UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 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 endedJune 30, |
Or
| ☐ | 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:000-11882
B2Digital, Incorporated
(Exact name of registrant as specified in its charter)
| Delaware | 84-0916299 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 4522 West Village Drive, Suite 215, Tampa, FL | 33624 |
| (Address of principal executive offices) | (Zip Code) |
(813) 961-3051
(Registrant’s telephone number, including area code)
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.
YesxNo☐
Indicate by check mark whether the registrant has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐ Nox
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yesx ☒ No☐
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,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☐ | 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☐ Nox ☒
Securities registered pursuant to section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Not applicable | Not applicable | Not applicable |
The number of shares outstanding of the registrant’s common stock, par value of $0.00001 on November 20, 2019,August 19, 2020, was 563,120,110.577,965,438.
| 2 |
PART I - FINANCIAL INFORMATION
| Item 1. | Financial |
Unaudited
Consolidated Financial Statements
B2Digital, IncorporatedIncorporated.
| 3 |
B2Digital, Incorporated
| As of June 30, 2019 (Unaudited) | As of March 31, 2019 | As of June 30, 2020 (Unaudited) | As of March 31, 2020
| |||||||||||||
| Assets | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | $ | 14,857 | $ | 27,579 | $ | 55,016 | $ | 46,729 | ||||||||
| Prepaid expenses | 1,753 | 6,260 | ||||||||||||||
| Note receivable- related party | 115,201 | 65,416 | ||||||||||||||
| Inventory | 7,256 | 7,256 | ||||||||||||||
| Deposits and prepaid expenses | 2,980 | 3,120 | ||||||||||||||
| Total current assets | 131,811 | 99,255 | 65,252 | 57,105 | ||||||||||||
| Fixed assets | ||||||||||||||||
| Cages | 100,025 | 46,025 | ||||||||||||||
| Trucks trailers and vehicles | 12,500 | 9,500 | ||||||||||||||
| Event assets | 39,987 | 8,987 | ||||||||||||||
| Electronics hardware and software | 6,960 | 6,960 | ||||||||||||||
| Less: accumulated depreciation | (19,719 | ) | (16,407 | ) | ||||||||||||
| Total fixed assets | 139,753 | 55,065 | ||||||||||||||
| Property and equipment, net of accumulated depreciation | 333,534 | 351,393 | ||||||||||||||
| Intangible assets, net of accumulated amortization | 182,922 | 196,951 | ||||||||||||||
| Goodwill | 259,672 | 193,045 | 172,254 | 172,254 | ||||||||||||
| Total Assets | $ | 531,236 | $ | 347,365 | $ | 753,962 | $ | 777,703 | ||||||||
| Liabilities & Stockholders' Equity | ||||||||||||||||
| Liabilities & Stockholders' Deficit | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable & accrued liabilities | $ | 126,010 | $ | 109,627 | $ | 124,749 | $ | 131,700 | ||||||||
| Deferred revenue | 21,284 | 13,992 | ||||||||||||||
| Note payable- current maturity | 14,000 | 75,000 | 137,250 | 14,000 | ||||||||||||
| Note payable- in default | 14,000 | – | ||||||||||||||
| Payable due for business acquisitions | 30,000 | – | 10,000 | 15,000 | ||||||||||||
| Note payable- in default | 15,000 | – | ||||||||||||||
| Convertible notes payable | 642,461 | 598,150 | ||||||||||||||
| Derivative liabilities | 334,222 | 58,790 | ||||||||||||||
| Due to shareholder | 241 | 711 | ||||||||||||||
| Total current liabilities | 185,010 | 184,627 | 1,284,207 | 832,343 | ||||||||||||
| Note payable- long-term | 60,000 | 14,000 | 106,606 | 156,727 | ||||||||||||
| Total Liabilities | 245,010 | 198,627 | 1,390,813 | 989,070 | ||||||||||||
| Commitments and contingencies (Note 7) | ||||||||||||||||
| Commitments and contingencies (Note 14) | ||||||||||||||||
| Stockholders' Equity | ||||||||||||||||
| Preferred stock, 50,000,000 shares authorized, 40,000,000 shares of Series B; 2,000,000 shares of Series A, convertible into 240 shares of common stock issued and outstanding at June 30, 2019 and March 31, 2019, respectively; 8,000,000 shares are undesignated | 20 | 20 | ||||||||||||||
| Common stock, $0.00001 par value; 5,000,000,000 shares authorized; 475,901,630 and 377,620,110 shares issued and outstanding at June 30, 2019 and March 31, 2019, respectively | 4,759 | 3,776 | ||||||||||||||
| Stockholders' Deficit | ||||||||||||||||
| Preferred stock, 50,000,000 shares authorized, 40,000,000 shares designated of Series B; 2,000,000 shares of Series A, convertible into 240 shares of common stock issued and outstanding at June 30, 2020 and March 31, 2020, respectively; 8,000,000 shares are undesignated | 20 | 20 | ||||||||||||||
| Common stock, $0.00001 par value; 5,000,000,000 shares authorized; 559,560,219 and 539,267,304 shares issued and outstanding at June 30, 2020 and March 31, 2020, respectively | 5,597 | 5,394 | ||||||||||||||
| Additional paid in capital | 3,252,590 | 2,624,573 | 3,670,016 | 3,600,197 | ||||||||||||
| Accumulated deficit | (2,971,143 | ) | (2,479,631 | ) | (4,312,484 | ) | (3,816,978 | ) | ||||||||
| Total Stockholders' Equity | 286,226 | 148,738 | ||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 531,236 | $ | 347,365 | ||||||||||||
| Total Stockholders' Deficit | (636,851 | ) | (211,367 | ) | ||||||||||||
| Total Liabilities and Stockholders' Deficit | $ | 753,962 | $ | 777,703 | ||||||||||||
See accompanying Notesnotes to the Unaudited Consolidated Financial Statements.
B2Digital, Incorporated
Consolidated Statements of Operations
| For the three months ended June 30, 2019 | For the three months ended June 30, 2018 | |||||||
| (unaudited) | (unaudited) | |||||||
| Live event revenue | $ | 85,636 | $ | 93,603 | ||||
| Live event expenses | 61,952 | 82,028 | ||||||
| Live event income- net | 23,684 | 11,575 | ||||||
| General and administrative corporate expenses | ||||||||
| Stock compensation expense | 454,400 | – | ||||||
| General & administrative expenses | 56,113 | 42,232 | ||||||
| Depreciation expense | 3,312 | 2,499 | ||||||
| Total general and administrative corporate expenses | 513,825 | 44,731 | ||||||
| Loss from continuing operations | (490,141 | ) | (33,156 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (1,371 | ) | (1,357 | ) | ||||
| Total other income (expense) | (1,371 | ) | (1,357 | ) | ||||
| Net loss | $ | (491,512 | ) | $ | (34,513 | ) | ||
| Basic diluted earnings per share on net loss | $ | (0 | ) | $ | (0 | ) | ||
| Weighted average shares outstanding | 411,478,970 | 125,354,453 | ||||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.unaudited consolidated financial statements.
B2Digital, Incorporated
Consolidated StatementStatements of Changes in Stockholders' Equity Operations(Unaudited)
Three Months Ended June 30, 2018
| Preferred Stock | Common Stock | Additional Paid in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance March 31, 2018 | 2,000,000 | $ | 20 | 263,075,044 | $ | 2,631 | $ | 2,381,068 | $ | (2,345,820 | ) | $ | 37,899 | |||||||||||||||
| Sale of common stock | – | – | 30,000,000 | 300 | – | – | 300 | |||||||||||||||||||||
| Issuance of common stock for services | – | – | 35,000,000 | 350 | – | – | 350 | |||||||||||||||||||||
| Issuance of common stock for conversion of debt | – | – | 3,478,400 | 35 | 37,985 | – | 38,020 | |||||||||||||||||||||
| Net Loss | – | – | – | – | – | (34,513 | ) | (34,513 | ) | |||||||||||||||||||
| Balance June 30, 2018 | 2,000,000 | $ | 20 | 331,553,444 | $ | 3,316 | $ | 2,419,053 | $ | (2,380,333 | ) | $ | 42,056 | |||||||||||||||
| For the three months ended | ||||||||
| June 30, | June 30, | |||||||
| 2020 | 2019 | |||||||
| Revenue: | ||||||||
| Live event revenue | $ | 59 | $ | 85,636 | ||||
| Gym revenue | 59,962 | – | ||||||
| Total revenue | 60,021 | 85,636 | ||||||
| Cost of sales | 1,312 | 61,952 | ||||||
| Gross profit | 58,709 | 23,684 | ||||||
| General and administrative corporate expenses | ||||||||
| General & administrative expenses | 164,788 | 510,513 | ||||||
| Depreciation and amortization expense | 32,972 | 3,312 | ||||||
| Total general and administrative corporate expenses | 197,760 | 513,825 | ||||||
| Loss from operations | (139,051 | ) | (490,141 | ) | ||||
| Other income (expense): | ||||||||
| Gain on forgiveness of loan | 5,040 | – | ||||||
| Grant income | 2,000 | – | ||||||
| Loss on settlement of debt | (18,281 | ) | – | |||||
| Loss on change in fair value of derivative liabilities | (275,432 | ) | – | |||||
| Interest expense | (69,782 | ) | (1,371 | ) | ||||
| Total other expense | (356,455 | ) | (1,371 | ) | ||||
| Net loss | $ | (495,506 | ) | $ | (491,512 | ) | ||
| Basic and diluted earnings per share on net loss | $ | (0 | ) | $ | (0 | ) | ||
| Weighted average shares outstanding | 550,425,206 | 411,478,970 | ||||||
See accompanying Notesnotes to the Unaudited Consolidated Financial Statements.
unaudited consolidated financial statements.
B2Digital, Incorporated
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)(Deficit)
For the Three Months Ended June 30, 2020 and 2019(Unaudited)
| Preferred Stock | Common Stock | Additional Paid in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance March 31, 2019 | 2,000,000 | $ | 20 | 377,620,110 | $ | 3,776 | $ | 2,624,573 | $ | (2,479,631 | ) | $ | 148,738 | |||||||||||||||
| Sale of common stock | – | – | 13,281,250 | 133 | 84,867 | – | 85,000 | |||||||||||||||||||||
| Issuance of common stock for services | – | – | 71,000,000 | 710 | 453,690 | – | 454,400 | |||||||||||||||||||||
| Issuance of common stock as part of business combination | – | – | 14,000,000 | 140 | 89,460 | – | 89,600 | |||||||||||||||||||||
| Net Loss | – | – | – | – | – | (491,512 | ) | (491,512 | ) | |||||||||||||||||||
| Balance June 30, 2019 | 2,000,000 | $ | 20 | 475,901,360 | $ | 4,759 | $ | 3,252,590 | $ | (2,971,143 | ) | $ | 286,226 | |||||||||||||||
| Preferred Stock | Common Stock | Additional Paid in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance March 31, 2020 | 2,000,000 | $ | 20 | 539,267,304 | $ | 5,394 | $ | 3,600,197 | $ | (3,816,978 | ) | $ | (211,367 | ) | ||||||||||||||
| Issuance of common stock for services | – | – | 4,000,000 | 40 | 14,360 | – | 14,400 | |||||||||||||||||||||
| Conversion of notes payable | – | – | 16,292,915 | 163 | 55,459 | – | 55,622 | |||||||||||||||||||||
| Net loss | – | – | – | – | – | (495,506 | ) | (495,506 | ) | |||||||||||||||||||
| Balance June 30, 2020 | 2,000,000 | $ | 20 | 559,560,219 | $ | 5,597 | $ | 3,670,016 | $ | (4,312,484 | ) | $ | (636,851 | ) | ||||||||||||||
| Preferred Stock | Common Stock | Additional Paid in | Accumulated | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||
| Balance March 31, 2019 | 2,000,000 | $ | 20 | 377,620,110 | $ | 3,776 | $ | 2,624,573 | $ | (2,479,631 | ) | $ | 148,738 | |||||||||||||||
| Sale of common stock for cash | – | – | 13,281,250 | 133 | 84,867 | – | 85,000 | |||||||||||||||||||||
| Issuance of common stock for services | – | – | 71,000,000 | 710 | 453,690 | – | 454,400 | |||||||||||||||||||||
| Issuance of common stock as part of business combination | – | – | 14,000,000 | 140 | 89,460 | – | 89,600 | |||||||||||||||||||||
| Net Loss | – | – | – | – | – | (491,512 | ) | (491,512 | ) | |||||||||||||||||||
| Balance June 30, 2019 | 2,000,000 | $ | 20 | 475,901,360 | $ | 4,759 | $ | 3,252,590 | $ | (2,971,143 | ) | $ | 286,226 | |||||||||||||||
See accompanying Notesnotes to the Unaudited Consolidated Financial Statements.unaudited consolidated financial statements.
B2Digital, Incorporated
Consolidated Statements of Cash Flows
| For the three months ended June 30, 2019 | For the three months ended June 30, 2018 | |||||||
| (unaudited) | (unaudited) | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Loss | $ | (491,512 | ) | $ | (34,513 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Stock compensation | 454,400 | – | ||||||
| Depreciation | 3,312 | 2,499 | ||||||
| Changes in operating assets & liabilities | ||||||||
| Prepaid expenses | 4,506 | – | ||||||
| Inventory | – | 154 | ||||||
| Accounts payable & accrued liabilities | (8,643 | ) | 15,085 | |||||
| Net cash used by operating activities | (37,937 | ) | (16,775 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Note receivable- related party | (49,785 | ) | – | |||||
| Purchase of fixed assets | – | (1,045 | ) | |||||
| Business acquisitions, net of cash acquired | (10,000 | ) | – | |||||
| Net cash used by investing activities | (59,785 | ) | (1,045 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Payment to note payable | – | (13,029 | ) | |||||
| Issuance of common stock | 85,000 | 38,670 | ||||||
| Net cash provided by financing activities | 85,000 | 25,641 | ||||||
| (Decrease) Increase in Cash | (12,722 | ) | 7,821 | |||||
| Cash at beginning of period | 27,579 | 16,468 | ||||||
| Cash at end of period | $ | 14,857 | $ | 24,289 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | – | $ | 750 | ||||
| Cash paid for income taxes | $ | – | $ | – | ||||
| Non-cash investing and financing activities: | ||||||||
| 14,000,000 shares of common stock issued for business combination | $ | 89,600 | $ | – | ||||
| Payables for acquisitions | $ | 30,000 | $ | – | ||||
See accompanying Notes to the Unaudited Consolidated Financial Statements.
B2Digital, Incorporated
Consolidated Statements of Cash Flows (Unaudited)
| For the three months ended | ||||||||
| June 30, | June 30, | |||||||
| 2020 | 2019 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Loss | $ | (495,506 | ) | $ | (491,512 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock issued for services | 14,400 | 454,400 | ||||||
| Depreciation and amortization | 32,972 | 3,312 | ||||||
| Loss on settlement of debt | 18,281 | – | ||||||
| Gain on forgiveness of loan | (5,040 | ) | – | |||||
| Amortization of debt discount | 51,651 | – | ||||||
| Loss on change in fair value of derivative liabilities | 275,432 | – | ||||||
| Changes in operating assets & liabilities | ||||||||
| Prepaid expenses | 140 | – | ||||||
| Inventory | – | 4,506 | ||||||
| Accounts payable and accrued liabilities | (6,948 | ) | (8,643 | ) | ||||
| Deferred revenue | 7,293 | – | ||||||
| Net cash used in operating activities | (107,325 | ) | (37,937 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Business acquisitions | – | (10,000 | ) | |||||
| Payments to related parties | (470 | ) | (49,785 | ) | ||||
| Capital expenditures | (1,084 | ) | – | |||||
| Net cash used in investing activities | (1,554 | ) | (59,785 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable | 122,800 | – | ||||||
| Repayments related to payable due for business combinations | (5,000 | ) | – | |||||
| Payment to note payable | (63 | ) | – | |||||
| Issuance of common stock | – | 85,000 | ||||||
| Net cash provided by financing activities | 117,166 | 85,000 | ||||||
| Increase in Cash | 8,287 | (12,722 | ) | |||||
| Cash at beginning of period | 46,729 | 27,579 | ||||||
| Cash (and equivalents) at end of period | $ | 55,016 | $ | 14,857 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | – | $ | – | ||||
| Cash paid for income taxes | $ | – | $ | – | ||||
| Non-cash investing and financing activities: | ||||||||
| Conversion of note payable to equity | $ | 48,281 | $ | 59,400 | ||||
| Assets acquired | $ | – | $ | 59,000 | ||||
See accompanying notes to the unaudited consolidated financial statements.
| F-4 |
B2DIGITAL, INCORPORATED
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
In February 2017, the Board of Directors of B2Digital, Incorporated ("B2Digital" or the "Company") approved a complete restructuring, new management team and strategic direction for the Company. Capitalizing on its history in television, video and technology, the Company is now forging ahead and becoming a full-service live event sports company.
B2Digital's first strategy is to build an integrated live event Minor League for the Mixed Martial Arts (MMA) marketplace. B2Digital will be creating and developing Minor League champions that will move on to the MMA Major Leagues from the B2 Fighting Series (B2FS). This will be accomplished by sponsoring operating live events, acquiring existing MMA promotions and then inviting those champions to the B2FS Regional and National Championship Series. B2Digital will own all media and merchandising rights and digital distribution networks for the B2FS.
2017 marked the kickoff of the B2FS by sponsoring and acquiring MMA regional promotion companies for the development of the B2FS. The second strategy is that the Company plans to add additional sports, leagues, tournaments and special events to its live event business model. This will enable B2Digital to capitalize on their core technologies and business models that will be key to broadening the revenue base of the Company's live event core business. B2Digital will also be developing and expanding the B2Digital live event systems and technologies. These include systems for event management, digital ticketing sales, digital video distribution, digital marketing, Pay-Per View (PPV), fighter management, merchandise sales, brand management and financial control systems.
Basis of Presentation and Consolidation
The Company has fiveseven wholly-owned subsidiaries. Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, Colosseum Combat LLC which owns Colosseum Combat MMA in Indiana, Blue Grass MMA LLC which is a marketing company, United Combat League MMA LLC, and Pinnacle Combat LLC. All significant intercompany balancesLLC, Strike Hard Productions, LLC, ONE More Gym, and transactions have been eliminated.B2 Productions LLC.
The consolidated financial statements, which include the accounts of the Company and its fiveseven wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements, which include the accounts of the Company and its seven wholly-owned subsidiaries, and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and presented in US dollars. The fiscal year end is March 31.
NOTE 2 - ACCOUNTING POLICIES
The significant accounting policies of the Company are as follows:
Basis of Accounting
The accountsinterim consolidated financial statements are maintainedcondensed and should be read in conjunction with the Company’s latest annual financial statements; interim disclosures generally do not repeat those in the annual statements. The interim unaudited consolidated financial statements have been prepared usingin conformity with accounting principles generally accepted in the accrual basisUnited States of accounting in accordance with GAAP.America (“GAAP”).
| F-5 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The most significant assumptions and estimates relate to the valuation of derivative liabilities and the valuation of assets and liabilities acquired through business combinations. Actual results could differ from these estimates and assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains deposits primarily in four financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation ("FDIC"). The Company has not experienced any losses related to amounts in excess of FDIC limits.limits or $250,000. The Company did not have any cash in excess of FDIC limits at June 30, 2020 and 2019, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided on the straight-line method over the assets’ estimated service lives. Expenditures for maintenance and repairs are charged to expense in the period in which they are incurred, and betterments are capitalized. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are reflected in the accompanying consolidated statement of operations of the respective period. The estimated useful lives range from 3 to 7 years.
Goodwill
Goodwill represents the cost in excess of the fair value of net assets acquired in business combinations. The Company tests goodwill for impairment on an annual basis and when events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is deemed to be impaired if the carrying amount of goodwill exceeds its estimated fair value. As of June 30, 2020, there were no charges to goodwill impairment.
Other income
During the three months ended June 30, 2020, the Company received $2,000 in grant income due to COVID-19 relief. The Company has recorded this grant income under other income in the Statement of Operations.
| F-6 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally,The majority of revenues are received from ticket and beverage sales before and during the Company's performance obligationslive events. Sponsorship revenue is also recognized when the live event takes place. Any revenue received for events that have yet to take place are transferred to customers at a pointrecorded in time, typically upon delivery.deferred revenue.
Income Taxes
The Company follows Section 740-10-30 of the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated Statements of Operations in the period that includes the enactment date. Through June 30, 2019,2020, the Company has an accumulated deficit.expected loss. Due to uncertainty of realization for these losses, a full valuation allowance is expected.recorded. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.
| F-7 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. In addition, Receivables that are factored through the Company's Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.
Impairment of Long-Lived Assets
In accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved. There were no impairment charges recorded during the three months ended June 30, 2020 and 2019.
Inventory
Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2020 and March 31, 2020, the Company had outstanding balances of Finished Goods Inventory of $7,256 and $7,256, respectively.
Earnings Per Share (EPS)
The Company utilize FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included because their effect would be anti-dilutive. As of June 30, 2020 the convertible notes are indexed to 277,598,000 shares of common stock.
The following table sets for the computation of basic and diluted earnings per share the three months ended June 30, 2020 and 2019:
June 30, 2020 | June 30, 2019 | |||||||
| Basic and diluted | ||||||||
| Net loss | $ | (495,506 | ) | $ | (491,512 | ) | ||
| Net loss per share | ||||||||
| Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic & diluted | 550,425,206 | 411,478,970 | ||||||
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
Stock based compensationBased Compensation
The Company records stock-based compensation in accordance with the provisions of FASB ASC Topic 718, “Accounting for Stock Compensation,” which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance provided under ASC.
Topic 718, the Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. As of June 30, 2019,2020 there were no options outstanding.
Recently Adopted Accounting Pronouncements
On June 20, 2018, the FASB issued ASU 2018-07,Compensation—Stock Compensation(Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on April 1, 2019. The adoption of this standard did not have a material impact on the consolidated financial statements.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill, but rather requires an entity to record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Company is currently assessing the impact of this standard on their Financial Statements.
In September 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. ASU 2016-13 is effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - RELATED PARTY
B2 Management, LLC (“B2 Management”) has as its sole member the Chief Executive Officer and Chairman of B2Digital. During
| F-9 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis. For the three months ended June 30, 2019, B22020, the Company had a net loss of $495,506, had net cash used in operating activities of $105,728, had negative working capital of $1,204,505, accumulated deficit of $4,312,484 and stockholders’ deficit of $636,851. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future. Management plans to provide for the Company’s capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – REVENUE
The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. The majority of revenues are received $49,785from live events, which primarily include ticket and beverage sales before and during the live events. Sponsorship revenue is also recognized when the live event takes place. Any revenue received for events that have yet to take place are recorded in advances. Asdeferred revenue. Gym revenue comprises primarily of membership dues and subscription. Other gym revenue includes personal training, group fitness and meal planning.
Information about the Company’s net sales by revenue type for the three months ended June 30, 2020 and 2019 are as follows:
| For the three months ended | ||||||||
| June 30, | June 30, | |||||||
2020 (Unaudited) | 2019 (Unaudited) | |||||||
| Live events | $ | 59 | $ | 85,636 | ||||
| Gym revenue | 59,962 | – | ||||||
| Net sales | $ | 60,621 | $ | 85,636 | ||||
| F-10 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment, net, consisted of the following at June 30, 2020 and March 31, 2020:
| As of | As of | |||||||
| June 30, 2020 | March 31, 2020 | |||||||
| Gym equipment | $ | 163,147 | $ | 163,147 | ||||
| Cages | 124,025 | 124,025 | ||||||
| Event assets | 61,319 | 61,319 | ||||||
| Production equipment | 30,697 | 30,697 | ||||||
| Electronics hardware and software | 12,929 | 11,845 | ||||||
| Trucks trailers and vehicles | 11,210 | 11,210 | ||||||
| 403,327 | 402,243 | |||||||
| Less: accumulated depreciation | (69,793 | ) | (50,850 | ) | ||||
| $ | 333,534 | $ | 351,393 | |||||
Depreciation expense related to these assets for the three months ended June 30, 2020 and 2019 amounted to $18,943 and $3,312, respectively.
NOTE 6 – INTANGIBLE ASSETS
Intangible assets, net, consisted of the Company has an uncollateralized, non-interest-bearing note receivable of $115,201following at June 30, 2020:
| As of | As of | |||||||
| June 30, 2020 | March 31, 2020 | |||||||
| Licenses | $ | 142,248 | $ | 142,248 | ||||
| Customer relationships | 83,000 | 83,000 | ||||||
| 225,248 | 225,248 | |||||||
| Less: accumulated amortization | (42,326 | ) | (28,297 | ) | ||||
| $ | 182,922 | $ | 196,951 | |||||
Licenses are amortized over five years, whereas customer relationships are amortized over three years. Amortization expense related to these assets for the three months ended June 30, 2020 and $65,416, respectively, from B2 Management that is due upon demand.2019 amounted to $14,029 and $0, respectively.
| F-11 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
| Estimated amortization expense for each of the next five years: | ||||
| Fiscal year ended March 31, 2021 | $ | 42,087 | ||
| Fiscal year ended March 31, 2022 | 56,116 | |||
| Fiscal year ended March 31, 2023 | 49,200 | |||
| Fiscal year ended March 31, 2024 | 28,450 | |||
| Fiscal year ended March 31, 2025 | 7,069 | |||
| Total | $ | 182,922 | ||
NOTE 47 – BUSINESS ACQUISITIONS
United Combat League, UCL MMA LLC
Effective May 1, 2019, the Company completed its previously announced acquisition of 100% of the equity interest in United Combat League, LLC (“UCL”), in an effort to execute its strategy of developing and building a Premier Development League for the Mixed Martial Arts (“MMA”) marketplace. The purchase price was $20,000 in cash and 6,000,000 shares of Restricted Common Stock issuable to Michael Davis, the seller of the equity interest in the acquisition. The Company is required to pay the cash consideration in three payments as follows: (i) $10,000 on or before 10 calendar days after the execution date of the agreement, (ii) $5,000 on or before 45 calendar days after the execution date of the agreement, and (iii) $5,000 on or before 90 calendar days after the execution date of the agreement. As of June 30, 2020, the $10,000 cash consideration has been paid in full.
| Consideration | |||
| Cash | $ | 20,000 | |
| 6,000,000 shares of common stock issued to the sellers valued using an observable market price | 39,000 | ||
| Total consideration | $ | 59,000 | |
| Fair value of net identifiable assets (liabilities) acquired | |||
| Intangible assets - licenses for the right to hold fight events | $ | 59,000 | |
| Consideration | ||||
| Cash | $ | 20,000 | ||
| 6,000,000 shares of common stock issued to the sellers | 38,400 | |||
| Total consideration | $ | 58,400 | ||
| Fair value of net identifiable assets (liabilities) acquired | ||||
| Goodwill resulting from transaction | $ | 58,400 | ||
Goodwill is calculated as the excess of the purchase price paid over the net assets recognized. The goodwill recorded as part of the UCL acquisition primarily reflects the value of adding UCL to B2Digital in order to expand its footprint in the MMA marketplace and execute its strategy of developing and building a Premier Development League MMA marketplace. Goodwill is not amortizable nor deductible for tax purposes. The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The initial accounting for this transaction is not completed and the fair value of the acquired identifiable intangible assets - licenses are provisional pending receipt of the final valuations for those assets.being amortized over their estimated life, currently expected to be five years.
B2DIGITAL, INCORPORATED
The Company is required to present a pro forma balance sheet assuming the transaction was consummated on the date of the latest balance sheet included in the filing and a pro forma statement of operations assuming the transaction was consummated at the beginning of the fiscal year presented and carried forward through any interim period presented. However, since the initial accounting has not been finalized for the transaction the Company believes presenting pro forma information is impracticable and plans to present it once the accounting is finalized.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
Pinnacle Combat LLC- Acquisition
On July 15, 2019, to be effective June 29, 2019, the Company completed an acquisition of 100% of the equity interest in Pinnacle Combat LLC of Iowa (“Pinnacle”), in an effort to execute its strategy of developing and building a Premier Development League for the MMA marketplace. The purchase price was $20,000 in cash and 8,000,000 shares of Restricted Common Stock, 5,000,000 to be issued to Harry Maglaris and 3,000,000 to be issued to Ken Rigdon, collectively the sellers of the equity interest in the acquisition. The Company is required to pay the cash consideration in three payments as follows: (i) $10,000 on or before 10 calendar days after the execution date of the agreement, (ii) $5,000 on or before 45 calendar days after the execution date of the agreement, and (iii) $5,000 on or before 90 calendar days after the execution date of the agreement. As of June 30, 2020, the $10,000 cash consideration has been paid in full.
| Consideration | ||||||||
| Cash | $ | 20,000 | $ | 20,000 | ||||
| 8,000,000 shares of common stock issued to the sellers | 51,200 | |||||||
| 8,000,000 shares of common stock issued to the sellers valued using an observable market price | 62,400 | |||||||
| Total consideration | $ | 71,200 | $ | 82,400 | ||||
| Fair values of identifiable net assets: | ||||||||
| Property & equipment: | ||||||||
| Cages | $ | 54,000 | $ | 54,000 | ||||
| Event asset (barriers) | 6,000 | 3,420 | ||||||
| Truck/trailer | 3,000 | 1,710 | ||||||
| Venture lighting system | 25,000 | 14,250 | ||||||
| Total identifiable net assets | 88,000 | 73,380 | ||||||
| Intangible assets: | ||||||||
| Licenses for the right to hold fight events | 34,048 | |||||||
| Fair value of liabilities assumed: | ||||||||
| Credit card liability | 25,028 | 25,028 | ||||||
| Fair value of net identifiable assets (liabilities) acquired | 62,972 | $ | 82,400 | |||||
| Goodwill resulting from transaction | $ | 8,228 | ||||||
Goodwill is calculated as the excess of the purchase price paid over the net assets recognized. The goodwill recorded as part of the Pinnacle acquisition primarily reflects the value of adding Pinnacle to B2Digital in order to expand its footprint in the MMA marketplace and execute its strategy of developing and building a Premier Development League MMA marketplace. Goodwill is not amortizable nor deductible for tax purposes. The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The initial accounting for this transaction is notintangible assets - licenses are being amortized over their estimated life, currently expected to be five years.
| F-13 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
Strike Hard Productions LLC- Acquisition
On September 1, 2019, the Company completed and the fair valuean acquisition of 100% of the acquired identifiable intangible assets are provisional pending receiptequity interest in Strike Hard Productions LLC, a fighting promotion business, in an effort to execute its strategy of developing and building a Premier Development League for the MMA marketplace. The purchase price was $20,000 in cash and 9,000,000 shares of Restricted Common Stock, 3,000,000 Restricted Shares issued to be issued to David Elder, 3,000,000 Restricted Common Shares to be issued to James Sullivan and 3,000,000 Restricted Common Shares to be issued to Matt Leavell, collectively the sellers of the final valuations for those assets.
equity interest in the acquisition. The Company is required to present a pro forma balance sheet assumingpay the transaction was consummatedcash consideration in three payments as follows: (i) $10,000 on or before 10 calendar days after the execution date of the latest balance sheet includedagreement, (ii) $5,000 on or before 45 calendar days after the execution date of the agreement, and (iii) $5,000 on or before 90 calendar days after the execution date of the agreement. As of June 30, 2020, the $10,000 cash consideration has been paid in full.
| Consideration | ||||
| Cash | $ | 20,000 | ||
| 9,000,000 shares of common stock issued to the sellers valued using an observable market price | 52,200 | |||
| Total consideration | $ | 72,200 | ||
| Fair values of identifiable net assets: | ||||
| Property & equipment: | ||||
| Cages | $ | 22,000 | ||
| Event asset (tables) | 1,000 | |||
| Total property & equipment | 23,000 | |||
| Intangible assets: | ||||
| Licenses for the right to hold fight events | 49,200 | |||
| Total fair value of identifiable net assets | $ | 72,200 | ||
The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The intangible assets - licenses are being amortized over their estimated life, currently expected to be five years.
| F-14 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
One More Gym LLC
On January 6, 2020, the Company completed an acquisition of 100% of the equity interest in One More Gym LLC (“1MG”), a gym. The purchase price was $30,000 in cash and 6,000,000 shares of Restricted Common Stock (valued at $31,800 or $0.0053 per share), 6,000,000 shares to be issued to BHC Management LLC, the seller of the equity interest in the filing and a pro forma statementacquisition. As of operations assuming the transaction was consummated at the beginning of the fiscal year presented and carried forward through any interim period presented. However, since the initial accounting has not been finalized for the transactionJune 30, 2020, the Company believes presenting pro forma information is impracticableowes $10,000 in cash consideration to BHC Management.
| Consideration | ||||
| Cash | $ | 30,000 | ||
| 6,000,000 shares of common stock issued to the sellers valued using an observable market price | 31,800 | |||
| Total consideration | $ | 61,800 | ||
| Fair values of identifiable net assets: | ||||
| Property & equipment: | ||||
| Cash | $ | 2,392 | ||
| Gym equipment | 149,703 | |||
| Inventory | 10,000 | |||
| Intangible assets: | ||||
| Customer relationships | 83,000 | |||
| Fair value of liabilities assumed: | ||||
| Liabilities | 130,712 | |||
| Fair value of net identifiable assets (liabilities) acquired | $ | 114,383 | ||
| Gain on bargain purchase | $ | 52,583 | ||
The Company analyzed the acquisition under applicable guidance and plansdetermined that the acquisition should be accounted for as a business combination. The intangible assets – customer relationships are being amortized over their estimated life, currently expected to present it once the accounting is finalized.be three years.
| F-15 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 58 - NOTES PAYABLE
The following is a summary of notes payable as of June 30, 2020 and March 31, 2020:
| As of | As of | |||||||
| June 30, | March 31, | |||||||
| 2020 | 2020 | |||||||
| Notes payable - current maturity: | ||||||||
| Emry Capital $14,000, 4% loan with principal and interest due April, 2020 | $ | – | $ | 14,000 | ||||
| Note Payable PPP SBA Loan | 15,600 | – | ||||||
| SBA EIDL Loan | 10,000 | – | ||||||
| SBA Loan Payable B2 Digital | 97,200 | – | ||||||
| Notes payable – in default: | ||||||||
| Emry Capital $14,000, 4% loan with principal and interest due April, 2020 | 14,000 | – | ||||||
| Notes payable – long term: | ||||||||
| WLES LP LLC $60,000, 5% loan due January 15, 2022 | 30,000 | 60,000 | ||||||
| Brian Cox 401K | 19,742 | 21,970 | ||||||
| SBA Loan (One More Gym, LLC) | 71,314 | 74,757 | ||||||
| Total notes payable | 257,856 | 170,727 | ||||||
| Less: short-term | (151,250 | ) | (14,000 | ) | ||||
| Total | $ | 106,606 | $ | 156,727 | ||||
On May 8, 2020, WLES LP LLC converted $30,000 of its $60,000 notes payable into 12,000,000 shares of common stock. As a result the Company recorded a loss on settlement of debt in the amount of $18,281.
During the three months ended June 30, 2020, the Company repaid $2,228 on its loan payable to Brian Cox.
During the three months ended June 30, 2020, the bank forgave $3,443 in principal and $1,597 in accrued interest on its SBA Loan (One More Gym, LLC). As a result, the Company recorded $3,443 in gain on forgiveness of loan.
| F-16 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 9 – CONVERTIBLE NOTE PAYABLE
The following is a summary of convertible notes payable as of June 30, 2020:
| Note | Inception Date | Maturity | Coupon | Face Value | Unamortized Discount | Carrying Value | ||||||||||||||||
| Note 1 | 10/4/2019 | 10/4/2020 | 8% | $ | 74,659 | $ | 6,005 | $ | 68,654 | |||||||||||||
| Note 2 | 10/31/2019 | 12/15/2020 | 8% | 208,000 | 37,602 | 170,398 | ||||||||||||||||
| Note 3 | 12/5/2019 | 12/5/2020 | 8% | 62,000 | 9,017 | 52,983 | ||||||||||||||||
| Note 4 | 12/31/2019 | 12/31/2020 | 8% | 62,000 | 6,282 | 55,718 | ||||||||||||||||
| Note 5 | 1/27/2020 | 1/27/2021 | 8% | 184,000 | 18,985 | 165,015 | ||||||||||||||||
| Note 6 | 2/19/2020 | 2/19/2021 | 8% | 78,000 | 11,859 | 66,141 | ||||||||||||||||
| Note 7 | 3/10/2020 | 3/10/2021 | 8% | 78,000 | 14,448 | 63,552 | ||||||||||||||||
| $ | 746,659 | $ | 104,198 | $ | 642,461 | |||||||||||||||||
Between October 4, 2019 and March 31, 2019:10, 2020, the Company issued to GS Capital Partners, LLC, an accredited investor (“GS Capital”), Convertible Promissory Notes aggregating a principal amount of $734,000. The Company received an aggregate net proceeds of $725,500 after $28,500 in original note discount. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the date on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment to GS Capital as set forth in the agreements.
| As of | As of | |||||||
| June 30, 2019 | March 31, 2019 | |||||||
| Notes payable - current maturity: | ||||||||
| Emry Capital $14,000, 4% loan with principal and interest due April, 2020. | $ | 14,000 | $ | 14,000 | ||||
| Notes payable – in default: | ||||||||
| Good Hunting $15,000, 7.5% loan with principal and interest due March 31, 2019 (In Default) | 15,000 | 15,000 | ||||||
| Notes payable – long term: | ||||||||
| WLES LP LLC $60,000, 5% loan due January 15, 2022 | 60,000 | 60,000 | ||||||
| Total | $ | 89,000 | $ | 89,000 | ||||
The outstanding principal amount of the Notes is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months of the term of the Notes. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest trading prices of the Company’s common stock.
Accounting Considerations
The Company has accounted for the Notes as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior to making the accounting allocation, the Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The material embedded derivative features consisted of the embedded conversion option and default puts. The conversion option and default puts bear risks of equity which were not clearly and closely related to the host debt agreement and required bifurcation. The contracts do not permit the Company to settle in registered shares and the contracts also contain make-whole provisions both of which preclude equity classification. Current accounting principles that are also provided in ASC 815 do not permit an issuer to account separately for individual derivative terms and features that require bifurcation and liability classification. Rather, such terms and features must be and were bundled together and fair valued as a single, compound embedded derivative.
| F-17 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
Based on the previous conclusions, the Company allocated the cash proceeds first to the derivative components at its fair value with the residual allocated to the host debt contract, as follows:
| Note 1 | Note 2 | Note 3 | Note 4 | Note 5 | Note 6 | Note 7 | Total | |||||||||||||||||||||||||
| Compound embedded derivative | $ | 26,395 | $ | 68,030 | $ | 15,893 | $ | 10,812 | $ | 25,834 | $ | 14,095 | $ | 17,636 | $ | 178,695 | ||||||||||||||||
| Convertible notes payable | 48,605 | 133,970 | 44,107 | 49,188 | 152,666 | 60,905 | 57,364 | 546,805 | ||||||||||||||||||||||||
| Original issue discount | 7,000 | 6,000 | 2,000 | 2,000 | 5,500 | 3,000 | 3,000 | 28,500 | ||||||||||||||||||||||||
| Face value | $ | 82,000 | $ | 208,000 | $ | 62,000 | $ | 62,000 | $ | 184,000 | $ | 78,000 | $ | 78,000 | $ | 754,000 | ||||||||||||||||
The net proceeds were allocated to the compound embedded derivative and original issue discount. The notes will be amortized up to its face value over the life of Notes based on an effective interest rate. Amortization expense and interest expense for the three months ended June 30, 2020 is as follows:
| Note | Interest Expense | Accrued Interest Balance | Amortization of Debt Discount | |||||||||||
| Note 1 | $ | 1,201 | $ | 4,418 | $ | 12,863 | ||||||||
| Note 2 | 4,149 | 10,105 | 15,696 | |||||||||||
| Note 3 | 1,237 | 2,827 | 4,004 | |||||||||||
| Note 4 | 1,237 | 2,473 | 2,898 | |||||||||||
| Note 5 | 3,670 | 6,251 | 7,524 | |||||||||||
| Note 6 | 1,556 | 2,257 | 3,967 | |||||||||||
| Note 7 | 1,556 | 1,915 | 4,699 | |||||||||||
| $ | 14,606 | $ | 30,246 | $ | 51,651 | |||||||||
On April 23, 2020, GS Capital converted $7,341 in principal of the October 4, 2019 $84,000 face value note into 4,292,915 shares of common stock.
NOTE 610 –DERIVATIVE FINANCIAL INSTRUMENTS
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2020:
| June 30, 2020 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Compound embedded derivatives | 277,598,000 | $ | (334,222 | ) | ||||
| Total | 277,598,000 | $ | (334,222 | ) | ||||
| F-18 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
The following table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the three months ended June 30, 2020:
| The financings giving rise to derivative financial instruments and the income effects: | ||||
| Compound embedded derivatives | $ | (275,432 | ) | |
| Total gain (loss) | $ | (275,432 | ) | |
The Company’s Convertible Promissory Notes issued on October 4, 2019, October 31, 2019, December 5, 2019, December 31, 2019, January 27, 2020, February 19, 2020 and March 10, 2020 respectively, gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. In addition, the standards do not permit an issuer to account separately for individual derivative terms and features embedded in hybrid financial instruments that require bifurcation and liability classification as derivative financial instruments. Rather, such terms and features must be bundled together and fair valued as a single, compound embedded derivative. The Company has selected the Monte Carlo Simulations valuation technique to fair value the compound embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving compound embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Monte Carlo Simulations technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators.
Significant inputs and results arising from the Monte Carlo Simulations process are as follows for the embedded derivatives that have been bifurcated from the Convertible Notes and classified in liabilities:
| Inception | ||
| Quoted market price on valuation date | $0.0031 - $0.0058 | |
| Contractual conversion rate | $0.01 | |
| Contractual term to maturity | 1.00 Years – 1.13 Years | |
| Market volatility: | ||
| Equivalent Volatility | 15.89% - 319.40% | |
| Interest rate | 8.0% |
The following table reflects the issuances of compound embedded derivatives and the changes in fair value inputs and assumptions related to the compound embedded derivatives during the period ended June 30, 2020.
| June 30, 2020 | ||||
| Balance at April 1, 2020 | $ | 58,790 | ||
| Issuances: | ||||
| Compound embedded derivatives | – | |||
| Loss on changes in fair value inputs and assumptions reflected in income | 275,432 | |||
| Balance at June 30, 2020 | $ | 334,222 | ||
| F-19 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 11 - EQUITY
Preferred stockStock
There are 50,000,000 shares authorized as preferred stock, of which 40,000,000 are designated as Series B and 2,000,000 are designated as Series A. 8,000,000 shares have yet to be designated. All 2,000,000 shares of Series A preferred are issued and outstanding. Each share of Series A preferred is convertible into 240 shares of common stock. The Series A Preferred Stock votes with the Common Stock on all matters to be voted on by the common stock on an as-converted basis. On such matters, each holder of Series A Preferred Stock is entitled to 240 votes for each share of Series A Preferred Stock held by such shareholder.
Common Stock
Common stockStock Issuances for the three months ended June 30, 2019
On April 23, 2019, the Company issued 4,000,000 shares of common stock in exchange for services valued at $25,600 or $0.0064 per share.
On May 14, 2019, the Company sold 1,562,500 shares of common stock for $10,000 or $0.0064 per share.
On May 25, 2019, the Company sold 11,718,750 shares of common stock for $75,000 or $0.0064 per share.
On June 1, 2019, the Company issued 67,000,000 shares of common stock in exchange for services valued at $428,800 or $0.0064 per share.
On June 1, 2019, the Company issued 6,000,000 shares of common stock in exchange for the acquisition of UCL MMA LLC valued at $38,400$39,000 or $0.0064$0.0065 per share.
Common Stock Issuances for the three months ended June 30, 2020
On April 23, 2020, the Company issued 4,292,915 shares of stock to GS Capital in exchange for the conversion of $7,341 in convertible note principal.
On May 8, 2020, the Company issued 12,000,000 shares of stock to WLES LP LLC in exchange for the conversion of $30,000 in convertible note principal.
On June 16, 2020, the Company issued 4,000,000 shares of common stock to Veyo Partners LLC in exchange for investor relation services valued at $14,400 or $0.0036 per share.
As partNOTE 12 –LEASES
In connection with the acquisition of the Pinnacle CombatOne More Gym, LLC, acquisition, the Company issued 8,000,000 sharesassumed a building lease and two equipment leases. The lease terms are under 12 months. Under Topic 842, a short-term lease is a lease that, at the commencement date, has a ‘lease term’ of common stock valued at $51,20012 months or $0.0064 per share.less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Although short-term leases are in the scope of Topic 842, a simplified form of accounting is permitted. A lessee can elect, by class of underlying asset, not to apply the recognition requirements of Topic 842 and instead to recognize the lease payments as lease cost on a straight-line basis over the lease term. The Company has elected the short-term method to account for these leases.
| F-20 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2020
NOTE 713 – COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of June 30, 2019,2020, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.
The Company entered into employment agreements with its Chief Executive Officer and Executive Vice President as of November 24, 2017. Under the terms of these agreements the Company will be liable for severance and other payments under certain conditions. The employment agreement for the Executive Vice President is for a period of 36 months and renews for a successive two years unless written notice is provided by either party under the terms of the agreement. The employment agreement for the Chief Executive Officer can be terminated by the Chief Executive Officer upon three months written notice. Termination of the Chief Executive Officer requires 80% of the votes of all stockholders of the Company.
Each of the acquisition agreements contain a Management Services Agreement (“MSA”) whereby the Company agrees to pay a management fee based on certain performance targets. The MSA agreements expire 10 years from the acquisition agreement dates.
NOTE 8 – GOING CONCERN
The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At June 30, 2019 and March 31, 2019, the Company had $14,857 and $27,579 in cash and $53,199 and $85,372 in negative working capital, respectively. For the three months ended June 30, 2019 and 2018, the Company had a net loss of $491,512 and $34,513, respectively.Continued losses may adversely affect the liquidity of the Company in the future. In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
As a going concern, Management’s plan moving forward is to improve operating results through the live event sports businesses. Management believes these will operate with positive cash flows and facilitate acquisition of additional Sports related businesses. Management plans to finance the growth of the company and cover operating shortfalls by securing convertible loans and selling common stock.
NOTE 914 - SUBSEQUENT EVENTS
Convertible Promissory Note extension
On August 30, 2019, the Company entered into a Note Modification Agreement with WLES LP LLC, where the Holder agreed to extend the maturity date of the $60,000 face value loan from June 30, 2019 to January 15, 2022. In addition to the maturity date extension, the Holder has the option to convert the principal and interest at $.0064 per share.
Shares issued for services
On July 3, 2019 the Company issued 6,000,000 shares of common stock in exchange for services valued at $38,400 or $0.0064 per share.
Subscription Agreement
On July 8, 2019, the Company entered into a Subscription Agreement with a holder for the sale of 14,062,500 shares of common stock at $.0064 per share, or $90,000.
Shares issued for services
On July 15, 2019 the Company issued 30,500,000 shares of common stock in exchange for services valued at $195,200 or $0.0064 per share.
Subscription Agreement
On August 30, 2019, the Company entered into a Subscription Agreement with a holder for the sale of 15,625,000 shares of common stock at $0.0064 per share, or $100,000.
Business acquisition
On September 1, 2019, the Company completed an acquisition of 100% of the equity interest in Strike Hard Productions LLC, a fighting promotion business. The purchase price was $20,000 in cash and 9,000,000 shares of Restricted Common Stock (valued at $57,600), 3,000,000 shares issued to be issued to David Elder, 3,000,000 shares to be issued to James Sullivan and 3,000,000 shares to be issued to Matt Leavell, collectively the sellers of the equity interest in the acquisition. The initial accounting for this acquisition is not completed.
Subscription Agreement
On September 7, 2019, the Company entered into a Subscription Agreement with a holder for the sale of 7,812,500 shares of common stock at $0.0064 per share, or $50,000.
Subscription Agreement
On September 19, 2019, the Company entered into a Subscription Agreement with a holder for the sale of 11,718,750 shares of common stock at $0.0064 per share, or $75,000.
Related party debt
On September 27, 2019, the Company and B2 Management Group LLC (“B2MG”) entered into an agreement whereby B2MG agreed to return 7,500,000 shares of the Company’s common stock in exchange for the cancellation of $75,000 owed by B2MG to the Company.
Formation of wholly-owned subsidiary
On October 1, 2019, the Company formed a wholly-owned subsidiary called B2 Productions LLC. B2 Productions is an entity that supplies all the TV, PPV and media for B2 Fighting Series LIVE Events.
Securities purchase agreement
On October 4, 2019,2020, the Company entered into a Securities Purchase Agreement with GS Capital Partners, LLC, whereby the Company agreedpursuant to issue an $82,000 face value, 8% convertible note.
Convertible promissory note
On October 31, 2019,which the Company issued to GS Capital a face value $208,000 Convertible Promissory Note to GS Capital Partners, LLC.in the aggregate principal amount of $156,000. The NoteCompany received net proceeds of $150,000 after a $6,000 original note discount. The note has a maturity date of December 15,5, 2020 and the Company has agreed to pay interest on the unpaid principal balance of the Notenote at the rate of eight percent (8%) per annum from the date on which the Notenote is issued until the same becomes due and payable.payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Note containsCompany shall have the right to prepay the note, provided it makes a $6,000 original issue discount.payment to GS Capital as set forth in the note.
The outstanding principal amount of the Notenote is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months.months of the term of the note. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest trading prices of the Company’s common stock. The initial accounting for this note is not completed.
Common Stock.Stock Issuances
On August 18, 2020, the Company sold 13,333,334 shares of common stock for $100,000, or $0.0075 per share.
On August 18, 2020, the Company issued 5,071,885 shares of common stock in conversion of $7,500 in principal and $488 of accrued interest.
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of |
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the section titled “Risk Factors” of our post-qualification amendment toAnnual Report on Form 1-A10-K for the year ended March 31, 2020 filed qualified on October 9, 2019.August 19, 2020. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements
Basis of Presentation
We have sixseven wholly-owned subsidiaries:subsidiaries. Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, Colosseum Combat LLC which owns Colosseum Combat MMA in Indiana, Blue Grass MMA LLC which is a marketing company, United Combat League MMA LLC, Pinnacle Combat LLC, Strike Hard Productions, LLC, and B2 Productions LLC.
The consolidated financial statements, which include the accounts of the Company and its fivesix wholly owned subsidiaries, are prepared in conformity with GAAP.generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated.
Forward-Looking Statements
Some of the statements under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” and “would” or the negatives of these terms or other comparable terminology.
You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important factors, which you should consider in evaluating our forward-looking statements. These factors include, among other things:
| · | The unprecedented impact of COVID-19 pandemic on our business, customers, employees, consultants, service providers, stockholders, investors and other stakeholders; |
| · | The speculative nature of the business we intend to develop; |
| · | Our reliance on suppliers and customers; |
| · | Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern;” |
| · | Our ability to effectively execute our business plan; |
| · | Our ability to manage our expansion, growth and operating expenses; |
| · | Our ability to finance our businesses; |
| · | Our ability to promote our businesses; |
| · | Our ability to compete and succeed in highly competitive and evolving businesses; |
| · | Our ability to respond and adapt to changes in technology and customer behavior; and |
| · | Our ability to protect our intellectual property and to develop, maintain and enhance strong brands. |
| 4 |
Although the forward-looking statements in this Quarterly Report on Form 10-Q are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to update this Quarterly Report on Form 10-Q or otherwise make public statements updating our forward-looking statements.
Critical Accounting Policies
Basis of Accounting
The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended June 30, 2020 are not necessarily indicative of the results to be expected for the year ending March 31, 2021.
The accounts are maintained and the consolidated financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates
Management uses estimates and assumptions in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. The most significant assumptions and estimates relate to the valuation of derivative liabilities and the valuation of assets and liabilities acquired through business combinations. Actual results could differ from these estimates and assumptions.
Cash and Cash Equivalents
We considerThe Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. We maintainThe Company maintains deposits primarily in four financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”("FDIC"). We haveThe Company has not experienced any losses related to amounts in excess of FDIC limits.limits or $250,000. The Company did not have any cash in excess of FDIC limits at June 30, 2020 and 2019, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist primarily of accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
| 5 |
Property and Equipment
Property and equipment are carried at cost. Depreciation is provided on the straight-line method over the assets’ estimated service lives. Expenditures for maintenance and repairs are charged to expense in the period in which they are incurred, and betterments are capitalized. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are reflected in the accompanying consolidated statement of operations of the respective period. The estimated useful lives range from three3 to seven7 years.
Goodwill
Goodwill represents the cost in excess of the fair value of net assets acquired in business combinations. We testThe Company tests goodwill for impairment on an annual basis and when events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is deemed to be impaired if the carrying amount of goodwill exceeds its estimated fair value. As of June 30, 2020, there were no impairment charges.
Revenue Recognition
Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that we expectthe Company expects to receive in exchange for those goods. We applyThe Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfythe Company satisfies each performance obligation.
WeThe Company only applyapplies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Financial Accounting Standards Board (“FASB”FASB”) Accounting Standards Codification (“ASC”ASC”) 606 at contract inception, we reviewthe Company reviews the contract to determine which performance obligations wethe Company must deliver and which of these performance obligations are distinct. We recognizeThe Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, our performance obligationsThe majority of revenues are transferredreceived from ticket and beverage sales before and during the live events. Sponsorship revenue is also recognized when the live event takes place. Any revenue received for events that have yet to customers at a pointtake place are recorded in time, typically upon delivery.deferred revenue.
Income Taxes
We followThe Company follows Section 740-10-30 of the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated Statements of Operations in the period that includes the enactment date. Through June 30, 2019, we have2020, the Company has an accumulated deficit.expected loss. Due to uncertainty of realization for these losses, a full valuation allowance is expected.recorded. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.
Stock-Based Compensation
We record
| 6 |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. In addition, Receivables that are factored through the Company's Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.
Impairment of Long-Lived Assets
In accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved. There were no impairment charges recorded during the three months ended June 30, 2020 and 2019.
Inventory
Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2020 and March 31, 2020, the Company had outstanding balances of Finished Goods Inventory of $7,256 and $7,256, respectively.
Earnings Per Share (EPS)
The Company utilize FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included because their effect would be anti-dilutive.
The following table sets for the computation of basic and diluted earnings per share the three months ended June 30, 2020 and 2019:
June 30, 2020 | June 30, 2019 | |||||||
| Basic and diluted | ||||||||
| Net loss | $ | (495,506 | ) | $ | (491,512 | ) | ||
| Net loss per share | ||||||||
| Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic & diluted | 550,425,206 | 411,478,970 | ||||||
| 7 |
Stock Based Compensation
The Company records stock-based compensation in accordance with the provisions of FASB ASC Topic 718, “Accounting for Stock Compensation,” which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance provided under ASC.
Topic 718, we recognizethe Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. As of June 30, 2019,2020, there were no options outstanding.
Recently Adopted Accounting Pronouncements
On June 20, 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on April 1, 2019. The adoption of this standard did not have a material impact on the consolidated financial statements.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment”, which eliminates the requirement to calculate the implied fair value of goodwill, but rather requires an entity to record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. We do not expect the adoption of this ASU to have a material effect on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective for the Registrants for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted. The Company is currently assessing the impact of this standard on their Financial Statements.
In September 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. ASU 2016-13 is effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and we dothe Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Organization and Nature of Business
In February 2017, ourthe Board of Directors of B2Digital, Incorporated, a Delaware corporation (“B2Digital” or the “Company”) approved a complete restructuring, new management team and strategic direction for the Company. Capitalizing on its history in television, video and technology, we are now forging ahead and becoming a full-service live event sports company.
Our Chairman and CEO is now Greg P. Bell. Mr. Bell has over 30 years of global experience developing more than 20 companies in the sports, television, entertainment, digital distribution and banking transaction industries. Capitalizing on the combination of his expertise, relationships and experience as well as his involvement with more than 40,000 live events over his career for major sports leagues and entertainment venues, we are in the process of developing and acquiring companies to become a premier vertically integrated live event sports company.
Our first strategy is to build an integrated live event minor league for the mixed martial arts (“MMA”) marketplace, which is a billion-dollar industry. We are creating and developing minor league champions that will move on to the MMA major leagues from the B2 Fighting Series (“B2FS”). This will be accomplished by sponsoring operating live events, acquiring existing MMA promotions and then inviting those champions to the B2FS Regional and National Championship Series. We own all media and merchandising rights and digital distribution networks for the B2FS. This concept was developed and test marketed for two years by Mr. Bell’s B2 Management Group, LLC.
2017 marked the kickoff of the B2FS by sponsoring and acquiring MMA regional promotion companies for the development of the B2FS. Our second strategy is to add additional sports, leagues, tournaments and special events to our live event business model. This will enable us to capitalize on our core technologies and business models that will be key to broadening the revenue base of our live event core business. We will also be developing and expanding the B2Digital live event systems and technologies. These include systems for event management, digital ticketing sales, digital video distribution, digital marketing, Pay-Per View (“PPV”), fighter management, merchandise sales, brand management and financial control systems.
Historically, we had been a provider of in-room, on-demand video entertainment and satellite services to the domestic lodging industry. In the past, we had provided video services to over 50,000 hotel rooms in the lodging industry. PPV lost a great deal of market share due to the increased internet use by hotel guests. With this loss, our Board of Directors agreed to dissolve Hotel Movie Network on March 11, 2010.
Business of the Company
The Company has fiveseven wholly-owned subsidiaries as of the balance sheet date.subsidiaries. Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, Colosseum Combat LLC which owns Colosseum Combat MMA in Indiana, Blue Grass MMA LLC which is a marketing company, United Combat League MMA LLC, and Pinnacle Combat LLC. All significant intercompany balancesLLC, Strike Hard Productions, LLC, ONE More Gym, and transactions have been eliminated.B2 Productions LLC.
Results of Operations
The following information represents our results of operations for three months ended June 30, 2019 compared to June 30, 2018.
Three Months Ended June 30, 20192020 Compared to the Three Months Ended June 30, 20182019
| For the three months ended June 30, 2019 | For the three months ended June 30, 2018 | |||||||||||||||
| (unaudited) | (unaudited) | Change | % Change | |||||||||||||
| Live event revenue | $ | 85,636 | $ | 93,603 | (7,967 | ) | (8.51% | ) | ||||||||
| Live event expenses | 61,952 | 82,028 | (20,076 | ) | (24.47% | ) | ||||||||||
| Live event income- net | 23,684 | 11,575 | 12,109 | 104.61% | ||||||||||||
| General and administrative corporate expenses | ||||||||||||||||
| Stock compensation expense | 454,400 | – | 454,400 | 100.00% | ||||||||||||
| General & administrative expenses | 56,113 | 42,232 | 13,881 | 32.87% | ||||||||||||
| Depreciation expense | 3,312 | 2,499 | 813 | 32.53% | ||||||||||||
| Total general and administrative corporate expenses | 513,825 | 44,731 | 469,094 | 1048.70% | ||||||||||||
| Loss from continuing operations | (490,141 | ) | (33,156 | ) | 456,985 | 1378.29% | ||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (1,371 | ) | (1,357 | ) | 14 | 1.03% | ||||||||||
| Total other income (expense) | (1,371 | ) | (1,357 | ) | 14 | 1.03% | ||||||||||
| Net loss | $ | (491,512 | ) | $ | (34,513 | ) | 456,999 | 1324.14% | ||||||||
Revenue
We had revenues of $60,021 for the three months ended June 30, 2020 versus revenues of $85,636 for the three months ended June 30, 2019 versus revenues2019. There was a decrease of $93,603$85,577 in live event revenue due to the effects of COVID-19. There was an increase in gym revenue of 59,962, or 100% as the Company acquired a gym since the comparative period.
| 9 |
Cost of Sales
We incurred cost of sales of $1,312 for the three months ended June 30, 2018. The decrease2020 versus cost of $7,967 was primarily due to a decrease in live event VIP ticket sales.
Live Event Expenses
We incurred live event expensessales of $61,952 for the three months ended June 30, 2019 versus live event expenses of $82,028 for the three months ended June 30, 2018.2019. The decrease of $20,076 was primarily due to a decrease in fighter and venue expenses.
Live Event Income- Net
We had live event income-net of $23,684 for the three months ended June 30, 2019 versus live event income-net of $11,575 for the three months ended June 30, 2018. The increase of $12,109 was primarily$60,640 is due to a decrease in live event expenses.events due to the effects of COVID-19.
General and administrative corporate expensesOperating Expenses
Stock Compensation Expenses
We recorded stock compensation expense in the amount of $454,400 for the three months ended June 30, 2019 for common stock issued for services. We did not have any stock compensation expense for the three months ended June 30, 2018.
General & Administrative Expenses
General and administrative expenses include professional fees, all costs associated with marketing, press releases, public relations, rent, sponsorships and other expenses. We incurred general and administrative expenses of $56,113$164,788 for the three months ended June 30, 20192020 versus general and administrative expenses of $42,232$510,513 for the three months ended June 30, 2018.2019. The increasedecrease of $13,881$345,725 was primarily due to increaseddecreased operations associated with new business acquisitions.as a result of COVID-19 and stock-based compensation of $454,400.
Depreciation and Amortization Expense
We incurred depreciation and amortization expense of $32,972 for the three months ended June 30, 2020 versus depreciation expense of $3,312 for the three months ended June 30, 2019 versus depreciation expense of $2,499 for the three months ended June 30, 2018.2019. The increase of $813$29,600 was due to the purchase of fixed and intangible assets during the three months ended June 30, 2019 related to a result of business acquisition.acquisitions.
Other Income (Expense)
Other Expense
Our other income and expenses include interest expense. We incurredexpense, gain on forgiveness of loan, grant income, loss on settlement of debt, and change in fair value of derivative liabilities. The increase of $356,455 was primarily due to interest expense and changes in fair value of $1,371 for the three months ended June 30, 2019 versus interest expenses of $1,357 for the three months ended June 30, 2018.derivative instruments.
Net Losses
We incurred a net loss of $491,512 for the$495,506 for the three months ended June 30, 20192020 versus a net loss of $34,513$491,512 for the three months ended June 30, 2018. The increase of $456,999 was primarily due to increased operations from acquisitions and stock based compensation expense.2019.
Current Liquidity and Capital Resources for the three months ended June 30, 20192020 compared to the three months ended June 30, 20182019
| 2019 | 2018 | |||||||
| Summary of Cash Flows: | ||||||||
| Net cash used by operating activities | $ | (37,937 | ) | $ | (16,775 | ) | ||
| Net cash used by investing activities | (59,785 | ) | (1,045 | ) | ||||
| Net cash provided by financing activities | 85,000 | 25,641 | ||||||
| Net increase (decrease) in cash and cash equivalents | (12,722 | ) | 7,821 | |||||
| Beginning cash and cash equivalents | 27,579 | 16,468 | ||||||
| Ending cash and cash equivalents | $ | 14,857 | $ | 24,289 | ||||
| 2020 | 2019 | |||||||
| Summary of Cash Flows: | ||||||||
| Net cash used by operating activities | $ | (107,325 | ) | $ | (37,937 | ) | ||
| Net cash used by investing activities | (1,554 | ) | (59,785 | ) | ||||
| Net cash provided by financing activities | 117,166 | 85,000 | ||||||
| Net increase (decrease) in cash and cash equivalents | 8,287 | (12,722 | ) | |||||
| Beginning cash and cash equivalents | 46,729 | 27,579 | ||||||
| Ending cash and cash equivalents | $ | 55,016 | $ | 14,857 | ||||
Operating Activities
Cash used byin operations of $107,325 during the three months ended June 30, 2020 was primarily a result of our $495,506 net loss reconciled with our net non-cash expenses relating to stock compensation, depreciation expense, inventory, prepaid expenses, accounts payable, accrued liabilities and deferred compensation. Cash used in operations of $37,937 during the three months ended June 30, 2019 was primarily a result of our $491,512 net loss reconciled with our net non-cash expenses relating to stock compensation, depreciation expense, inventory, prepaid expenses, accounts payable, accrued liabilities and deferred compensation. Cash
Investing Activities
Net cash used in operations of $16,775 duringinvesting activities for the three months ended June 30, 2018 was primarily a result2020 of our $34,513 net loss reconciled with our net non-cash expenses relating$1,554 resulted from the from the payments to stock compensation, depreciation expense, inventory, prepaid expenses, accounts payable, accrued liabilitiesrelated parties in the amount of $470 and deferred compensation.
Investing Activities
capital expenditures in the amount of $1,084. Net cash used in investing activities for the three months ended June 30, 2019 of $59,785 resulted from the business acquisitions net of cash in the amount of $10,000 and money loanedpayments to a related partyparties in the amount of $49,785. Net cash used in investing activities for the three months ended June 30, 2018 of $1,045 resulted from the acquisition of fixed assets.
Financing Activities
Net cash provided by financing activities was $85,000$117,166 for three months ended June 30, 2020, which consisted of $122,800 from proceeds from the issuance of notes payable, $5,000 in payments related to payable due for business acquisitions, and $2,231 payment on notes payable. Net cash provided by financing activities was $85,00 for three months ended June 30, 2019, which consisted of $85,000 in proceeds from the issuance of common stock. Net cash provided by financing activities was $25,641 for three months ended June 30, 2018, which consisted of $38,670 in proceeds from the issuance of common stock and $13,029 in payments on notes payable.
Future Capital Requirements
Our current available cash and cash equivalents are insufficient to satisfy our liquidity requirements. Our capital requirements for fiscal year 2020 will depend on numerous factors, including management’s evaluation of the timing of projects to pursue. Subject to our ability to generate revenues and cash flow from operations and our ability to raise additional capital (including through possible joint ventures and/or partnerships), we expect to incur substantial expenditures to carry out our business plan, as well as costs associated with our capital raising efforts and being a public company.
Our plans to finance our operations include seeking equity and debt financing, alliances or other partnership agreements, or other business transactions, that would generate sufficient resources to ensure continuation of our operations.
The sale of additional equity or debt securities may result in additional dilution to our shareholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. Any such required additional capital may not be available on reasonable terms, if at all. If we were unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned activities and limit our operations which could have a material adverse effect on our business, financial condition and results of operations.
Inflation
The amounts presented in our consolidated financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Going concernConcern
The Company'saccompanying financial statements arehave been prepared using the generally accepted accounting principles applicable toon a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At June 30, 2019 and March 31, 2019, the Company had $14,857 and $27,579 in cash and $53,200 and $85,372 in negative working capital, respectively.basis. For the three months ended June 30, 2019 and 2018,2020, the Company had a net loss of $491,512$495,506, had net cash used in operating activities of $107,325, and $34,513, respectively.Continued losses may adversely affecthad negative working capital of $1,204,505. These matters raise substantial doubt about the liquidityCompany’s ability to continue as a going concern for a period of one year from the Companydate of this filing. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future. In viewManagement plans to provide for the Company’s capital requirements by continuing to issue additional equity and debt securities. The outcome of thethese matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations ofcannot be predicted at this time and there are no assurances that, if achieved, the Company which in turn is dependent upon the Company's abilitywill have sufficient funds to raise additional capital, obtain financing and to succeed inexecute its future operations.business plan or generate positive operating results. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary shouldresult from the Company be unable to continue as a going concern.
As a going concern, Management’s plan moving forward is to improve operating results through the live event sports businesses. Management believes these will operate with positive cash flows and facilitate acquisitionoutcome of additional Sports related businesses. Management plans to finance the growth of the company and cover operating shortfalls by securing convertible loans and selling common stock.this uncertainty.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Quantitative and Qualitative Disclosures about Market Risk
In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.
The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our significant estimates and assumptions include the fair value of our common stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to our deferred tax assets.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Our management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.
| 12 |
Item 4. Controls and Procedures
| Item 4. | Controls and Procedures. |
Disclosure Controls and Procedures
The Company has established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to the Company’s Chief Executive Officer, Greg P. Bell, who serves as our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Mr. Bell, evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of June 30, 2019.2020. Based on his evaluation, Mr. Bell concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2019.2020.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the Company’s most recent fiscal quarter ended June 30, 2019,2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Item 2. Unregistered SalesDuring the three months ended June 30, 2020, two lenders converted a portion of Equity Securities and Usetheir promissory notes into an aggregate of Proceeds
Shares Issued for Services
On April 23, 2019 the Company issued 4,000,00016,292,915 shares of common stock in exchange for services valued at $25,600 or $0.0064 per share.
On June 1, 2019 the CompanyCompany’s Common Stock. The securities were issued 67,000,000 shares of common stock in exchange for services valued at $428,800 or $0.0064 per share.
These issuances were made pursuant to the exemption fromwithout registration contained in Section 4(a)(2) ofunder the Securities Act of 1933, as amended, (the “Securities Act”).
Shares Sold Under Regulation A
During the quarter ended June 30, 2019, the Company sold an aggregate of 13,281,250 shares of common stock for an aggregate of $85,000 at $0.0064 per share.
These sales were made without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Regulation ASection 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. No selling commissions were paid in connection with the issuance of the Securities Act.securities.
Shares Sold for Acquisitions
On June 1, 2019 the Company issued 6,000,000 shares of common stock in exchange for the acquisition of UCL MMA LLC valued at $38,400 or $0.0064 per share.
As part of the Pinnacle Combat LLC acquisition, the Company issued 8,000,000 shares of common stock valued at $51,200 or $0.0064 per share.
These sales were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
| Item 6. | Exhibits. |
| SEC Ref. No. | Title of Document |
| 31.1* | Rule 13a-14(a) Certification by Principal Executive and Financial Officer |
| Section 1350 Certification of Principal Executive and Financial Officer | |
| XBRL Instance Document | |
| XBRL Taxonomy Extension Schema Document | |
| XBRL Taxonomy Extension Calculation Linkbase Document | |
| XBRL Taxonomy Extension Definition Linkbase Document | |
| XBRL Taxonomy Extension Label Linkbase Document | |
| XBRL Taxonomy Extension Presentation Linkbase Document |
__________________
*Filed with this Report.
**Furnished with this Report.
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.
| B2Digital, Incorporated | ||
| Date: | By | /s/ Greg P. Bell |
| Greg P. Bell, Chief Executive Officer | ||
| (Principal Executive Officer and Principal | ||
| Financial Officer) | ||