B2Digital, Inc. - FORM 10-Q

Attached files

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EX-32.1 - CERTIFICATION - B2Digital, Inc.	b2digital_ex3201.htm
EX-31.1 - CERTIFICATION - B2Digital, Inc.	b2digital_ex3101.htm

Table of Contents

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 ended June 30, 2020

☐		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. Yes ☒ No ☐

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). Yes ☒ 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 ☐ No ☒

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 August 19, 2020, was 577,965,438.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION	3
Item 1. Financial Statements.	3
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.	4
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	12
Item 4. Controls and Procedures.	13
PART II—OTHER INFORMATION	14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	14
Item 6. exhibits.	14
SIGNATURES	15

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements.

Consolidated Financial Statements

B2Digital, Incorporated.

		Page
Consolidated Balance Sheets as of June 30, 2020 (unaudited) and March 31, 2020		F-1

Consolidated Statements of Operations (unaudited) for the three months ended June 30, 2020 and 2019		F-2

Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) for the three months ended June 30, 2020 and 2019		F-3

Consolidated Statements of Cash Flows (unaudited) for the three months ended June 30, 2020 and 2019		F-4

Notes to the Unaudited Consolidated Financial Statements		F-5

B2Digital, Incorporated

Consolidated Balance Sheets

	As of June 30, 2020 (Unaudited)			As of March 31, 2020
Assets
Current assets
Cash and cash equivalents	$	55,016		$	46,729
Inventory		7,256			7,256
Deposits and prepaid expenses		2,980			3,120
Total current assets		65,252			57,105

Property and equipment, net of accumulated depreciation		333,534			351,393
Intangible assets, net of accumulated amortization		182,922			196,951
Goodwill		172,254			172,254
Total Assets	$	753,962		$	777,703

Liabilities & Stockholders' Deficit
Current liabilities
Accounts payable & accrued liabilities	$	124,749		$	131,700
Deferred revenue		21,284			13,992
Note payable- current maturity		137,250			14,000
Note payable- in default		14,000			–
Payable due for business acquisitions		10,000			15,000
Convertible notes payable		642,461			598,150
Derivative liabilities		334,222			58,790
Due to shareholder		241			711
Total current liabilities		1,284,207			832,343

Note payable- long-term		106,606			156,727

Total Liabilities		1,390,813			989,070

Commitments and contingencies (Note 14)

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		3,670,016			3,600,197
Accumulated deficit		(4,312,484	)		(3,816,978	)
Total Stockholders' Deficit		(636,851	)		(211,367	)
Total Liabilities and Stockholders' Deficit	$	753,962		$	777,703

See accompanying notes to the unaudited consolidated financial statements.

F-1

B2Digital, Incorporated

Consolidated Statements of Operations (Unaudited)

	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 notes to the unaudited consolidated financial statements.

F-2

B2Digital, Incorporated

Consolidated Statement of Changes in Stockholders' Equity (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, 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 notes to the unaudited consolidated financial statements.

F-3

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 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 seven wholly-owned subsidiaries. Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, Colosseum Combat LLC which owns Colosseum Combat MMA in Indiana, United Combat League MMA LLC, Pinnacle Combat LLC, Strike Hard Productions, LLC, ONE More Gym, and B2 Productions LLC.

The consolidated financial statements, which include the accounts of the Company and its seven 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 interim consolidated financial statements are condensed 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 in conformity with accounting principles generally accepted in the United States of 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 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. The majority of revenues are received 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 take place are recorded in 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, 2020, the Company has an expected loss. Due to uncertainty of realization for these losses, a full valuation allowance is 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

F-8

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

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, 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, 2020 there were no options outstanding.

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.

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, 2020, 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 from 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 deferred 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 following 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 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 7 – 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

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-12

B2DIGITAL, INCORPORATED

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
8,000,000 shares of common stock issued to the sellers valued using an observable market price		62,400
Total consideration	$	82,400

Fair values of identifiable net assets:
Property & equipment:
Cages	$	54,000
Event asset (barriers)		3,420
Truck/trailer		1,710
Venture lighting system		14,250
Total identifiable net assets		73,380

Intangible assets:
Licenses for the right to hold fight events		34,048

Fair value of liabilities assumed:
Credit card liability		25,028

Fair value of net identifiable assets (liabilities) acquired	$	82,400

F-13

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

Strike Hard Productions LLC- 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, 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 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
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

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 acquisition. As of June 30, 2020, the Company owes $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 determined 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 be three years.

F-15

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

NOTE 8 - 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 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.

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 10 –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 Stock

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 Stock 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 $39,000 or $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.

NOTE 12 –LEASES

In connection with the acquisition of the One More Gym, LLC, the Company assumed 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 12 months or 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 13 – 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, 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 14 - SUBSEQUENT EVENTS

Convertible Promissory Note

On August 4, 2020, the Company entered into a Securities Purchase Agreement with GS Capital pursuant to which the Company issued to GS Capital a Convertible Promissory Note in the aggregate principal amount of $156,000. The Company received net proceeds of $150,000 after a $6,000 original note discount. The note has a maturity date of December 5, 2020 and the Company has agreed to pay interest on the unpaid principal balance of the note at the rate of eight percent (8%) per annum from the date on which the note is 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 note, provided it makes a payment to GS Capital as set forth in the note.

The outstanding principal amount of the note 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 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 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.

F-21

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

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 Annual Report on Form 10-K for the year ended March 31, 2020 filed on 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 seven 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, Pinnacle Combat LLC, Strike Hard Productions, LLC, and B2 Productions LLC.

The consolidated financial statements, which include the accounts of the Company and its six 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.

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.

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.

Use of Estimates

Cash and Cash Equivalents

Fair Value of Financial Instruments

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

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

Goodwill

Revenue Recognition

Income Taxes

Concentration of Credit Risk

Impairment of Long-Lived Assets

Inventory

Earnings Per Share (EPS)

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

Stock Based Compensation

Recently Adopted Accounting Pronouncements

Organization and Nature of Business

In February 2017, the 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

Results of Operations

Three Months Ended June 30, 2020 Compared to the Three Months Ended June 30, 2019

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. There was a decrease of $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.

Cost of Sales

We incurred cost of sales of $1,312 for the three months ended June 30, 2020 versus cost of sales of $61,952 for the three months ended June 30, 2019. The decrease of $60,640 is due to a decrease in live events due to the effects of COVID-19.

Operating Expenses

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 $164,788 for the three months ended June 30, 2020 versus general and administrative expenses of $510,513 for the three months ended June 30, 2019. The decrease of $345,725 was primarily due to decreased operations 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. The increase of $29,600 was due to the purchase of fixed and intangible assets a result of business acquisitions.

Other Income (Expense)

Other Expense

Our other income and expenses include interest expense, 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 derivative instruments.

Net Losses

We incurred a net loss of $495,506 for the three months ended June 30, 2020 versus a net loss of $491,512 for the three months ended June 30, 2019.

Current Liquidity and Capital Resources for the three months ended June 30, 2020 compared to the three months ended June 30, 2019

	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 in 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.

Investing Activities

Net cash used in investing activities for the three months ended June 30, 2020 of $1,554 resulted from the from the payments to related parties in the amount of $470 and 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 business acquisitions in the amount of $10,000 and payments to related parties in the amount of $49,785.

Financing Activities

Net cash provided by financing activities was $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.

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 Concern

The accompanying financial statements have been prepared on a going concern basis. For the three months ended June 30, 2020, the Company had a net loss of $495,506, had net cash used in operating activities of $107,325, and had negative working capital of $1,204,505. 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.

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.

As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.

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, 2020. Based on his evaluation, Mr. Bell concluded that the Company’s disclosure controls and procedures were effective as of June 30, 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, 2020, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

During the three months ended June 30, 2020, two lenders converted a portion of their promissory notes into an aggregate of 16,292,915 shares of the Company’s Common Stock. The securities were issued without registration under the Securities Act of 1933, as amended, by reason of the exemption from registration afforded by the provisions of Section 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.

Item 6.

Exhibits.

SEC Ref. No.	Title of Document
31.1*	Rule 13a-14(a) Certification by Principal Executive and Financial Officer
32.1**	Section 1350 Certification of Principal Executive and Financial Officer
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

__________________

*Filed with this Report.

**Furnished with this Report.

SIGNATURES

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: August 19, 2020	By	/s/ Greg P. Bell
		Greg P. Bell, Chief Executive Officer
		(Principal Executive Officer and Principal
		Financial Officer)

B2Digital, Inc. - FORM 10-Q - August 19, 2020

Attached files

B2Digital, Inc. Reports