UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)(Mark One)
of the Securities Exchange Act of
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2021 |
For the quarter ended June 30, 2001Or
| ☐ | 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: 0-11882File Number: 000-11882
TELECOMMUNICATION PRODUCTS, INC.
B2Digital, Incorporated
(Exact name of registrant as specified in its charter)
Colorado
| 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
(State or other jurisdiction of incorporation or organization)
84-0916299
(I.R.S. Employer Identification No.)
P. O. Box l7013, Golden, Colorado 80402
(address of principal executive offices)
Registrant'sRegistrant’s telephone number, including area code: (303)278 - -2725code)
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 thesuch filing requirements for at least the past 90 days. Yes X☒ 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 each of the registrant's classes ofregistrant’s common stock, aspar value of the latest practicable date: 22,492,800 as of June 30, 2001.$0.00001 on November 15, 2021, was .
ITEM 1
TABLE OF CONTENTS
| 2 |
PART I - FINANCIAL STATEMENTSINFORMATION
TELECOMMUNICATION PRODUCTS, INC.
BALANCE SHEETS (Unaudited)
MARCH 31, 2001
|
|
|
| ||
|
|
|
|
|
|
PROPERTY AND EQUIPMENT (Note 1)B2Digital, Incorporated
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheets
As of 2021 | As of 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 273,912 | $ | 122,176 | ||||
| Deposits and prepaid expenses | 80,794 | 10,681 | ||||||
| Total current assets | 354,706 | 132,857 | ||||||
| Notes receivable & other receivables | 43,947 | 35,400 | ||||||
| Operating lease right-of-use asset | 2,040,053 | 1,575,792 | ||||||
| Property and equipment, net of accumulated depreciation | 1,144,177 | 944,999 | ||||||
| Intangible assets, net of accumulated amortization | 218,823 | 224,890 | ||||||
| Total Assets | $ | 3,801,706 | $ | 2,913,938 | ||||
| Liabilities & Stockholders' Deficit | ||||||||
| Current liabilities | ||||||||
| Accounts payable & accrued liabilities | $ | 367,495 | $ | 213,663 | ||||
| Deferred revenue | 88,880 | 119,504 | ||||||
| Note payable- current maturity | 295,600 | 158,200 | ||||||
| Note payable- in default | 14,000 | 14,000 | ||||||
| Payable due for business acquisitions | 0 | 40,000 | ||||||
| Convertible notes payable, net of debt discount | 3,012,419 | 1,074,733 | ||||||
| Derivative liabilities | 1,763,093 | 1,137,623 | ||||||
| Lease liability, current | 387,311 | 264,165 | ||||||
| Due to shareholder | 14,950 | 0 | ||||||
| Total current liabilities | 5,943,748 | 3,021,888 | ||||||
| Lease liability, long-term | 1,713,402 | 1,319,457 | ||||||
| Note payable- long-term | 90,685 | 105,929 | ||||||
| Total Liabilities | 7,747,835 | 4,447,274 | ||||||
| Commitments and contingencies (Note 13) | ||||||||
| Stockholders' Deficit | ||||||||
| Preferred stock, shares authorized, 8,000,000 shares are undesignated | ||||||||
| Series A: 2,000,000 shares convertible into shares of common stock issued and outstanding at September 30, 2021 and March 31, 2021, respectively. | 20 | 20 | ||||||
| Series B: 40,000,000 shares convertible into shares of common stock issued and outstanding at September 30, 2021 and March 31, 2021, respectively. | 400 | 400 | ||||||
| Common stock, $ par value; shares authorized; and shares issued and outstanding at September 30, 2021 and March 31, 2021, respectively | 13,820 | 10,815 | ||||||
| Additional paid in capital | 8,855,402 | 7,652,677 | ||||||
| Accumulated deficit | (12,815,771 | ) | (9,197,248 | ) | ||||
| Total Stockholders' Deficit | $ | (3,946,129 | ) | $ | (1,533,336 | ) | ||
| Total Liabilities and Stockholders' Deficit | $ | 3,801,706 | $ | 2,913,938 | ||||
See accompanying notes to the unaudited consolidated financial statementsstatements.
TELECOMMUNICATION PRODUCTS, INC.
STATEMENT OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
B2Digital, Incorporated
Consolidated Statements of Operations (Unaudited)
| For the three months ended | For the six months ended | |||||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue: | ||||||||||||||||
| Live event revenue | $ | 283,171 | $ | 30,318 | $ | 518,762 | $ | 30,377 | ||||||||
| Gym revenue | 376,839 | 105,609 | 710,013 | 165,571 | ||||||||||||
| Total revenue | 660,010 | 135,927 | 1,228,775 | 195,948 | ||||||||||||
| Cost of sales | 327,682 | 47,907 | 531,184 | 49,219 | ||||||||||||
| Gross profit | 332,328 | 88,020 | 697,591 | 146,729 | ||||||||||||
| General and administrative corporate expenses | ||||||||||||||||
| General & administrative expenses | 1,854,487 | 675,129 | 3,408,367 | 839,917 | ||||||||||||
| Depreciation and amortization expense | 98,470 | 33,883 | 186,519 | 66,855 | ||||||||||||
| Total general and administrative corporate expenses | 1,952,957 | 709,012 | 3,594,886 | 906,772 | ||||||||||||
| Loss from continuing operations | (1,620,629 | ) | (620,992 | ) | (2,897,295 | ) | (760,043 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Gain on forgiveness of loan | 0 | 5,040 | 23,303 | 10,080 | ||||||||||||
| Loss on sale of assets | (1,757 | ) | 0 | (1,527 | ) | 0 | ||||||||||
| Grant income | 0 | 0 | 0 | 2,000 | ||||||||||||
| Loss on settlement of debt | 0 | 0 | 0 | (18,281 | ) | |||||||||||
| Loss on forgiveness of notes receivable | (2,094 | ) | 0 | (2,094 | ) | 0 | ||||||||||
| Gain (Loss) on extinguishment of debt | 55,925 | (64,194 | ) | 136,666 | (64,194 | ) | ||||||||||
| Change in fair value of derivatives | (665,813 | ) | (511,975 | ) | (354,942 | ) | (787,407 | ) | ||||||||
| Interest expense | (322,808 | ) | (77,232 | ) | (522,634 | ) | (147,014 | ) | ||||||||
| Total other expense | (936,547 | ) | (648,361 | ) | (721,228 | ) | (1,004,816 | ) | ||||||||
| Net loss | $ | (2,557,176 | ) | $ | (1,269,353 | ) | $ | (3,618,523 | ) | $ | (1,764,859 | ) | ||||
| Basic and diluted earnings per share on net loss | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| Weighted average shares outstanding | 1,369,390,550 | 597,871,392 | 1,289,383,719 | 574,198,491 | ||||||||||||
See accompanying notes to the unaudited consolidated financial statementsstatements.
TELECOMMUNICATION PRODUCTS, INC.
STATEMENTS OF STOCKHOLDERS DEFICIENCY (Unaudited)
THREE MONTHS ENDING JUNE 30, 2001
|
|
|
|
|
|
|
|
|
|
B2Digital, Incorporated
Consolidated Statement of Changes in Stockholders' Deficit
For the Three and Six Months Ended September 30, 2021 and 2020 (Unaudited)
| Preferred Stock | Preferred Stock | Additional | Total | |||||||||||||||||||||||||||||||||
| Series A | Series B | Common Stock | Paid in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance March 31, 2021 | 2,000,000 | $ | 20 | 40,000,000 | $ | 400 | 1,081,390,550 | $ | 10,815 | $ | 7,652,677 | $ | (9,197,248 | ) | $ | (1,533,336 | ) | |||||||||||||||||||
| Sale of common stock | – | – | – | – | 220,000,000 | 2,200 | 877,800 | – | 880,000 | |||||||||||||||||||||||||||
| Issuance of common stock for services | – | – | – | – | 5,500,000 | 55 | 23,595 | – | 23,650 | |||||||||||||||||||||||||||
| Issuance of convertible notes | – | – | – | – | – | – | 2,080 | – | 2,080 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (1,061,347 | ) | (1,061,347 | ) | |||||||||||||||||||||||||
| Balance June 30, 2021 | 2,000,000 | $ | 20 | 40,000,000 | $ | 400 | 1,306,890,550 | $ | 13,070 | $ | 8,556,152 | $ | (10,258,595 | ) | $ | (1,688,953 | ) | |||||||||||||||||||
| Sale of common stock | – | – | – | – | 75,000,000 | 750 | 299,250 | – | 300,000 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (2,557,176 | ) | (2,557,176 | ) | |||||||||||||||||||||||||
| Balance September 30, 2021 | 2,000,000 | $ | 20 | 40,000,000 | $ | 400 | 1,381,890,550 | $ | 13,820 | $ | 8,855,402 | $ | (12,815,771 | ) | $ | (3,946,129 | ) | |||||||||||||||||||
| Preferred Stock | Preferred Stock | Additional | Total | |||||||||||||||||||||||||||||||||
| Series A | Series B | Common Stock | Paid in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance March 31, 2020 | 2,000,000 | $ | 20 | – | $ | – | 539,267,304 | $ | 5,394 | $ | 3,600,197 | $ | (3,816,978 | ) | $ | (211,367 | ) | |||||||||||||||||||
| Sale of common stock | – | – | – | – | 4,000,000 | 40 | 14,360 | – | 14,400 | |||||||||||||||||||||||||||
| Issuance of common stock for services | – | – | – | – | – | – | – | – | – | |||||||||||||||||||||||||||
| 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 | ) | |||||||||||||||||||
| Sale of common stock | – | – | – | – | 62,000,002 | 620 | 464,380 | – | 465,000 | |||||||||||||||||||||||||||
| Issuance of common stock for services | – | – | – | – | 11,733,333 | 117 | 74,816 | – | 74,933 | |||||||||||||||||||||||||||
| Conversion of Notes Payable | – | – | – | – | 25,663,705 | 256 | 434,579 | – | 434,835 | |||||||||||||||||||||||||||
| Net loss | – | – | – | – | – | – | – | (1,269,353 | ) | (1,269,353 | ) | |||||||||||||||||||||||||
| Balance September 30, 2020 | 2,000,000 | $ | 20 | – | $ | – | 658,957,259 | $ | 6,590 | $ | 4,643,791 | $ | (5,581,837 | ) | $ | (931,436 | ) | |||||||||||||||||||
See accompanying notes to the unaudited consolidated financial statementsstatements.
| 5 |
TELEC OMMUNICATION PRODUCTS, INC.
STATEMENT OF CASH FLOWSB2Digital, Incorporated
Consolidated Statements of Cash Flows (Unaudited)
YEARS ENDING MARCH 31, 2001, 2000, AND 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the six months ended | ||||||||
| September 30, | September 30, | |||||||
| 2021 | 2020 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Loss | $ | (3,618,523 | ) | $ | (1,764,859 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Stock compensation | 23,650 | 89,333 | ||||||
| Depreciation and amortization expense | 186,519 | 66,855 | ||||||
| Gain on forgiveness of loan | (23,303 | ) | 0 | |||||
| Legal fees on convertible notes | 7,000 | 0 | ||||||
| Loss on settlement of debt | 0 | 18,281 | ||||||
| Loss on extinguishment of debt | 0 | 64,194 | ||||||
| Gain on extinguishment of debt | (136,666 | ) | 0 | |||||
| Interest expense on extinguishment of debt | 35,014 | 0 | ||||||
| Loss of sale of assets | 1,527 | 0 | ||||||
| Gain on settlement of debt | 0 | (10,080 | ) | |||||
| Grant income | 0 | (2,000 | ) | |||||
| Amortization of debt discount | 413,180 | 103,266 | ||||||
| Changes in fair value of compound embedded derivative | 354,942 | 787,407 | ||||||
| Right- of- use asset/liability | 52,830 | 0 | ||||||
| Changes in operating assets & liabilities | ||||||||
| Prepaid expenses | (70,113 | ) | (2,325 | ) | ||||
| Inventory | 0 | 5,811 | ||||||
| Accounts receivable | (8,548 | ) | 0 | |||||
| Accounts payable and accrued liabilities | 178,152 | 42,581 | ||||||
| Deferred revenue | (30,624 | ) | 26,597 | |||||
| Net cash used by operating activities | (2,634,963 | ) | (574,939 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Business acquisitions | (165,000 | ) | 0 | |||||
| Payments to related parties | 0 | (470 | ) | |||||
| Capital expenditures | (256,156 | ) | (128,031 | ) | ||||
| Net cash used by investing activities | (421,156 | ) | (128,501 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable | 150,000 | 122,766 | ||||||
| Proceeds from convertible notes payable | 2,096,681 | 150,000 | ||||||
| Repayments related to payable due for business combinations | 0 | (15,000 | ) | |||||
| Repayments of convertible notes payable | (207,863 | ) | 0 | |||||
| Repayment of notes payable | (8,609 | ) | 0 | |||||
| Payment to note payable | (2,354 | ) | (4,484 | ) | ||||
| Issuance of common stock | 1,180,000 | 465,000 | ||||||
| Net cash provided by financing activities | 3,207,855 | 718,282 | ||||||
| Increase in Cash | 151,736 | 14,842 | ||||||
| Cash at beginning of period | 122,176 | 46,729 | ||||||
| Cash (and equivalents) at end of period | $ | 273,912 | $ | 61,571 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash paid for interest | $ | 8,303 | $ | 599 | ||||
| Cash paid for income taxes | $ | 0 | $ | 0 | ||||
| Non-cash investing and financing activities: | ||||||||
| Conversion of note payable to equity | $ | 0 | $ | 490,457 | ||||
See accompanying notes to the unaudited consolidated financial statementsstatements.
TELECOMMUNICATION PRODUCTS, INC.
| 6 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
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 eleven 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 LLC, One More Gym Merrillville LLC, One More Gym Valparaiso LLC, One More Gym Tuscaloosa LLC, One More Gym Birmingham, Inc. and B2 Productions LLC.
The consolidated financial statements, which include the accounts of the Company and its eleven 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 eleven 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 U.S. 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”).
| 7 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
YEARS ENDING MARCH 31, 2001 AND 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESSEPTEMBER 30, 2021
Organization - Telecommunication Products, Inc. (Company) was incorporated
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 0t have any cash in excess of FDIC limits at September 30, 2021 and 2020, 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 Stateperiod in which they are incurred, and betterments are capitalized. The cost of Coloradoassets 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. During the three and six months ended September 30, 2021, the Company did 0t record any impairment on goodwill.
| 8 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
Other income
During the six months ended September 30, 2021 and September 30, 2020, the Company received $0 and $2,000, respectively in grant income due to COVID-19 relief. The Company has recorded this grant income under other income in the Statement of Operations.
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 September 30, 2021, 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.
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.
| 9 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
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 six months ended September 30, 2021 and 2020, respectively.
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 September 30, 2021, the convertible notes are indexed to shares of common stock.
The following table sets forth the computation of basic and diluted earnings per share for the six months ended September 30, 2021 and 2020:
| Schedule of Earnings Per Share, Basic and Diluted | ||||||||
September 30, 2021 | September 30, 2020 | |||||||
| Basic and diluted | ||||||||
| Net loss | $ | (3,618,523 | ) | $ | (1,764,859 | ) | ||
| Net loss per share | ||||||||
| Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic & diluted | 1,289,383,719 | 574,198,491 | ||||||
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 September 30, 2021, there were options outstanding.
| 10 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
On June 8, 1983,20, 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to design, manufactureNonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and market specialized communication equipment.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.
Going-Concern Basis -
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 our consolidated 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.
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplatesgoing concern basis. For the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the financial statements, as of June 20, 2001,six months ended September 30, 2021, the Company has anhad a net loss of $3,618,523, had net cash used in operating activities of $2,634,963 had negative working capital of $5,589,042, accumulated deficit of $1,454,183$12,815,771 and a net stockholders' deficiencystockholders’ deficit of $720,415.$3,946,129. These factors, among others, may indicate thatmatters raise substantial doubt about the Company will be unableCompany’s ability to continue as a going concern.concern for a period of one year from the date of this filing. The financial statements do not include any adjustments that may be necessary should the Company be unableCompany’s ability to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate sufficient cash flowobtain the necessary financing to meet its obligations on a timely basis,and repay its liabilities arising from normal business operations when they come due, to obtainfund 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 financingequity 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 11 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 4 – REVENUE
The Company recognizes as may be required, and ultimately to attain successful operations. Management isrevenues the amount of the opiniontransaction price that enhanced marketing efforts will enableis allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Live event revenue primarily includes 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 and six months ended September 30, 2021 and 2020 are as follows:
| Schedule of net sales by revenue type | ||||||||
| For the three months ended | ||||||||
| September 30, | September 30, | |||||||
2021 (Unaudited) | 2020 (Unaudited) | |||||||
| Live events | $ | 283,171 | $ | 30,318 | ||||
| Gym revenue | 376,839 | 105,609 | ||||||
| Net sales | $ | 660,010 | $ | 135,927 | ||||
| For the six months ended | ||||||||
| September 30, | September 30, | |||||||
2021 (Unaudited) | 2020 (Unaudited) | |||||||
| Live events | $ | 518,762 | $ | 30,377 | ||||
| Gym revenue | 710,013 | 165,571 | ||||||
| Net sales | $ | 1,228,775 | $ | 195,948 | ||||
| 12 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment, net, consisted of the following at September 30, 2021 and March 31, 2021:
| Schedule of property and equipment | ||||||||
| As of | As of | |||||||
September 30, 2021 | March 31, 2021 | |||||||
| Gym equipment | $ | 507,906 | $ | 420,880 | ||||
| Cages | 151,009 | 132,350 | ||||||
| Event assets | 116,088 | 92,117 | ||||||
| Furniture and fixtures | 16,766 | 16,766 | ||||||
| Production truck gear | 11,740 | 11,740 | ||||||
| Production equipment | 58,704 | 32,875 | ||||||
| Venue lighting system | 38,266 | 37,250 | ||||||
| Leasehold improvements | 167,229 | 43,712 | ||||||
| Electronics hardware and software | 149,234 | 124,624 | ||||||
| Trucks trailers and vehicles | 225,278 | 197,921 | ||||||
| 1,442,220 | 1,110,235 | |||||||
| Less: accumulated depreciation | (298,043 | ) | (165,236 | ) | ||||
| $ | 1,144,177 | $ | 944,999 | |||||
Depreciation expense related to these assets for the six months ended September 30, 2021 and 2020 amounted to $134,140 and $38,672, respectively.
NOTE 6 – INTANGIBLE ASSETS
Intangible assets, net, consisted of the following:
| Schedule of intangible assets | ||||||||
| As of | As of | |||||||
September 30, 2021 | March 31, 2021 | |||||||
| Licenses | $ | 142,248 | $ | 142,248 | ||||
| Software/website development | 12,585 | 12,585 | ||||||
| Customer relationships | 216,343 | 170,031 | ||||||
| 371,176 | 324,864 | |||||||
| Less: accumulated amortization | (152,353 | ) | (99,974 | ) | ||||
| $ | 218,823 | $ | 224,890 | |||||
Licenses are amortized over 5 five years, whereas customer relationships and software/website development are amortized over three 3 years. Amortization expense related to these assets for the six months ended September 30, 2021 and 2020 amounted to $52,379 and $28,183, respectively.
| 13 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
| Schedule of amortization expense | ||||
| Estimated amortization expense for each of the next four years: | ||||
| Fiscal year ended March 31, 2022 | $ | 52,379 | ||
| Fiscal year ended March 31, 2023 | 97,873 | |||
| Fiscal year ended March 31, 2024 | 61,532 | |||
| Fiscal year ended March 31, 2025 | 7,069 | |||
| Total | $ | 218,823 | ||
NOTE 7 – BUSINESS ACQUISITIONS
Club Fitness, LLC
On April 1, 2021, the Company entered into an agreement for the acquisition of 100% of the equity interest in Club Fitness LLC. The purchase price was $125,000 in cash. The acquisition closed in April 2021.
| Schedule of business combination purchase allocation | ||||
| Consideration | ||||
| Cash | $ | 125,000 | ||
| Fair values of identifiable net assets: | ||||
| Property & equipment: | ||||
| Gym equipment | $ | 76,689 | ||
| Intangible assets: | ||||
| Customer relationships | 46,311 | |||
| Total fair value of identifiable net assets | $ | 125,000 |
The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The fair value of the net identifiable assets consisted of gym equipment of $76,689. The Company assigned a fair value of $46,311 in intangible assets – customer relationships. The intangible assets – customer relationships are being amortized over their estimated life, currently expected to be three years.
| 14 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 8 - NOTES PAYABLE
The following is a summary of notes payable as of September 30, 2021 and March 31, 2021:
| Schedule of notes payable | ||||||||
| As of | As of | |||||||
| September 30, | March 31, | |||||||
| 2021 | 2021 | |||||||
| Notes payable - current maturity: | ||||||||
| Note Payable PPP SBA Loan | $ | 0 | $ | 15,600 | ||||
| SBA EIDL Loan | 10,000 | 10,000 | ||||||
| SBA Loan Payable B2Digital | 97,200 | 97,200 | ||||||
| Notes payable – in default: | ||||||||
| Emry Capital $14,000, 4% loan with principal and interest due April, 2020 | 14,000 | 14,000 | ||||||
| Notes payable – long term: | ||||||||
| WLES LP LLC $60,000, 5% loan due January 15, 2022 | 30,000 | 30,000 | ||||||
| Brian Cox 401K | 8,157 | 12,882 | ||||||
| SBA Loan (Hillcrest) | 35,400 | 35,400 | ||||||
| SBA Loan (One More Gym, LLC) | 52,528 | 63,047 | ||||||
| GS Capital, LLC | 153,000 | 0 | ||||||
| Total notes payable | 400,285 | 278,129 | ||||||
| Less: long-term | (90,685 | ) | (105,929 | ) | ||||
| Total | $ | 309,600 | $ | 172,200 | ||||
During the six months ended September 30, 2021, the Company incurred $9,902 in interest expense related to notes payable.
During the six months ended September 30, 2021, the Company repaid $4,724 on its loan payable to Brian Cox.
During the six months ended September 30, 2021, the bank forgave $6,634 in principal and $1,069 in accrued interest on its SBA Loan (One More Gym, LLC). As a result, the Company recorded $7,703 in gain on forgiveness of loan.
During the six months ended September 30, 2021 the bank forgave the Company’s PPP loan of $15,600. No interest was accrued as of the payoff date. As a result, the Company recorded $15,600 in gain on forgiveness of loan.
| 15 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 9 – CONVERTIBLE NOTE PAYABLE
The following is a summary of convertible notes payable as of September 30, 2021:
| Schedule of convertible notes payable | ||||||||||||||||||||
| Note* | Inception Date | Maturity | Coupon | Face Value | Unamortized Discount | Carrying Value | ||||||||||||||
| Note 5 | 1/27/2020 | 1/27/2021 | 8% | $ | 202,400 | $ | 0 | $ | 202,400 | |||||||||||
| Note 6 | 2/19/2020 | 2/19/2021 | 8% | 85,800 | 0 | 85,800 | ||||||||||||||
| Note 7 | 3/10/2020 | 3/10/2021 | 8% | 85,800 | 0 | 85,800 | ||||||||||||||
| Note 8 | 8/4/2020 | 8/4/2021 | 8% | 156,000 | 0 | 156,000 | ||||||||||||||
| Note 9 | 10/2/2020 | 10/2/2021 | 8% | 205,000 | 0 | 205,000 | ||||||||||||||
| Note 10 | 10/15/2020 | 10/15/2021 | 8% | 172,000 | 7,463 | 164,537 | ||||||||||||||
| Note 11 | 11/2/2020 | 11/2/2021 | 8% | 69,000 | 3,542 | 65,458 | ||||||||||||||
| Note 12 | 11/12/2020 | 11/12/2021 | 8% | 69,000 | 2,181 | 66,819 | ||||||||||||||
| Note 14 | 12/10/2020 | 12/10/2021 | 8% | 80,000 | 7,067 | 72,933 | ||||||||||||||
| Note 16 | 1/14/2021 | 1/14/2022 | 8% | 107,000 | 13,863 | 93,137 | ||||||||||||||
| Note 17 | 1/27/2021 | 1/27/2021 | 8% | 60,000 | 9,724 | 50,276 | ||||||||||||||
| Note 20 | 4/30/2021 | 4/30/2022 | 8% | 104,000 | 2,352 | 101,648 | ||||||||||||||
| Note 21 | 5/25/2021 | 5/25/2022 | 8% | 104,000 | 4,094 | 99,906 | ||||||||||||||
| Note 22 | 06/24/2021 | 06/24/2022 | 8% | 185,652 | 45,081 | 140,571 | ||||||||||||||
| Note 23 | 07/01/2021 | 07/01/2022 | 8% | 180,400 | 30,317 | 150,083 | ||||||||||||||
| Note 24 | 07/24/2021 | 07/24/2022 | 8% | 265,000 | 60,970 | 204,030 | ||||||||||||||
| Note 25 | 08/04/2021 | 08/04/2022 | 8% | 129,800 | 31,372 | 98,428 | ||||||||||||||
| Note 26 | 08/11/2021 | 08/11/2022 | 8% | 151,500 | 35,572 | 115,928 | ||||||||||||||
| Note 27 | 08/16/2021 | 08/16/2022 | 8% | 88,400 | 24,411 | 63,989 | ||||||||||||||
| Note 28 | 08/20/2021 | 08/20/2022 | 8% | 151,500 | 40,075 | 111,425 | ||||||||||||||
| Note 29 | 08/30/2021 | 08/30/2022 | 8% | 140,650 | 34,054 | 106,596 | ||||||||||||||
| Note 30 | 09/02/2021 | 09/02/2022 | 8% | 216,385 | 58,052 | 158,333 | ||||||||||||||
| Note 31 | 09/17/2021 | 09/17/2022 | 8% | 270,480 | 63,833 | 206,647 | ||||||||||||||
| Note 32 | 09/30/2021 | 09/30/2022 | 8% | 270,480 | 63,805 | 206,675 | ||||||||||||||
| Total | $ | 3,550,247 | $ | 537,828 | $ | 3,012,419 | ||||||||||||||
* Notes 1, 2, 3 and 4 in the amounts of $82,000, $208,000, $27,000 and $62,000, respectively, were fully converted as of March 31, 2021.
Between April 1, 2021 and September 30, 2021, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $2,258,247. The Company received an aggregate net proceeds of $2,096,681 after $154,566 in original note discount and $7,000 in legal fees. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the dates 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 as set forth in the agreements.
| 16 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
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 increase revenues sufficientlysettle 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 sustain operations.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.
Revenue Recognition
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 six months ended September 30, 2021 is as follows:
| Schedule of amortization expense, interest expense and accrued interest on debt | ||||||||||||||||
| Note | Interest Expense | Accrued Interest | Amortization of Debt Discount | Unamortized | ||||||||||||
| Note 5 | $ | 9,183 | $ | 39,315 | $ | 0 | $ | 0 | ||||||||
| Note 6 | 3,892 | 15,693 | 0 | 0 | ||||||||||||
| Note 7 | 3,893 | 14,872 | 0 | 0 | ||||||||||||
| Note 8 | 1,949 | 14,429 | 9,379 | 0 | ||||||||||||
| Note 9 | 4,224 | 16,400 | 37,415 | 0 | ||||||||||||
| Note 10 | 3,468 | 13,195 | 20,501 | 7,463 | ||||||||||||
| Note 11 | 1,391 | 5,021 | 9,572 | 3,542 | ||||||||||||
| Note 12 | 1,391 | 4,870 | 6,137 | 2,181 | ||||||||||||
| Note 14 | 1,613 | 5,155 | 9,447 | 7,067 | ||||||||||||
| Note 16 | 2,158 | 6,074 | 9,205 | 13,863 | ||||||||||||
| Note 17 | 1,210 | 3,235 | 6,244 | 9,724 | ||||||||||||
| Note 18 | 912 | 2,370 | 9,192 | 24,247 | ||||||||||||
| Note 19 | 1,391 | 3,478 | 13,932 | 33,469 | ||||||||||||
| Note 20 | 2,097 | 3,488 | 992 | 2,352 | ||||||||||||
| Note 21 | 2,097 | 2,918 | 1,493 | 4,094 | ||||||||||||
| Note 22 | 3,744 | 3,988 | 12,448 | 45,081 | ||||||||||||
| Note 23 | 3,598 | 3,598 | 8,928 | 30,317 | ||||||||||||
| Note 24 | 3,775 | 3,775 | 10,395 | 60,970 | ||||||||||||
| Note 25 | 1,622 | 1,622 | 5,337 | 31,372 | ||||||||||||
| Note 26 | 1,660 | 1,660 | 6,042 | 35,572 | ||||||||||||
| Note 27 | 872 | 872 | 4,012 | 24,411 | ||||||||||||
| Note 28 | 1,361 | 1,361 | 6,641 | 40,075 | ||||||||||||
| Note 29 | 956 | 956 | 2,653 | 34,054 | ||||||||||||
| Note 30 | 1,328 | 1,328 | 4,433 | 58,052 | ||||||||||||
| Note 31 | 1,660 | 1,660 | 4,996 | 63,833 | ||||||||||||
| Note 32 | 0 | 0 | 0 | 63,805 | ||||||||||||
| Total | $ | 61,445 | $ | 171,333 | $ | 199,394 | $ | 595,544 | ||||||||
| 17 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
As of September 30, 2021, Note 5, Note 6, and Note 7 are considered in default. Upon an event of default, the interest accrues at 18%. Additionally, upon non-payment at maturity, the principal increases by 10%. The principal on Note 5 increased by $18,400, Note 6 increased by $7,800 and Note 7 increased by $7,800.
NOTE 10 –DERIVATIVE FINANCIAL INSTRUMENTS
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of September 30, 2021:
| Schedule of derivative liabilities | ||||||||
| September 30, 2021 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Compound embedded derivatives | 810,258,880 | $ | (1,762,774 | ) | ||||
| Total | 810,258,880 | $ | (1,762,774 | ) | ||||
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of September 30, 2020:
| September 30, 2020 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Compound embedded derivatives | 183,301,607 | $ | (599,454 | ) | ||||
| Total | 183,301,607 | $ | (599,454 | ) | ||||
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 September 30, 2021 and 2020:
| The financings giving rise to derivative financial instruments and the income effects: | September 30, 2021 | September 30, 2020 | ||||||
| Compound embedded derivatives | $ | (354,942 | ) | $ | (511,975 | ) | ||
| Total (loss) | $ | (354,942 | ) | $ | (511,975 | ) | ||
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 six months ended September 30, 2021 and 2020:
| The financings giving rise to derivative financial instruments and the income effects: | September 30, 2021 | September 30, 2020 | ||||||
| Compound embedded derivatives | $ | (665,813 | ) | $ | (787,407 | ) | ||
| Total (loss) | $ | (665,813 | ) | $ | (787,407 | ) | ||
| 18 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
The Company’s Convertible Promissory Notes issued between October 4, 2019 and September 30, 2021 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 - Revenue is recognized when products are deliveredDerivatives and accepted by customers.
Warranty Reserve - The Company grantsHedging 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 one-year warranty on parts and labor for all of its products.single, compound embedded derivative. The Company has historically experienced minimal warranty claims.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.
Net Loss P er Common Share - Net loss per common share is computed by dividing net loss by
Significant inputs and results arising from the weighted average common shares outstandingMonte Carlo Simulations process are as follows for the embedded derivatives that have been bifurcated from the Convertible Notes and classified in liabilities:
| Significant inputs | ||
| September 30, 2021 | ||
| Quoted market price on valuation date | $0.01 | |
| Contractual conversion rate | $0.00265-$0.01 | |
| Contractual term to maturity | 0.005 Years – 1.0 Years | |
| Market volatility: | ||
| Equivalent Volatility | 93.44% - 184.40% | |
| Interest rate | 8.00% |
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. The weighted shares outstanding include 9,800,000 shares issued to certain persons at a price substantially less than the public offering price.
2. RELATED PARTY TRANSACTIONS
Certain officers/stockholders of the Company elected to defer their salaries beginning the first quarter of calendar year 1987 in order to help the Company's cash flow. Unpaid compensation expenses of $49,200 annually were incurred in each of the subsequent years, including the three years in the periods ending March 31, 2001, and as of Juneperiod ended September 30, 20012021 and March 31, 2001, unpaid compensation2021.
| Schedule of changes in fair value of derivatives | ||||||||
| September 30, | March 31, | |||||||
| 2021 | 2021 | |||||||
| Beginning balance | $ | 1,137,623 | $ | 58,790 | ||||
| Issuances: | ||||||||
| Compound embedded derivatives | 407,194 | 732,416 | ||||||
| Conversions | 0 | (859,352 | ) | |||||
| Derivative extinguished / debt repaid in cash | (136,666 | ) | (126,892 | ) | ||||
| (Gain) loss on changes in fair value inputs and assumptions reflected in income | 354,942 | 1,332,661 | ||||||
| Total | $ | 1,763,093 | $ | 1,137,623 | ||||
| 19 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
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 officers/ stockholders totaled $701,100be designated. All 2,000,000 shares of Series A preferred are issued and $701,100, respectively.
3. INVENTORY
Due to damage and attrition associatedoutstanding. Each share of Series A preferred is convertible into 240 shares of common stock. The Series A Preferred Stock votes with the move fromCommon Stock on all matters to be voted on by the Company' former laboratory and offices, as well ascommon 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 age and obsolescence of certain parts and components, a determination was made in re cent audit ofsix months ended September 30, 2020
On April 23, 2020, the Company that all inventory would be most appropriatelyissued 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 shares of stock to WLES LP LLC in exchange for the conversion of $30,000 in convertible note principal. The shares were valued at zero. This and the$48,281 resulting impact is more fully reflected and explainedin a loss on settlement of debt in the Company's amended 10-K filing for the last fiscal year.amount of $18,281.
4. COMMON STOCK
On June 8, 1983,16, 2020, the Company's Board approved an incentiveCompany issued shares of common stock option planto Veyo Partners LLC in exchange for all employeesinvestor relation services valued at $14,400 or $ per share.
On July 10, 2020, the Company issued shares of common stock to Veyo Partners LLC in exchange for investor relation services valued at $14,000 or $0.0035 per share.
On July 31, 2020, GS Capital converted $7,500 in principal and reserved 3,000,000$488 in accrued interest of the October 4, 2019 $84,000 face value note into shares of common stock. The shares were valued at $16,558. The Company recorded the removal of the $7,500 in principle, $488 in interest, and $8,570 in derivative liabilities resulting in no gain or loss.
On August 10, 2020, the Company issued shares of common stock to Veyo Partners LLC in exchange for investor relation services valued at $34,800 or $0.0087 per share.
On August 13, 2020, the Company sold shares of common stock for issuance upon$100,000 or $0.0075 per share.
On August 19, 2020, the exerciseCompany sold shares of options granted. The minimum exercise price under the plan is generally 100%common stock for $100,000 or $0.0075 per share.
On August 20, 2020, GS Capital converted $12,500 in principal and $871 in accrued interest of the fair marketOctober 4, 2019 $84,000 face value note into shares of common stock. The shares were valued at $155,914. After recording the removal of the Company's$12,500 in principal, $871 in interest, and $138,647 in derivative liabilities, the Company recorded $3,896 as loss on extinguishment of debt.
| 20 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
On September 1, 2020, the Company sold shares of common stock for $100,000 or $0.0075 per share.
On September 9, 2020, GS Capital converted $55,000 in principal and $4,075 in accrued interest of the October 4, 2019 $84,000 face value note into shares of common stock. The shares were valued at $262,363. After recording the removal of the $55,000 in principal, $4,075 in interest, and $142,990 in derivative liabilities, the Company recorded $60,298 as loss on extinguishment of debt.
On September 14, 2020, the Company sold shares of common stock for $165,000 or $0.0075 per share.
On September 30, 2020, the Company issued shares of common stock for services valued at $26,133 or $0.0070 per share.
Common Stock Issuances for the six months ended September 30, 2021
On April 1, 2021, the Company issued shares of stock to GS Capital in exchange for $200,000 or $0.004 per share.
On April 10, 2021, the Company issued shares of stock to AES Capital in exchange for $100,000 or $0.004 per share.
On April 14, 2021, the Company issued shares of stock to GS Capital in exchange for $55,000 or $0.004 per share.
On May 13, 2021, the Company issued shares of stock to GS Capital in exchange for $200,000 or $0.004 per share.
On May 21, 2021 the Company issued shares of common stock to Rex Chan in exchange for contractor services valued at $6,450 or $0.0043 per share representing the share price at the date of the grant,transaction.
On May 21, 2021 the Company issued shares of common stock to BM Giancarlo in exchange for management services valued at $8,600 or $0.0043 per share representing the share price at the date of the transaction.
On May 21, 2021 the Company issued shares of common stock to Carlos Diaz in exchange for management services valued at $8,600 or $0.0043 per share representing the share price at the date of the transaction.
On June 3, 2021, the Company issued shares of stock to AES Capital in exchange for $100,000 or $0.004 per share.
On June 16, 2021, the Company issued shares of stock to GS Capital in exchange for $125,000 or $0.004 per share.
On June 25, 2021, the Company issued shares of stock to AES Capital in exchange for $100,000 or $0.004 per share.
On July 13, 2021, the Company issued shares of stock to Geneva Roth in exchange for $100,000 or $0.004 per share.
On July 15, 2021, the Company issued shares of stock to GS Capital in exchange for $100,000 or $0.004 per share.
On July 21, 2021, the Company issued shares of stock to GS Capital in exchange for $100,000 or $0.004 per share.
| 21 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 12 –LEASES
Kokomo lease
On October 1, 2020, the Company, under its subsidiary ONE More Gym LLC, entered into a facilities lease (“Kokomo Lease”) for 25,000 square feet in Kokomo, Indiana. The initial lease term is for five years and the optionslease commencement date is October 1, 2020. The monthly lease payments are exercisable$7,291.66 in year 1, $7,656.25 in year 2, $8,039.06 in year 3, and $8,441.02 in years 4 and 5.
Valparaiso Lease7,624
The Company leases 11,676 square feet of office space located at 1805 E. Lincolnway, Valparaiso, Indiana 46383. The Company assumed the lease (“Valparaiso Lease”) when it acquired CFit Indiana Inc. on October 6, 2020. The monthly lease payments are $7,624.50 and the lease expires on December 31, 2023.
Merrill Lease
In connection with the acquisition of CFit Indiana Inc. on October 6, 2020, the Company acquired a facilities lease for 15,000 square feet at 6055N. Broadway Ave., Merrillville, Indiana. The monthly lease payments are $11,189.50 and the lease expires on February 28, 2026.
Tuscaloosa Lease
In connection with the acquisition of Hillcrest Fitness LLC on December 1, 2020, the Company acquired a facilities lease at 6551 Highway 69 South, Tuscaloosa, AL 35405. The monthly lease payments are $6,000 and the lease expires on March 6, 2024.
Birmingham Lease
In connection with the acquisition of Club Fitness LLC on April 1, 2021, the Company acquired a facilities lease at 2520 Moody Parkway, Mood, AL 35004. The monthly lease payments are $6,000 and the lease expires on April 30, 2026.
Valparaiso Additional Space Lease
On August 30, 2021, the Company entered into a facilities lease (“Valparaiso Additional Space”) for 6,380 square feet in Valparaiso, Indiana. The initial lease term is for five years and the lease commencement date is August 30, 2021. The monthly lease payments are $4,250.00 plus Common Area Maintenance (“CAM”) in year 1, $5,316.66 plus (“CAM”) in year 2 and 3, and $6,380.00 plus (“CAM”) in year 4 and 5. The Company has the option to renew at a rental rate of $6,911.66 plus (“CAM”) for years 2029 through 2033.
Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other general and administrative expenses on the statements of operations.
| 22 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
Right-of-use asset is summarized below:
| Summary of right-of-use asset | ||||||||||||||||||||||||||||
| September 30, 2021 | ||||||||||||||||||||||||||||
| Kokomo Lease | Valparaiso Lease | Merrill Lease | Tuscaloosa Lease | Birmingham Lease | Valparaiso Additional Lease | Total | ||||||||||||||||||||||
| Office lease | $ | 375,483 | $ | 374,360 | $ | 701,404 | $ | 222,087 | $ | 284,745 | $ | 372,778 | $ | 2,330,857 | ||||||||||||||
| Less: accumulated amortization | (61,255 | ) | (102,574 | ) | (66,088 | ) | (39,078 | ) | (18,695 | ) | (3,114 | ) | (290,804 | ) | ||||||||||||||
| Right-of-use asset, net | $ | 314,228 | $ | 271,786 | $ | 635,316 | $ | 183,009 | $ | 266,050 | $ | 369,664 | $ | 2,040,053 | ||||||||||||||
Operating lease liability is summarized below:
| Summary of operating lease liability | ||||||||||||||||||||||||||||
| September 30, 2021 | ||||||||||||||||||||||||||||
| Kokomo Lease | Valparaiso Lease | Merrill Lease | Tuscaloosa Lease | Birmingham Lease | Valparaiso Additional Lease | Total | ||||||||||||||||||||||
| Office lease | $ | 322,413 | $ | 271,786 | $ | 681,570 | $ | 183,009 | $ | 266,051 | $ | 375,884 | $ | 2,100,713 | ||||||||||||||
| Less: current portion | (63,246 | ) | (113,315 | ) | (95,730 | ) | (56,858 | ) | (48,163 | ) | (9,999 | ) | (387,311 | ) | ||||||||||||||
| Long term portion | $ | 259,167 | $ | 158,471 | $ | 585,840 | $ | 126,151 | $ | 217,888 | $ | 365,885 | $ | 1,713,402 | ||||||||||||||
Maturity of the lease liability is as follows:
| Summary of maturity of lease liability | ||||||||||||||||||||||||||||
| September 30, 2021 | ||||||||||||||||||||||||||||
Kokomo Lease | Valparaiso Lease | Merrill Lease | Tuscaloosa Lease | Birmingham Lease | Valparaiso Additional Lease | Total | ||||||||||||||||||||||
| Fiscal year ending March 31, 2022 | $ | 45,938 | $ | 67,137 | $ | 58,756 | $ | 36,000 | $ | 36,000 | $ | 15,780 | $ | 259,611 | ||||||||||||||
| Fiscal year ending March 31, 2023 | 94,172 | 134,274 | 201,450 | 72,000 | 72,000 | 63,122 | 637,018 | |||||||||||||||||||||
| Fiscal year ending March 31, 2024 | 98,880 | 100,706 | 201,450 | 72,000 | 72,000 | 66,441 | 611,477 | |||||||||||||||||||||
| Fiscal year ending March 31, 2025 | 101,292 | – | 201,450 | 30,000 | 72,000 | 76,400 | 481,142 | |||||||||||||||||||||
| Fiscal year ending March 31, 2026 | 50,646 | – | 184,664 | – | 72,000 | 79,665 | 386,974 | |||||||||||||||||||||
| Fiscal year ending March 31, 2027 | – | – | – | – | 6,000 | 89,460 | 95,460 | |||||||||||||||||||||
| Fiscal year ending March 31, 2028 | – | – | – | – | – | 89,460 | 89,460 | |||||||||||||||||||||
| Fiscal year ending March 31, 2029 | – | – | – | – | – | 67,095 | 67,095 | |||||||||||||||||||||
| Present value discount | (68,515 | ) | (30,330 | ) | (166,199 | ) | (26,991 | ) | (63,949 | ) | (171,540 | ) | (527,524 | ) | ||||||||||||||
| Lease liability | $ | 322,413 | $ | 271,786 | $ | 681,570 | $ | 183,009 | $ | 266,051 | $ | 375,884 | $ | 2,100,713 | ||||||||||||||
| 23 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
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 September 30, 2021, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.
The Company entered into an employment agreement with its Executive Vice President as of November 24, 2017. Under the terms of the agreement, the Company will be liable for severance and other payments under certain conditions. The employment agreement is for a period upof 36 months and renews for a successive two years unless written notice is provided by either party under the terms of the agreement.
On November 29, 2020, with Greg P. Bell abstaining, the board of directors of the Company approved the Chairman of the Board and Chief Executive Officer & President Agreement dated effective November 23, 2020 with Mr. Bell, the Company’s Chairman of the Board, CEO, and President. The agreement supersedes the previous agreement of the same title dated effective November 24, 2017. The term of the agreement is until Mr. Bell is removed from his executive positions by 80% of the voting control of the Company unless Mr. Bell is legally incapacitated (until legal capacity is regained), as determined by a court of competent jurisdiction or upon Mr. Bell’s death. Mr. Bell can terminate the agreement upon three months’ prior written notice to the Company.
Pursuant to the agreement, Mr. Bell is entitled to an annual salary of $120,000 and Mr. Bell was also issued shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”).
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 date ofacquisition agreement dates.
NOTE 14 - SUBSEQUENT EVENTS
Convertible Promissory Note
On October 8, 2021, the grant. For 10% stockholders, the minimum exercise price is 110% of the fair market value at the date of grant, and the options are exercisable for a period up to 5 years from the date of grant. As of March 31, 2001, no options have been granted.
5. SUBSEQUENT EVENT - ACQUISITION OF INTERLEISURE
On June 25, 2001, the Company ("Telpro"), and Interle isure, S.A., a privately held Dominican Republic corporation ("Interleisure"), entered into an Agreement with Geneva Roth Remark Holdings, Inc. pursuant to which the Company issued to Geneva Roth Remark Holdings, Inc. a Promissory Note in the aggregate principal amount of $86,900. The note has a maturity date of October 8, 2022, and Plan of Merger (the "Merger Agreement") providing for a business combination between Telpro and Interleisure. An 8-K was filedthe Company has agreed to pay interest on June 27, 2001, apprising shareholders that the directors had approved a merger agreement subject to shareholder approval. This 8-K summarizes further aspectsunpaid 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 Geneva Roth Remark Holdings, Inc. as set forth in the note.
| 24 |
B2DIGITAL, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
On October 26, 2021, the Company entered into an Agreement with Sixth Street Lending LLC pursuant to which the Company issued to Sixth Street Lending LLC a Promissory Note in the aggregate principal amount of $46,800. The note has a maturity date of October 26, 2022, 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.
On October 30, 2021, the Company entered into an Agreement with GS Capital pursuant to which the Company issued to GS Capital a Promissory Note in the aggregate principal amount of $270,480. The note has a maturity date of October 19, 2022, 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.
On November 3, 2021, the Company entered into an Agreement with GS Capital pursuant to which the Company issued to GS Capital a Promissory Note in the aggregate principal amount of $270,480. The note has a maturity date of November 3, 2022, 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.
Subscription Agreements
On October 26, 2021, the Company entered into a Subscription Agreement with Geneva Roth Remark Holdings for the sale of 11,250,000 shares of common stock for $45,000, or $0.004 per share. As of the date of this filing, the shares have not been issued.
Amendments to Convertible Promissory Notes
Effective October 18, in order to memorialize a prior verbal agreement as well.between the Company and the lender, each of the Company’s notes issued on January 27, 2020, February 19, 2020, March 10, 2020, August 4, 2020, October 2, 2020, October 15, 2020, November 2, 2020, November 12, 2020, December 10, 2020, January 14, 2021, January 27, 2021, May 25, 2021, June 24, 2021, July 24, 2021, August 4, 2021, August 11, 2021, August 20, 2021, August 30, 2021, September 2, 2021, September 17, 2021, and September 30, 2021, respectively, the Company and a lender entered into amendments to the issued convertible promissory notes which extended each of the maturity dates to April 18, 2021. In addition, the lender waived any penalty interest that would have accrued due to any defaults.
| 25 |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations. |
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThis 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, 2021 filed on June 29, 2021. 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 eleven 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 LLC, One More Gym Merrillville LLC, One More Gym Valparaiso LLC, One More Gym Tuscaloosa LLC, One More Gym Birmingham, Inc. and B2 Productions LLC.
The consolidated financial statements, which include the accounts of the Company and its eleven 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;” |
| 26 |
| · | 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 and six months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending March 31, 2022.
Use of Estimates
Management providesuses 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 September 30, 2021 and March 31, 2021, respectively.
| 27 |
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.
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 September 30, 2021, there were no charges to goodwill impairment.
Other Income
During the three months ended September 30, 2021, the Company received $0 in grant income due to COVID-19 relief.
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 forward-looking informationfive-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 bestperformance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
| 28 |
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 September 30, 2021, 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.
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 informationcustomers and, beliefbased 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.
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 September 30, 2021 and 2020, respectively.
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 September 30, 2021 and March 31, 2021, the Company did not carry any finished goods inventory.
| 29 |
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 September 30, 2021, the convertible notes are indexed to 810,258,880 shares of common stock.
The following table sets for the computation of basic and diluted earnings per share for the three months ended September 30, 2021 and 2020:
| September 30, 2021 | September 30, 2020 | |||||||
| Basic and diluted | ||||||||
| Net loss | $ | (3,618,523 | ) | $ | (1,764,859 | ) | ||
| Net loss per share | ||||||||
| Basic | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding: | ||||||||
| Basic & diluted | 1,289,383,719 | 574,198,491 | ||||||
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 signing,grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. As of September 30, 2021, 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.
During the three months ended September 30, 2021 and 2020, the Company recorded $0 in stock-compensation expense.
Leases
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with no assurance asthe new revenue guidance in ASC 606.
| 30 |
On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to eventual outcome.
Financial Conditionleases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and Changes(3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in Financial Conditionthe contract to each lease component based on its relative stand-alone price to determine the lease payments.
Although
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 had no sales revenuesmade 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 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. The new guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Recently, the FASB voted to delay the implementation date for this accounting standard, for smaller reporting companies, the new effective date is beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements and is collecting and analyzing data that will be needed to produce historical inputs into any models created as a result of adopting this ASU. At this time, the Company does not believe the adoption of this ASU will have a material effect on the financial statements.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the past five years, it received income of $75,000 from a letter of intent entered into in the last fiscal year. Due to problems and concerns on both sides, the letter of intent was f ully released,consolidated financial statements unless otherwise disclosed, and the Company retaineddoes not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Organization and Nature of Business
Historically, we had been a provider of in-room, on-demand video entertainment and satellite services to the $75,000 pursuantdomestic lodging industry. In the past, we had provided video services to agreementover 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.
In February 2017, our Board of Directors approved a complete restructuring, new management team and strategic direction for the Company. Capitalizing on management’s history in television, video and technology, we are now forging ahead and becoming a full-service live event sports company.
| 31 |
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 parties. These monies were used to bring current mostB2FS by sponsoring and acquiring MMA regional promotion companies for the development of the outstandingB2FS. Our second strategy is to add additional sports, leagues, tournaments and current obligationsspecial 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.
Results of Operations
Three Months Ended September 30, 2021 Compared to the Three Months Ended September 30, 2020
Revenue
We had revenues of $660,010 for the three months ended September 30, 2021, versus revenues of $135,927 for the three months ended September 30, 2020. There was an increase of $252,853, or 834% in live event revenue due to the reopening of live events as there continues to be a partial recovery from the effects of COVID-19. There was also an increase in gym revenue of $271,230, or 257% primarily as a result of the Company including but not limitedacquiring four gyms since the comparative period.
Cost of Sales
We incurred cost of sales of $327,682 for the three months ended September 30, 2021, versus cost of sales of $47,907 for the three months ended September 30, 2020. This increase of $279,775 is directly attributable to accounts payable, loans outstanding, deferred directors'the increase in live event revenue and gym revenue for the three months ended September 30, 2021.
Operating Expenses
General & Administrative Expenses
General and administrative expenses include all costs associated with professional fees, legalsalaries, marketing, public relations, rent, travel, sponsorships and accountingother expenses. We incurred general and administrative expenses of $1,854,487 for the three months ended September 30, 2021, versus general and administrative expenses of $675,129 for the three months ended September 30, 2020. The increase of $1,179,358 was primarily due to increased operations as a result of gym acquisitions, investor relations, salaries, travel, professional fees and wagesother costs associated with expanding infrastructure as we continue to execute our growth strategy.
| 32 |
Depreciation and Amortization Expense
We incurred depreciation and amortization expense of $98,470 for the three months ended September 30, 2021, versus depreciation expense of $33,833 for the three months ended September 30, 2020. The increase of $64,587 was due to the purchase of fixed and intangible assets as a result of business acquisitions and infrastructure growth.
Other Income (Expense)
Our other income and expenses include loss on sale of assets, loss on the forgiveness of notes receivable, gain on extinguishment of debt, change in this quarter.fair value of derivative liabilities and interest expense. The Company still owes significant outstanding wagesincrease of $288,186 (net expense) was primarily due to its officers who, exceptan increase in interest expense and negative changes in the fair value of derivative instruments.
Net Losses
We incurred a net loss of $2,557,176 for this past quarter,the three months ended September 30, 2021, versus a net loss of $1,269,353 for the three months ended September 30, 2020.
Six Months Ended September 30, 2021 Compared to the Six Months Ended September 30, 2020
Revenue
We had agreedrevenues of $1,228,775 for the six months ended September 30, 2021, versus revenues of $195,948 for the six months ended September 30, 2020. There was an increase of $488,385 or 1,608% in live event revenue due to defer their salaries due them since January, 1987the reopening of live events as there continues to be a partial recovery from the effects of COVID-19. There was also an increase in order to enablegym revenue of $544,442, or 516% primarily as a result of the Company acquiring four gyms since the comparative period.
Cost of Sales
We incurred cost of sales of $531,184 for the six months ended September 30, 2021, versus cost of sales of $49,219 for the six months ended September 30, 2020. This increase of $481,965 is directly attributable to the increase in live event revenue and gym revenue for the six months ended September 30, 2021.
Operating Expenses
General & Administrative Expenses
General and administrative expenses include all costs associated with professional fees, salaries, marketing, public relations, rent, travel, sponsorships and other expenses. We incurred general and administrative expenses of $3,408,367 for the six months ended September 30, 2021, versus general and administrative expenses of $839,917 for the six months ended September 30, 2020. The increase of $2,568,450 was primarily due to increased operations as a result of gym acquisitions, investor relations, salaries, travel, professional fees and other costs associated with expanding infrastructure as we continue to execute our growth strategy.
| 33 |
Depreciation and Amortization Expense
We incurred depreciation and amortization expense of $186,519 for the six months ended September 30, 2021, versus depreciation expense of $66,855 for the six months ended September 30, 2020. The increase of $119,664 was due to the purchase of fixed and intangible assets as result of business acquisitions and infrastructure growth.
Other Income (Expense)
Our other income and expenses include gain on forgiveness of loan, loss on sale of assets, loss on the forgiveness of notes receivable, loss on settlement of debt, (loss) on extinguishment of debt, change in the fair value of derivative liabilities and interest expense. The decrease of $283,588 (income) was primarily due to positive changes in fair value of derivative instruments and gains on extinguishment of debt which were partially offset by an increase in interest expense.
Net Losses
We incurred a net loss of $3,618,523 for the six months ended September 30, 2021, versus a net loss of $1,764,859 for the six months ended September 30, 2020.
Current Liquidity and Capital Resources for the six months ended September 30, 2021 compared to the six months ended September 30, 2020
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| Summary of Cash Flows: | ||||||||
| Net cash used by operating activities | $ | (2,634,963 | ) | $ | (574,939 | ) | ||
| Net cash used by investing activities | (421,156 | ) | (128,501 | ) | ||||
| Net cash provided by financing activities | 3,207,855 | 718,282 | ||||||
| Net increase in cash and cash equivalents | 151,736 | 14,842 | ||||||
| Beginning cash and cash equivalents | 122,176 | 46,729 | ||||||
| Ending cash and cash equivalents | $ | 273,912 | $ | 61,571 | ||||
Operating Activities
Cash used in operations of $2,634,963 during the six months ended September 30, 2021 was primarily a result of our $3,618,523 net loss reconciled with our net non-cash expenses relating to stock compensation, depreciation and amortization expense, gain on forgiveness of loan, legal fees on convertible notes, gain on extinguishment of debt, interest expense on extinguishment of debt, loss on sale of assets, amortization of debt discount, inventory, changes in fair value of derivative liabilities, right-of-use asset/liability, prepaid expenses, accounts receivable, deferred revenue and accrued liabilities.
Cash used in operations of $574,939 during the six months ended September 30, 2020 was primarily a result of our $1,764,859 net loss reconciled with our net non-cash expenses relating to stock compensation, depreciation and amortization expense, loss on settlement of debt, loss on extinguishment of debt, gain on settlement of debt, grant income, amortization of debt discount, changes in fair value of derivative liabilities, inventory, prepaid expenses, accrued liabilities and deferred revenue.
| 34 |
Investing Activities
Net cash used in investing activities for the six months ended September 30, 2021, of $421,156 resulted from the payments of $165,000 related to business combinations and capital expenditures in the amount of $256,156. Net cash used in investing activities for the six months ended September 30, 2020, of $128,501 resulted from the payments to related parties in the amount of $470 and capital expenditures in the amount of $128,031.
Financing Activities
Net cash provided by financing activities was $3,207,855 for six months ended September 30, 2021, which consisted of $150,000 from the issuance of notes payable, $2,096,681 from the issuance of convertible notes payable, $207,863 in payments related to repayment of convertible notes payable, $8,609 repayment on notes payable, $2,354 in payment of note payable and $1,180,000 in proceeds from the issuance of common stock.
Net cash provided by financing activities was $718,282 for six months ended September 30, 2020, which consisted of $122,766 from the issuance of notes payable, $150,000 from the issuance of convertible notes payable, $15,000 in payments related to payable due for business combinations, $4,484 payment on notes payable, and $465,000 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.
| 35 |
Going Concern
The accompanying financial statements have been prepared on a going concern basis. For the six months ended September 30, 2021, the Company had a net loss of $3,618,523, had net cash used in operating activities of $2,634,963, had negative working capital of $5,589,042, accumulated deficit of $12,815,771 and stockholders’ deficit of $3,946,129. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The present outstanding balanceconcern for a period of one year from the date of this wage claim is $701,100.
Since its liquidity was enhanced in fiscal 1984 by a limited offering of the Company's securities in August, 1983 for net proceeds of $218,055, and an initial public offering of its common stock for net proceeds of $493,394 on March 20, 1984, the Company's liquidity has declined due to the initial expenditures required for research and development, and the time involved in se curing a market for the Company's products. There are no present or planned commitments for material capital expenditures, and the Company presently has no material unused sources of liquid assets.
There was a net loss this quarter, and overall there is a significant accumulated deficit which has eroded stockholders' equity. As no sales are presently pending, such attrition was projectedfiling. The Company’s ability to continue through fiscal 2002. Due to the losses sustained by the Company during its development stage and over the intervening years, the Company's ability to remainas a going concern dependsis dependent upon its ability to generate sufficient cash flowobtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to obtain additional financing as may be required,fund possible future acquisitions, and to continuegenerate profitable operations in the future. Management plans to increaseprovide 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 product sales,business plan or alternativelygenerate 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 pursue a merger arrangement with an appropriate candidate. In lightmarket risk of the factsort that the Company has been unable to obtain additional financing and has not had any sales revenues for the past five years, management believesmay arise from changes in interest rates or foreign currency exchange rates, or that the Compan y's best prospects aremay otherwise arise from transactions in pursuing a merger with another company. As a result, the Company has continued to concentrate operations on finding a merger candidate with products or services which might generate revenue for continuing operations; a merger agreement has been signed by the directors effective June 25, 2001, subject to shareholder approval, as more fully described in the 8-K filed on June 27, 2001.derivatives.
Results of Operations
The Company had no sales revenues again this year. Aspreparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the Company has had no salesreported amounts of its products in the past five years, it has recently concentrated operations on finding a merger candidate with products or services which might generate revenue for continuing operations; a merger agreement has been signed by the directors, subject to shareholder approval, on June 25, 2001, as more fully described in the 8-K filed on June 27, 2001.
The Company was previously working to upgrade its Model 9100 system with a new diode which would increase the transmission pow er of the system from 1 watt power input to 1.2assets and 2.4 optical power output, thereby increasing the transmission range to over two miles in normal atmospheric conditions. However, the new technology has made the present work in process inventory obsolete, and no monies have been available to start constructing the upgraded systems at this point.
In addition, the Company was working to upgrade the data rate transmission capabilities of the Model 9100. Presently, the Model 9100-2 is capable of transmitting communication formats of DS-0 (64 kbps), DS-1 (1.544 mbps),liabilities and the European standard CEPT HDB-3 (2.048 mbps). Upgrades would allow transmissiondisclosure of additional data rates of OC-1 (51.84 mbps)contingent assets and OC-2 (155.520 mbps). The present plans to accomplish these upgrades would utilize the same castings, optics, mounts, and most other hardware, therefore reducing the cost of the new design while greatly enhancing system features. Again, the Company has not had appropriate funding to pursue these enhancements, a nd so no work in process has been started to accomplish these upgrades.
Other than the above, the Company does not expect any material changes in the mix and relative cost of resources. Raw materials were previously augmented in the anticipation of potential future demand in Asia. As of year end and the date of this report, there were no finished goods in inventory. Inflation has had no material effect on the Company's operations over the last three fiscal years.
The Company's only full time employees, Don and Clara Ranniger, had elected to defer their salaries since January of 1987 throughliabilities at the date of the last 10-Kconsolidated 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 ordera loss to help the Company's cash flow;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 resolutioncontingency indicates it is probable that a material loss has been incurred and the amount of that wage claim is presently addressedthe liability can be estimated, then the estimated liability would be accrued in our financial statements. If the proposed merger agreement.
Besides pursuing a merger withassessment indicates a potentially profitable candidate, fiscal 2002 operations will continue to concentrate efforts on increasing sales and productionmaterial loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the Model 9100. However, due to varying economic conditionscontingent 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 domestic and world - -wide markets for this product, and based on the fact thatguarantees would be disclosed.
| 36 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
As a smaller reporting company, the Company has had no sales revenueselected 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 past five years, itrules and forms of the Securities and Exchange Commission and, as such, is unlikelyaccumulated 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 September 30, 2021. Based on his evaluation, Mr. Bell concluded that the Company will have any significant sales in 2001, thereby increasing the lossCompany’s disclosure controls and financial risk factors.procedures were effective as of September 30, 2021.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. Not applicable.Internal Control Over Financial Reporting
Item 3. Defaults upon Senior Securities. Not applicable.
Item 4. SubmissionThere has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of Matttersthe Exchange Act, during the Company’s most recent fiscal quarter ended September 30, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 37 |
PART II—OTHER INFORMATION
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
Convertible Note Issuances
Between July 1, 2021, and September 30, 2021, we issued to “accredited investors,” Convertible Promissory Notes aggregating a Voteprincipal amount of Security Holders. Not applicable.$1,864,595.
Item 5. Other Information.
Item 6. ExhibitsThese Notes 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 ReportsRule 506(b) promulgated thereunder, as transactions by an issuer not involving any public offering. No selling commissions were paid in connection with the issuances of the notes.
Use of Proceeds
On February 2, 2021, our Registration Statement on Form 8-K.
(b) Reports on Form 8-K. An 8-KS-1 (File No. 333-251846) was filed on 11/2/2000, apprising shareholdersdeclared effective by the SEC and the publicoffering was commenced upon effectiveness and is still ongoing as all of the entity status issue. Another 8-K was filed on June 27, 2001, apprising shareholders that625,000,000 (for gross proceeds of $2,500,000) offered shares have not been sold and the directors had approvedoffering has not been terminated.
During the quarter ended September 30, 2021, we sold a merger agreement subject to shareholder approval.total of 75,000,000 shares of Common Stock for gross proceeds of $300,000. We did not pay any fees or commissions from the sales and received net proceeds of $300,000. The net proceeds were used as follows: 1) acquisition of gyms - $45,000, 2) cap-ex - $94,882, 3) Repayment of convertible notes - $142,491, and 4) working capital - $17,627.
&nbs p;
| 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* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104* | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
__________________
*Filed with this Report.
**Furnished with this Report.
| 38 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
TELECOMMUNICATION PRODUCTS, INC.
| B2Digital, Incorporated | ||
| Date: November 15, 2021 | By | /s/ Greg P. Bell |
| Greg P. Bell, Chief Executive Officer | ||
| (Principal Executive Officer and Principal | ||
| Financial Officer) | ||
By:_____________/s/_____________
Don E. Ranniger, President
August 5, 2001
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| 39 |