B2DIGITAL, INCORPORATED 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
Basis of Presentation
We have seven wholly-owned subsidiaries.
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
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 nature of our outstanding debt being senior secured and the risk of
foreclosure on our assets by the lender;
· 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;"
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· 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 service debt, when due and avoid defaults;
· 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
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
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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 3-7 years.
Assets Held for Sale
We consider properties to be Assets held for sale when management approves and
commits to a plan to dispose of a property or group of properties. The property
held for sale prior to the sale date is separately presented on the balance
sheet as Assets held for sale. During the fourth quarter of fiscal 2022
management initiated the sale of the gyms located in
Long-Lived Assets
Management reviews long-lived assets, including finite-lived intangible assets, for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related assets are estimated over the asset's useful life on an undiscounted basis. For assets held for use, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. If the evaluation indicates that the carrying value of the asset may not be recoverable, the potential impairment is measured using fair value. Impairment losses for assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.
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.
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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
Live Event 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 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
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 for gym membership dues. Members pay their dues on the monthly anniversary of when they join the gym. Dues are recognized as revenue over the period they are earned. Any unearned dues are recorded in deferred revenue.
Discontinued Operations
Discontinued operations comprise those activities disposed of during the period
or classified as held for sale at the end of the period. It represents a
separate, major line of business clearly distinguished for operational and
financial reporting purposes. Due to the efforts of the Company to sell
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
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.
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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. During the three months ended
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
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
The following table sets for the computation of basic and diluted earnings per
share the three months ended
December 31, 2022 December 31, 2021
Basic and diluted
Net loss from continuing operations $ (10,153,004 ) $ (2,556,102 )
Net loss from discontinued operations $ (606,950 ) $ (137,015 )
Net loss from operations $ (10,760,485 ) $ (2,693,117 )
Net loss per share from continuing operations
Basic $ (0.003 ) $ (0.002 )
Diluted $ (0.003 ) $ (0.002 )
Net loss per share from discontinued operations
Basic $ (0.000 ) $ (0.000 )
Diluted $ (0.000 ) $ (0.000 )
Net loss per share from operations
Basic $ (0.003 ) $ (0.002 )
Diluted $ (0.003 ) $ (0.002 )
Weighted average number of shares outstanding:
Basic & diluted 3,207,338,338 1,452,481,989
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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
On
Leases
In
On
Operating lease right of use ("ROU") assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is presented on the statements of operations.
As permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of the new guidance to short term leases (leases with a lease term of twelve months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term.
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Recent Accounting Pronouncements
In
In
Organization and Nature of Business
We are the premier development league for MMA. We operate in two major branded businesses: The B2 Fighting Series and The Official B2 Training Facilities Network, which is comprised of our two ONE MORE Gym Facilities. We primarily derive revenues from live event ticket sales, pay-per-view ticket sales, content media marketing, and fitness facility memberships.
The Live Events business (the B2 Fighting Series) is primarily engaged with scheduling, organizing, and producing live MMA events, marketing those events, and generating both live audience and PPV ticket sales, as well as creatively marketing the archived content generated through its operations in this business. We own all media rights, merchandising rights, digital distribution networks of the B2 Fighting Series. We also plan to generate additional revenues over time from endorsement deals with global brands as its audience grows. The B2 Fighting Series is licensed in 18 U.S. states to operate LIVE MMA Fights. Most B2 Fighting Series events sell out at the gate.
The B2 Training Facilities business operates primarily through our ONE More Gym Facilities brand. We currently operate two ONE More Gym locations.
For more information about
Results of Operations for the three months ended
Revenue
We had total revenues of
Operating Expenses
Operating expenses are all expenses including merchant fees, payroll, utilities,
professional fees, all costs associated with marketing, press releases, public
relations, rent, sponsorships, and other expenses. We incurred operating
expenses of
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Depreciation and Amortization Expense
We incurred depreciation and amortization expense of
Other Income (Expense)
Our other income and expenses include loss on extinguishment of debt, financing
expense, change in fair value of derivative liabilities, day-one derivative
expense and interest expense. We incurred other expenses of
Net Losses
We incurred a net loss from continuing operations of
Results of Operations for the nine months ended
Revenue
We had total revenues of
Operating Expenses
Operating expenses are all expenses including merchant fees, payroll, utilities,
professional fees, all costs associated with marketing, press releases, public
relations, rent, sponsorships, and other expenses. We incurred operating
expenses of
Depreciation and Amortization Expense
We incurred depreciation and amortization expense of
Other Income (Expense)
Our other income and expenses include gain on sale of assets, gain on
extinguishment of debt, financing expense, change in fair value of derivative
liabilities, day-one derivative expense and interest expense. We incurred other
expenses of
Net Losses
We incurred a net loss from continuing operations of
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Current Liquidity and Capital Resources for the nine months ended
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