,679.$55,597.
Cash Flows from Investing Activities
There was no investing activities during ninethe six months ended SeptemberJune 30, 20172022 and 2016.2021.
Cash Flows from Financing Activities
ForDuring the ninesix months ended SeptemberJune 30, 2017, net cash flows provided by financing activities was $65,780 for proceeds from the convertible note of $65,000 and advancement from related party of $780. For the nine months ended September 30, 2016,2022, net cash provided by financing activities was $233,675, consisting of$45,000 through proceeds from issuance of a convertible notes of $173,750,note.
During the six months ended June 30, 2021, net cash provided by financing activities was $265,000 through the proceeds from issuance of promissory notes of $50,000, offset by payment for cancellation of common shares of $75.notes.
Off-Balance Sheet Arrangements
As of June 30, 2022, we had no off-balance sheet arrangements.
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Item 3. Quantitative and Qualitative Disclosures aboutAbout Market Risk.Risk
We doAs a “smaller reporting company”, we are not hold any derivative instruments and do not engage in any hedging activities.required to provide the information required by this Item.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 underOur management, with the Exchange Act,participation of our managementChief Executive Officer (our principal executive officer, principal financial officer and principal accounting officer), has evaluated the effectiveness of the design and operation 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 September 30, 2017.
Disclosurethe 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 referwere not effective such that the information relating to controls and other procedures designed to ensure that informationus required to be disclosed in theour Securities and Exchange Commission (“SEC”) reports we file or submit under the Securities Exchange Act(i) is recorded, processed, summarized and reported within the time periods specified in theSEC rules and forms, of the SEC and that such information(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. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based on that evaluation, we concluded that our disclosure controls and procedures were not effective as of September 30, 2017.
(a) ChangesChanges in Internal Control Over Financial Reporting
There have beenDuring the period covered by this report there were no changes in the Company’sour internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.
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We are not currently not involved in any litigation that we believe could have a materialmaterially 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 companyCompany or any of our subsidiaries, threatened against or affecting our company,Company, our common stock, any of our subsidiaries or of our companiesCompany’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.
Item 1A. Risk Factors
We areAs a smaller“smaller reporting company as defined by Rule 12b-2 of the Exchange Act andcompany”, we are not required to provide the information underrequired by this item.Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the nine months ended September 30, 2017, the Company issued 488,517,204 common shares for conversion of debt in the amount of $111,542.None.
Item 3. Defaults upon Senior Securities
On April 1, 2016, the Company entered into an agreement to issue a convertible promissory note to an unrelated party for an amount of $40,000 with a $6,000 original issue discount. The convertible promissory note bears interest at 10% per annum and matures twelve months from issue date. The conversion price is 55% of the lowest trading price 25 days prior to conversion. The note was discounted for a derivative and the discount of $34,000 is being amortized over the life of the note using the effective interest method resulting in $10,000 of interest expense for the nine months ended September 30, 2017.
During the nine months ended September 30, 2017, principal of $20,885 was converted for 92,296,000 common shares.
As at September 30, 2017, the note is presented net of a debt discount of $0.
The note is currently in default.
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 $14,542 of interest expense for the nine months ended September 30, 2017.
During the nine months ended September 30, 2017, principal of $15,278 and accrued interest of $5,975 were converted for 111,460,000 common shares.
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The note is currently in default.
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 $35,607 of interest expense for the nine months ended September 30, 2017.Item 3. Defaults Upon Senior Securities
As of SeptemberJune 30, 2017, the notes are presented net2022, total note payable amount of a debt discount of $0.$549,010 in default as follows:
The note is currently in default.
|
| 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#4 |
| 11/2/2017 |
| 8/2/2018 |
| $ | - |
|
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 |
|
On April 4, 2016, the Company entered into an investment agreement with an unrelated party. Per the investment agreement, the investor will invest up to $5,000,000 to purchase the Company’s common stock, par value of $.001 per share. In connection with the investment agreement, the Company entered into a registration rights agreement with the unrelated party which has been filed with the SEC. The maximum investment amount is equal to one hundred percent of the average of the daily trading volume of the common stock for the ten days prior to the put notice entered into by the unrelated party. The total purchase price to be paid in connection with the put notice, is calculated at eighteen percent discount of the lowest trading price of the common stock during the five consecutive trading days immediately succeeding the put notice date.
The Company issued a promissory note to the unrelated party for $100,000, as a commitment fee, which bears interest at 10% of the principle amount and matures seven months from April 4, 2016 with a possible extension to ten months based on whether the Company executes the related investment agreement within 180 days from April 4, 2016. If the registration statement is declared effective within 90 days of the execution of the investment agreement, the Company and the unrelated party agree the principal balance of the note will be immediately reduced by $40,000. The note payable will be available to be converted upon default. Per the agreement, default could occur based on: failure of payment on any outstanding amounts longer than five days after the due date, failure to issue shares after request, or failure to comply with all of the other material provisions included in the agreement. The conversion price is equal to the lower of: (a) 90% 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, or (b) 90% of the lowest trading price of the Company’s common stock during the 25 consecutive trading days prior to the effective date of April 4, 2016. At the election of the unrelated party, at each closing date (as defined in the investment agreement) after the date which is six months after April 4, 2016, the unrelated party shall retain (or the Company shall pay to the unrelated party) an amount equal to ten percent of each Put Amount (as defined in the agreement), and the amounts shall be applied by the unrelated party as follows: first against the amount of any unpaid interest or other fees, and second against any unpaid principal amounts, until all interest, fees, and principal have been paid.
On April 28, 2016, the Company filed a registration statement with the Securities and Exchange Commission to register 3,500,000 shares of common stock pursuant to the Investment Agreement and the Registration Rights Agreement. On May 24, 2016, the Company received a comment letter from the Securities and Exchange Commission regarding the registration statement. On March 3, 2017, the Company voluntarily withdrew the registration statement.
The Company expensed the $100,000 as commitment fee during the year ended December 31, 2016.
The note was discounted for a derivative and the discount of $65,238 is fully amortized into interest expense for the year ended December 31, 2016. As of September 30, 2017, the note is presented net of a debt discount of $0.
On January 10, 2017, the Company entered into an Assignment Agreement that Denali acquired $50,000 of the $100,000 note held by Tangiers. As at January 10, 2017, $50,000 of principal remained with Tangiers.
During the nine months ended September 30, 2017, principal of $26,199 was converted for 49,905,893 common shares.
The note is currently in default.
On January 10, 2017, the Company entered into an Assignment Agreement that Denali acquired $50,000 of the $100,000 note held by Tangiers.
During the nine months ended September 30, 2017, principal of $18,385 was converted for 9,884,409 common shares.
The note is currently in default.
Item 4. Mine Safety Disclosures
Not applicable.Applicable.
Item 5. Other informationInformation
On September 25, 2017, the Company entered into a Securities Purchase Agreement (“EMA SPA”) with EMA Financial LLC, providing for the purchase of a Convertible Redeemable Note in the aggregate principal amount of $53,000. On February 20, 2018, a note amendment was executed with $5,636.04 increase in the principal amount of the note for partial repayment made on behalf of the Company to settle a convertible note originally issued to Crown Bridge Partners, LLC on April 1, 2016 and the note principal subsequently increased to $58,636.04.None.
On October 18, 2017, the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC, providing for the purchase of a Convertible Redeemable Note in the aggregate principal amount of $53,000. On February 23, 2018, a note amendment was executed with $5,636.04 increase in the principal amount of the note for partial repayment made on behalf of the Company to settle a convertible note originally issued to Crown Bridge Partners, LLC on April 1, 2016 and the note principal subsequently increased to $58,636.04.
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, totaling $11,272.08 to settle the total outstanding principal and accrued penalty amount at $11,272.08 of the $40,000 convertible note originally issued to Crown Bridge Partners, LLC on April 1, 2016.
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Exhibit Number | Description | |
(31) | Rule 13a-14 (d)/15d-14d) Certifications | |
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(32) | Section 1350 Certifications | |
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101.INS |
| XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL |
| XBRL Taxonomy Extension |
|
| XBRL Taxonomy Extension |
|
| XBRL Taxonomy Extension |
|
| XBRL Taxonomy Extension |
|
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________________ ______________
* Filed herewith.
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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.
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.
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