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" herein. 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 ten wholly-owned subsidiaries.
The consolidated financial statements, which include the accounts of the Company
and its ten 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 Annual Report on Form 10-K 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.
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You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Annual Report on Form 10-K 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 Annual Report on Form 10-K are based on our beliefs, assumptions, and expectations, considering 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 Annual Report on Form 10-K or otherwise make public statements updating our forward-looking statements.
Critical Accounting Policies
Basis of Accounting
The accompanying consolidated financial statements were prepared in conformity
with
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.
20 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
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 three to seven 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.
21 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
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.
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. There were no impairment charges recorded during the years 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 utilizes 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 years ended
March 31, March 31,
2022 2021
Basic and diluted
Net loss $ (11,276,819 ) $ (5,380,270 )
Net loss per share
Basic $ (0.008 ) $ (0.008 )
Diluted $ (0.008 ) $ (0.008 )
Weighted average number of shares outstanding:
Basic & diluted 1,449,504,359 684,096,652
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
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On
During the years ended
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.
Recently Adopted Accounting Pronouncements
In
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Organization and Nature of Business
We are the premier development league for MMA. We operate in two major branded segments: 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 segment (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 segment. 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 20 U.S. states to operate LIVE MMA Fights. Most B2 Fighting Series events sell out at the gate. We now operate at a pace of more than 40 events per year.
The B2 Training Facilities segment 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 Year 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 forgiveness of loan, gain on
bargain purchase, grant income, loss on extinguishment of debt, gain on
extinguishment of debt, change in fair value of derivative liabilities and
interest expense. We incurred other expenses of
25 Net Losses
We incurred a net loss of
Current Liquidity and Capital Resources for the Year Ended
March 31, 2022 2021
Summary of Cash Flows:
Net cash used by operating activities
(757,170 ) (715,737 )
Net cash provided by financing activities 7,192,741 2,843,448 Net increase in cash and cash equivalents (82,553 ) 75,447 Beginning cash and cash equivalents
122,176 46,729
Ending cash and cash equivalents $ 39,623 $ 122,176
Operating Activities
Cash used in operations of
Investing Activities
Net cash used in investing activities for the year ended
Financing Activities
Net cash provided by financing activities was
26 Future Capital Requirements
Our current available cash and cash equivalents are insufficient to satisfy our liquidity requirements. Our capital requirements for the fiscal year 2022-23 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 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 consolidated financial statements have been prepared on a going
concern basis. For the year ended
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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