Lingerie Fighting Championships: IPO Of The Year?

This month’s most dubious IPO is the Las Vegas-based Lingerie Fighting Championships (LFC). There are no prizes for guessing LFC’s business model. From the prospectus relating to the public offering:

“We are a development-stage media company, which is in the process of developing and implementing a program of original entertainment which we plan to make available predominantly through live entertainment events, as well as through digital home video, broadcast television networks, video-on-demand and digital media channels. Our business is focused on developing mixed martial arts fighting techniques, known as MMA, together with fictional character persona portrayed by beautiful women in attractive costumes based on their respective fictional characters for the purpose of providing entertainment.”

Events are already taking place:

“On August 8, 2015, we presented our first program, Lingerie Fighting Championships 20:  A Midsummer Night’s Dream, at the Hard Rock Hotel and Casino in Las Vegas, Nevada.  The program featured eight matches with 16 fighters.  The fighters are beautiful women in attractive costumes.  Each of the fighters has a specific and unique persona and appearance.”

If you need further explanation of the company’s activities, you can head over to its website – not exactly family viewing.

An IPO worth avoiding

While the nature of LFC’s business has attracted some attention, the nature of the company’s IPO is even more suspect. LFC, which used to be known as Spaking Events, trades (rarely) under the OTC Pink trading symbol BOTY and is conducting the IPO as a reverse acquisition. From the prospectus:

“On March 31, 2015, we acquired Lingerie Fighting Championships, Inc. (“LFC”) in a transaction which is accounted for as a reverse acquisition.  As a result of the reverse acquisition, we ceased to be a shell company and our business became the business of LFC, and our historical financial statements became the financial statements of LFC, to the extent that such financial statements relate to periods prior to the completion of the reverse acquisition transaction.  In connection with the reverse acquisition, we changed our fiscal year to the calendar year.  Since LFC was formed in July 2014, we do not show results of operations or cash flows for any periods prior to LFC’s organization in July 2014.  On April 1, 2015, LFC was merged into us, and our corporate name was changed to Lingerie Fighting Championships Inc.”

There’s also a one-for-800 reverse stock split taking place.

LFC/ BOTY is looking to offer 3.9 million shares at a proposed maximum price of $5.10 for a proposed maximum aggregate value of $19.9 million. The existing shareholders are offering up the 3.9 million shares, which is around 19.7% of the 19.8 million shares outstanding. There will be no proceeds to the company from the sale by the selling stockholders of their common stock.

Is BOTY worth more than $20 million? No. You don’t have to look further than page six of the prospectus to see:

“As of June 30 , 2015, we had working capital of approximately $117,000 , which represented the net proceeds of our March 31, 2015 private placement less current liabilities and operating expenses incurred primarily during the second quarter and costs incurred in the second quarter related to Lingerie Fighting Championships 20: A Midsummer Night’s Dream…We are a development stage company that has not generated any revenue since our organization in July 2014.  As of the date of this prospectus, we do not know the extent of the revenue, if any, generated from Lingerie Fighting Championships 20: A Midsummer Night’s Dream.   As a result, you have no basis for evaluating our ability either to generate revenue or operate at a profit.”

Jumping ship

So, what’s the real reason for LFC’s listing? If seems as if the company is trying to create an easy way out for existing shareholders to jump ship, and make a bit of cash at the expense of unsuspecting investors. Here are the shareholders taking part in the offering, according to LFC’s prospectus:

Lingerie Fighting Championships’s IPO sellers

“Issuances of Shares to Selling Stockholders

In February 2015, LFC borrowed a total of $5,250 from four individuals, for which LFC issued its 5% convertible promissory notes due September 30, 2015.  The lenders included two of the selling stockholders, Giselle Dufourcq and Natalia Lopera, each of whom lent $700 to LFC and received a convertible note in the principal amount of $700.   The notes did not become convertible until the completion of the reverse acquisition.  Pursuant to the Share Exchange Agreement relating to the reverse acquisition transaction, on March 31, 2015, we issued 11,500,000 shares of common stock to the holders of the LFC common stock and 5,250,000 shares of common stock to the holders of the convertible notes.  As holders of convertible notes, Ms. Dufourcq and Ms. Lopera each received 700,000 shares of common stock in exchange for her convertible note on March 31, 2015.

On March 31, 2015, contemporaneously with the closing relating to the reverse acquisition, we sold to four of the selling stockholders – Hsu Tseng Hui, Michael and Sonya Ogrizovich, Zima World Holdings Corp. and Elliot Gar Hung Choi – a total of 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, and were paid to us on April 2, 2015.”

In summary, LFC’s existing shareholders lent the company a few thousand dollars and received stock in return. Now they are looking to cash out through an IPO to raise just under $20 million.

LFC’s IPO might be worth avoiding.

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