NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS
In February 2017, the Board of Directors
of B2Digital, Incorporated ("B2Digital" or the "Company") approved a complete restructuring, new management
team and strategic direction for the Company. Capitalizing on its history in television, video and technology, the Company is now
forging ahead and becoming a full-service live event sports company.
B2Digital's first strategy is to build
an integrated live event Minor League for the Mixed Martial Arts (MMA) marketplace. B2Digital will be creating and developing Minor
League champions that will move on to the MMA Major Leagues from the B2 Fighting Series (B2FS). This will be accomplished by sponsoring
operating live events, acquiring existing MMA promotions and then inviting those champions to the B2FS Regional and National Championship
Series. B2Digital will own all media and merchandising rights and digital distribution networks for the B2FS.
2017 marked the kickoff of the B2FS by
sponsoring and acquiring MMA regional promotion companies for the development of the B2FS. The second strategy is that the Company
plans to add additional sports, leagues, tournaments and special events to its live event business model. This will enable B2Digital
to capitalize on their core technologies and business models that will be key to broadening the revenue base of the Company's live
event core business. B2Digital will also be developing and expanding the B2Digital live event systems and technologies. These include
systems for event management, digital ticketing sales, digital video distribution, digital marketing, Pay-Per View (PPV), fighter
management, merchandise sales, brand management and financial control systems.
Basis of Presentation and Consolidation
The Company has seven wholly-owned subsidiaries.
Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, Colosseum Combat LLC which owns Colosseum Combat MMA in Indiana, United
Combat League MMA LLC, Pinnacle Combat LLC, Strike Hard Productions, LLC, ONE More Gym, and B2 Productions LLC.
The consolidated financial statements,
which include the accounts of the Company and its seven wholly-owned subsidiaries, are prepared in conformity with generally accepted
accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions
have been eliminated. The consolidated financial statements, which include the accounts of the Company and its seven wholly-owned
subsidiaries, and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission
(“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with accounting
principles generally accepted in the United States of America (“GAAP”) and presented in US dollars. The fiscal year
end is March 31.
NOTE 2 - ACCOUNTING POLICIES
The significant accounting policies
of the Company are as follows:
Basis of Accounting
The interim consolidated financial statements
are condensed and should be read in conjunction with the Company’s latest annual financial statements; interim disclosures
generally do not repeat those in the annual statements. The interim unaudited consolidated financial statements have been prepared
in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
In the opinion of management, the unaudited
interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation
of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Use of Estimates
Management uses estimates and assumptions
in preparing financial statements. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure
of contingent assets and liabilities, and the reported revenues and expenses. The most significant assumptions and estimates relate
to the valuation of derivative liabilities and the valuation of assets and liabilities acquired through business combinations.
Actual results could differ from these estimates and assumptions.
Cash and Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains deposits primarily
in four financial institutions, which may at times exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance
Corporation ("FDIC"). The Company has not experienced any losses related to amounts in excess of FDIC limits or $250,000.
The Company did not have any cash in excess of FDIC limits at September 30, 2020 and 2019, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments
consist primarily of accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their
respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The
three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation
methodology are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation
methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the
asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation
methodology are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments
with features of both liabilities and equity under ASC 480, Distinguishing Liabilities from Equity, and ASC 815.
Property and Equipment
Property and equipment are carried at cost.
Depreciation is provided on the straight-line method over the assets’ estimated service lives. Expenditures for maintenance
and repairs are charged to expense in the period in which they are incurred, and betterments are capitalized. The cost of assets
sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are reflected
in the accompanying consolidated statement of operations of the respective period. The estimated useful lives range from 3 to 7
years.
Goodwill
Goodwill represents the cost in excess
of the fair value of net assets acquired in business combinations. The Company tests goodwill for impairment on an annual basis
and when events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is deemed to be
impaired if the carrying amount of goodwill exceeds its estimated fair value. As of September 30, 2020, there were no charges to
goodwill impairment.
Other income
During the six months ended September 30,
2020, the Company received $2,000 in grant income due to COVID-19 relief. The Company has recorded this grant income under other
income in the Statement of Operations.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Revenue Recognition
Revenue is recognized when a customer obtains
control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty
of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration
that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to
determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods
are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction
price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations;
and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step
model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods
or services it transfers to the customer. Once a contract is determined to be within the scope of Financial Accounting Standards
Board (“FASB”) Accounting Standards Codification (“ASC”) 606 at contract inception, the Company reviews
the contract to determine which performance obligations the Company must deliver and which of these performance obligations are
distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance
obligation when the performance obligation is satisfied or as it is satisfied. The majority of revenues are received from ticket
and beverage sales before and during the live events. Sponsorship revenue is also recognized when the live event takes place. Any
revenue received for events that have yet to take place are recorded in deferred revenue.
Income Taxes
The Company follows Section 740-10-30 of
the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities
are based on the differences between the consolidated financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the consolidated Statements of Operations in the period that includes the enactment date. Through
September 30, 2020, the Company has an expected loss. Due to uncertainty of realization for these losses, a full valuation allowance
is recorded. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Concentration of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal
business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company controls
credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely
assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance,
if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond
such allowance is limited. In addition, Receivables that are factored through the Company's Receivable finance facility are guaranteed
by the finance company that further mitigates Credit Risk.
Impairment of Long-Lived Assets
In accordance with ASC 360-10, the Company,
on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally
and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based
on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized
based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on appraised
value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved.
There were no impairment charges recorded during the six months ended September 30, 2020 and 2019.
Inventory
Inventories are valued at the lower of
cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and
allowance is made to write down inventories to market value, if lower. As of September 30, 2020 and March 31, 2020, the Company
had outstanding balances of finished goods inventory of $1,445 and $7,256, respectively.
Earnings Per Share (EPS)
The Company utilize FASB ASC 260, Earnings
per Share. Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the
weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss)
per share except that the denominator is increased to include additional common shares available upon exercise of stock options
and warrants using the treasury stock method, except for periods of operating loss for which no common share equivalents are included
because their effect would be anti-dilutive. As of September 30, 2020, the convertible notes are indexed to 183,301,670 shares
of common stock.
The following table sets for the computation
of basic and diluted earnings per share the six months ended September 30, 2020 and 2019:
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
Basic and diluted
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,764,859
|
)
|
|
$
|
(904,927
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
Basic & diluted
|
|
|
574,198,491
|
|
|
|
471,101,799
|
|
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Stock Based Compensation
The Company records stock-based compensation
in accordance with the provisions of FASB ASC Topic 718, Accounting for Stock Compensation, which establishes accounting
standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance
provided under ASC.
Topic 718, the Company recognizes an expense
for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether
held by employees or others. As of September 30, 2020, there were no options outstanding.
On June 20, 2018, the FASB issued ASU 2018-07,
Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07
is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example,
service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value
non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date
under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on April 1, 2019. The adoption of
this standard did not have a material impact on the consolidated financial statements.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU No.
2017-04, Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the requirement
to calculate the implied fair value of goodwill, but rather requires an entity to record an impairment charge based on the excess
of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment
tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. We do not expect the adoption of this ASU
to have a material effect on our consolidated financial statements.
In August 2018, the FASB issued ASU No.
2018-13, Fair Value Measurements (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement.
The amendments in this update modify the disclosure requirements on fair value measurements in Topic 820. The ASU is effective
for the Registrants for fiscal years beginning after December 15, 2019, and interim periods therein. Early adoption is permitted.
The Company is currently assessing the impact of this standard on their Financial Statements.
In September 2016, the FASB issued ASU
2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred-loss impairment
methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including
trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances
for credit losses limited to the amount by which fair value is below amortized cost. ASU 2016-13 is effective for the Company beginning
January 1, 2020 and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related
codification improvements will be material to its financial position, results of operations and cash flows.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements
unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been
issued that might have a material impact on its financial position or results of operations.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 3 – GOING CONCERN
The accompanying consolidated financial
statements have been prepared on a going concern basis. For the six months ended September 30, 2020, the Company had a net loss
of $1,764,859, had net cash used in operating activities of $574,939, had negative working capital of $1,597,844, accumulated deficit
of $5,581,837 and stockholders’ deficit of $931,436. These matters raise substantial doubt about the Company’s ability
to continue as a going concern for a period of one year from the date of this filing. The Company’s ability to continue as
a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities
arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations
in the future. Management plans to provide for the Company’s capital requirements by continuing to issue additional equity
and debt securities. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved,
the Company will have sufficient funds to execute its business plan or generate positive operating results. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – REVENUE
The Company recognizes as revenues the
amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied
or as it is satisfied. 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 six months ended September 30, 2020 and 2019 are as follows:
|
|
For the six months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2020
(Unaudited)
|
|
|
2019
(Unaudited)
|
|
Live events
|
|
$
|
30,377
|
|
|
$
|
181,911
|
|
Gym revenue
|
|
|
165,571
|
|
|
|
–
|
|
Net sales
|
|
$
|
195,948
|
|
|
$
|
181,911
|
|
|
|
For the three months ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2020
(Unaudited)
|
|
|
2019
(Unaudited)
|
|
Live events
|
|
$
|
30,318
|
|
|
$
|
96,275
|
|
Gym revenue
|
|
|
105,609
|
|
|
|
–
|
|
Net sales
|
|
$
|
135,927
|
|
|
$
|
96,275
|
|
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment, net,
consisted of the following at September 30, 2020 and March 31, 2020:
|
|
As of
|
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
Gym equipment
|
|
$
|
170,500
|
|
|
$
|
163,147
|
|
Cages
|
|
|
124,025
|
|
|
|
124,025
|
|
Event assets
|
|
|
93,121
|
|
|
|
61,319
|
|
Furniture and fixtures
|
|
|
2,500
|
|
|
|
0
|
|
Production equipment
|
|
|
30,697
|
|
|
|
30,697
|
|
Electronics hardware and software
|
|
|
31,254
|
|
|
|
11,845
|
|
Trucks trailers and vehicles
|
|
|
65,592
|
|
|
|
11,210
|
|
|
|
|
517,689
|
|
|
|
402,243
|
|
Less: accumulated depreciation
|
|
|
(89,521
|
)
|
|
|
(50,850
|
)
|
|
|
$
|
428,168
|
|
|
$
|
351,393
|
|
Depreciation expense related to these assets
for the six months ended September 30, 2020 and 2019 amounted to $38,672 and $10,053, respectively.
NOTE 6 – INTANGIBLE ASSETS
Intangible assets, net, consisted
of the following at September 30, 2020:
|
|
As of
|
|
|
As of
|
|
|
|
September 30,
2020
|
|
|
March 31,
2020
|
|
|
|
|
|
|
|
|
Licenses
|
|
$
|
142,248
|
|
|
$
|
142,248
|
|
Software/website development
|
|
|
12,585
|
|
|
|
–
|
|
Customer relationships
|
|
|
83,000
|
|
|
|
83,000
|
|
|
|
|
237,833
|
|
|
|
225,248
|
|
Less: accumulated amortization
|
|
|
(56,480
|
)
|
|
|
(28,297
|
)
|
|
|
$
|
181,353
|
|
|
$
|
196,951
|
|
Licenses are amortized over five years,
whereas customer relationships and software/website development are amortized over three years. Amortization expense related to
these assets for the six months ended September 30, 2020 and 2019 amounted to $28,183 and $0, respectively.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Estimated amortization expense for each of the next five years:
Fiscal year ended March 31, 2021
|
|
$
|
30,156
|
|
Fiscal year ended March 31, 2022
|
|
|
60,311
|
|
Fiscal year ended March 31, 2023
|
|
|
53,395
|
|
Fiscal year ended March 31, 2024
|
|
|
30,422
|
|
Fiscal year ended March 31, 2025
|
|
|
7,069
|
|
Total
|
|
$
|
181,353
|
|
NOTE 7 – BUSINESS ACQUISITIONS
United Combat League, UCL MMA LLC
Effective May 1, 2019, the Company completed
its previously announced acquisition of 100% of the equity interest in United Combat League, LLC (“UCL”), in an effort
to execute its strategy of developing and building a Premier Development League for the Mixed Martial Arts (“MMA”)
marketplace. The purchase price was $20,000 in cash and 6,000,000 shares of Restricted Common Stock issuable to Michael Davis,
the seller of the equity interest in the acquisition. The Company is required to pay the cash consideration in three payments as
follows: (i) $10,000 on or before 10 calendar days after the execution date of the agreement, (ii) $5,000 on or before 45 calendar
days after the execution date of the agreement, and (iii) $5,000 on or before 90 calendar days after the execution date of the
agreement. As of September 30, 2020, the $10,000 cash consideration has been paid in full.
The Company analyzed the acquisition under
applicable guidance and determined that the acquisition should be accounted for as a business combination. The value of the consideration
was $59,000 of which $20,000 was in cash and $39,000 as the fair value of the 6,000,000 shares of common stock. The Company assigned
a fair value of $59,000 to the intangible assets – licenses. The intangible assets - licenses are being amortized over their
estimated life, currently expected to be five years.
Pinnacle Combat LLC- Acquisition
On July 15, 2019, to be effective June
29, 2019, the Company completed an acquisition of 100% of the equity interest in Pinnacle Combat LLC of Iowa (“Pinnacle”),
in an effort to execute its strategy of developing and building a Premier Development League for the MMA marketplace. The purchase
price was $20,000 in cash and 8,000,000 shares of Restricted Common Stock, 5,000,000 to be issued to Harry Maglaris and 3,000,000
to be issued to Ken Rigdon, collectively the sellers of the equity interest in the acquisition. The Company is required to pay
the cash consideration in three payments as follows: (i) $10,000 on or before 10 calendar days after the execution date of the
agreement, (ii) $5,000 on or before 45 calendar days after the execution date of the agreement, and (iii) $5,000 on or before 90
calendar days after the execution date of the agreement. As of September 30, 2020, the $10,000 cash consideration has been paid
in full.
The Company analyzed the acquisition under
applicable guidance and determined that the acquisition should be accounted for as a business combination. The value of the consideration
was $82,400 of which $20,000 was in cash and $62,400 as the fair value of the 8,000,000 shares of common stock. The fair value
of the next identifiable assets which consisted of property and equipment amounted to $73,380. The fair value of the liability
assumed which consisted of a credit card liability amounted to $25,028. The Company assigned a fair value of $34,048 in intangible
assets – licenses. The intangible assets - licenses are being amortized over their estimated life, currently expected to
be five years.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Strike Hard Productions LLC- Acquisition
On September 1, 2019, the Company completed
an acquisition of 100% of the equity interest in Strike Hard Productions LLC, a fighting promotion business, in an effort to execute
its strategy of developing and building a Premier Development League for the MMA marketplace. The purchase price was $20,000 in
cash and 9,000,000 shares of Restricted Common Stock, 3,000,000 Restricted Shares issued to be issued to David Elder, 3,000,000
Restricted Common Shares to be issued to James Sullivan and 3,000,000 Restricted Common Shares to be issued to Matt Leavell, collectively
the sellers of the equity interest in the acquisition. The Company is required to pay the cash consideration in three payments
as follows: (i) $10,000 on or before 10 calendar days after the execution date of the agreement, (ii) $5,000 on or before 45 calendar
days after the execution date of the agreement, and (iii) $5,000 on or before 90 calendar days after the execution date of the
agreement. As of September 30, 2020, the $10,000 cash consideration has been paid in full.
The Company analyzed the acquisition under
applicable guidance and determined that the acquisition should be accounted for as a business combination. The value of the consideration
was $82,400 of which $20,000 was in cash and $62,400 as the fair value of the 9,000,000 shares of common stock. The fair value
of the next identifiable assets which consisted of property and equipment amounted to $23,000. The Company assigned a fair value
of $49,200 in intangible assets – licenses. The intangible assets - licenses are being amortized over their estimated life,
currently expected to be five years.
One More Gym LLC
On January 6, 2020, the Company completed
an acquisition of 100% of the equity interest in One More Gym LLC (“1MG”), a gym. The purchase price was $30,000 in
cash and 6,000,000 shares of Restricted Common Stock (valued at $31,800 or $0.0053 per share), 6,000,000 shares to be issued to
BHC Management LLC, the seller of the equity interest in the acquisition. As of September 30, 2020, the Company owes $10,000 in
cash consideration to BHC Management.
The Company analyzed the acquisition under
applicable guidance and determined that the acquisition should be accounted for as a business combination. The value of the consideration
was $61,800 of which $20,000 was in cash and $31,800 as the fair value of the 6,000,000 shares of common stock. The fair value
of the next identifiable assets which consisted of cash of $2,392 and property and equipment of $159,703, amounted to $162,095.
The Company assigned a fair value of $83,000 in intangible assets – customer relationships. The intangible assets –
customer relationships are being amortized over their estimated life, currently expected to be three years. The Company recorded
a gain on bargain purchase of $52,583.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 8 - NOTES PAYABLE
The following is a summary of notes payable as of
September 30, 2020 and March 31, 2020:
|
|
As of
|
|
|
As of
|
|
|
|
September 30,
|
|
|
March 31,
|
|
|
|
2020
|
|
|
2020
|
|
Notes payable - current maturity:
|
|
|
|
|
|
|
|
|
Emry Capital $14,000, 4% loan with principal and interest due April, 2020
|
|
$
|
–
|
|
|
$
|
14,000
|
|
Note Payable PPP SBA Loan
|
|
|
15,600
|
|
|
|
–
|
|
SBA EIDL Loan
|
|
|
10,000
|
|
|
|
–
|
|
SBA Loan Payable B2 Digital
|
|
|
97,200
|
|
|
|
–
|
|
Notes payable – in default:
|
|
|
|
|
|
|
|
|
Emry Capital $14,000, 4% loan with principal and interest due April, 2020
|
|
|
14,000
|
|
|
|
–
|
|
Notes payable – long term:
|
|
|
|
|
|
|
|
|
WLES LP LLC $60,000, 5% loan due January 15, 2022
|
|
|
30,000
|
|
|
|
60,000
|
|
Brian Cox 401K
|
|
|
17,486
|
|
|
|
21,970
|
|
SBA Loan (One More Gym, LLC)
|
|
|
67,841
|
|
|
|
74,757
|
|
Total notes payable
|
|
|
252,127
|
|
|
|
170,727
|
|
Less: long-term
|
|
|
(115,327
|
)
|
|
|
(34,162
|
)
|
Total
|
|
$
|
136,800
|
|
|
$
|
136,565
|
|
On May 8, 2020, WLES LP LLC converted $30,000
of its $60,000 notes payable into 12,000,000 shares of common stock. As a result, the Company recorded a loss on settlement of
debt in the amount of $18,281.
During the six months ended September 30,
2020, the Company repaid $4,484 on its loan payable to Brian Cox.
During the six months ended September 30,
2020, the bank forgave $6,949 in principal and $3,132 in accrued interest on its SBA Loan (One More Gym, LLC). As a result, the
Company recorded $10,080 in gain on forgiveness of loan.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 9 – CONVERTIBLE NOTE PAYABLE
The following is a summary of convertible notes payable
as of September 30, 2020:
|
Note*
|
Inception Date
|
|
Maturity
|
|
|
Coupon
|
|
|
Face Value
|
|
|
Unamortized Discount
|
|
|
Carrying Value
|
|
|
Note 2
|
10/31/2019
|
|
|
12/15/2020
|
|
|
|
8%
|
|
|
$
|
208,000
|
|
|
$
|
19,945
|
|
|
$
|
188,055
|
|
|
Note 3
|
12/5/2019
|
|
|
12/5/2020
|
|
|
|
8%
|
|
|
|
62,000
|
|
|
|
4,685
|
|
|
|
57,315
|
|
|
Note 4
|
12/31/2019
|
|
|
12/31/2020
|
|
|
|
8%
|
|
|
|
62,000
|
|
|
|
3,225
|
|
|
|
58,775
|
|
|
Note 5
|
1/27/2020
|
|
|
1/27/2021
|
|
|
|
8%
|
|
|
|
184,000
|
|
|
|
11,101
|
|
|
|
172,899
|
|
|
Note 6
|
2/19/2020
|
|
|
2/19/2021
|
|
|
|
8%
|
|
|
|
78,000
|
|
|
|
7,640
|
|
|
|
70,360
|
|
|
Note 7
|
3/10/2020
|
|
|
3/10/2021
|
|
|
|
8%
|
|
|
|
78,000
|
|
|
|
9,374
|
|
|
|
68,626
|
|
|
Note 8
|
8/4/2020
|
|
|
8/4/2021
|
|
|
|
8%
|
|
|
|
156,000
|
|
|
|
45,077
|
|
|
|
110,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
828,000
|
|
|
$
|
101,047
|
|
|
$
|
726,953
|
|
* Note 1 in the amount of $82,000
was fully converted as of September 30, 2020.
Between October 4, 2019 and August 4, 2020,
the Company issued to GS Capital Partners, LLC, an accredited investor (“GS Capital”), Convertible Promissory Notes
aggregating a principal amount of $910,000. The Company received an aggregate net proceeds of $875,500 after $34,500 in original
note discount. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum
from the date on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration or by
prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment to GS Capital as set
forth in the agreements.
The outstanding principal amount of the
Notes is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months
of the term of the Notes. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest
trading prices of the Company’s common stock.
Accounting Considerations
The Company has accounted for the Notes
as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior
to making the accounting allocation, the Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC
815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be
evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and
closely related to the risks of the host contract. The material embedded derivative features consisted of the embedded conversion
option and default puts. The conversion option and default puts bear risks of equity which were not clearly and closely related
to the host debt agreement and required bifurcation. The contracts do not permit the Company to settle in registered shares and
the contracts also contain make-whole provisions both of which preclude equity classification. Current accounting principles that
are also provided in ASC 815 do not permit an issuer to account separately for individual derivative terms and features that require
bifurcation and liability classification. Rather, such terms and features must be and were bundled together and fair valued as
a single, compound embedded derivative.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Based on the previous conclusions, the
Company allocated the cash proceeds first to the derivative components at its fair value with the residual allocated to the host
debt contract, as follows:
|
|
Note 1
|
|
|
Note 2
|
|
|
Note 3
|
|
|
Note 4
|
|
|
Note 5
|
|
|
Note 6
|
|
|
Note 7
|
|
|
Note 8
|
|
Total
|
|
Compound embedded derivative
|
|
$
|
26,395
|
|
|
$
|
68,030
|
|
|
$
|
15,893
|
|
|
$
|
10,812
|
|
|
$
|
25,834
|
|
|
$
|
14,095
|
|
|
$
|
17,636
|
|
$
|
42,463
|
|
$
|
221,156
|
|
Convertible notes payable
|
|
|
48,605
|
|
|
|
133,970
|
|
|
|
44,107
|
|
|
|
49,188
|
|
|
|
152,666
|
|
|
|
60,905
|
|
|
|
57,364
|
|
|
107,537
|
|
|
654,344
|
|
Original issue discount
|
|
|
7,000
|
|
|
|
6,000
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
5,500
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
6,000
|
|
|
34,500
|
|
Face value
|
|
$
|
82,000
|
|
|
$
|
208,000
|
|
|
$
|
62,000
|
|
|
$
|
62,000
|
|
|
$
|
184,000
|
|
|
$
|
78,000
|
|
|
$
|
78,000
|
|
$
|
156,000
|
|
$
|
910,000
|
|
The net proceeds were allocated to the
compound embedded derivative and original issue discount. The notes will be amortized up to its face value over the life of Notes
based on an effective interest rate. Amortization expense and interest expense for the six months ended September 30, 2020 is as
follows:
Note
|
|
Interest
Expense
|
|
Accrued Interest
Balance
|
|
Amortization of Debt Discount
|
|
Unamortized
Discount
|
Note 1
|
|
$
|
1,015
|
|
$
|
–
|
|
$
|
18,870
|
|
$
|
0
|
Note 2
|
|
|
8,343
|
|
|
13,958
|
|
|
33,352
|
|
|
19,945
|
Note 3
|
|
|
2,487
|
|
|
4,077
|
|
|
8,335
|
|
|
4,685
|
Note 4
|
|
|
2,487
|
|
|
3,723
|
|
|
5,955
|
|
|
3,225
|
Note 5
|
|
|
7,380
|
|
|
9,961
|
|
|
15,408
|
|
|
11,101
|
Note 6
|
|
|
3,129
|
|
|
3,829
|
|
|
8,186
|
|
|
7,640
|
Note 7
|
|
|
3,129
|
|
|
3,488
|
|
|
9,774
|
|
|
9,374
|
Note 8
|
|
|
6,975
|
|
|
6,975
|
|
|
3,386
|
|
|
45,077
|
|
|
$
|
34,945
|
|
$
|
46,011
|
|
$
|
103,266
|
|
$
|
101,047
|
On April 23, 2020, GS Capital converted
$7,000 in principal and $341 in accrued interest of the October 4, 2019 $84,000 face value note into 4,292,915 shares of common
stock. On July 31, 2020, GS Capital converted $7,500 in principal and $488 in accrued interest of the October 4, 2019 $84,000 face
value note into 5,071,885 shares of common stock. On August 20, 2020, GS Capital converted $12,500 in principal and $871 in accrued
interest of the October 4, 2019 $84,000 face value note into 8,468,394 shares of common stock. 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 12,123,426 shares
of common stock. As a result of the August and September conversions, the Company recorded $64,194 as loss on extinguishment of
debt.
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, 2020:
|
|
September 30, 2020
|
|
The financings giving rise to derivative financial instruments
|
|
Indexed
Shares
|
|
|
Fair
Values
|
|
Compound embedded derivatives
|
|
|
183,301,670
|
|
|
$
|
(599,454
|
)
|
Total
|
|
|
183,301,670
|
|
|
$
|
(599,454
|
)
|
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
The following table summarizes the effects
on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of
financing for the six months ended September 30, 2020:
The financings giving rise to derivative financial instruments and the income effects:
|
|
|
|
Compound embedded derivatives
|
|
$
|
(787,407
|
)
|
Total gain (loss)
|
|
$
|
(787,407
|
)
|
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, 2020:
The financings giving rise to derivative financial instruments and the income effects:
|
|
|
|
Compound embedded derivatives
|
|
$
|
(511,975
|
)
|
Total gain (loss)
|
|
$
|
(511,975
|
)
|
The Company’s Convertible Promissory
Notes issued on October 4, 2019, October 31, 2019, December 5, 2019, December 31, 2019, January 27, 2020, February 19, 2020, March
10, 2020 and August 4, 2020, respectively, gave rise to derivative financial instruments. The notes embodied certain terms and
conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics.
These terms and features consist of the embedded conversion option.
Current accounting principles that are
provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and
carried at fair value with changes recorded in income. In addition, the standards do not permit an issuer to account separately
for individual derivative terms and features embedded in hybrid financial instruments that require bifurcation and liability classification
as derivative financial instruments. Rather, such terms and features must be bundled together and fair valued as a single, compound
embedded derivative. The Company has selected the Monte Carlo Simulations valuation technique to fair value the compound embedded
derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption
inputs, that market participants would likely consider in transactions involving compound embedded derivatives. Such assumptions
include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional
inputs for option models such as market trading volatility and risk-free rates. The Monte Carlo Simulations technique is a level
three valuation technique because it requires the development of significant internal assumptions in addition to observable market
indicators.
Significant inputs and results arising
from the Monte Carlo Simulations process are as follows for the embedded derivatives that have been bifurcated from the Convertible
Notes and classified in liabilities:
|
Inception
|
|
Quoted market price on valuation date
|
$0.0031 - $0.0058
|
|
Contractual conversion rate
|
$0.01
|
|
Contractual term to maturity
|
1.00 Years – 1.13 Years
|
|
Market volatility:
|
|
|
Equivalent Volatility
|
15.89% - 319.40%
|
|
Interest rate
|
8.0%
|
|
The following table reflects the issuances
of compound embedded derivatives and the changes in fair value inputs and assumptions related to the compound embedded derivatives
during the period ended September 30, 2020.
|
|
September 30, 2020
|
|
Balance at April 1, 2020
|
|
$
|
58,790
|
|
Issuances:
|
|
|
|
|
Compound embedded derivatives
|
|
|
42,463
|
|
Conversions
|
|
|
(289,206
|
)
|
Loss on changes in fair value inputs and assumptions reflected in income
|
|
|
787,407
|
|
Balance at September 30, 2020
|
|
$
|
599,454
|
|
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 11 - EQUITY
Preferred Stock
There are 50,000,000 shares authorized
as preferred stock, of which 40,000,000 are designated as Series B and 2,000,000 are designated as Series A. 8,000,000 shares have
yet to be designated. All 2,000,000 shares of Series A preferred are issued and outstanding. Each share of Series A preferred is
convertible into 240 shares of common stock. The Series A Preferred Stock votes with the Common Stock on all matters to be voted
on by the common stock on an as-converted basis. On such matters, each holder of Series A Preferred Stock is entitled to 240 votes
for each share of Series A Preferred Stock held by such shareholder.
Common Stock
Common Stock Issuances for the six months
ended September 30, 2019
On April 23, 2019, the Company issued 4,000,000
shares of common stock in exchange for services valued at $25,600 or $0.0064 per share.
On May 14, 2019, the Company sold 1,562,500
shares of common stock for $10,000 or $0.0064 per share.
On May 25, 2019, the Company sold 11,718,750
shares of common stock for $75,000 or $0.0064 per share.
On June 1, 2019, the Company issued 67,000,000
shares of common stock in exchange for services valued at $428,800 or $0.0064 per share.
On June 1, 2019, the Company issued 6,000,000
shares of common stock in exchange for the acquisition of UCL MMA LLC valued at $39,000 or $0.0065 per share.
On July 3, 2019 the Company issued 6,000,000
shares of common stock in exchange for services valued at $38,400 or $0.0064 per share.
On July 8, 2019, the Company entered into
a Subscription Agreement with a holder for the sale of 14,062,500 shares of common stock at $0.0064 per share, or $90,000.
On July 15, 2019 the Company issued 30,500,000
shares of common stock in exchange for services valued at $195,200 or $0.0064 per share.
On July 15, 2019 the Company issued 8,000,000
shares of common stock in exchange for the acquisition of Pinnacle Combat LLC valued at $51,200 or $0.0064 per share.
On August 30, 2019 the Company sold 15,625,000
shares of common stock for $100,000 or $0.0064 per share.
On September 7, 2019 the Company sold 7,812,500
shares of common stock for $50,000 or $0.0064 per share.
On September 19, 2019 the Company sold
11,718,750 shares of common stock for $75,000 or $0.0064 per share.
On September 27, 2019, the Company canceled
7,500,000 in exchange for the cancellation of $75,000 in Notes Receivable.
As part of the Strike Hard Productions
LLC acquisition, the Company issued 9,000,000 shares of common stock valued at $57,600 or $0.0064 per share.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Common Stock Issuances for the six months
ended September 30, 2020
On April 23, 2020, the Company issued 4,292,915
shares of stock to GS Capital in exchange for the conversion of $7,341 in convertible note principal.
On May 8, 2020, the Company issued 12,000,000
shares of stock to WLES LP LLC in exchange for the conversion of $30,000 in convertible note principal. The 12,000,000 shares were
valued at $48,281 resulting in a loss on settlement of debt in the amount of $18,281.
On June 16, 2020, the Company issued 4,000,000
shares of common stock to Veyo Partners LLC in exchange for investor relation services valued at $14,400 or $0.0036 per share.
On July 10, 2020, the Company issued 4,000,000
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 $488 in accrued interest of the October 4, 2019 $84,000 face value note into 5,071,885 shares of common
stock. The 5,071,885 shares were valued at $16,558. The Company recorded the removal of the $7,500 in principal, $488 in interest,
and $8,570 in derivative liabilities resulting in no gain or loss.
On August 10, 2020, the Company issued
4,000,000 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 13,333,334
shares of common stock for $100,000 or $0.0075 per share.
On August 19, 2020, the Company sold 13,333,334
shares of 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 October 4, 2019 $84,000 face value note into 8,468,394 shares of common
stock. The 8,468,394 shares were valued at $155,914. After recording the removal of the $12,500 in principal, $871 in interest,
and $138,647 in derivative liabilities, the Company recorded $3,896 as loss on extinguishment of debt.
On September 1, 2020, the Company sold
13,333,334 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 12,123,426 shares of common
stock. The 12,123,426 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
22,000,000 shares of common stock for $165,000 or $0.0075 per share.
On September 30, 2020, the Company issued
3,733,333 shares of common stock for services valued at $26,133 or $0.0070 per share.
NOTE 12 –LEASES
In connection with the acquisition of the
One More Gym, LLC, the Company assumed a building lease and two equipment leases. The lease terms are under 12 months. Under Topic
842, a short-term lease is a lease that, at the commencement date, has a ‘lease term’ of 12 months or less and does
not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. Although short-term leases
are in the scope of Topic 842, a simplified form of accounting is permitted. A lessee can elect, by class of underlying asset,
not to apply the recognition requirements of Topic 842 and instead to recognize the lease payments as lease cost on a straight-line
basis over the lease term. The Company has elected the short-term method to account for these leases.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
NOTE 13 – COMMITMENTS AND
CONTINGENCIES
During the normal course of business, the
Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case
in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement
strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and
can be reasonably estimated, it establishes the necessary accruals. As of September 30, 2020, the Company is not aware of any contingent
liabilities that should be reflected in the consolidated financial statements.
The Company entered into employment agreements
with its Chief Executive Officer and Executive Vice President as of November 24, 2017. Under the terms of these agreements the
Company will be liable for severance and other payments under certain conditions. The employment agreement for the Executive Vice
President is for a period of 36 months and renews for a successive two years unless written notice is provided by either party
under the terms of the agreement. The employment agreement for the Chief Executive Officer can be terminated by the Chief Executive
Officer upon three months written notice. Termination of the Chief Executive Officer requires 80% of the votes of all stockholders
of the Company.
Each of the acquisition agreements contain
a Management Services Agreement (“MSA”) whereby the Company agrees to pay a management fee based on certain performance
targets. The MSA agreements expire 10 years from the acquisition agreement dates.
NOTE 14 - SUBSEQUENT EVENTS
Convertible Promissory Note
On October 2, 2020, the Company entered
into a Securities Purchase Agreement with GS Capital pursuant to which the Company issued to GS Capital a Convertible Promissory
Note in the aggregate principal amount of $205,000. The Company received net proceeds of $195,000 after a $10,000 original note
discount. The note has a maturity date of October 2, 2021 and the Company has agreed to pay interest on the unpaid principal balance
of the note at the rate of eight percent (8%) per annum from the date on which the note is issued until the same becomes due and
payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the
note, provided it makes a payment to GS Capital as set forth in the note.
The outstanding principal amount of the
note is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months
of the term of the note. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest
trading prices of the Company’s common stock. The initial accounting for this note is not completed.
On October 15, 2020, the Company entered
into a Securities Purchase Agreement with GS Capital pursuant to which the Company issued to GS Capital a Convertible Promissory
Note in the aggregate principal amount of $172,000. The Company received net proceeds of $165,000 after a $7,000 original note
discount. The note has a maturity date of October 15, 2021 and the Company has agreed to pay interest on the unpaid principal balance
of the note at the rate of eight percent (8%) per annum from the date on which the note is issued until the same becomes due and
payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the
note, provided it makes a payment to GS Capital as set forth in the note.
The outstanding principal amount of the
note is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months
of the term of the note. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest
trading prices of the Company’s common stock. The initial accounting for this note is not completed.
B2Digital, Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
Common Stock Issuances
On October 1, 2020, the Company issued
33,934,759 shares of common stock in conversion of $108,000 in principal and $7,196 of accrued interest.
On October 15, 2020, the Company issued
14,521,245 shares of common stock in conversion of $45,000 in principal and $3,136 of accrued interest.
Lease
On October 1, 2020, the Company, under
its subsidiary ONE More Gym LLC, entered into a facilities lease for 25,000 square feet in Kokomo, Indiana. The initial lease term
is for five years and the lease commencement date is October 1, 2020. The Company will receive the first month’s rent free
and will pay lease payments as follows:
|
|
Annual Lease Payments
|
|
Period
|
|
|
|
|
Year 1
|
|
$
|
87,500
|
|
Year 2
|
|
|
91,875
|
|
Year 3
|
|
|
96,469
|
|
Year 4
|
|
|
101,292
|
|
Year 5
|
|
|
101,292
|
|
Total
|
|
$
|
478,428
|
|
The Company will analyze the lease to determine proper accounting
in accordance with ASC 842.
Business Acquisition
Effective October 6, 2020, the
Company completed an acquisition of 100% of the equity interest in CFit Indiana, Inc., doing business as Charter Fitness, a gym.
Charter Fitness has two locations: one is Merrillville, Indiana and the other in Valparaiso, Indiana. The purchase price was $115,000
The initial accounting for this acquisition is not completed.
Common Stock Purchase Agreement
On October 21, 2020 the Company
entered into a Common Stock Purchase Agreement (the “CSPA”) with Triton Funds, LP (“Triton”) (www.tritonfunds.com),
the nation’s largest student venture investment fund, for an investment by Triton in the Company’s common equity of
as much as $5 million. Triton has agreed to invest up to $2.5 million in common stock of B2Digital through the purchase of shares
the Company has agreed to sell to Triton, subject to the terms and conditions set forth in the CSPA. In addition, in connection
with the CSPA, Triton may invest up to an additional $2.5 million pursuant to warrant agreements.