Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

B2DIGITAL, INCORPORATED

(Exact name of registrant as specified in its charter)

 

DELAWARE

(State or other jurisdiction of incorporation or organization)

 

7997

(Primary Standard Industrial Classification Code Number)

 

84-0916299

(I.R.S. Employer Identification Number)

 

4522 West Village Drive

Suite 215

Tampa, FL 33624

(813) 961-3051

(Address and telephone number of registrant’s principal

executive offices and principal place of business)

 

Bradley E. Essman, Esq.

600 North Broad Street

Suite 5 #3133

Middletown, DE 19709

(727) 768-2121

(Name, address and telephone number of agent for service)

 

Communication Copies to:

 

Business Legal Advisors, LLC

Brian Higley, Esq.

14888 South Auburn Sky Drive

Draper, UT 84020

(801) 634-1984

 

From time to time after the effective date of this Registration Statement

(Approximate date of commencement of proposed sale to the public)

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering. ¨

 

If delivery of the prospectus is expected to be made pursuant to Rule 424, check the following box. ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 x
    Emerging growth company ¨

 

If an emerging growth company, indicate by checkmark if the registrant has not elected to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

 

     

 

 

CALCULATION OF REGISTRATION FEE

  

Title of Each Class of Securities to be Registered  

Amount

Registered

(1)(2)(3)

   

Proposed

Maximum

Offering

Price Per

Share (4)

   

Proposed

Maximum

Aggregate

Offering

Price

   

Amount of

Registration

Fee (5)

 
Common Stock, $0.00001 par value per share     500,000,000     $ 0.005     $ 2,500,000     $ 272.75  
Common Stock, $0.00001 par value per share, issuable upon the exercise of the Warrant Shares (as defined below)     125,000,000     $ 0.02     $ 2,500,000     $ 272.75  
                                 
Total     625,000,000     $     $ $5,000,000     $ 545.50  

__________ 

(1) This Registration Statement covers a direct public offering by the Company of up to 500,000,000 shares of our Common Stock.
   
(2) All shares issuable upon the exercise of Warrant Shares (as defined below) registered pursuant to this Registration Statement are to be offered by the Selling Security Holder (as defined below).
   
(3) This Registration Statement includes an indeterminate number of additional shares of Common Stock issuable for no additional consideration pursuant to any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration, which results in an increase in the number of outstanding shares of our Common Stock. In the event of a stock split, stock dividend or similar transaction involving our Common Stock, in order to prevent dilution, the number of shares registered shall be automatically increased to cover the additional shares in accordance with Rule 416(b) under the Securities Act of 1933, as amended (the “Securities Act”).
   
(4) Pursuant to Rule 457(g) of the Securities Act, the Warrant Shares are exercisable at $0.02 per share.
   
(5) $152.48 has been previously paid to the Securities and Exchange Commission (the “SEC”) via a withdrawn registration statement filed on November 2, 2020 (file number 333-249795).

 

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(A) of the Securities Act or until the Registration Statement shall become effective on such date as the SEC, acting pursuant to said Section 8(A), may determine.

 

 

 

 

     

 

 

The information in this prospectus is not complete and may be changed. These securities may not be sold (except pursuant to a transaction exempt from the registration requirements of the Securities Act) until this Registration Statement filed with the SEC is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED DECEMBER 31, 2020

 

B2DIGITAL, INCORPORATED

 

500,000,000 Shares of Common Stock

 

$0.005 per share

125,000,000 Shares of Common Stock Issuable Upon the Exercise of Warrants

 

This Prospectus relates to the offer of up to 500,000,000 shares of our Common Stock, par value $0.00001 per share (the “Shares”) with an offering price of $0.005 per Share (with the resale of the Warrant Shares, the “Offering”). This Offering shall be conducted by the Company in a direct offering. Should all Shares being offered by the Company hereunder be sold, the Company would receive an aggregate of $2,500,000 at an offering price of $0.005 per Share. There is no minimum number of Shares that must be sold by us for the Offering to proceed, and we will retain the proceeds from the sale of any of the offered Shares. The Offering is being conducted on a self-underwritten, best efforts basis, which means our officers and directors will attempt to sell the Shares. This Prospectus will permit our officers and directors to sell the Shares directly to the public, with no commission or other remuneration payable to them for any Shares they may sell. In offering the Shares on our behalf, our officers and directors will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange of 1934, as amended (the “Exchange Act”).

 

This Prospectus also relates to the resale of up to 125,000,000 shares of our Common Stock, par value $0.00001 per share, to be issued to Triton Funds, LP, a Delaware limited partnership (“Triton”) upon the exercise of warrants issued to Triton (the “Warrant Shares”). The Warrant Shares may be issued pursuant to that that certain Warrant Agreement, dated December 23, 2020. Triton is also referred to herein as the “Selling Security Holder.”

 

We will not receive any of the proceeds from the sale of the Common Stock by the Selling Security Holder.

 

The Selling Security Holder identified in this prospectus may offer the shares of Common Stock from time to time through public or private transactions at prevailing market prices or at privately negotiated prices. The Selling Security Holder can offer all, some or none of its shares of Common Stock, thus we have no way of determining the number of shares of Common Stock it will hold after this Offering. See “Plan of Distribution.”

 

Our Common Stock is currently quoted on the OTC Markets under the symbol “BTDG.” On December 29, 2020, the last reported sale price of our Common Stock on the OTC Markets was $0.0054

 

Investing in our Common Stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the heading “Risk Factors” beginning on page 4 of this Prospectus, and under similar headings in any amendments or supplements to this Prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is December 31, 2020

 

 

 

 

 

 

 

     

 

 

TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS 1
PROSPECTUS SUMMARY 2
THE OFFERING 3
RISK FACTORS 4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 14
USE OF PROCEEDS 15
DETERMINATION OF OFFERING PRICE 16
DILUTION 16
SELLING SECURITY HOLDER 17
MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS 18
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION 20
BUSINESS 31
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 34
EXECUTIVE COMPENSATION 38
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 39
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 41
DESCRIPTION OF SECURITIES 42
PLAN OF DISTRIBUTION 47
SHARES ELIGIBLE FOR FUTURE SALE 52
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS 53
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES 53
LEGAL MATTERS 53
EXPERTS 53
WHERE YOU CAN FIND MORE INFORMATION 53
INDEX TO FINANCIAL STATEMENTS F-1

 

You should rely only on the information contained in this Prospectus. We have not authorized anyone to provide you with information different from that which is contained in this Prospectus. This Prospectus may be used only where it is legal to sell these securities. The information in this Prospectus may only be accurate on the date of this prospectus, regardless of the time of delivery of this Prospectus or of any sale of securities.

 

 

 

 

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ABOUT THIS PROSPECTUS

 

The Registration Statement of which this Prospectus forms a part that we have filed with the Securities and Exchange Commission (the “SEC”) includes exhibits that provide more detail of the matters discussed in this prospectus. You should read this Prospectus and the related exhibits filed with the SEC, together with the additional information described under the heading “Where You Can Find More Information” before making your investment decision.

 

You should rely only on the information provided in this Prospectus or in any Prospectus supplement or any free writing Prospectuses or amendments thereto. Neither we, nor the Selling Security Holder, have authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. You should assume that the information in this Prospectus is accurate only as of the date hereof. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Neither we, nor the Selling Security Holder, are offering to sell or seeking offers to purchase these securities in any jurisdiction where the offer or sale is not permitted. Neither we, nor the Selling Security Holder, have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the securities as to distribution of the prospectus outside of the United States.

 

Information contained in, and that can be accessed through our web site, www.b2digitalotc.com, does not constitute part of this prospectus.

 

This prospectus includes market and industry data that has been obtained from third party sources, including industry publications, as well as industry data prepared by our management on the basis of its knowledge of and experience in the industries in which we operate (including our management’s estimates and assumptions relating to such industries based on that knowledge). Management’s knowledge of such industries has been developed through its experience and participation in these industries. While our management believes the third-party sources referred to in this prospectus are reliable, neither we nor our management have independently verified any of the data from such sources referred to in this prospectus or ascertained the underlying economic assumptions relied upon by such sources. Internally prepared and third-party market forecasts in particular are estimates only and may be inaccurate, especially over long periods of time. In addition, the underwriters have not independently verified any of the industry data prepared by management or ascertained the underlying estimates and assumptions relied upon by management. Furthermore, references in this prospectus to any publications, reports, surveys or articles prepared by third parties should not be construed as depicting the complete findings of the entire publication, report, survey or article. The information in any such publication, report, survey or article is not incorporated by reference in this prospectus.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PROSPECTUS SUMMARY

 

This summary highlights information contained elsewhere in this prospectus; it does not contain all the information you should consider before investing in our Common Stock. You should read the entire prospectus before making an investment decision. Throughout this prospectus, the terms the “Company”, “B2Digital”, “we,” “us,” “our,” and “our company” refer to B2Digital, Incorporated, a Delaware corporation.

 

Company Overview

 

In February 2017, the Board of Directors of B2Digital, a Delaware corporation (the “Company”), approved a complete restructuring, new management team and strategic direction for the Company. Capitalizing on its history in television, video and technology, we are now forging ahead and becoming a full-service live event sports company.

 

Since the restructuring, we have been led by a management team headed by our Chairman and CEO, Greg P. Bell. Our management team has over 30 years of global experience developing more than 20 companies in the sports, television, entertainment, digital distribution, and banking transaction industries. As part of our growth strategy, we intend to continue to develop and acquire assets meeting our business model with the goal of becoming a premier vertically-integrated live event sports company.

 

With extensive background in entertainment, television, video and technology, we are now forging ahead and becoming a full-service live event sports company. Our current Chairman and CEO is Greg P. Bell. 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. To accomplish this, 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 (the “B2FS”). In 2017, we started operating live MMA Events by acquiring additional existing MMA promotions. These acquisitions which facilitate the best fighters being invited annually to the yearly B2FS National Championship Live Event. We own all media rights, merchandising rights, digital distribution networks of the B2FS. We are developing the systems and technologies for event management, digital ticketing sales, digital video distribution, digital marketing, PPV, fighter management, merchandise sales, brand management and financial control systems.

 

Where You Can Find Us

 

Our executive offices are located at 4522 West Village Drive, Suite 215, Tampa, Florida 33624, and our telephone number is (813) 961-3051. Our website address is www.b2digitalotc.com. Information contained on our website does not form part of this prospectus and is intended for informational purposes only.

 

 

 

 

 

 

 

 

 

 

 

 

 

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THE OFFERING

 

Issuer   B2Digital, Incorporated, a Delaware corporation.
     
Securities Offered  

The sale of up to 500,000,000 of shares of our Common Stock (the “Shares”). Our Common Stock is described in further detail in the section of this Prospectus titled "DESCRIPTION OF SECURITIES.”

 

The resale of up to 125,000,000 shares of our Common Stock to be issued to Triton Funds, LP, a Delaware limited partnership (“Triton”) upon the exercise of warrants issued to Triton (the “Warrant Shares”).

 

Offering Price Per Share   $0.005 per Share.
     
Common Stock Outstanding Before the Offering   730,864,213 shares of Common Stock.
     
Common Stock to be Outstanding After Giving Effect to the Issuance of 625,000,000 Shares of Common Stock   1,355,864,213 shares of Common Stock.
     
Use of Proceeds  

We are offering a maximum of 500,000,000 shares of our Common Stock at an Offering price of $0.005 per Share for net proceeds to the Company of $2,500,000. The full subscription price will be payable at the time of subscription and accordingly, funds received from subscribers in this Offering will be released to us when subscriptions are received and accepted.

 

No assurance can be given that the net proceeds from the total number of Shares offered hereby or any lesser net amount will be sufficient to accomplish our goals. If proceeds from this Offering are insufficient, we may be required to seek additional capital. No assurance can be given that we will be able to obtain such additional capital, or even if available, that such additional capital will be available on terms acceptable to us.

 

We will use the proceeds from these sales for future acquisitions, acquisitions of fight groups/gyms, infrastructure/CAPEX, working capital, and other corporate purposes. See “Use of Proceeds.”

 

We will not receive any of the proceeds from any sale of the shares of Common Stock by the Selling Security Holder. See “Use of Proceeds.”

     
Risk Factors   The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors” beginning on page 4.
     
Trading Symbol   The Company’s Common Stock is quoted on the OTC Markets quotation service platform under the symbol “BTDG.”

 

The number of shares of Common Stock outstanding is based on an aggregate of 730,864,213 shares outstanding as of December 29, 2020 and excludes the shares of Common Stock issuable upon purchase of the Shares and the Warrant Shares.

 

For a more detailed description of the Warrant Shares, see “Private Placement”.

 

 

 

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RISK FACTORS

 

An investment our Common Stock is highly speculative and involves a high degree of risk. The risk factors described below summarize some of the material risks inherent in an investment in us. These risk factors are not presented in any particular order of significance. Each prospective investor should carefully consider the following risk factors inherent in and affecting our business and the Offering before making an investment decision. You should also refer to the other information set forth in this prospectus and to the risk factors in our SEC filings.

 

Risks Related to Our Business

 

A pandemic, epidemic or outbreak of an infectious disease in the markets in which the Company operates or that otherwise impacts its facilities and customers could adversely impact the Company’s business.

 

If a pandemic, epidemic, or outbreak of an infectious disease including the recent outbreak of respiratory illness caused by a novel coronavirus (COVID-19) first identified in Wuhan, Hubei Province, China, or other public health crisis were to affect the Company’s markets or facilities, or its customers, the Company’s business could be adversely affected. Consequences of the coronavirus outbreak are resulting in disruptions in or restrictions on the Company’s ability to travel and hold live events. If such an infectious disease broke out at the Company’s office, facilities or work sites, its operations may be affected significantly, its productivity may be affected, and the Company may incur increased costs. If the persons and entities with which the Company contracts are affected by an outbreak of infectious disease, its live events may be delayed or cancelled, and the Company may incur increased costs. If the Company’s subcontractors with whom it works were affected by an outbreak of infectious disease, the Company’s labor supply may be affected and it may incur increased labor costs. In addition, the Company may experience difficulties with certain suppliers or with vendors in its supply chains, and its business could be affected if the Company becomes unable to procure essential equipment, supplies or services in adequate quantities and at acceptable prices. Further, an infectious outbreak may cause disruption to the U.S. economy, or the local economies of the markets in which the Company operates, increase costs associated with its business, affect job growth and consumer confidence, or cause economic changes that the Company cannot anticipate. Overall, the potential impact of a pandemic, epidemic or outbreak of an infectious disease with respect to the Company’s markets or its facilities is difficult to predict and could adversely impact the Company’s business. In response to the COVID-19 situation, federal, state and local governments (or other governments or bodies) are considering placing, or have placed, restrictions on travel and conducting or operating business activities. At this time those restrictions are very fluid and evolving. the Company has been and will continue to be impacted by those restrictions. Given that the type, degree and length of such restrictions are not known at this time, the Company cannot predict the overall impact of such restrictions on it, its customers, its subcontractors, and others with whom the Company works or the overall economic environment. As such, the impact these restrictions may have on the Company’s financial position, operating results and liquidity cannot be reasonably estimated at this time, but the impact may be material. In addition, due to the speed with which the COVID-19 situation is developing and evolving, there is uncertainty around its ultimate impact on public health, business operations and the overall economy; therefore, the negative impact on the Company’s financial position, operating results and liquidity cannot be reasonably estimated at this time, but the impact may be material.

 

The Company may fail to consummate its planned acquisitions, which could have a material adverse impact on its earnings and results of operations.

 

The Company may fail to consummate acquisitions, as planned. Because acquisitions are subject to a variety of factors, including the Company's ongoing due diligence and the satisfaction of customary closing conditions, many of which are outside of the Company's control.

 

If the Company is unable to complete the planned acquisitions, it may experience delays in locating and securing attractive alternative investments. The Company's failure to find suitable acquisitions on acceptable terms could result in returns that are substantially below expectations or result in losses.

 

 

 

 

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Furthermore, acquisitions, whether or not they are successful, require substantial time and attention from management of the Company. The Company may have incurred significant legal, accounting and other transaction costs in connection with a transaction without realizing a corresponding increase in its earnings and cash flow from the acquisition. As a result, the Company's failure to consummate an acquisition could have a material adverse impact on the Company's results of operations and earnings.

 

The success of the Company’s business is subject to the continued success and popularity of Mixed Martial Arts ("MMA").

 

MMA is currently a popular sport in the U.S., but the Company’s business is affected by consumer tastes and sports and entertainment trends, which are unpredictable and subject to change. Any decline in the popularity of MMA, changes in the Company’s fans' and customers' tastes or a material change in the perceptions of the MMA industry, whether due to internal or external factors, could adversely affect the Company’s operating results and have a material adverse effect on its business.

 

The Company may not be able to attract and retain key professional MMA fighters.

 

The Company’s business is dependent upon identifying, recruiting, and retaining highly regarded professional MMA fighters for its promotions. Fans and sponsors are attracted to events featuring top fighters, and the value placed on a promotion's television and other media rights is dependent to a great extent on the quality of the promotion's fighter roster. The Company may not be able to attract and retain key professional MMA fighters due to competition with other regional promoters for the same fighters. Failing to put on events featuring top professional fighters could adversely affect our operating results and have a material adverse effect on the Company’s business.

 

The Company may not be able to attract sufficient promotional and advertising sponsorships or maintain such arrangements.

 

The Company’s business strategy involves developing sponsorship arrangements, or expanding existing sponsorship arrangements, in support of its network of live MMA events. The Company will compete with larger, more established sports and entertainment organizations and media outlets for sponsorship and advertising revenue. Many factors, including the popularity and perception of MMA and the perceived quality of our promotions, will significantly affect the Company’s ability to secure and maintain important advertising and promotional arrangements. If the Company is unable to generate sponsorship and promotional revenue and increase that revenue over time, its operating results and business will be adversely affected.

 

Future acquisitions may result in potentially dilutive issuances of equity securities, the incurrence of indebtedness and increased amortization expense.

 

Future acquisitions will likely result in issuances of equity securities, which may be dilutive to the equity interests of existing stockholders; the incurrence of debt, which will require the Company to maintain cash flows sufficient to service the debt; the assumption of known and unknown liabilities; and the amortization of expenses related to intangible assets, all of which could have an adverse effect on the Company’s business, financial condition and results of operations.

 

The Company may need additional capital to support its operations or the growth of its business, and the Company cannot be certain that this capital will be available on reasonable terms when required, or at all.

 

In order for the Company to grow and successfully execute its business plan, the Company may require additional financing which may not be available or on acceptable terms. If such financing is available, it may be dilutive to the equity interests of existing stockholders. Failure to obtain financing may have a material adverse effect on the Company’s financial position. If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when required, the Company’s ability to continue to support the operation or growth of its business could be significantly impaired and its operating results may be harmed.

 

 

 

 

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The Company may be prohibited from promoting and conducting its live events if it does not comply with applicable regulations.

 

In various states in the U.S. and in some foreign jurisdictions, athletic commissions and other applicable regulatory agencies will require the Company to obtain licenses for promoters, medical clearances and/or other permits or licenses for athletes and/or permits for events in order for it to promote and conduct its live events. If the Company fails to comply with the regulations of a particular jurisdiction, it may be prohibited from promoting and conducting live events in that jurisdiction. The inability to present live events over an extended period of time or in a number of jurisdictions could lead to a decline in the revenue streams generated from the Company’s live events, in which case its operating results would be adversely affected.

 

The Company could incur substantial liability in the event of accidents or injuries occurring during its events.

 

The Company intends to hold numerous live MMA events each year. Each live event will expose the Company’s employees who are involved in the production of those events to the risk of travel and match-related accidents, the costs of which may not be fully covered by insurance. The physical nature of the Company’s events will expose its professional MMA fighters to the risk of serious injury or death. Although the Company’s fighters, as independent contractors, are responsible for maintaining their own health, disability and life insurance, the Company insures medical costs for injuries that a fighter may suffer at its events. Any liability the Company incurs as a result of the death of or a serious injury sustained by one of its fighters while fighting in a match at its events, to the extent not covered by the Company’s insurance, could adversely affect its business, financial condition and operating results.

 

The Company’s live events will entail other risks inherent in public live events, including air and land travel interruption or accidents, the spread of illness, pandemics, injuries resulting from building problems, equipment malfunction, terrorism or other violence, local labor strikes and other "force majeure" type events. These circumstances could result in personal injuries or deaths, canceled events and other disruptions to the Company’s business for which it does not carry business interruption insurance, or result in liability to third parties for which the Company may not have insurance. The occurrence of any of these circumstances could adversely affect the Company’s business, financial condition and results of operations.

 

The Company may be unable to establish, protect or enforce our intellectual property rights adequately.

 

The Company’s success will depend in part on its ability to establish, protect and enforce its intellectual property and other proprietary rights. The Company’s inability to protect its portfolio of copyrighted material, trade names and other intellectual property rights from infringement, piracy, counterfeiting or other unauthorized use could negatively affect its business. If the Company fails to establish, protect or enforce our intellectual property rights, it may lose an important advantage in the markets in which it competes. The Company’s intellectual property rights may not be sufficient to help it maintain its position in the markets and its competitive advantages. Monitoring unauthorized uses of and enforcing the Company’s intellectual property rights can be difficult and costly. Legal intellectual property actions are inherently uncertain and may not be successful and may require a substantial amount of resources and divert the attention of management.

 

The Company relies on its marketing efforts and channels to promote its brand and events. These efforts may require significant expense and may not be successful.

 

The Company will employ various marketing tactics and use a variety of marketing channels to promote its brand, including sponsorships, advertisement, email and social media marketing. If the Company loses access to one or more of these channels for any reason, it will not be able to promote its brand or events effectively, which could limit the Company’s ability to grow. Further, if the marketing activities fail to generate traffic to the Company’s events, attract new fans or lead to new and renewal sales for its events, its business and operating results could be affected. There is no assurance in the results of the Company’s continuing marketing efforts. If customer acquisition cost increases, the operating results could also be affected.

 

 

 

 

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Risks Relating to Our Financial Condition

 

There are doubts about the Company’s ability to continue as a going concern.

 

The Company is a development stage enterprise and has commenced planned principal operations. The Company had minimal revenues and has incurred losses of $1,337,347 for the fiscal year ended March 31, 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company’s existing stockholders.

 

The Company intends to overcome the circumstances that impact its ability to remain a going concern through a combination of the commencement of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing. The Company anticipates raising additional funds through public or private financing, strategic relationships or other arrangements in the near future to support its business operations; however, the Company may not have commitments from third parties for a sufficient amount of additional capital. The Company cannot be certain that any such financing will be available on acceptable terms, or at all, and its failure to raise capital when needed could limit its ability to continue its operations. The Company’s ability to obtain additional funding will determine its ability to continue as a going concern. Failure to secure additional financing in a timely manner and on favorable terms would have a material adverse effect on the Company’s financial performance, results of operations and stock price and require it to curtail or cease operations, sell off its assets, seek protection from its creditors through bankruptcy proceedings, or otherwise. Furthermore, additional equity financing may be dilutive to the holders of the Company’s common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary, to raise additional funds, and may require that the Company relinquish valuable rights. Please see Financial Statements – Note 3. Going Concern for further information.

 

The Company’s management has a limited experience operating a public company and is subject to the risks commonly encountered by early-stage companies.

 

Although the Company’s management has experience in operating small companies, its management has not had to manage expansion while being a public company. Many investors may treat the Company as an early-stage company. In addition, the Company’s management has not overseen a company with large growth. Because the Company has a limited operating history, its operating prospects should be considered in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets. These risks include:

 

  · risks that the Company may not have sufficient capital to achieve its growth strategy;

 

  · risks that the Company may not develop its product and service offerings in a manner that enables it to be profitable and meet our customers’ requirements;

 

  · risks that the Company’s growth strategy may not be successful; and

 

  · risks that fluctuations in our operating results will be significant relative to our revenues.

 

 

 

 

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These risks are described in more detail below. The Company’s future growth will depend substantially on its ability to address these and the other risks described in this section. If the Company does not successfully address these risks, its business could be significantly harmed.

 

The Company has limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operations.

 

As the Company has limited operations in its business and has yet to generate significant revenue, it is extremely difficult to make accurate predictions and forecasts on its finances. This is compounded by the fact that the Company operates in a rapidly transforming industry. There is no guarantee that the Company’s products or services will remain attractive to potential and current users as these industries undergo rapid change, or that potential customers will utilize the Company’s services.

 

As a growing company, the Company has yet to achieve a profit and may not achieve a profit in the near future, if at all.

 

The Company has not yet produced a net profit and may not in the near future, if at all. While the Company expects revenue to grow, it has not achieved profitability and cannot be certain that it will be able to sustain its current growth rate or realize sufficient revenue to achieve profitability. The Company’s ability to continue as a going concern may be dependent upon raising capital from financing transactions, increasing revenue throughout the year and keeping operating expenses below revenue levels in order to achieve positive cash flows, none of which can be assured.

 

The Company will require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.

 

The Company intends to continue to make investments to support its business growth and may require additional funds to respond to business challenges, including the need to update hardware, improve its operating infrastructure or acquire complementary businesses and technologies. Accordingly, the Company will need to engage in continued equity or debt financings to secure additional funds. If the Company raises additional funds through future issuances of equity or convertible debt securities, its existing stockholders could suffer significant dilution, and any new equity securities the Company issues could have rights, preferences and privileges superior to those of its common stock. Any debt financing the Company secures in the future could involve restrictive covenants relating to the Company’s capital raising activities and other financial and operational matters, which may make it more difficult for the Company to obtain additional capital and to pursue business opportunities, including potential acquisitions. The Company may not be able to obtain additional financing on terms favorable to it, if at all. If the Company is unable to obtain adequate financing or financing on terms satisfactory to it when we required, its ability to continue to support its business growth and to respond to business challenges could be impaired, and the Company’s business may be harmed.

 

The Company is highly dependent on the services of its key executive, the loss of whom could materially harm the Company’s business and its strategic direction. If the Company loses key management or significant personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in its compensation costs, the Company’s business may materially suffer.

 

The Company is highly dependent on its management, specifically Greg P. Bell. The Company has an employment agreement in place with Mr. Bell. If the Company loses key employees, its business may suffer. Furthermore, the Company’s future success will also depend, in part, on the continued service of its management personnel and its ability to identify, hire, and retain additional key personnel. The Company does not carry “key-man” life insurance on the lives of any of its executives, employees or advisors. The Company experiences intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of its business. Because of this competition, the Company’s compensation costs may increase significantly.

 

 

 

 

  8  

 

 

The Company may be unable to manage growth, which may impact its potential profitability.

 

Successful implementation of the Company’s business strategy requires it to manage its growth. Growth could place an increasing strain on the Company’s management and financial resources. To manage growth effectively, the Company will need to:

 

  · Establish definitive business strategies, goals and objectives;

 

  · Maintain a system of management controls; and

 

  · Attract and retain qualified personnel, as well as develop, train, and manage management-level and other employees.

 

If the Company fails to manage its growth effectively, its business, financial condition, or operating results could be materially harmed, and the Company’s stock price may decline.

 

The Company operates in a highly competitive environment, and if it is unable to compete with its competitors, its business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.

 

The Company operates in a highly competitive environment. The Company’s competition includes all other companies that are in the business of entertainment events or other related companies. A highly competitive environment could materially adversely affect the Company’s business, financial condition, results of operations, cash flows and prospects.

 

The Company may not be able to compete successfully with other established companies offering the same or similar services and, as a result, the Company may not achieve its projected revenue and user targets.

 

If the Company is unable to compete successfully with other businesses in its existing markets, it may not achieve its projected revenue and/or customer targets. The Company competes with both start-up and established companies. Compared to the Company’s business, some of its competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established.

 

The Company’s lack of adequate D&O insurance may also make it difficult for it to retain and attract talented and skilled directors and officers.

 

In the future the Company may be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, the Company has not obtained directors and officers liability (“D&O”) insurance. Without adequate D&O insurance, the amounts the Company would pay to indemnify its officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on the Company’s financial condition, results of operations and liquidity. Furthermore, the Company’s lack of adequate D&O insurance may make it difficult for it to retain and attract talented and skilled directors and officers, which could adversely affect its business.

 

The Company expects to incur substantial expenses to meet its reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in the Company’s financial reporting and could harm its ability to manage its expenses.

 

The Company estimates that it will cost approximately $117,000 annually to maintain the proper management and financial controls for the Company’s filings required as a public reporting company. In addition, if the Company does not maintain adequate financial and management personnel, processes and controls, it may not be able to accurately report its financial performance on a timely basis, which could cause a decline in the Company’s stock price and adversely affect our ability to raise capital.

 

 

 

  9  

 

 

Risks Relating to our Common Stock and Offering

 

The price of the Company’s common stock may continue to be volatile.

 

The trading price of the Company’s common stock has been and is likely to remain highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond the Company’s control or unrelated to its operating performance. In addition to the factors discussed in this “Risk Factors” section and elsewhere, these factors include: the ongoing COVID-19 pandemic, the operating performance of similar companies; the overall performance of the equity markets; the announcements by the Company or its competitors of acquisitions, business plans, or commercial relationships; threatened or actual litigation; changes in laws or regulations relating to the Company’s business; any major change in the Company’s board of directors or management; publication of research reports or news stories about the Company, its competitors, or its industry or positive or negative recommendations or withdrawal of research coverage by securities analysts; large volumes of sales of our shares of common stock by existing stockholders; and general political and economic conditions.

 

In addition, the stock market in general, and the market for developmental related companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies’ securities. This litigation, if instituted against the Company, could result in very substantial costs; divert management’s attention and resources; and harm the Company’s business, operating results, and financial condition.

 

The Company’s common stock is thinly traded, so the Company’s stockholders may be unable to sell at or near ask prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate their shares.

 

The Company’s common stock has historically been sporadically traded on the OTC Markets, meaning that the number of persons interested in purchasing the Company’s shares at, or near ask prices at any given time, may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that the Company is a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if the Company came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as the Company or purchase or recommend the purchase of its shares until such time as the Company became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in the Company’s shares is minimal or non-existent, as compared to a seasoned issuer, which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. The Company cannot give shareholders any assurance that a broader or more active public trading market for its common shares will develop or be sustained, or that current trading levels will be sustained.

 

The market price for the Company’s common stock is particularly volatile given its status as a relatively unknown company with a small and thinly traded public float, limited operating history, and lack of revenue, which could lead to wide fluctuations in the Company’s share price. The price at which a shareholder purchases the Company’s shares may not be indicative of the price that will prevail in the trading market. The Company’s shareholders may be unable to sell their common shares at or above the purchase price, which may result in substantial losses to the Company’s shareholders.

 

The market for the Company’s shares of common stock is characterized by significant price volatility when compared to seasoned issuers, and the Company expects that its share price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in the Company’s share price is attributable to a number of factors. First, as noted above, the Company’s shares are sporadically traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares may disproportionately influence the price of those shares in either direction. The price for the Company’s shares could, for example, decline precipitously in the event that a large number of the Company’s shares is sold into the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, the Company is a speculative investment due to, among other matters, its limited operating history and lack of significant revenue or profit to date, and the uncertainty of future market acceptance for the Company’s products. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the securities of a seasoned issuer. The following factors may add to the volatility in the price of the Company’s shares: actual or anticipated variations in our quarterly or annual operating results; acceptance of the Company’s inventory of events, games, government regulations, announcements of significant acquisitions, strategic partnerships or joint ventures, the Company’s capital commitments and additions or departures of its key personnel. Many of these factors are beyond the Company’s control and may decrease the market price of its shares regardless of operating performance. The Company cannot make any predictions or projections as to what the prevailing market price for its shares will be at any time, including as to whether its shares will sustain their current market prices, or as to what effect the sale of shares or the availability of shares for sale at any time will have on the prevailing market price.

 

 

 

  10  

 

 

The Company’s shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. The Company’s management is aware of the abuses that have occurred historically in the penny stock market. Although the Company does not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, the Company’s management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to its securities. The possible occurrence of these patterns or practices could increase the volatility of the Company’s share price.

 

The market price of the Company’s common stock may be volatile and adversely affected by several factors.

 

The market price of the Company’s common stock could fluctuate significantly in response to various factors and events, including, but not limited to:

 

  · the unprecedented impact of COVID-19 pandemic on our business, customers, employees, consultants, service providers, stockholders, investors and other stakeholders;

 

  · the Company’s ability to integrate operations, technology, products and services;

 

  · our ability to execute our business plan;

 

  · operating results below expectations;

 

  · our issuance of additional securities, including debt or equity or a combination thereof;

 

  · announcements of technological innovations or new products by us or our competitors;

 

  · loss of any strategic relationship;

 

  · industry developments, including, without limitation, changes in competition or practices;

 

  · economic and other external factors;

 

  · period-to-period fluctuations in our financial results; and

 

  · whether an active trading market in our common stock develops and is maintained.

 

 

 

  11  

 

 

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the Company’s common stock. Issuers using the Alternative Reporting standard for filing financial reports with OTC Markets are often subject to large volatility unrelated to the fundamentals of the company.

 

Pandemics, natural disasters and geo-political events could adversely affect the Company’s business.

 

Pandemics, natural disasters, including hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes and tsunamis, weather conditions, including winter storms, droughts and tornadoes, whether as a result of climate change or otherwise, and geo-political events, including civil unrest or terrorist attacks, that affect the Company, or other service providers, could adversely affect the Company’s business.

 

The Company does not expect to pay dividends in the future; any return on investment may be limited to the value of the Company’s common stock.

 

The Company does not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on the Company’s common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. The Company’s current intention is to apply net earnings, if any, in the foreseeable future to increasing the Company’s capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of its common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of the Company’s board of directors. If the Company does not pay dividends, its common stock may be less valuable because a return on investment will only occur if its stock price appreciates.

 

The Company’s issuance of additional shares of common stock, or options or warrants to purchase those shares, would dilute shareholders’ proportionate ownership and voting rights.

 

The Company is entitled under its articles of incorporation to issue up to 5,000,000,000 shares of common stock. The Company has issued and outstanding 707,413,262 shares of common stock as of October 26, 2020. In addition, the Company is entitled under its Articles of Incorporation to issue “blank check” preferred stock. The Company’s board may generally issue shares of common stock, preferred stock, options, or warrants to purchase those shares, without further approval by our shareholders based upon such factors as the Company’s board of directors may deem relevant at that time. It is likely that the Company will be required to issue a large amount of additional securities to raise capital to further its development. It is also likely that the Company will issue a large amount of additional securities to directors, officers, employees and consultants as compensatory grants in connection with their services, both in the form of stand-alone grants or under the Company’s stock plans. The Company cannot give any assurance that it will not issue additional shares of common stock, or options or warrants to purchase those shares, under circumstances the Company may deem appropriate at that time.

 

The existence of indemnification rights to the Company’s directors, officers and employees may result in substantial expenditures by the Company and may discourage lawsuits against its directors, officers and employees.

 

The Company has contractual indemnification obligations under its agreements with its directors, officers and employees. The foregoing indemnification obligations could result in the Company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that the Company may be unable to recoup. These provisions and resulting costs may also discourage the Company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by the Company’s shareholders against its directors, officers and employees even though such actions, if successful, might otherwise benefit the Company and shareholders.

 

 

 

  12  

 

 

The Company may become involved in securities class action litigation that could divert management’s attention and harm its business.

 

The stock market, in general, and the shares of early stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of the Company’s shares could fall regardless of its operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of the Company’s shares suffers extreme fluctuations, then it may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing the Company’s business.

 

As a public company, the Company may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. The Company’s management has limited experience as a management team in a public company and, as a result, projections may not be made timely or set at expected performance levels and could materially affect the price of the Company’s shares. Any failure to meet published forward-looking statements that adversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC.

 

The Company’s common stock is currently deemed a “penny stock,” which makes it more difficult for the Company’s shareholders to sell their shares.

 

The SEC has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require that a broker or dealer approve a person’s account for transactions in penny stocks, and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

 

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

 

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form sets forth the basis on which the broker or dealer made the suitability determination, and that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock if and when such shares are eligible for sale and may cause a decline in the market value of its stock.

 

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities, and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

 

 

 

 

  13  

 

 

As an issuer of a “penny stock,” the protection provided by the federal securities laws relating to forward-looking statements does not apply to the Company.

 

Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, the Company will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by the Company contained a material misstatement of fact or was misleading in any material respect because of the Company’s failure to include any statements necessary to make the statements not misleading. Such an action could hurt the Company’s financial condition.

 

Securities analysts may elect not to report on the Company’s common stock or may issue negative reports that adversely affect the stock price.

 

At this time, no securities analysts provide research coverage of the Company’s common stock, and securities analysts may not elect to provide such coverage in the future. It may remain difficult for the Company, with its small market capitalization, to attract independent financial analysts that will cover the Company’s common stock. If securities analysts do not cover the Company’s common stock, the lack of research coverage may adversely affect the stock’s actual and potential market price. The trading market for the Company’s common stock may be affected in part by the research and reports that industry or financial analysts publish about the Company’s business. If one or more analysts elect to cover the Company and then downgrade the stock, the stock price would likely decline rapidly. If one or more of these analysts cease coverage of the Company, it could lose visibility in the market, which, in turn, could cause the Company’s stock price to decline. This could have a negative effect on the market price of the Company’s common stock.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains various “forward-looking statements.” You can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “may,” “would,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases. You can also identify forward-looking statements by discussions of strategy, plans or intentions. These statements may be impacted by a number of risks and uncertainties.

 

The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information currently available to us. These beliefs, assumptions and expectations are subject to risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks before you make an investment decision with respect to our securities. For a further discussion of these and other factors that could impact our future results, performance or transactions, see the section entitled “Risk Factors.”

 

 

 

 

  14  

 

 

USE OF PROCEEDS

 

Our Offering is being made in a direct public offering on a self-underwritten basis - no minimum of shares must be sold in order for the Offering to proceed. The Offering price per share is $0.005. There is no assurance that we will raise the full $2,500,000, as anticipated.

 

Not taking into account any possible additional funding or revenues, we intend to use the proceeds from this Offering as follows. The following chart indicates the amount of funds that we will allocate to each item, but does not indicate the total fee/cost of each item. The amount of proceeds we allocate to each item is dependent upon the amount of proceeds we receive from this Offering:

 

Use of Proceeds   100% of Shares Sold     % of Total     50% of Shares Sold     % of Total     25% of Shares Sold     % of Total  
Gross Proceeds from Offering   $ 2,500,000             $ 1,250,000             $ 625,000          
Use of Proceeds                                                
Future acquisitions   $ 800,000       32%     $ 400,000       32%     $ 200,000       32%  
Acquisitions of fight groups/gyms     200,000       8%       100,000       8%       50,000       8%  
Infrastructure/CAPEX     600,000       24%       300,000       24%       150,000       24%  
Working capital     900,000       36%       450,000       36%       225,000       36%  
Total use of proceeds   $ 2,500,000       100%     $ 1,250,000       100%     $ 625,000       100%  
                                                 
Offering Expenses (1)                                                
Securities and Exchange Commission registration fee   $ 545.50             $ 545.50             $ 545.50          
Accounting fees and expenses     5,000               5,000               5,000          
Legal fees and expenses     5,000               5,000               5,000          
Registrar and transfer agent fees and expenses     2,000               2,000               2,000          
                                                 
Total offering expenses   $ 12,545.50             $ 12,545.50             $ 12,545.50          

 

(1) Offering expenses will not be paid from proceeds received from the Offering.

 

We believe that our current cash and cash equivalents, anticipated cash flow from operations and the proceeds from the sale of the maximum amount of Shares being offered hereunder will only be sufficient to meet our anticipated cash needs for the next 12 months. Our management has determined that the maximum amount of funds received from this Offering would be sufficient to cover our intended plan of operations contemplated hereby. We will use any proceeds received to file reports with the SEC, as well as to proceed with our intended business. However, there can be no assurance that we will raise any funds through our direct participation offering. As with any form of financing, there are uncertainties concerning the availability of such funds and the likelihood that such funds will be available to us on terms acceptable to us.

 

The Selling Security Holder will receive all the proceeds from the sales of the Warrant Shares under this Prospectus. We will not receive any proceeds from these sales. We have agreed to bear the certain expenses relating to the registration of the shares of Common Stock being registered herein for Selling Security Holder.

 

See “Plan of Distribution” elsewhere in this Prospectus for more information.

 

 

 

  15  

 

 

DETERMINATION OF OFFERING PRICE

 

Prior to the Offering, there has been a limited public market for the Shares. The initial public offering price was determined by management. The principal factors considered in determining the initial public offering price include:

 

  · the information set forth in this Registration Statement and otherwise available;

 

  · our history and prospects and the history of and prospects for the industries in which we compete;

 

  · our past and present financial performance;

 

  · our prospects for future earnings and the present state of our development;

 

  · the general condition of the securities markets at the time of this Offering;

 

  · the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

 

  · other factors deemed relevant by us.

 

DILUTION

 

If you purchase shares in this Offering, your ownership interest in our Common Stock will be diluted immediately, to the extent of the difference between the price to the public charged for each share in this Offering and the net tangible book value per share of our Common Stock after this Offering.

 

Our historical net tangible book value as of March 31, 2020 was $(580,572) based on 539,267,304 outstanding shares of our Common Stock outstanding on March 31, 2020. Historical net tangible book value per share equals the amount of our total tangible assets less total liabilities, divided by the total number of shares of our Common Stock outstanding, all as of the date specified.

 

The following table illustrates the per share dilution to new investors discussed above, assuming the sale of, respectively, 100%, 75%, 50% and 25% of the shares offered for sale in this Offering (after deducting estimated offering expenses of $12,545):

 

Percentage of shares offered that are sold   100%   75%   50%   25%
                 
Assumed price to the public charged for each share in this offering (1)   $0.005   $0.005   $0.005   $0.005
                 
Historical net tangible book value per share as of March 31, 2020 (2)   (0.0108)   (0.0108)   (0.0108)   (0.0108)
                 
Increase in net tangible book value per share attributable to new investors in this offering (3)   0.0142   0.0138   0.0129   0.0109
                 
Net tangible book value per share, after this offering   0.0034   0.0030   0.0022   0.00029
                 
Dilution per share to new investors   $0.0016   $0.0020   $0.0028   $0.0048

 

  (1) In computing, the above, we assumed an initial public offering price of $0.005 per share of Common Stock.

 

  (2) Based on net tangible shareholders equity book value as of March 31, 2020 of $(580,572) or $(0.0108) based on 539,267,304 outstanding shares of Common Stock.

 

  (3) After deducting estimated offering expenses of $12,545.

 

 

  16  

 

 

SELLING SECURITY HOLDER

 

Warrants

 

In connection with the Common Stock Purchase Agreement dated December 23, 2020 with Triton, we issued to Triton warrants to purchase 125,000,000 of the Company’s Common Stock at $0.02 per share (the “Warrants”), subject to adjustments. The Warrants terminate five years from the date of issuance. In the event that the S-1 Registration Statement registering the resales of the shares underlying the exercise of the Warrant (the “Warrant Shares”) is not deemed effective within 90 days of the issuance of the Warrants, 100,000,000 Warrants will terminate and 25,000,000 Warrants will remain which shall either be registered by us in an S-1 Registration Statement or will be available for cashless exercise pursuant to the terms of the Warrant.

 

The table below lists the Selling Security Holder and other information regarding the “beneficial ownership” of the shares of Common Stock by the Selling Security Holder. In accordance with Rule 13d-3 of the Exchange Act, “beneficial ownership” includes any shares of Common Stock as to which the Selling Security Holder has sole or shared voting power or investment power and any shares of Common Stock the Selling Security Holder has the right to acquire within 60 days.

 

The second column indicates the number of shares of Common Stock beneficially owned by the Selling Security Holder, based on its ownership as of December 29, 2020.

 

The third column lists the shares of Common Stock being offered by this prospectus by the Selling Security Holder.

 

As it pertains to the Selling Security Holder, this Prospectus covers the resale of (i) the Warrant Shares, and (ii) any securities issued or then issuable upon any full anti-dilution protection, stock split, dividend or other distribution, recapitalization or similar event with respect to the common shares.

 

Because the issuance price of the common shares may be adjusted, the number of shares of Common Stock that will actually be issued upon issuance of the common shares may be more or less than the number of shares of Common Stock being offered by this Prospectus. The Selling Security Holder can offer all, some or none of its shares of Common Stock, thus we have no way of determining the number of shares of Common Stock it will hold after this Offering. Therefore, the fourth and fifth columns assume that the Selling Security Holder will sell all Warrant Shares covered by this Prospectus. See “Plan of Distribution.”

 

The Selling Security Holder identified below has confirmed to us that it is not a broker-dealer or an affiliate of a broker-dealer within the meaning of United States federal securities laws.

 

   

Number of

Shares of

Common Stock

Owned Prior to

Offering(1)

   

Maximum

Number of

Shares of

Common Stock

to be Sold

Pursuant to this

Prospectus

   

Number of

Shares of

Common Stock

Owned After

Offering

   

Percentage

Beneficially

Owned After

Offering

 
Triton Funds LP (1)     0       125,000,000 (2)            
TOTAL     0       125,000,000              

__________

(1) Triton Funds LP is a limited partnership organized under the laws of Delaware and is controlled by Triton Funds LLC. Its address 1262 Prospect Street La Jolla, CA 92037. Triton Funds LP is managed by Triton Funds LLC, a Delaware limited liability company located at the same address as Triton Funds LP. Triton Funds LP and Triton Funds LLC are affiliates.
(2) 125,000,000 shares to be issued pursuant to warrants issued to Triton Funds LP.

 

Material Relationships with Selling Security Holder

 

The Selling Security Holder has not at any time during the past three years acted as one of our employees, officers or directors or had a material relationship with us except with respect to transactions described above.

 

 

 

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MARKET PRICE OF COMMON STOCK AND OTHER STOCKHOLDER MATTERS

 

Our Common Stock is currently quoted on the OTC Markets, which is sponsored by OTC Markets Group, Inc. The OTC Markets is a network of security dealers who buy and sell stock. The dealers are connected by a computer network that provides information on current “bids” and “asks,” as well as volume information. Our shares are quoted on the OTC Markets under the symbol “BTDG.”

 

The table below sets forth for the periods indicated the quarterly high and low bid prices as reported by OTC Markets. Limited trading volume has occurred during these periods. These quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.

 

    Quarter     High     Low  
FISCAL YEAR ENDING MARCH 31, 2021     First     $ 0.0042     $ 0.0025  
      Second     $ 0.0216     $ 0.0025  

 

    Quarter     High     Low  
FISCAL YEAR ENDED MARCH 31, 2020     First     $ 0.0244     $ 0.0050  
      Second     $ 0.0124     $ 0.0042  
      Third     $ 0.0071     $ 0.0035  
      Fourth     $ 0.0075     $ 0.0028  

 

    Quarter     High     Low  
FISCAL YEAR ENDED MARCH 31, 2019     First     $ 0.0150     $ 0.0081  
      Second     $ 0.0150     $ 0.0055  
      Third     $ 0.0087     $ 0.0035  
      Fourth     $ 0.0170     $ 0.0050  

 

Our common stock is considered to be penny stock under rules promulgated by the SEC. Under these rules, broker-dealers participating in transactions in these securities must first deliver a risk disclosure document which describes risks associated with these stocks, broker-dealers’ duties, customers’ rights and remedies, market and other information, and make suitability determinations approving the customers for these stock transactions based on financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing, provide monthly account statements to customers, and obtain specific written consent of each customer. With these restrictions, the likely effect of designation as a penny stock is to decrease the willingness of broker-dealers to make a market for the stock, to decrease the liquidity of the stock and increase the transaction cost of sales and purchases of these stocks compared to other securities.

 

The high and low bid price for shares of our Common Stock on December 24, 2020, was $0.0049 and $0.0046, respectively, based upon bids that represent prices quoted by broker-dealers on the OTC Markets.

 

Approximate Number of Equity Security Holders

 

As of December 29, 2020, there were approximately 401 stockholders of record. Because shares of our Common Stock are held by depositaries, brokers and other nominees, the number of beneficial holders of our shares is substantially larger than the number of stockholders of record.

 

Voting Control

 

The officers and directors currently have voting control of the Company, including ownership of 2,000,000 shares of Series A Preferred Stock which are currently issued and outstanding which votes with the Common Stock on all matters to be voted on by the Common Stock on an as-converted basis and 40,000,000 shares of Series B Preferred Stock which are currently issued and outstanding which 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. On such matters, each holder of Series B Preferred Stock is entitled to 20 votes for each share of Series B Preferred Stock held by such shareholder. If all of the shares offered in this Offering are sold the officers and directors will control 55.85% of all votes.

 

 

 

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Section 15(g) of the Securities Exchange Act of 1934

 

Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.

 

Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as bid and offer quotes, a dealers spread and broker/dealer compensation; the broker/dealer compensation, the broker/dealers’ duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers’ rights and remedies in cases of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Securities Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

 

Dividends

 

The Company has not declared or paid a cash dividend to stockholders since it was organized and does not intend to pay dividends in the foreseeable future. The board of directors presently intends to retain any earnings to finance our operations and does not expect to authorize cash dividends in the foreseeable future. Any payment of cash dividends in the future will depend upon the Company's earnings, capital requirements and other factors.

 

Penny Stock

 

Our stock is considered a penny stock. The SEC has adopted rules that regulate broker-dealer practices in transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

 

These disclosure requirements may have the effect of reducing the trading activity for our Common Stock. Therefore, stockholders may have difficulty selling our securities.

 

 

 

 

 

 

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the section titled “Risk Factors” herein. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements.

 

Basis of Presentation

 

We have seven wholly-owned subsidiaries. Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, Colosseum Combat LLC which owns Colosseum Combat MMA in Indiana, Blue Grass MMA LLC which is a marketing company, United Combat League MMA LLC, Pinnacle Combat LLC, Strike Hard Productions, LLC, and B2 Productions LLC.

 

The consolidated financial statements, which include the accounts of the Company and its six wholly owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated.

 

Forward-Looking Statements

 

Some of the statements under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Prospectus constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” and “would” or the negatives of these terms or other comparable terminology.

 

You should not place undue reliance on forward-looking statements. The cautionary statements set forth in this Quarterly Report on Form 10-Q identify important factors, which you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

  · The unprecedented impact of COVID-19 pandemic on our business, customers, employees, consultants, service providers, stockholders, investors and other stakeholders;

 

  · The speculative nature of the business we intend to develop;

 

  · Our reliance on suppliers and customers;

 

  · Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern;”

 

  · Our ability to effectively execute our business plan;

 

  · Our ability to manage our expansion, growth and operating expenses;

 

  · Our ability to finance our businesses;

 

 

 

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  · 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 Prospectus 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 Prospectus or otherwise make public statements updating our forward-looking statements.

 

Critical Accounting Policies

 

Basis of Accounting

The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended September 30, 2020 are not necessarily indicative of the results to be expected for the year ending March 31, 2021.

 

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.

 

 

 

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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 impairment charges.

 

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.

 

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.

 

 

 

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Impairment of Long-Lived Assets

In accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved. There were no impairment charges recorded during the three 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  

 

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.

 

 

 

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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.

 

Organization and Nature of Business

In February 2017, the Board of Directors of B2Digital, Incorporated, a Delaware corporation (“B2Digital” or the “Company”) approved a complete restructuring, new management team and strategic direction for the Company. Capitalizing on its history in television, video and technology, we are now forging ahead and becoming a full-service live event sports company.

 

Our Chairman and CEO is now Greg P. Bell. Mr. Bell has over 30 years of global experience developing more than 20 companies in the sports, television, entertainment, digital distribution and banking transaction industries. Capitalizing on the combination of his expertise, relationships and experience as well as his involvement with more than 40,000 live events over his career for major sports leagues and entertainment venues, we are in the process of developing and acquiring companies to become a premier vertically integrated live event sports company.

 

Our first strategy is to build an integrated live event minor league for the mixed martial arts (“MMA”) marketplace, which is a billion-dollar industry. We are creating and developing minor league champions that will move on to the MMA major leagues from the B2 Fighting Series (“B2FS”). This will be accomplished by sponsoring operating live events, acquiring existing MMA promotions and then inviting those champions to the B2FS Regional and National Championship Series. We own all media and merchandising rights and digital distribution networks for the B2FS. This concept was developed and test marketed for two years by Mr. Bell’s B2 Management Group, LLC.

 

2017 marked the kickoff of the B2FS by sponsoring and acquiring MMA regional promotion companies for the development of the B2FS. Our second strategy is to add additional sports, leagues, tournaments and special events to our live event business model. This will enable us to capitalize on our core technologies and business models that will be key to broadening the revenue base of our live event core business. We will also be developing and expanding the B2Digital live event systems and technologies. These include systems for event management, digital ticketing sales, digital video distribution, digital marketing, Pay-Per View (“PPV”), fighter management, merchandise sales, brand management and financial control systems.

 

 

 

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Historically, we had been a provider of in-room, on-demand video entertainment and satellite services to the domestic lodging industry. In the past, we had provided video services to over 50,000 hotel rooms in the lodging industry. PPV lost a great deal of market share due to the increased internet use by hotel guests. With this loss, our Board of Directors agreed to dissolve Hotel Movie Network on March 11, 2010.

 

Business of the Company

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.

 

Results of Operations

 

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

 

Revenue

 

We had revenues of $135,927 for the three months ended September 30, 2020 versus revenues of $96,275 for the three months ended September 30, 2019. There was a decrease of $65,957 in live event revenue due to the effects of COVID-19. There was an increase in gym revenue of $105,609, or 100% as the Company acquired a gym since the comparative period.

 

Cost of Sales

 

We incurred cost of sales of $47,907 for the three months ended September 30, 2020 versus cost of sales of $73,588 for the three months ended September 30, 2019. The decrease of $25,681 is due to a decrease in live events due to the effects of COVID-19.

 

Operating Expenses

 

General & Administrative Expenses

 

General and administrative expenses include professional fees, all costs associated with marketing, press releases, public relations, rent, sponsorships and other expenses. We incurred general and administrative expenses of $675,129 for the three months ended September 30, 2020 versus general and administrative expenses of $349,297 for the three months ended September 30, 2019. The increase of $325,832 was primarily due to increased operations as a result of gym acquisitions, and investor relations and professional fees due to the growth of the business.

 

Depreciation and Amortization Expense

 

We incurred depreciation and amortization expense of $33,883 for the three months ended September 30, 2020 versus depreciation expense of $6,741 for the three months ended September 30, 2019. The increase of $27,142 was due to the purchase of fixed and intangible assets a result of business acquisitions.

 

Other Income (Expense)

 

Other Income (Expense)

 

Our other income and expenses include gain on forgiveness of loan, loss on extinguishment of debt, change in fair value of derivative liabilities and interest expense. The increase of $568,297 was primarily due to interest expense and changes in fair value of derivative instruments.

 

 

 

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Net Losses

 

We incurred a net loss of $1,269,353 for the three months ended September 30, 2020 versus a net loss of $413,415 for the three months ended September 30, 2019.

 

Results of Operations

 

Six Months Ended September 30, 2020 Compared to the Six Months Ended September 30, 2019

 

Revenue

 

We had revenues of $195,948 for the six months ended September 30, 2020 versus revenues of $181,911 for the six months ended September 30, 2019. There was a decrease of $151,534 in live event revenue due to the effects of COVID-19. There was an increase in gym revenue of $165,571, or 100% as the Company acquired a gym since the comparative period.

 

Cost of Sales

 

We incurred cost of sales of $49,219 for the six months ended September 30, 2020 versus cost of sales of $135,540 for the six months ended September 30, 2019. The decrease of $86,321 is due to a decrease in live events due to the effects of COVID-19.

 

Operating Expenses

 

General & Administrative Expenses

 

General and administrative expenses include professional fees, all costs associated with marketing, press releases, public relations, rent, sponsorships and other expenses. We incurred general and administrative expenses of $839,917 for the six months ended September 30, 2020 versus general and administrative expenses of $859,810 for the six months ended September 30, 2019. The decrease of $19,893 was a result of decreased live events due to COVID-19 but this decrease was partially offset by the increase in G&A at the gym. 

 

Depreciation and Amortization Expense

 

We incurred depreciation and amortization expense of $66,855 for the six months ended September 30, 2020 versus depreciation expense of $10,053 for the six months ended September 30, 2019. The increase of $56,802 was due to the purchase of fixed and intangible assets a result of business acquisitions.

 

Other Income (Expense)

 

Other Income (Expense)

 

Our other income and expenses include gain on forgiveness of loan, grant income, loss on settlement of debt, loss on extinguishment of debt, change in fair value of derivative liabilities and interest expense. The increase of $923,381 was primarily due to interest expense and changes in fair value of derivative instruments.

 

Net Losses

 

We incurred a net loss of $1,764,859 for the six months ended September 30, 2020 versus a net loss of $904,927 for the six months ended September 30, 2019.

 

 

 

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Current Liquidity and Capital Resources for the six months ended September 30, 2020 compared to the six months ended September 30, 2019

 

    2020     2019  
Summary of Cash Flows:                
Net cash used by operating activities   $ (574,939 )   $ (184,942 )
Net cash used by investing activities     (128,501 )     (206,230 )
Net cash provided by financing activities     718,282       400,000  
Net increase in cash and cash equivalents     14,842       8,828  
Beginning cash and cash equivalents     46,729       27,579  
Ending cash and cash equivalents   $ 61,571     $ 36,407  

 

Operating Activities

 

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 expense, loss on settlement of debt, loss on extinguishment of debt, gain on settlement of debt, grant income, amortization of debt discount, inventory, prepaid expenses, accounts payable, accrued liabilities and deferred compensation. Cash used in operations of $184,942 during the six months ended September 30, 2019 was primarily a result of our $904,927 net loss reconciled with our net non-cash expenses relating to stock compensation, depreciation expense, loss on settlement of debt, loss on extinguishment of debt, inventory, prepaid expenses, accounts payable, accrued liabilities and deferred compensation.

 

Investing Activities

 

Net cash used in investing activities for the six months ended September 30, 2020 of $128,501 resulted from the from the payments to related parties in the amount of $470 and capital expenditures in the amount of $128,031. Net cash used in investing activities for the six months ended September 30, 2019 of $206,230 resulted from the payments to related parties in the amount of $174,245 and capital expenditures in the amount of $31,985.

 

Financing Activities

 

Net cash provided by financing activities was $718,282 for six months ended September 30, 2020, which consisted of $122,766 from proceeds from the issuance of notes payable, $150,000 from proceeds from the issuance of convertible notes payable, $15,000 in payments related to payable due for business acquisitions, $4,484 payment on notes payable, and $465,000 in proceeds from the issuance of common stock. Net cash provided by financing activities was $400,000 for six months ended September 30, 2019, which consisted of $400,000 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.

 

 

 

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The sale of additional equity or debt securities may result in additional dilution to our shareholders. If we raise additional funds through the issuance of debt securities or preferred stock, these securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations. Any such required additional capital may not be available on reasonable terms, if at all. If we were unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned activities and limit our operations which could have a material adverse effect on our business, financial condition and results of operations.

 

Inflation

 

The amounts presented in our consolidated financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

 

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis. For the 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 financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Quantitative and Qualitative Disclosures about Market Risk

 

In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

 

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our significant estimates and assumptions include the fair value of our common stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to our deferred tax assets.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Our management, in consultation with its legal counsel as appropriate, assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we, in consultation with legal counsel, evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our financial statements. If the assessment indicates a potentially material loss contingency is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

 

 

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Income Taxes

 

The Company follows Section 740-10-30 of the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated Statements of Operations in the period that includes the enactment date. Through June 30, 2020, the Company has an expected loss. Due to uncertainty of realization for these losses, a full valuation allowance is recorded. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. In addition, Receivables that are factored through the Company's Receivable finance facility are guaranteed by the finance company that further mitigates Credit Risk.

 

Impairment of Long-Lived Assets

 

In accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved. There were no impairment charges recorded during the three months ended June 30, 2020 and 2019.

 

Inventory

 

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2020 and March 31, 2020, the Company had outstanding balances of Finished Goods Inventory of $7,256 and $7,256, respectively.

 

 

 

 

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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.

 

The following table sets for the computation of basic and diluted earnings per share the three months ended June 30, 2020 and 2019:

  

   

June 30,

2020

   

June 30,

2019

 
Basic and diluted                
Net loss   $ (495,506 )   $ (491,512 )
                 
Net loss per share                
Basic   $ (0.00 )   $ (0.00 )
Diluted   $ (0.00 )   $ (0.00 )
                 
Weighted average number of shares outstanding:                
Basic & diluted     550,425,206       411,478,970  

 

Stock Based Compensation

 

The Company records stock-based compensation in accordance with the provisions of FASB ASC Topic 718, “Accounting for Stock Compensation,” which establishes accounting standards for transactions in which an entity exchanges its equity instruments for goods or services. In accordance with guidance provided under ASC.

 

Topic 718, the Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. As of June 30, 2020, there were no options outstanding.

 

On June 20, 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC 718 and forgo revaluing the award after this date. The Company adopted ASU 2018-07 on April 1, 2019. The adoption of this standard did not have a material impact on the consolidated financial statements.

 

 

 

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BUSINESS

 

Summary

 

B2Digital, Incorporated was incorporated as a Delaware corporation on June 3, 2004. Historically, the Company had been a provider of in-room, on-demand video entertainment and satellite services to the domestic lodging industry. In the past the Company had provided the video services to over 50,000 hotel rooms in the lodging industry. Pay-Per View (“PPV”) lost a great deal of market share due to the increased internet use by hotel guests. With this loss, the Company’s Board of Directors agreed to dissolve Hotel Movie Network on March 11, 2010.

 

In February 2017, the Company’s Board of Directors 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.

 

Since the restructuring, the Company has been led by a management team headed by the Company’s Chairman and CEO, Greg P. Bell. The management team has over 30 years of global experience developing more than 20 companies in the sports, television, entertainment, digital distribution, and banking transaction industries. As part of its growth strategy, the Company intends to continue to develop and acquire assets meeting its business model with the goal of becoming a premier vertically-integrated live event sports company.

 

With extensive background in entertainment, television, video and technology, the Company is now forging ahead and becoming a full-service live event sports company. The current Chairman and CEO of the Company is Greg P. Bell. 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, the Company is in the process of developing and acquiring companies to become a premier vertically-integrated live event sports company. To accomplish this, the Company’s first strategy is to build an integrated live event minor league for the Mixed Martial Arts (“MMA”) marketplace, which is a billion-dollar industry.

 

The Company is creating and developing minor league champions that will move on to the MMA major leagues from the B2 Fighting Series (the “B2FS”). In 2017, the Company started operating live MMA Events by acquiring additional existing MMA promotions. These acquisitions which facilitate the best fighters being invited annually to the yearly B2FS National Championship Live Event. The Company owns all media rights, merchandising rights, digital distribution networks of the B2FS. The Company is developing the systems and technologies for event management, digital ticketing sales, digital video distribution, digital marketing, PPV, fighter management, merchandise sales, brand management and financial control systems.

 

 

 

 

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The Company’s fiscal year runs from April 1 – March 31 of each year.

 

The Company’s wholly-owned subsidiaries are as follows:

 

Colosseum Combat LLC

www.colosseumcombat.com

MMA Company that puts on LIVE MMA Fights

Indian, Michigan

CEO: Mark Slater

 

Hardrock Promotions LLC

www.hrmma.com

MMA Company that puts on LIVE MMA Fights

Kentucky, Ohio, Tennessee, West Virginia

CEO: Vanessa Higdon

 

Pinnacle Combat LLC

www.pinnaclecombat.com

MMA Company that puts on LIVE MMA Fights

Iowa

CEO: Harry Maglaris

 

UCL MMA LLC

www.uclmma.com

MMA Company that puts on LIVE MMA Fights

Illinois, Indiana

CEO: Mike Davis

 

StrikeHard Productions LLC

www.strikehardproductions.com

MMA Company that puts on LIVE MMA Fights

CEO: Jamie Sullivan

 

ONE More Gym LLC

ONE More Gym Valparaiso LLC

ONE More Gym Merrillville LLC

https://www.onemoregymkokomo.com

Official B2 Training facility

CEO: Brian Cox

 

B2 Productions LLC

CEO: Gene Gregory

Production Company who produces B2 LIVE Events and Photographs and Broadcasts the events via PPV, FTV, Social Media

 

 

 

 

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Expansion by Acquisition

 

The Company’s operational plan is to acquire existing operating fight groups that are properly licensed and operating in up to 10 additional states or to expand one of its existing brands into those target states if the Company cannot find or identify an existing compatible fight group to its business model in the target states.

 

Through its wholly-owned subsidiaries, the Company is currently licensed in and has planned fights to occur in the following states (contingent upon COVID-19 restrictions):

 

  1. Kentucky

 

  2. Ohio

 

  3. Indiana

 

  4. Illinois

 

  5. Iowa

 

  6. West Virginia

 

  7. Tennessee

 

  8. Michigan

 

  9. Alabama

 

  10. Mississippi

 

The Company has targeted the following states for expansion:

 

  1. Kansas

 

  2. Nebraska

 

  3. South Dakota

 

Fight group businesses of this type typically does not have a large amount of hard dollar assets. Most acquired groups own a cage, a truck to transport the cage, materials that are used in the live event shows such as pipe and drape and signage, and retail POS machines to sell merchandise and tickets at the event.

 

Seasonality

 

We do not expect material seasonality in our business.

 

 

 

 

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Facilities

 

The Company occupies offices at 4522 West Village Drive Suite 215. Tampa, Florida 33624. The Company does not currently own or lease any properties or facilities. The Company leases the Fitness Facility through ONE More Gym LLC in Kokomo, Indiana. The Company expects to lease new office space in the future to the extent consistent with its business model.

 

Intellectual Property

 

The Company has a policy of requiring key employees and consultants to execute confidentiality agreements upon the commencement of an employment or consulting relationship. The Company’s employee agreements also require relevant employees to assign to it all rights to any inventions made or conceived during their employment with the Company. In addition, the Company has a policy of requiring individuals and entities with which it discusses potential business relationships to sign non-disclosure agreements. The Company’s agreements with clients include confidentiality and non-disclosure provisions.

 

Legal Proceedings

 

The Company may from time to time be involved in various claims and legal proceedings of a nature it believes are normal and incidental to its business. These matters may include product liability, intellectual property, employment, personal injury cause by the Company’s employees, and other general claims. The Company is not presently a party to any legal proceedings that, in the opinion of its management, are likely to have a material adverse effect on its business. Regardless of outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

 

Employees

 

As of December 29, 2020, we had 32 employees, including officers and directors, 22 of which are full-time and 10 of which are part-time. The Company believes that it will be successful in attracting experienced and capable personnel. The Company’s CEO has entered into agreements with us requiring him not to compete or disclose the Company’s proprietary information. The Company’s employees are not represented by any labor union. The Company believes that relations with its employees are excellent. Usually, the number of total employees and number of full-time employees will vary.

 

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of December 29, 2020:

 

Name and Principal Position   Age   Term of Office   Approximate hours per week for part-time employees
Greg P. Bell, Chief Executive Officer and Director   63   Since January 2017   45
Paul D. H. LaBarre, Executive Vice President   75   Since September 2005   3
Andrew Georgens, Director, Secretary   69   Since November 2017   2
Hugh Darryl Metz, Director   60   Since November 2017   2

 

 

 

 

 

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Greg P. Bell, Chairman of the Board Chief Executive Officer and Director

 

Mr. Bell is one of the early pioneers and entrepreneurs in Entertainment and Digital Media and has been working in the field for over 30 years. He was involved in the early creation of the technologies and algorithms that allowed analog media to be transformed into digital bits and compressed data streams and created specific business enterprises that capitalized on the creation of digital transmissions at Scientific Atlanta, Compression Labs, VCON International and Qwest. Mr. Bell was one of the initial Vice Presidents of Business Development at Qwest Communications where he developed Qwest's Digital Media Company, Slingshot Networks. He then ran all operations of Slingshot, reporting to the board of directors, which managed and operated three full time studios including the creation of the Broadcast Studio in Staples Center, TV and News productions, LIVE events at the Staples Center, distribution of a national television show distributed by Warner Brothers TV Distribution and online television productions and web distribution for the NFL, NBA, NHL, AFL, Boxing, Democratic Convention and LIVE music events.

 

Upon leaving Slingshot in 2000, Mr. Bell founded B3 Development Group, a firm specializing in developing emerging market media companies. Mr. Bell ‘s B3 Development Group founded B2 Networks in 2001 which quickly became the defacto standard for Watching LIVE Pay per View Sporting events online. B2's Proprietary Online System broadcast LIVE Professional and Collegiate sporting events online to a global audience broadcasting over 1000 LIVE games per month. Mr. Bell developed and implemented a merger with B2 Networks and the America ONE Television Network where he became CEO of the combined companies. Under Mr. Bell's direction the company now called ONE Media Corp launched the new ONE World Sports TV Network, now operating under the brand Eleven Sports, in North America on Cable and Satellite, with a pure digital end-to-end distribution system, along with continuing the company’s growth in the online distribution of Sports and Entertainment. After leaving as CEO of ONE Media Corp, he continues to develop companies and specializes in developing and fast tracking emerging entertainment, transaction technology and media companies, Mr. Bell continues to expand his holdings and currently has business holdings in B3 Development Group which under contract with Caymanas Park Race Track, owned by the country of Jamaica, developed Jamaica’s first all-digital state of the art Pari-Mutuel Live Sports Gaming System for mobile devices and currently is operating under the brand CaymanasToGO for the Caribbean Consumers and Platinum Racing for USA, European and global consumers. The B3 mobile device wagering system and technology allows consumers globally to watch and wager on Live Horse Races and Sporting Events being held in the UK, USA, Canada and the Caribbean; B3 Gaming Services Group, a premier transaction and customer service group that offers management services to the Gaming industry in the Caribbean, B3 Networks, a premier state of the art digital broadcasting company that developed the B3 Television Satellite Replacement Technology which allows TV Networks to broadcast globally on the public internet instead of satellites in broadcast quality HD & SD Television. B3 Networks has deployed and services the B3 technology to broadcast High Definition and SD TV signals globally to cable headends, smart phones and Internet connected devices for the Jamaica Education Television Network, the Caymanas Race Track and other mobile applications globally. In February 2017 he became the Chairman and CEO of B2 Digital, Inc., trading at Symbol: BTDG on the OTC. B2 Digital will capitalize on Mr. Bell’s LIVE Event Experience and is in the process of building a Minor League for the MMA, Mixed Martial Arts Major Leagues, in conjunction with acquiring Sports Related companies to develop the business into a vertically integrated LIVE Event Sports Company.

 

Mr. Bell has worked at the top technology development companies that developed the digital technologies, which are in use today at Scientific Atlanta, Compression Labs, VCON and Qwest. He also has managed and been directly involved with over 55,000 LIVE events in his 30-year career. He has worked with a diverse group of clients in the entertainment, sports and technology communities including the NFL, NBA, NHL, AHL, NLL, ECHL, IFL, USHL, SPHL, NCAA, NAIA, MISL, AFL, AOL, FOX, UFC, NAAFS, Bellator, WEF, the Staples Center, the Orleans Arena, Oscar De La Hoya, Barbra Streisand, and top entertainment venues, acts and actors. His clients and companies have capitalized on Mr. Bell's knowledge of the world of Entertainment, LIVE Events, Sports, Digital Television and Digital Online Transaction and Distribution Systems.

 

EDUCATION:

East Grand Rapids High School

Graduated 1975

 

Grand Valley State University

Graduated 1980

BBA Business Management

Emphasis in Computer Science, Economics and Marketing

 

 

 

 

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Hugh Darryl Metz, Director

 

Mr. Metz has over 30 years’ experience in Broadcasting, Television, Computer Graphics and LIVE Event Management. He was one of the first to operate computer graphics television technology in the early 80s while developing Live Event graphics solutions for major television networks for LIVE professional and college sports television broadcasts.  He is certified in several Microsoft and Cisco product lines and served as IT systems administrator for Blockbuster Entertainment and IBM on the Blockbuster business support systems of the Blockbuster franchisees IT Network. He has worked on Sports productions for national TV networks operating and managing LIVE Television broadcasts for over 1000 LIVE Sports Event.

 

In 2007 Mr. Metz began working with the B2 Networks PPV Company as Mr. Bell’s head of LIVE Event Operations. His responsibilities included managing all aspects of over 200 LIVE TV and Internet broadcast productions for the NCAA and Pro Sports Leagues in Football, Basketball, Hockey, MMA and Special Events and then serving as Special Projects Director reporting to Mr. Bell the CEO of ONE World Sports, which acquired B2 Networks.

 

In 2012 Mr. Metz became VP of Operations for Mr. Bell’s B3 Enterprises Company, which owned the largest minority share of the NAAFS MMA group in OHIO. He was instrumental in developing all the LIVE Event operations systems, financial controls, security and event management operations with the management team who operated the B2 MMA Test Market Business model that produced over 20 LIVE MMA Events in 2 years.

 

Currently, he is the acting Broadcast IT Engineer at Gray Television's station that serves southern Oklahoma and oversees the technical operations of 3 local CBS, MyTV, Fox affiliate Television Networks.

 

EDUCATION:

Robstown High School

Robstown, Texas

Graduated 1979

 

Courses Attended:

2000 to 2001

Grayson County College

IT and Technology Training

 

IBM Technical Training

2000 to 2007

Internal Technical Certification in IT, Infrastructure and Systems Engineering

 

Paul D. H. LaBarre, Executive Vice President, Director

 

2006 to 2017, Member of the Board of Directors Good Hunting Communications, Inc.

 

2010 to 2017, CEO B2Digital INC. and Director

 

EDUCATION:

Attended Courses and studies:

Business Management, technology courses offered by Scientific Atlanta, Blonder Tongue, Jerrold, C-Cor & Magnavox,

Lawyer’s Assistant-Litigation & Trial Practice,

Automotive Training, Ford, General Motors, Chrysler & VW, Attended Several Courses in Automotive Training, CAC, PC General studies.

 

 

 

 

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Andrew Georgens, Director

 

1970 - 1973 Payne Construction Company, Monsoon MATel Com / CATV construction Lineman, foreman, supervisor, management.
   
1973 - 1980 Tiger Communications, Springfield MA Tel com / CATV construction / engineering
  Owner, General Manager
   
1980 - 2005   Communications Systems Contractors, Springfield MA / Dalton MA
  Tel com / CATV & related fields / construction / engineering
  Owner / General Manager
   
2005 - present Retired

 

EDUCATION:

Cathedral High School

Springfield MA

Graduated 1969

Springfield Technical Community College

Attended 1970. 1 yr.

 

Except as disclosed herein, there are no arrangements or understandings between our directors any other person(s) (naming such person(s)) pursuant to which he was or is to be selected as a director or nominee

 

Legal Proceedings

 

On June 26, 2013, Paul D.H. LaBarre, the Company’s Executive Vice President and a director, was convicted of improper use of a satellite signal in connection with the previously disclosed action involving DirecTV. Mr. LaBarre was sentenced to five years’ probation in connection with the conviction.

 

Besides the disclosure above, during the past ten years there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors or executive officers, and none of these persons has been involved in any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity, any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws or regulations, or any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.

 

Family Relationships

 

There are no family relationships among and between our directors, officers, persons nominated or chosen by the Company to become directors or officers, or beneficial owners of more than five percent (5%) of the any class of the Company’s equity securities.

 

Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.”

 

 

 

 

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We currently have not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, other than as described above, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.

  

Code of Ethics

 

The Company has yet to adopt a Code of Ethics due to the COVID-19 pandemic and lack of resources. The Company plans on adopting a Code of Ethics during the fiscal year ending March 31, 2021.

 

EXECUTIVE COMPENSATION

 

The following table sets forth information concerning the annual compensation awarded to, earned by, or paid to the following named executive officers for all services rendered in all capacities to our company and its subsidiaries for the fiscal years ended March 31, 2020 and 2019.

  

Summary Compensation Table

 

Name and principal position   Year  

Salary

($)

   

Stock Awards

($)

  Total
($)
Greg P. Bell, Chairman, CEO, and President     2019-20         576,000(1)   576,000  
      2018-19         3,000(2)   3,000  
Paul LaBarre, Executive V.P. and Director     2019-20         25,600(3)   25,600  
      2018-19            

 

  (1) Includes the issuance of 90,000,000 shares of Common Stock valued at $576,000.
  (2) Includes the issuance of an aggregate of 30,000,000 shares of Common Stock valued at $3,000.
  (3) Includes the issuance of an aggregate of 4,000,000 shares of Common Stock valued at $25,600.

 

CEO Agreement

 

The Company has also entered into an agreement with Mr. Bell as the Chairman of the Board and Chief Executive Officer & President (the “CEO Agreement”). Pursuant to the terms of the CEO Agreement, the Company may not terminate Mr. Bell from his positions as Chief Executive Officer and President of the Company, or remove him from the Board or change his position as Chairman thereof, without the approval of 80% of the voting capital stock of the Company, unless such termination and/or removal is due to death or legal incapacity.

 

As compensation for Mr. Bell’s services pursuant to the terms of the CEO Agreement, the Company issued to B2 Management Group LLC, a limited liability company wholly owned and controlled by Mr. Bell (“B2 Management Group”), a total of 30,000,000 shares of Common Stock (the “CEO Stock Award”).

 

Effective November 23, 2020, Mr. Bell renewed his agreement with the Company (upon terms substantially similar to those in the CEO Agreement). Pursuant to the new agreement, Mr. Bell is entitled to an annual salary of $120,000 and Mr. Bell was also issued 40,000,000 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”).

 

As further compensation for Mr. Bell’s services to the Company in connection with the Company’s acquisition activity, the Company has issued B2 Management Group, LLC an additional 60,000,000 shares of Common Stock as compensation for the completion of the Company’s previously announced acquisitions of Hard Rock MMA (30,000,000 Shares) and Colosseum Combat LLC (30,000,000) (collectively, the “Recent Acquisitions”).

 

 

 

 

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Finally, pursuant to the terms of the CEO Agreement, the Company will issue B2 Management Group, LLC an additional 30,000,000 shares of Common Stock within ten days of completion of each future acquisition by the Company of any MMA fight organization, whether pursuant to an equity or asset purchase, up to a total of five (5) acquisitions subsequent to the Recent Acquisitions (corresponding to a total aggregate amount of 150,000,000 shares that may be issued in connection with future acquisitions).

 

The CEO Agreement also includes a non-compete covenant whereby Mr. Bell will not compete directly with the Company during the term of the CEO Agreement.

 

The foregoing summary is qualified in its entirety to the terms of the CEO Agreement itself, a copy of which is an exhibit to this Registration Statement.

 

LaBarre Agreement

 

The Company has also entered into an Employment and Board Service Agreement with Paul D.H. LaBarre, the Company’s Executive Vice President and a director (the “LaBarre Agreement”). The term of the LaBarre Agreement is 36 months, which shall run from the Effective Date, and will renew automatically for successive two-year periods unless either the Company or Mr. LaBarre provides notice of non-renewal no later than six months prior to the expiration of the then-current term. Pursuant to the terms of the LaBarre Agreement, the Company may not terminate Mr. LaBarre from his positions as Executive Vice President of the Company, or remove him from the Board, without the approval of 80% of the voting capital stock of the Company, unless such termination and/or removal is due to death or legal incapacity. Additionally, Mr. LaBarre may terminate the LaBarre Agreement at any time upon three months’ prior written notice to the Company.

 

As payment for past compensation owed to Mr. LaBarre from his employment agreement for his past services to the Company, the Company will issue Mr. LaBarre 50,000,000 shares of Common Stock. As compensation for Mr. LaBarre’s continuing services to the Company as Executive Vice President, the Company will issue Mr. LaBarre 4,000,000 shares of Common Stock per year for each year in which Mr. LaBarre remains employed in such capacity and the LaBarre Agreement remains in effect (the “Annual Salary Issuance”). 50% of the Annual Salary Issuance will vest every six months. In the event of a merger or consolidation of the Company in which the Company is not the surviving entity, or a proposed dissolution or liquidation of the Company or a sale of substantially all of its assets, any unvested portion of the Annual Salary Issuance remaining in the then-current term of the LaBarre Agreement will vest immediately.

 

As payment to Mr. LaBarre for his services as a director, the Company will pay Mr. LaBarre annual cash compensation of $500 per year.

 

The foregoing summary is qualified in its entirety to the terms of the LaBarre Agreement itself, a copy of which is an exhibit to this Registration Statement.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table and footnotes thereto sets forth information regarding the number of shares of common stock beneficially owned by (i) each director and named executive officer of our company, (ii) each person known by us to be the beneficial owner of 5% or more of its issued and outstanding shares of common stock, and (iii) named executive officers, executive officers, and directors of the Company as a group. In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table assumes 730,864,213 shares of common stock, 2,000,000 shares of Series A Preferred Stock, and 40,000,000 shares of Series B Preferred Stock issued and outstanding. Unless otherwise further indicated in the following table, the footnotes thereto and/or elsewhere in this Registration Statement, the persons and entities named in the following table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s name, subject to community property laws, where applicable. Unless as otherwise indicated in the following table and/or the footnotes thereto, the address of our named executive officers and directors in the following table is: 4522 West Village Drive, Suite 215, Tampa, FL 33624.

 

 

 

 

 

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Name and Address

Shares of

Series A

Preferred

Stock Owned

 

Shares of

Series B

Preferred

Stock Owned

Shares of

Common

Stock

Owned

Amount and

Nature of

Beneficial

Ownership(1)

Percentage of Votes Before Offering Percentage of Votes Assuming all Shares are Sold
Greg P. Bell(2)   850,000   40,000,000   145,045,202   1,149,045,202   66.23% 48.69%
Paul D. H. LaBarre   850,000     64,191,494   268,191,494   28.69% 17.19%
Andrew Georgens   100,000     1,022,880   25,022,280   3.31% 1.81%
Hugh Darryl Metz       3,000,000   3,000,000   * *
Total Officers and Directors   1,800,000   40,000,000   213,259,576   1,445,258,976   73.63% 55.85%
>5% Shareholders                      

B2 Management Group LLC(2)

4522 West Village Drive, Suite 215,

Tampa, Florida 33624

      145,045,200   145,045,200   19.85% 10.70%

*Less than 1%

 

  (1) Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the date of this Annual Report.

 

  (2) Includes 145,045,200 shares of Common Stock are owned by B2 Management Group LLC which is owned and controlled by Mr. Bell, the Company’s Chairman and Chief Executive Officer.

 

In addition to the Common Stock, the Company has authorized a total of 50,000,000 shares of preferred stock, currently designated as Series A Convertible Preferred Stock and Series B Convertible Preferred Stock (“Series B Preferred Stock”). 2,000,000 shares of Series A Preferred Stock are currently issued and outstanding and 40,000,000 shares of Series B Preferred Stock are currently issued and outstanding. The Series A Preferred Stock and Series B 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 and each holder of Series B Preferred Stock is entitled to 20 votes for each share of Series B Preferred Stock held by such shareholder.

 

Capitalization

 

Class of Stock   Par Value   Authorized   Outstanding as of
October 26, 2020
Preferred Stock, Series A   0.00001     2,000,000     2,000,000  
Preferred Stock, Series B   0.00001     40,000,000     40,000,000  
Common Stock   0.00001     5,000,000,000     730,864,213  

 

 

 

 

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Certain Relationships and Related Transactions

 

Except as disclosed below, for transactions with our executive officers and directors, please see the disclosure under “EXECUTIVE COMPENSATION” above.

 

B2 Management Group LLC

 

Our CEO and Chairman is the sole member of B2 Management Group, LLC (“B2MG”). During the year ended March 31, 2020, B2MG received $192,245 in advances from the Company. On September 27, 2019, the Company and B2MG entered into an agreement whereby B2MG agreed to return 7,500,000 shares of the Company’s common stock in exchange for the cancellation of $75,000 owed by B2MG to the Company. On December 22, 2019, the Company and B2MG entered into an agreement whereby B2MG agreed to return 21,954,800 shares of the Company’s common stock in exchange for the cancellation of $164,660 owed by B2MG to the Company.

 

Indemnification Agreements

 

We have entered into indemnification agreements with each of our directors, executive officers and other key employees. The indemnification agreements will require us to indemnify our directors to the fullest extent permitted by Delaware law.

 

Insofar as indemnification for liabilities arising under the Securities Act, may be permitted to directors, executive officers or persons controlling us, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Review, Approval or Ratification of Transactions with Related Parties

 

We have adopted a related-party transactions policy under which our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of any class of our Common Stock, and any members of the immediate family of any of the foregoing persons are not permitted to enter into a related-party transaction with us without the consent of our audit committee. If the related party is, or is associated with, a member of our audit committee, the transaction must be reviewed and approved by another independent body of our Board of Directors, such as our governance committee. Any request for us to enter into a transaction with a related party in which the amount involved exceeds $120,000 and such party would have a direct or indirect interest must first be presented to our audit committee for review, consideration and approval. If advance approval of a related-party transaction was not feasible or was not obtained, the related-party transaction must be submitted to the audit committee as soon as reasonably practicable, at which time the audit committee shall consider whether to ratify and continue, amend and ratify, or terminate or rescind such related-party transaction. All of the transactions described above were reviewed and considered by, and were entered into with the approval of, or ratification by, our Board of Directors.

 

During the last two full fiscal years and the current fiscal year or any currently proposed transaction, there are transactions involving the issuer, in which the amount involved exceeds the lesser of $120,000 or one percent of the average of the issuer’s total assets at year-end for its last three fiscal years, except compensation awarded to executives.

 

Disclosure of Conflicts of Interest

 

There are no conflicts of interest between the Company and any of its officers or directors.

 

 

 

 

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Director Independence

 

We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” Although we have not have adopted the independence standards any national securities exchange to determine the independence of directors, the NYSE MKT LLC provides that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of our board of directors, free of any relationship that would interfere with the exercise of independent judgment. Under this standard, our board of directors has determined that Messrs. Metz and Georgens would meet this standard, and therefore, would be considered to be independent.

  

DESCRIPTION OF SECURITIES

 

The Common Stock

 

We are authorized to issue 5,000,000,000 shares of Common Stock, $0.00001 par value. The holders of Common Stock are entitled to equal dividends and distributions, with respect to the Common Stock when, as, and if declared by the Board of Directors from funds legally available for such dividends. No holder of Common Stock has any preemptive right to subscribe for any of our stock nor are any shares subject to redemption. Upon our liquidation, dissolution or winding up, and after payment of creditors and any amounts payable to senior securities, the assets will be divided pro rata on a share-for-share basis among the holders of the shares of Common Stock. All shares of Common Stock now outstanding upon completion of this Offering and conversion of any Preferred Stock, are, and will be, fully paid, validly issued and non-assessable.

 

Holders of our Common Stock do not have cumulative voting rights, so that the holders of more than 50% of the shares voting for the election of directors will be able to elect 100% of the directors if they choose to do so, and in that event, the holders of the remaining shares will not be able to elect any members to the Board of Directors.

 

The Company has never paid any dividends to shareholders of our Common Stock. The declaration in the future of any cash or stock dividends will depend upon our capital requirements and financial position, general economic conditions, and other pertinent factors. We presently intend not to pay any cash or stock dividends in the foreseeable future. Management intends to reinvest earnings, if any, in the development and expansion of our business. No dividend may be paid on the Common Stock until all Preferred Stock dividends are paid in full.

 

Preferred Stock

 

We are authorized to issued 5,000,000,000 shares of preferred stock of the Corporation; par value $0.00001 per share.

 

Series A Convertible Preferred Stock

 

There are 2,000,000 shares of Series A Convertible Preferred Stock designated.

 

The Series A Preferred is senior to the Common Stock and any other series or class of the Company's Preferred Stock.

 

 

 

 

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Liquidation Rights. In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, before any payment or declaration, and setting apart for payment of any amount shall be made in respect of any outstanding capital stock of the Company, an amount equal to Two Dollars and Forty Cents ($2.40) per share, plus the Redemption provision (as defined below). Then all of the assets of the Company available to be distributed shall be distributed ratably to the holders of the Series A Preferred and then to the holders of other outstanding shares of capital stock of the Company. If upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the holders of the Series A Preferred shall be insufficient to permit the payment to the holders thereof the full preferential amount as provided herein, then such available assets shall be distributed ratably to the holders of the Series A Preferred.

 

None of the following events shall be treated as or deemed to be a liquidation hereunder: (1) A merger, consolidation or reorganization of the Company; (2) A sale or other transfer of all or substantially all of the Company's assets; (3) A sale of 50% or more of the Company's capital stock then issued and outstanding; (4) A purchase or redemption by the Company of stock of any class; or (5) Payment of a dividend or distribution from funds legally available therefor.

 

Voting Rights. On all matters to be voted on by the holders of Common Stock, the Holders of the Series A Preferred shall be entitled to 240 votes for each share of Series A Preferred held of record. On all such matters, the holders of Common Stock and the Holders of Series A Preferred shall vote together as a single class. If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series A Preferred shall not be subject to adjustment unless specifically authorized Conversion. The Series A Preferred shall have the following conversion rights (the "Conversion Rights"):

 

Holder's Optional Right to Convert. Each share of Series A Preferred shall be convertible, at the option of the holder(s), on the Conversion Basis (as set forth below) in effect at the time of conversion. Such right to convert shall commence as of the Issue Date and shall continue thereafter for a period of years, such period ending on the fifth anniversary' of the Issue Date. In the event that the holder(s) of the Series A Preferred elect to convert such shares into Common Stock, the holder(s) shall have 60 days from the date of such notice in which they tender their shares of Series A Preferred to the Company.

 

Conversion Basis. Each share of Series A Preferred shall be convertible into 240 shares of the Company's Common Stock.

 

Mechanics of Conversion. Before any bolder of Series A Preferred shall be entitled to convert the same into shares of Common Stock, such holder shall (i) give written notice to the Company, at the office of the Company or of its transfer agent for the Common Stock or the Preferred Stock, that he elects to convert the same and shall state therein the number of shares of Series A Preferred being converted; and (ii) surrender the certificate or certificates therefor, duly endorsed. Thereupon the Company shall promptly issue and deliver to such holder of Series A Preferred a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled. The conversion shall be deemed to have been made and the resulting shares of Common Stock shall be deemed to have been issued immediately prior to the close of business on the date of such notice and tender of the shares of Series A Preferred.

 

 

 

 

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Adjustments to the Conversion Basis. (1) Stock Splits and Combinations. Subject to the Protective Provisions (as defined below), if at any time after the Company first issues the Series A Preferred and while any of the shares of Series A Preferred remain outstanding, if the Company shall effect a subdivision or combination of the Common Stock, the Conversion Basis then in effect immediately before that subdivision or combination shall be proportionately adjusted. Any adjustment shall become effective at the close of business on the date the subdivision or combination becomes effective. (2) Reclassification. Exchange or Substitution. At any time after the Company first issues the Series A Preferred and while any of the shares of Series A Preferred remain outstanding, if the Common Stock issuable upon the conversion of the Series A Preferred shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets), then and in each such event the holder of each share of Series A Preferred shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series A Preferred might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustments as provided herein. (3) Reorganization. Mergers. Consolidations or Sales of Assets. At any time after the Company first issues the Series A Preferred and while any of such shares remain outstanding, if there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification, or exchange of shares), or a merger or consolidation of the Company with or into another Company, or the sale of all or substantially all of the Company's assets to any other person, then as a part of such reorganization, merger, consolidation, or sale, provision shall be made so that the holders of the Series A Preferred thereafter shall be entitled to receive upon conversion of the Series A Preferred, the number of shares of stock or other securities or property of the Company, or of the successor Company resulting from such merger or consolidation or sale, to which a bolder of Series A Preferred deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale.

 

Notices of Record Date. In the event of any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company, or any transfer of all or substantially all of the assets of the Company to any other Company, entity, or person, or any voluntary or involuntary dissolution, liquidating, or winding up of the Company, the Company shall mail to each holder of Series A Preferred at least 30 days prior to the record date specified therein, a notice specifying the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up.

 

Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one share of the Company's Common Stock on the date of conversion, as determined in good faith by the Company's directors.

 

 

 

 

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Reservation of Stock Issuable Upon Conversion. At such time as the Company increases its authorized capital resulting in a sufficient number of shares of Common Stock becoming available for the conversion of the Series A Preferred the Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred, a number of its shares of Common Stock as shall from time to time be sufficient to effectuate the conversion of all outstanding shares of Series A Preferred.

 

Protective Provisions. Notwithstanding anything contained herein to the contrary, so long any of the Series A Preferred shall be outstanding, the Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least two-thirds of the total number of shares of Series A Preferred outstanding: (a) Alter or change the rights, preferences or privileges of the Series A Preferred by way of reverse stock lit, reclassification, merger consolidation or otherwise, so as to adversely affect in any manner the voting rights including number of votes presently allowed or the conversion basis by which the shares of Series A Preferred are presently converted into shares of Common Stock; (b) Increase the authorized number of Series A Preferred; (c) Create any new class of shares having preferences over or being on a parity with the Series A Preferred as to dividends or assets, unless the purpose of creation of such class is, and the proceeds to be derived from the sale and issuance thereof are to be used for, the retirement of all Series A Preferred then outstanding; (d) Repurchase any of the Company's Common Stock (e) Merge or consolidate with any other Company, except into or with a wholly-owned subsidiary of the Company with the requisite shareholder approval; (f) Sell, convey or otherwise dispose of, or create or incur any mortgage, lien, charge or encumbrance on or security interest in or pledge of, or sell and leaseback, all or substantially all of the property or business of the Company; or (g) Incur, assume or guarantee any indebtedness (other than such as may be represented by the obligation to pay rent under leases) maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by the Company, except purchase money obligations, obligations assumed as part of the price of property purchased, or the extension, renewal or refunding of any thereof.

 

Redemption. Subject to the applicable provisions of Delaware law, the Company, at the option of its directors, may at any time or from time to time redeem the whole or any part of the outstanding Series A Preferred. Upon redemption the Company shall pay for each share redeemed $2.40 per share, payable in cash, plus a premium to compensate the original purchaser(s) for the investment risk and cost of capital equal to the greater of (a) $2.40 per share, or (b) an amount per shares equal to 50% of the market capitalization of the Company on the date of notice of such redemption divided by 2,000,000 (the "Redemption Premium"), the redemption amount and the Redemption Premium hereinafter being referred to as the "Redemption Price." Such redemption shall be on an all-or-nothing basis.

 

At least 30 days previous notice by mail, postage prepaid, shall be given to the holders of record of the Series A Preferred to be redeemed, such notice to be addressed to each such shareholder at the address of such holder appearing on the books of the Company or given to such holder to the Company for the purpose of notice, or if no such address appears or is given, at the place where the principal office of the Company is located. Such notice shall state the date fixed for redemption and the redemption price and shall call upon the holder to surrender to the Company on said date at the place designated in the notice such holder's certificate or certificates representing the shares to be redeemed. On or after the date fixed for redemption and stated in such notice, each holder of Series A Preferred called for redemption shall surrender the certificate evidencing such shares to the Company at the place designated in such notice and shall thereupon be entitled to receive payment of the redemption price. If less than all the shares represented by any such surrendered certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. If such notice of redemption shall have been duly given, and if on the date fixed for redemption funds necessary for the redemption shall be available therefore, notwithstanding that the certificates evidencing any Series A Preferred called for redemption shall not have been surrendered, the dividends, if any, with respect to the shares so called for redemption shall forthwith after such date cease and desist and determine, except only the right of the holders to receive the redemption price without interest upon surrender of their certificates therefore.

 

 

 

 

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If, on or prior to any date fixed for redemption or Series A Preferred, the Company deposits, with any bank or trust company as trust fund, the number of shares of Common Stock of a sum sufficient to redeem, on the date fixed for redemption thereof, the shares called for redemption, with irrevocable instructions and authority to the bank or trust company to give the notice of redemption thereof (or to complete the giving of such notice if theretofore commenced and to pay, or deliver, on or after the date fixed for redemption or prior thereto, the redemption price of the shares to their respective holders upon the surrender of their share certificates, then from and after the date of the deposit (although prior to the date fixed for redemption), the shares so called shall be redeemed and any dividends on those shares shall cease to accrue after the date fixed for redemption. The deposit shall constitute full payment of the shares to their holders and from and after the date of the deposit the shares shall no longer be outstanding and the holders thereof shall cease to be shareholders with respect to such shares, and shall have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of the shares without interest, upon the surrender of their certificates therefore. Any interest accrued on any funds so deposited shall be the property of, ari4 paid to, the Company. If the holders of Series A Preferred so called for redemption shall. not, at the end of six years from the date fixed for redemption thereof, have claimed any funds so deposited, such bank or trust company shall thereupon pay over to the Company such unclaimed funds, and such bank or trust company shall thereafter be relieved of all responsibility in respect thereof to such holders and such holders shall look only to the Company for payment of the redemption price.

 

Reissuance. No share or shares of Series A Preferred acquired by the Company by reason of conversion or otherwise shall be reissued as Series A Preferred, and all such shares thereafter shall be returned to the status of undesignated and unissued shares of Preferred Stock of the Company.

 

Status of Reacquired Stock. Shares of Series A Preferred which have been issued and reacquired in any manner shall, upon compliance with any applicable provisions of Delaware law, have the status of authorized and unissued shares of Preferred Stock may be redesignated and reissued in any series or class.

 

Series B Convertible Preferred Stock

 

There are 40,000,000 shares of Series B Convertible Preferred Stock designated.

 

Voting, Liquidation, Dividends, and Redemption.  On all matters to be voted on by the holders of Common Stock, the Holders of Series B Preferred Stock shall be entitled to twenty (20) votes for each share of Series B Preferred Stock held of record. On all such matters, the holders of Common Stock and the Holders of Series B Preferred Stock shall vote together as a single class. If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series B Preferred Stock shall not be subject to adjustments unless specifically authorized. The shares of Series B Convertible Preferred Stock shall (i) not have a liquidation preference; (ii) not accrue, earn, or participate in any dividends; and (iii) not be subject to redemption by the Corporation.

 

Conversion. Twelve (12) months following the original issuance date, but not before, each outstanding share of Series B Convertible Preferred Stock may be converted, at the option of the holder, into two (2) shares of the Corporation’s common stock.

 

 

 

 

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PLAN OF DISTRIBUTION

 

We are offering for sale a maximum of 500,000,000 shares of our Common Stock in a self-underwritten offering directly to the public at a price of $0.005 per share. There is no minimum amount of shares that we must sell in our direct offering, and therefore no minimum amount of proceeds will be raised. No arrangements have been made to place funds into escrow or any similar account. Upon receipt, offering proceeds will be deposited into our operating account and used to conduct our business and operations. We are offering the shares without any underwriting discounts or commissions. The purchase price is $0.005 per share. The Offering will terminate 12 months from the date that the Registration Statement relating to the Shares is declared effective, unless earlier fully subscribed or terminated by the Company. The offering may be extended.

 

In connection with the Company's selling efforts in the offering, the Company's officers and directors will not register as a broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the "safe harbor" provisions of SEC Rule 3a4-1, promulgated under the Exchange Act. Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer's securities. The Company's officers and directors are not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Our officers and directors will not be compensated in connection with their participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Our officers and directors are not now, nor has he been within the past 12 months, a broker or dealer, and he has not been, within the past 12 months, an associated person of a broker or dealer. At the end of the offering, our officers and directors will continue to primarily perform substantial duties for the Company or on its behalf otherwise than in connection with transactions in securities. Our officers and directors will not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii).

 

In order to comply with the applicable securities laws of certain states, the securities will be offered or sold in those states only if they have been registered or qualified for sale; exempted from such registration or if a qualification requirement is available and with which the Company has complied. In addition, and without limiting the foregoing, the Company will be subject to applicable provisions, rules and regulations under the Exchange Act with regard to security transactions during the period of time when this Registration Statement is effective.

 

Penny Stock Regulation

 

The

SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system).

 

 

 

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The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, that:

 

· contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

 

· contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties;

 

· contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price;

 

· contains a toll-free telephone number for inquiries on disciplinary actions;

 

· defines significant terms in the disclosure document or in the conduct of trading penny stocks; and

 

· contains such other information and is in such form (including language, type, size, and format) as the SEC shall require by rule or regulation.

 

The broker-dealer also must provide the customer with the following, prior to proceeding with any transaction in a penny stock:

 

· bid and offer quotations for the penny stock;

 

· details of the compensation of the broker-dealer and its salesperson in the transaction;

 

· the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and

 

· monthly account statements showing the market value of each penny stock held in the customer's account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities.

 

Offering Period and Expiration Date

 

This Offering will start on the date of this Registration Statement is declared effective by the SEC and continue for a period of 12 months. We may extend the offering period for an additional 90 days, unless the Offering is completed or otherwise terminated by us. 

 

 

 

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Procedures for Subscribing

 

We will not accept any money until this Registration Statement is declared effective by the SEC. Once the Registration Statement is declared effective by the SEC, if you decide to subscribe for any shares in this Offering, you must:

 

1. execute and deliver a Subscription Agreement; and

 

2. deliver payment* to us for acceptance or rejection.

 

*All checks for subscriptions must be made payable to “B2Digital, Incorporated.”

 

Right to Reject Subscriptions

 

We have the right to accept or reject subscriptions in whole or in part, if our management believes that accepting the subscription from the potential investor is not in the Company's best interests. All monies from rejected subscriptions will be returned immediately by us to the subscriber, without interest or deductions. The Company will accept or reject any subscriptions within ten days of receipt, and any funds received related to the rejected subscription agreement will be return promptly without interest or deduction.

 

Underwriters

 

We have no underwriter and do not intend to have one. In the event that we sell or intend to sell by means of any arrangement with an underwriter, then we will file a post-effective amendment to this Registration Statement to accurately reflect the changes to us and our financial affairs and any new risk factors, and in particular to disclose such material relevant to this Plan of Distribution.

 

Regulation M

 

We are subject to Regulation M of the Exchange Act. Regulation M governs activities of underwriters, issuers, selling security holders, and others in connection with offerings of securities. Regulation M prohibits distribution participants and their affiliated purchasers from bidding for, purchasing or attempting to induce any person to bid for or purchase the securities being distributed.

 

Section 15(G) of the Exchange Act

 

Our shares are covered by Section 15(g) of the Exchange Act and Rules 15g-1 through 15g-6 promulgated thereunder. They impose additional sales practice requirements on broker/dealers who sell our securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses).

 

Rule 15g-1 exempts a number of specific transactions from the scope of the penny stock rules.

 

 

 

  49  

 

 

Rule 15g-2 declares unlawful broker/dealer transactions in penny stocks unless the broker/dealer has first provided to the customer a standardized disclosure document.

 

Rule 15g-3 provides that it is unlawful for a broker/dealer to engage in a penny stock transaction unless the broker/dealer first discloses and subsequently confirms to the customer current quotation prices or similar market information concerning the penny stock in question.

 

Rule 15g-4 prohibits broker/dealers from completing penny stock transactions for a customer unless the broker/dealer first discloses to the customer the amount of compensation or other remuneration received as a result of the penny stock transaction.

 

Rule 15g-5 requires that a broker/dealer executing a penny stock transaction, other than one exempt under Rule 15g-1, disclose to its customer, at the time of or prior to the transaction, information about the salesperson’s compensation.

 

Rule 15g-6 requires broker/dealers selling penny stocks to provide their customers with monthly account statements.

 

Rule 15g-9 requires broker/dealers to approve the transaction for the customer's account; obtain a written agreement from the customer setting forth the identity and quantity of the stock being purchased; obtain from the customer information regarding his investment experience; make a determination that the investment is suitable for the investor; deliver to the customer a written statement for the basis for the suitability determination; notify the customer of his or her rights and remedies in cases of fraud in penny stock transactions; and FINRA's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.

 

Warrant Shares Offered by the Selling Security Holder

 

The common stock offered by this prospectus is being offered by the Selling Security Holder. The common stock may be sold or distributed from time to time by the Selling Share Holder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market price prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices , or at fixed prices, which may be changed . The Selling Security Holder may use any one or more of the following methods when selling securities:

  · ordinary brokers’ transactions;

 

  · transactions involving cross or block trades;

 

  · through brokers, dealers, or underwriters may act solely as agents;

 

  · “at the market” into an existing market for the common stock;

 

  · in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;

 

  · in privately negotiated transactions; or

 

  · any combination of the foregoing.

 

 

 

  50  

 

 

In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the state’s registration or qualification requirement is available and complied with.

 

The Selling Security Holder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

 

Triton has informed us that it intends to use an unaffiliated broker-dealer to effectuate all sales, if any, of the common stock that it may purchase from us pursuant to the Common Stock Purchase Agreement. Such sales will be made at prices and at terms then prevailing or at prices related to the then current market price. Each such unaffiliated broker-dealer will be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. Triton has informed us that each such broker-dealer will receive commissions from Triton that will not exceed customary brokerage commissions.

 

Brokers, dealers, underwriters or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions from the Selling Security Holder and/or purchasers of the common stock for whom the broker-dealers may act as agent. The compensation paid to a particular broker-dealer may be less than or in excess of customary commissions. Neither we nor Triton can presently estimate the amount of compensation that any agent will receive.

 

We know of no existing arrangements between Triton or any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of the shares offered by this prospectus. At the time a particular offer of shares is made, a prospectus supplement, if required, will be distributed that will set forth the names of any agents, underwriters or dealers and any compensation from the Selling Security Holder, and any other required information.

 

We will pay the expenses incident to the registration, offering, and sale of the shares to Triton. We have agreed to indemnify Triton and certain other persons against certain liabilities in connection with the offering of shares of common stock offered hereby, including liabilities arising under the Securities Act or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities. Triton has agreed to indemnify us against liabilities under the Securities Act that may arise from certain written information furnished to us by Triton specifically for use in this prospectus or, if such indemnity is unavailable, to contribute amounts required to be paid in respect of such liabilities.

 

Triton has represented to us that at no time prior to the CSPA has Triton or its agents, representatives or affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any short sale (as such term is defined in Rule 200 of Regulation SHO of the Exchange Act) of our common stock or any hedging transaction , which establishes a net short position with respect to our common stock. Triton agreed that during the term of the Common Stock Purchase Agreement, it, its agents, representatives or affiliates will not enter into or effect, directly or indirectly, any of the foregoing transactions.

 

We have advised Triton that it is required to comply with Regulation M promulgated under the Exchange Act. With certain exceptions, Regulation M precludes the selling stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the securities offered by this prospectus.

 

This offering will terminate on the date that all shares offered by this prospectus have been sold by the Selling Security Holder or upon the termination of the Warrants.

 

 

 

  51  

 

 

Our common stock is quoted on the OTC Markets under the symbol “BTDG.”

 

The Selling Security Holder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act.

 

The Selling Security Holder and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Selling Security Holder has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

 

Because the Selling Security Holder is deemed to be an “underwriter” within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act, including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Security Holder has advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Security Holder.

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Security Holder without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for us to be in compliance with the current public information requirement under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Security Holder will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the Common Stock by the Selling Security Holder or any other person. We will make copies of this prospectus available to the Selling Security Holder and have informed the Selling Security Holder of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

SHARES ELIGIBLE FOR FUTURE SALE

 

The sale of a substantial number of shares of our Common Stock, or the perception that such sales could occur, could adversely affect prevailing market prices for our Common Stock. In addition, any such sale or perception could make it more difficult for us to sell equity, or equity related, securities in the future at a time and price that we deem appropriate. If and when this Registration Statement becomes effective, we might elect to adopt a stock option plan and file a Registration Statement under the Securities Act registering the shares of Common Stock reserved for issuance thereunder. Following the effectiveness of any such Registration Statement, the shares of Common Stock issued under such plan, other than shares held by affiliates, if any, would be immediately eligible for resale in the public market without restriction.

 

The sale of shares of our Common Stock which are not registered under the Securities Act, known as “restricted” shares, typically are effected under Rule 144. As of December 29, 2020, we had outstanding an aggregate of 730,864,213 shares of Common Stock of which approximately 425,497,699 shares are restricted Common Stock. All our shares of Common Stock might be sold under Rule 144 after having been held for six months. No prediction can be made as to the effect, if any, that future sales of “restricted” shares of our Common Stock, or the availability of such shares for future sale, will have on the market price of our Common Stock or our ability to raise capital through an offering of our equity securities.

 

 

 

  52  

 

 

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 

As of March 31, 2020, the Company had no securities authorized for issuance under equity compensation plans either approved or not approved by the Company’s shareholders.

 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION OF SECURITIES ACT LIABILITIES

 

We have entered into indemnification agreements with each of our directors, executive officers and other key employees. The indemnification agreements will require us to indemnify our directors to the fullest extent permitted by Delaware law. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

LEGAL MATTERS

 

Business Legal Advisors, LLC has rendered a legal opinion as to the validity of the securities to be registered hereby.

 

EXPERTS

 

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

The financial statements of the Company included in this prospectus and in the registration statement have been audited by Assurance Dimensions and Accell Audit & Compliance, PC, to the extent and for the period set forth in their report appearing elsewhere herein and in the registration statement and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the shares of Common Stock being offered by this prospectus. This prospectus does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and the Common Stock offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference. You may read and copy any document that we file at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00 am and 3:00 pm. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. All filings we make with the SEC are also available on the SEC’s web site at http://www.sec.gov. You may also request a copy of these filings, at no cost, by writing us at B2Digital, Incorporated, 4522 West Village Drive, Suite 215, Tampa, Florida 33624.

 

We are subject to the periodic reporting requirements of the Exchange Act, and we will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information are available for inspection and copying at the public reference room and website of the SEC referred to above. You may access our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. We have not incorporated by reference into this prospectus the information contained in, or that can be accessed through, our website, and you should not consider it to be a part of this prospectus.

 

 

 

  53  

 

 

INDEX TO FINANCIAL STATEMENTS

 

    Page
Consolidated Balance Sheets as of September 30, 2020 (unaudited) and March 31, 2020   F-2
     
Consolidated Statements of Operations (unaudited) for the three and six months ended September 30, 2020 and 2019   F-3
     
Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) for the three and six months ended September 30, 2020   F-4
     
Consolidated Statements of Stockholders’ Equity (Deficit) (unaudited) for the three and six months ended September 30, 2019   F-5
     
Consolidated Statements of Cash Flows (unaudited) for the six months ended September 30, 2020 and 2019   F-6
     
Notes to the Unaudited Consolidated Financial Statements   F-7
     
Reports of Independent Registered Public Accounting Firm   F-24
     
Consolidated Balance Sheets as of March 31, 2020 and 2019   F-26
     
Consolidated Statements of Operations for the years ended March 31, 2020 and 2019   F-27
     
Consolidated Statements of Changes of Stockholders’ Deficit for the years ended March 31, 2020 and 2019   F-28
     
Consolidated Statements of Cash Flows for the years ended March 31, 2020 and 2019   F-29
     
Notes to Consolidated Financial Statements   F-30

 

 

  F-1  

 

 

 

B2Digital, Incorporated

Consolidated Balance Sheets

 

    As of
September 30,
2020
    As of
March 31,
2020
 
Assets                
Current assets                
Cash and cash equivalents   $ 61,571     $ 46,729  
Inventory     1,445       7,256  
Deposits and prepaid expenses     5,445       3,120  
Total current assets     68,461       57,105  
                 
Property and equipment, net of accumulated depreciation     428,168       351,393  
Intangible assets, net of accumulated amortization     181,353       196,951  
Goodwill     172,254       172,254  
Total Assets   $ 850,236     $ 777,703  
                 
Liabilities & Stockholders' Deficit                
Current liabilities                
Accounts payable & accrued liabilities   $ 162,309     $ 131,700  
Deferred revenue     40,588       13,992  
Note payable- current maturity     122,800       34,162  
Note payable- in default     14,000        
Payable due for business acquisitions           15,000  
Convertible notes payable     726,953       598,150  
Derivative liabilities     599,454       58,790  
Due to shareholder     241       711  
Total current liabilities     1,666,345       852,505  
                 
Note payable- long-term     115,327       136,565  
                 
Total Liabilities     1,781,672       989,070  
                 
Commitments and contingencies (Note 13)                
                 
Stockholders' Deficit                
Preferred stock, 50,000,000 shares authorized, 40,000,000 shares of Series B designated and none outstanding; 2,000,000 shares of Series A, convertible into 240 shares of common stock issued and outstanding at September 30, 2020 and March 31, 2020, respectively; 8,000,000 shares are undesignated     20       20  
Common stock, $0.00001 par value; 5,000,000,000 shares authorized; 658,957,259 and 539,267,304 shares issued and outstanding at September 30, 2020 and March 31, 2020, respectively     6,590       5,394  
Additional paid in capital     4,643,791       3,600,197  
Accumulated deficit     (5,581,837 )     (3,816,978 )
Total Stockholders' Deficit     (931,436 )     (211,367 )
Total Liabilities and Stockholders' Deficit   $ 850,236     $ 777,703  

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

 

 

  F-2  

 

 

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,  
    2020     2019     2020     2019  
Revenue:                        
Live event revenue   $ 30,318     $ 96,275     $ 30,377     $ 181,911  
Gym revenue     105,609             165,571        
Total revenue     135,927       96,275       195,948       181,911  
                                 
Cost of sales     47,907       73,588       49,219       135,540  
                                 
Gross profit     88,020       22,687       146,729       46,371  
                                 
General and administrative corporate expenses                                
General & administrative expenses     675,129       349,297       839,917       859,810  
Depreciation and amortization expense     33,883       6,741       66,855       10,053  
Total general and administrative corporate expenses     709,012       356,038       906,772       869,863  
                                 
Loss from continuing operations     (620,992 )     (333,351 )     (760,043 )     (823,492 )
                                 
Other income (expense):                                
Gain on forgiveness of loan     5,040             10,080        
Grant income                 2,000        
Loss on settlement of debt                 (18,281 )      
Loss on forgiveness of notes receivable           (27,000 )           (27,000 )
Loss on modification of debt           (50,756 )           (50,756 )
Loss on extinguishment of debt     (64,194 )           (64,194 )      
Change in fair value of derivatives     (511,975 )           (787,407 )      
Interest expense     (77,232 )     (2,308 )     (147,014 )     (3,679 )
Total other income (expense)     (648,361 )     (80,064 )     (1,004,816 )     (81,435 )
                                 
Net loss   $ (1,269,353 )   $ (413,415 )   $ (1,764,859 )   $ (904,927 )
                                 
Basic and diluted earnings per share on net loss   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                 
Weighted average shares outstanding     597,871,392       528,339,793       574,198,491       471,101,799  

 

See accompanying notes to the unaudited consolidated financial statements.

 

 

 

  F-3  

 

 

B2Digital, Incorporated

Consolidated Statement of Changes in Stockholders' Equity (Deficit)

For the Three and Six Months Ended September 30, 2020 (Unaudited)

 

    Preferred Stock     Common Stock     Additional
Paid in
    Accumulated        
    Shares     Amount     Shares     Amount     Capital     Deficit     Total  
Balance March 31, 2020     2,000,000       20       539,267,304     $ 5,394     $ 3,600,197     $ (3,816,978 )   $ (211,367 )
                                                         
Issuance of common stock for services                 4,000,000       40       14,360             14,400  
                                                         
Conversion of notes payable                 16,292,915       163       55,459             55,622  
                                                         
Net loss                                   (495,506 )     (495,506 )
                                                         
Balance June 30, 2020     2,000,000       20       559,560,219       5,597       3,670,016       (4,312,484 )     (636,851 )
                                                         
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 statements.

 

 

 

 

 

 

 

 

 

 

 

 

  F-4  

 

 

B2 Digital Incorporated

Consolidated Statement of Changes in Stockholders' Equity

For the Three and Six Months Ended September 30, 2019 (Unaudited)

   

 

    Preferred Stock     Common Stock     Additional
Paid in
    Accumulated        
    Shares     Amount     Shares     Amount     Capital     Deficit     Total  
Balance March 31, 2019     2,000,000       20       377,620,110     $ 3,776       2,624,573       (2,479,631 )   $ 148,738  
                                                         
Sale of common stock                 13,281,250       133       84,867             85,000  
                                                         
Issuance of common stock for services                 71,000,000       710       453,690             454,400  
                                                         
Issuance of common stock as part of business combination                 14,000,000       140       89,460             89,600  
                                                         
Net Loss                                   (491,512 )     (491,512 )
                                                         
Balance June 30, 2019     2,000,000       20       475,901,360       4,759       3,252,590       (2,971,143 )     286,226  
                                                         
Sale of common stock                 49,218,750       492       314,508             315,000  
                                                         
Issuance of common stock for services                 36,500,000       365       233,235             233,600  
                                                         
Issuance of common stock as part of business combination                 9,000,000       90       57,510             57,600  
                                                         
Cancellation of outstanding shares in exchange cancellation of notes receivable - related party                 (7,500,000 )     (75 )     (47,925 )           (48,000 )
                                                         
Loss from modification of debt                             50,756             50,756  
                                                         
Net loss                                   (413,415 )     (413,415 )
                                                         
Balance September 30, 2019     2,000,000       20       563,120,110     $ 5,631       3,860,674       (3,384,558 )   $ 481,767  

 

See accompanying notes to the unaudited consolidated financial statements.

 

 

  F-5  

 

 

 

B2Digital, Incorporated

Consolidated Statements of Cash Flows (Unaudited)

 

    For the six months ended  
    September 30,     September 30,  
    2020     2019  
             
Cash Flows from Operating Activities                
Net Loss   $ (1,764,859 )   $ (904,927 )
                 
Adjustments to reconcile net loss to net cash used by operating activities:                
Stock compensation     89,333       688,000  
Depreciation and amortization expense     66,855       10,053  
Loss on forgiveness of notes receivable           27,000  
Loss on settlement of debt     18,281        
Loss on extinguishment of debt     64,194       50,756  
Gain on settlement of debt     (10,080 )      
Grant income     (2,000 )      
Amortization of debt discount     103,266        
Changes in fair value of compound embedded derivative     787,407        
Changes in operating assets & liabilities                
Prepaid expenses     (2,325 )     (19,329 )
Inventory     5,811        
Accounts payable and accrued liabilities     42,581       (36,495 )
Deferred revenue     26,597        
Net cash used by operating activities     (574,939 )     (184,942 )
                 
Cash Flows from Investing Activities                
Payments to related parties     (470 )     (174,245 )
Capital expenditures     (128,031 )     (31,985 )
Net cash used by investing activities     (128,501 )     (206,230 )
                 
Cash Flows from Financing Activities                
Proceeds from notes payable     122,766        
Proceeds from convertible notes payable     150,000        
Repayments related to payable due for business combinations     (15,000 )      
Payment to note payable     (4,484 )      
Issuance of common stock     465,000       400,000  
Net cash provided by financing activities     718,282       400,000  
                 
Increase in Cash     14,842       8,828  
                 
Cash at beginning of period     46,729       27,579  
                 
Cash (and equivalents) at end of period   $ 61,571     $ 36,407  
                 
Supplemental Cash Flow Information                
Cash paid for interest   $ 599     $  
Cash paid for income taxes   $     $  
                 
Non-cash investing and financing activities:                
    Conversion of note payable to equity   $ 490,457     $ 59,400  

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

 

 

  F-6  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2020

 

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

 

In February 2017, the Board of Directors of B2Digital, Incorporated ("B2Digital" or the "Company") approved a complete restructuring, new management team and strategic direction for the Company. Capitalizing on its history in television, video and technology, the Company is now forging ahead and becoming a full-service live event sports company.

 

B2Digital's first strategy is to build an integrated live event Minor League for the Mixed Martial Arts (MMA) marketplace. B2Digital will be creating and developing Minor League champions that will move on to the MMA Major Leagues from the B2 Fighting Series (B2FS). This will be accomplished by sponsoring operating live events, acquiring existing MMA promotions and then inviting those champions to the B2FS Regional and National Championship Series. B2Digital will own all media and merchandising rights and digital distribution networks for the B2FS.

 

2017 marked the kickoff of the B2FS by sponsoring and acquiring MMA regional promotion companies for the development of the B2FS. The second strategy is that the Company plans to add additional sports, leagues, tournaments and special events to its live event business model. This will enable B2Digital to capitalize on their core technologies and business models that will be key to broadening the revenue base of the Company's live event core business. B2Digital will also be developing and expanding the B2Digital live event systems and technologies. These include systems for event management, digital ticketing sales, digital video distribution, digital marketing, Pay-Per View (PPV), fighter management, merchandise sales, brand management and financial control systems.

 

Basis of Presentation and Consolidation

 

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

 

The consolidated financial statements, which include the accounts of the Company and its seven wholly-owned subsidiaries, are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions have been eliminated. The consolidated financial statements, which include the accounts of the Company and its seven wholly-owned subsidiaries, and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and presented in US dollars. The fiscal year end is March 31.

 

NOTE 2 - ACCOUNTING POLICIES

 

The significant accounting policies of the Company are as follows:

 

Basis of Accounting

The interim consolidated financial statements are condensed and should be read in conjunction with the Company’s latest annual financial statements; interim disclosures generally do not repeat those in the annual statements. The interim unaudited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

 

 

  F-7  

 

 

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.

 

 

  F-8  

 

 

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.

 

 

 

  F-9  

 

 

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  

 

 

 

  F-10  

 

 

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.

 

 

 

  F-11  

 

 

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  

 

 

 

 

  F-12  

 

 

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.

 

 

 

  F-13  

 

 

 

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.

 

 

 

 

 

  F-14  

 

 

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.

 

 

 

  F-15  

 

 

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.

 

 

 

 

 

  F-16  

 

 

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.

 

 

 

  F-17  

 

 

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 )

 

 

 

  F-18  

 

 

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  

 

 

 

  F-19  

 

 

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.

 

 

 

  F-20  

 

 

 

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.

  

 

 

  F-21  

 

 

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.

 

 

 

 

 

  F-22  

 

 

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.

 

 

 

 

  F-23  

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board and Management

of B2Digital Incorporated

 

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheet of B2Digital Incorporated (the Company) as of March 31, 2020 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year ended March 31, 2020, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and the results of its operations and its cash flows for the year ended March 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

 

Explanatory Paragraph- Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses. For the year ended March 31, 2020 the Company had a net loss of $1,337,347, had net cash used in operating activities of $565,845, and had negative working capital of $775,238. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provided a reasonable basis for our opinion.

 

/s/ Assurance Dimensions

 

We have served as the Company’s auditor since 2019.

Margate, Florida

August 19, 2020

 

 

 

  F-24  

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Stockholders of B2 Digital Incorporated

 

Opinion on the Financial Statements

 

We have audited the accompanying balance sheet of B2 Digital Incorporated (the “Company”) as of March 31, 2019, and the related statements of operations, changes in stockholders’ equity and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2019, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has incurred net losses since its inception. This factor, and the need for additional financing in order for the Company to meet its business plans raises substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified with respect to that matter.

 

We have served as the Company’s auditor since 2019.

 

Tampa, Florida
August 2, 2019

 

 

 

4806 West Gandy Boulevard • Tampa, Florida 33611 • 813.440.6380

 

 

 

  F-25  

 

 

 

B2Digital, Incorporated

Consolidated Balance Sheets

 

   

As of

March 31, 2020

   

As of

March 31, 2019

 
Assets            
Current assets                
Cash and cash equivalents   $ 46,729     $ 27,579  
Inventory     7,256        
Deposits and prepaid expenses     3,120       6,260  
Note receivable- related party           65,416  
Total current assets     57,105       99,255  
                 
Property and equipment, net of accumulated depreciation     351,393       55,065  
Intangible assets, net of accumulated amortization     196,951        
Goodwill     172,254       193,045  
Total Assets   $ 777,703     $ 347,365  
                 
Liabilities & Stockholders' Equity (Deficit)                
Current liabilities                
Accounts payable & accrued liabilities   $ 131,700     $ 109,627  
Deferred revenue     13,992        
Note payable- current maturity     34,162       14,000  
Payable due for business acquisitions     15,000        
Note payable- in default           15,000  
Convertible notes payable, net of debt discount     598,150        
Derivative liabilities     58,790        
Due to shareholder     711        
Total current liabilities     852,505       138,627  
                 
Note payable- long-term     136,565       60,000  
                 
Total Liabilities     989,070       198,627  
                 
Commitments and contingencies (Note 5)                
                 
Stockholders' Equity (Deficit)                
Preferred stock, 50,000,000 shares authorized, 40,000,000 shares designated of Series B; 2,000,000 shares designated of Series A, convertible into 240 shares of common stock issued and outstanding at March 31, 2020 and 2019, respectively; 8,000,000 shares are undesignated     20       20  
Common stock, $0.00001 par value; 5,000,000,000 shares authorized; 539,267,304 and 377,620,110 shares issued and outstanding at March 31, 2020 and 2019, respectively     5,394       3,776  
Additional paid in capital     3,600,197       2,624,573  
Accumulated deficit     (3,816,978 )     (2,479,631 )
Total Stockholders' Equity (Deficit)     (211,367 )     148,738  
Total Liabilities and Stockholders' Equity (Deficit)   $ 777,703     $ 347,365  

 

 

See accompanying notes to the consolidated financial statements.

 

  F-26  

 

 

B2Digital, Incorporated

Consolidated Statements of Operations

 

    For the years ended  
    March 31,     March 31,  
    2020     2019  
Revenue:                
Live event revenue   $ 487,229     $ 346,688  
Gym revenue     109,506        
Total revenue     596,735       346,688  
                 
Cost of sales     350,976       251,550  
                 
Gross profit     245,759       95,138  
                 
General and administrative corporate expenses                
General & administrative expenses     1,463,417       210,890  
Depreciation and amortization expense     62,740       12,951  
Total general and administrative corporate expenses     1,526,157       223,841  
                 
Loss from operations     (1,280,398 )     (128,703 )
                 
Other income (expense):                
Gain on bargain purchase     52,583        
Loss on debt forgiveness     (81,887 )      
Loss on modification of debt     (50,756 )      
Loss on disposition of subsidiary     (20,790 )      
Gain on change in fair value of derivatives     119,902        
Interest expense     (76,001 )     (5,108 )
Total other income (expense)     (56,949 )     (5,108 )
                 
Net loss   $ (1,337,347 )   $ (133,811 )
                 
Basic and diluted earnings per share on net loss   $ (0 )   $ (0 )
                 
Weighted average shares outstanding     505,458,544       337,444,728  

 

 

See accompanying notes to the consolidated financial statements.

 

  F-27  

 

 

B2Digital, Incorporated

Consolidated Statement of Changes in Stockholders' Equity (Deficit)

For the Years Ended March 31, 2020 and 2019

 

    Preferred Stock     Common Stock    

Additional

Paid in

    Accumulated        
    Shares     Amount     Shares     Amount     Capital     Deficit     Total  
Balance March 31, 2018     2,000,000     $ 20       263,075,044     $ 2,631     $ 2,381,068     $ (2,345,820 )   $ 37,899  
                                                         
Sale of common stock for cash                 17,500,000       175       134,825             135,000  
                                                         
Issuance of common stock for services                 80,750,000       808       51,368             52,176  
                                                         
Issuance of common stock for conversion of debt                 16,295,066       162       57,312             57,474  
                                                         
Net Loss                                   (133,811 )     (133,811 )
                                                         
Balance March 31, 2019     2,000,000     $ 20       377,620,110     $ 3,776     $ 2,624,573     $ (2,479,631 )   $ 148,738  
                                                         
Sale of common stock for cash                 62,500,000       625       399,375             400,000  
                                                         
Issuance of common stock for services                 125,383,244       1,254       686,746             688,000  
                                                         
Issuance of common stock as part of business combination                 29,000,000       290       185,110             185,400  
                                                         
Cancellation of outstanding shares in exchange cancellation of notes receivable - related party                 (29,454,800 )     (294 )     (157,479 )           (157,773 )
                                                         
Loss from modification of debt                             50,756             50,756  
                                                         
Repurchase of outstanding shares (cancelled)                 (25,781,250 )     (257 )     (188,884 )           (189,141 )
                                                         
Net Loss                                   (1,337,347 )     (1,337,347 )
                                                         
Balance March 31, 2020     2,000,000     $ 20       539,267,304     $ 5,394     $ 3,600,197     $ (3,816,978 )   $ (211,367 )

 

 

See accompanying notes to the consolidated financial statements.

 

  F-28  

 

 

B2Digital, Incorporated

Consolidated Statements of Cash Flows

 

    For the years ended  
    March 31,     March 31,  
    2020     2019  
Cash Flows from Operating Activities                
Net Loss   $ (1,337,347 )   $ (133,811 )
                 
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock compensation     688,000       51,368  
Depreciation and amortization     62,739       12,951  
Gain on bargain purchase     (52,583 )      
Loss on receivable forgiveness     81,887        
Loss on modification of debt     50,756        
Loss on disposition of subsidiary     20,791        
Amortization of debt discount     51,343        
Gain on changes in fair value of compound embedded derivative     (119,902 )      
Changes in operating assets & liabilities                
Prepaid expenses and other current assets     3,140       (5,126 )
Inventory     2,744       1,740  
Accounts payable and accrued liabilities     (10,983 )     9,818  
Deferred revenue     (6,430 )      
Deferred compensation           1,600  
Net cash used in operating activities     (565,845 )     (61,460 )
                 
Cash Flows from Investing Activities                
Business acquisition, net of cash acquired     (42,609 )      
Payments to related parties     (173,533 )     (65,416 )
Capital expenditures     (84,688 )     (3,260 )
Net cash used in investing activities     (300,830 )     (68,676 )
                 
Cash Flows from Financing Activities                
Proceeds from convertible notes     725,499       52,450  
Issuance of common stock     400,000       133,832  
Repayment on notes payable     (20,532 )     (45,035 )
Purchase of outstanding common stock     (189,141 )      
Payment of acquisition payable     (30,000 )      
Net cash provided by financing activities     885,826       141,247  
                 
Increase in Cash     19,150       11,111  
                 
Cash at beginning of period     27,579       16,468  
                 
Cash (and equivalents) at end of period   $ 46,729     $ 27,579  
                 
Supplemental Cash Flow Information                
Cash paid for interest   $     $ 1,443  
Cash paid for income taxes   $     $  
                 
Non-cash investing and financing activities:                
Cancellation of outstanding shares in exchange cancellation of notes receivable - related party   $ 157,773     $  
Assets acquired in business combination through the issuance of stock   $ 185,400     $  
Acquisition payable from sellers due to acquisitions   $ 45,000     $  
Initial recognition of derivative liability as debt discount   $ 178,692     $  
Assets acquired on acquisition   $ 428,747     $  
Liabilities acquired on acquisition   $ 155,739     $  
Conversion of note payable to equity   $     $ 59,400  

 

See accompanying notes to the consolidated financial statements.

 

  F-29  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 accompanying consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).

 

 

 

  F-30  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

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 March 31, 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. For the year ended March 31, 2020, there were no impairment charges.

 

 

 

  F-31  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 March 31, 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.

 

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.

 

 

 

  F-32  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

Concentration of Revenues

The majority of revenues are received from live events, which primarily include ticket and beverage sales before and during the live events. Sponsorship revenue is also recognized when the live event takes place. Any revenue received for events that have yet to take place are recorded in deferred revenue. Gym revenue comprises primarily of membership dues and subscription. Other gym revenue includes personal training, group fitness and meal planning.

 

Impairment of Long-Lived Assets

In accordance with ASC 360-10, the Company, on a regular basis, reviews the carrying amount of long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. The Company determines if the carrying amount of a long-lived asset is impaired based on anticipated undiscounted cash flows, before interest, from the use of the asset. In the event of impairment, a loss is recognized based on the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined based on appraised value of the assets or the anticipated cash flows from the use of the asset, discounted at a rate commensurate with the risk involved. There were no impairment charges recorded during the years ended March 31, 2020 and 2019.

 

Inventory

Inventory includes beverages, supplements and merchandise available for sale at the gym. 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 March 31, 2020 and 2019, the Company had outstanding balances of Finished Goods Inventory of $7,256 and $0, 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 March 31, 2020, the number of potentially dilutive securities was 77,026,829 shares indexed to convertible notes. There were no potentially dilutive securities as of March 31, 2019.

 

The following table sets for the computation of basic and diluted earnings per share the fiscal years ended March 31, 2020 and 2019:

  

   

March 31,

2020

   

March 31,

2019

 
Basic and diluted                
Net loss   $ (1,337,347 )   $ (133,811 )
                 
Net loss per share                
Basic and diluted   $ (0.00 )   $ (0.00 )
                 
Weighted average number of shares outstanding:                
Basic & diluted     505,458,544       337,444,728  

 

 

 

  F-33  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 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 March 31, 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 February 2016, FASB issued ASC 842 that requires lessees to recognize lease assets and corresponding lease liabilities on the balance sheet for all leases with terms of more than 12 months. The update, which supersedes existing lease guidance, will continue to classify leases as either finance or operating, with the classification determining the pattern of expense recognition in the income statement.

 

The ASU will be effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted, and is applicable on a modified retrospective basis with various optional practical expedients. The Company has assessed the impact of this standard. The Company’s current leases as of the balance sheet date do not fall under this guidance as they are month-to-month leases.

 

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.

 

 

 

  F-34  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

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.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis. For the year ended March 31, 2020, the Company had a net loss of $1,337,347, had net cash used in operating activities of $565,845, had negative working capital of $775,238, an accumulated deficit of $3,816,978, and $211,367 in stockholders’ deficit. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. The Company’s ability to continue as a going concern is dependent upon its ability to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due, to fund possible future acquisitions, and to generate profitable operations in the future. Management plans to provide for the Company’s capital requirements by continuing to issue additional equity and debt securities. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved, the Company will have sufficient funds to execute its business plan or generate positive operating results. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

NOTE 4 – REVENUE

 

The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. The majority of revenues are received from live events, which primarily include ticket and beverage sales before and during the live events. Sponsorship revenue is also recognized when the live event takes place. Any revenue received for events that have yet to take place are recorded in deferred revenue. Gym revenue comprises primarily of membership dues and subscription. Other gym revenue includes personal training, group fitness and meal planning.

 

Information about the Company’s net sales by revenue type for the years ended March 31, 2020 and 2019 are as follows:

 

    For the years ended  
    March 31,     March 31,  
    2020     2019  
Live events   $ 487,229     $ 346,688  
Gym revenue     109,506        
Net sales   $ 596,735     $ 346,688  

 

 

 

  F-35  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

NOTE 5 – PROPERTY AND EQUIPMENT

 

Property and equipment, net, consisted of the following at March 31, 2020 and 2019:

 

    As of     As of  
    March 31, 2020     March 31, 2019  
             
Gym equipment   $ 163,147     $  
Cages     124,025       46,025  
Event assets     61,319       8,987  
Production equipment     30,697        
Electronics hardware and software     11,845       6,960  
Trucks trailers and vehicles     11,210       9,500  
      402,243       71,472  
Less:  accumulated depreciation     (50,850 )     (16,407 )
    $ 351,393     $ 55,065  

 

Depreciation expense related to these assets for the years ended March 31, 2020 and 2019 amounted to $34,443 and $12,951, respectively.

 

NOTE 6 – INTANGIBLE ASSETS

 

Intangible assets, net, consisted of the following at March 31, 2020:

 

    As of  
    March 31, 2020  
       
Licenses   $ 142,248  
Customer relationships     83,000  
      225,248  
Less:  accumulated amortization     (28,297 )
    $ 196,951  

 

Licenses are amortized over five years, whereas customer relationships are amortized over three years. Amortization expense related to these assets for the years ended March 31, 2020 amounted to $28,297.

 

 

 

  F-36  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

Estimated amortization expense for each of the next five years:
       
 Fiscal year ended March 31, 2021   $ 56,116  
 Fiscal year ended March 31, 2022     56,116  
 Fiscal year ended March 31, 2023     49,200  
 Fiscal year ended March 31, 2024     28,450  
 Fiscal year ended March 31, 2025     7,069  
    $ 196,951  

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

B2 Management, LLC (“B2 Management”) has as its sole member the Chief Executive Officer and Chairman of B2Digital. During the year ended March 31, 2020, B2 Management received $173,533 in advances. On September 27, 2019, the Company and B2 Management Group LLC (“B2MG”) entered into an agreement whereby B2MG agreed to return 7,500,000 shares of the Company’s common stock in exchange for the cancellation of $75,000 owed by B2MG to the Company. The Company recorded a loss on debt forgiveness in the amount of $27,000 related to this transaction. On December 22, 2019, the Company and B2MG entered into an agreement whereby B2MG agreed to return 21,954,800 shares of the Company’s common stock in exchange for the cancellation of $164,660 owed by B2MG to the Company. At the date of the agreement the shares were valued at $0.005 per share or $109,773. As a result, the Company recorded a loss on settlement of debt in the amount of $54,668. As of March 31, 2020 and 2019, the Company has an uncollateralized, non-interest-bearing note receivable of $0 and $65,416, respectively, from B2 Management that is due upon demand. During the years ended March 31, 2020 and 2019, the Company paid B2 Management $87,850 and $0 in management fees, respectively. The Company does not have a formal management agreement with B2 Management.

 

NOTE 8 – BUSINESS ACQUISITIONS

 

The Company recorded $96,510 in goodwill resulting from its November 3, 2017 acquisition of Hard Rock Promotions LLC. Additionally, the Company recorded $75,745 in goodwill resulting from its November 21, 2017 acquisition of Colosseum Combat LLC. On January 9, 2018 the Company recorded $20,790 in goodwill resulting from its acquisition of Blue Grass MMA LLC.

 

On November 11, 2019, the Company disposed of Blue Grass MMA LLC as a subsidiary. As a result, the Company recorded a loss on disposal of subsidiary in the amount of $20,790.

 

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 March 31, 2020, the $10,000 cash consideration has been paid in full.

 

 

 

  F-37  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

Consideration        
         
Cash   $ 20,000  
6,000,000 shares of common stock issued to the sellers valued using an observable market price     39,000  
Total consideration   $ 59,000  

 

Fair value of net identifiable assets (liabilities) acquired        
         
Intangible assets - licenses for the right to hold fight events   $ 59,000  

 

The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The intangible assets - licenses are being amortized over their estimated life, currently expected to be five years.

 

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 March 31, 2020, the $10,000 cash consideration has been paid in full.

 

Consideration        
         
Cash   $ 20,000  
8,000,000 shares of common stock issued to the sellers valued using an observable market price     62,400  
Total consideration   $ 82,400  
         
Fair values of identifiable net assets:        
Property & equipment:        
Cages   $ 54,000  
Event asset (barriers)     3,420  
Truck/trailer     1,710  
Venture lighting system     14,250  
Total identifiable net assets     73,380  
         
Intangible assets:        
Licenses for the right to hold fight events     34,048  
         
Fair value of liabilities assumed:        
Credit card liability     (25,028 )
Fair value of net identifiable assets (liabilities) acquired   $ 82,400  

 

 

 

  F-38  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The intangible assets - licenses are being amortized over their estimated life, currently expected to be five years.

 

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 March 31, 2020, the $10,000 cash consideration has been paid in full.

 

Consideration      
Cash   $ 20,000  
9,000,000 shares of common stock issued to the sellers valued using an observable market price     52,200  
Total consideration   $ 72,200  
         
Fair values of identifiable net assets:        
Property & equipment:        
Cages   $ 22,000  
Event asset (tables)     1,000  
Total property & equipment     23,000  
         
Intangible assets:        
Licenses for the right to hold fight events     49,200  
         
Total fair value of identifiable net assets   $ 72,200  

 

The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The intangible assets - licenses are being amortized over their estimated life, currently expected to be five years.

 

 

 

  F-39  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

One More Gym LLC

 

On January 6, 2020, the Company completed an acquisition of 100% of the equity interest in One More Gym LLC (“1MG”), a gym. The purchase price was $30,000 in cash and 6,000,000 shares of Restricted Common Stock (valued at $31,800 or $0.0053 per share), 6,000,000 shares to be issued to BHC Management LLC, the seller of the equity interest in the acquisition. As of March 31, 2020, the Company owes $15,000 in cash consideration to BHC Management.

 

Consideration      
Cash   $ 30,000  
9,000,000 shares of common stock issued to the sellers valued using an observable market price     31,800  
Total consideration   $ 61,800  
         
Fair values of identifiable net assets:        
Property & equipment:        
Cash   $ 2,392  
Gym equipment     149,703  
Inventory     10,000  
         
Intangible assets:        
Customer relationships     83,000  
         
Fair value of liabilities assumed:        
Liabilities     (130,712 )
Fair value of net identifiable assets (liabilities) acquired   $ 114,383  
         
Gain on bargain purchase   $ 52,583  

 

The Company analyzed the acquisition under applicable guidance and determined that the acquisition should be accounted for as a business combination. The intangible assets – customer relationships are being amortized over their estimated life, currently expected to be three years. Since the consideration for the acquisition was less than the fair value of the net identifiable assets (liabilities), the Company was required to record a gain on bargain purchase in the amount of $52,583.

 

 

 

  F-40  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

NOTE 9 – NOTES PAYABLE

 

The following is a summary of notes payable as of March 31, 2020 and 2019:

 

    As of     As of  
    March 31,     March 31,  
    2020     2019  
Notes payable - current maturity:                
Emry Capital $14,000, 4% loan with principal and interest due April, 2020   $ 14,000     $ 14,000  
Notes payable – in default:                
Good Hunting $15,000, 7.5% loan with principal and interest due March 31, 2019           15,000  
Notes payable – long term:                
WLES LP LLC $60,000, 5% loan due January 15, 2022     60,000       60,000  
Loan from Brian Cox     21,970        
Small Business Loan ($20,162, current maturity)     74,757        
Total notes payable     170,727       89,000  
Less: short-term     (34,162 )     (29,000 )
Total long-term notes payable   $ 136,565     $ 60,000  

 

On August 31, 2019, WLES LP LLC agreed to sign an amendment which extended the maturity date of the note and added conversion option. This amendment gave rise to a modification because a substantive conversion option was added to the contract. Under ASC 470-50-40-10, when a modification or an exchange of debt instruments adds a substantive conversion option debt extinguishment accounting is required. As a result, the Company recorded a loss on modification of debt in the amount of $50,756.

 

The Company and Emry Capital have a dispute of the amount owed under the Note Agreement. Emry Capital believes the amount owed under the agreement is $70,000. However, the Company believes only $14,000 is owed.

 

NOTE 10 – CONVERTIBLE NOTE PAYABLE

 

The following is a summary of convertible notes payable as of March 31, 2020:

 

Note Reference   Inception Date   Maturity     Coupon     Face Value     Unamortized Discount     Carrying Value  
Note 1   10/4/2019     10/4/2020       8%     $ 82,000     $ 18,868     $ 63,132  
Note 2   10/31/2019     12/15/2020       8%       208,000       53,298       154,702  
Note 3   12/5/2019     12/5/2020       8%       62,000       13,021       48,979  
Note 4   12/31/2019     12/31/2020       8%       62,000       9,181       52,819  
Note 5   1/27/2020     1/27/2021       8%       184,000       26,509       157,491  
Note 6   2/19/2020     2/19/2021       8%       78,000       15,826       62,174  
Note 7   3/10/2020     3/10/2021       8%       78,000       19,147       58,853  
                        $ 754,000     $ 155,850     $ 598,150  

 

 

 

  F-41  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

Between October 4, 2019 and March 10, 2020, the Company issued to GS Capital Partners, LLC, an accredited investor (“GS Capital”), Convertible Promissory Notes aggregating a principal amount of $734,000. The Company received an aggregate net proceeds of $725,500 after $28,500 in original note discount. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the date on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment to GS Capital as set forth in the agreements.

 

The outstanding principal amount of the Notes is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months of the term of the Notes. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest trading prices of the Company’s common stock.

 

Accounting Considerations

 

The Company has accounted for the Notes as a financing transaction, wherein the net proceeds that were received were allocated to the financial instrument issued. Prior to making the accounting allocation, the Company evaluated the agreement under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The material embedded derivative features consisted of the embedded conversion option and default puts. The conversion option and default puts bear risks of equity which were not clearly and closely related to the host debt agreement and required bifurcation. The contracts do not permit the Company to settle in registered shares and the contracts also contain make-whole provisions both of which preclude equity classification. Current accounting principles that are also provided in ASC 815 do not permit an issuer to account separately for individual derivative terms and features that require bifurcation and liability classification. Rather, such terms and features must be and were bundled together and fair valued as a single, compound embedded derivative.

 

Based on the previous conclusions, the Company allocated the cash proceeds first to the derivative components at its fair value with the residual allocated to the host debt contract, as follows:

 

    Note 1     Note 2     Note 3     Note 4     Note 5     Note 6     Note 7     Total  
Compound embedded derivative   $ 26,395     $ 68,030     $ 15,893     $ 10,812     $ 25,834     $ 14,095     $ 17,633     $ 178,692  
Convertible notes payable     48,605       133,970       44,107       49,188       152,666       60,905       57,367       546,808  
Original issue discount     7,000       6,000       2,000       2,000       5,500       3,000       3,000       28,500  
Face value   $ 82,000     $ 208,000     $ 62,000     $ 62,000     $ 184,000     $ 78,000     $ 78,000     $ 754,000  

 

 

 

  F-42  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

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, interest expense and accrued interest for the year ended March 31, 2020 is as follows:

 

Note    

Interest

Expense

   

Accrued Interest

Balance

   

Amortization of

Debt Discount

 
  Note 1     $ 3,217     $ 3,217     $ 14,526  
  Note 2       5,956       5,956       20,732  
  Note 3       1,590       1,590       4,872  
  Note 4       1,237       1,237       3,631  
  Note 5       2,581       2,581       4,825  
  Note 6       701       701       1,269  
  Note 7       359       359       1,488  
        $ 15,641     $ 15,641     $ 51,343  

 

NOTE 11 – DERIVATIVE FINANCIAL INSTRUMENTS

 

The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of March 31, 2020:

 

    March 31, 2020  
The financings giving rise to derivative financial instruments   Indexed
Shares
    Fair
Values
 
Compound embedded derivatives     77,026,829     $ (58,790 )
Total     77,026,829     $ (58,790 )

 

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 year ended March 31, 2020:

 

The financings giving rise to derivative financial instruments and the income effects:      
Compound embedded derivatives   $ 119,902  
Total gain (loss)   $ 119,902  

 

The Company’s Convertible Promissory Notes issued on October 4, 2019, October 31, 2019, December 5, 2019, December 31, 2019, January 27, 2020, February 19, 2020 and March 10, 2020 respectively, gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.

 

 

 

  F-43  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

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 March 31, 2020.

 

    March 31, 2020  
Balance at April 1, 2019   $  
Issuances:        
Compound embedded derivatives     178,692  
Gain on changes in fair value inputs and assumptions reflected in income     (119,902 )
Balance at March 31, 2020   $ 58,790  

 

 

 

  F-44  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

NOTE 12 – 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

 

2018 Common Stock Issuances

 

On April 19, 2018, the Company issued 3,478,400 shares of common stock in exchange for the conversion of a Note in the amount of $38,020.

 

On April 25, 2018, the Company issued 65,000,000 shares of common stock in exchange for services valued at $6,500 or $0.0001 per share.

 

On September 10, 2018, the Company issued 9,000,000 shares of common stock in exchange for services valued at $45,000 or $0.005 per share.

 

On December 10, 2018, the Company sold 6,250,000 shares of common stock for $50,000 or $0.008 per share.

 

On January 15, 2019, the Company sold 6,250,000 shares of common stock for $50,000 or $0.008 per share.

 

On February 6, 2019, the Company issued 6,000,000 shares of common stock in exchange for services valued at $600 or $0.00001 per share.

 

On February 21, 2019, the Company issued 12,816,666 shares of common stock in exchange for the conversion of a Note in the amount of $19,454.

 

On March 19, 2019, the Company sold 3,125,000 shares of common stock for $25,000 or $0.008 per share.

 

On March 19, 2019, the Company issued 750,000 shares of common stock in exchange for services valued at $75 or $0.00001 per share.

 

On March 26, 2019, the Company sold 1,875,000 shares of common stock for $10,000 or $0.008 per share.

 

 

 

  F-45  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

2019 Common Stock Issuances

 

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 $62,400 or $0.0078 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 shares of the outstanding stock, valued at $48,000 in exchange for the cancellation of $75,000 in Notes Receivable. There shares were cancelled and not returned to treasury.

 

On November 27, 2019, the Company issued 9,000,000 shares of common stock valued at $52,200 or $0.0058 per share in exchange for the acquisition of Strike Hard Productions LLC.

 

On December 3, 2019, the Company purchased 14,062,500 shares of stock back from GS Capital in exchange for the payment of $101,250 in cash.

 

 

 

  F-46  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

On December 22, 2019, B2MG returned 21,954,800 shares of the Company’s common stock, valued at $109,773 in exchange for the cancellation of $164,441 owed by B2MG to the Company. There shares were cancelled and not returned to treasury.

 

On January 6, 2020, the Company issued 6,000,000 shares of common stock valued at $31,800 or $0.0053 per share in exchange for the acquisition of One More Gym LLC.

 

On January 28, 2020, the Company purchased 11,718,750 shares of stock back from GS Capital in exchange for the payment of $87,891 in cash.

 

NOTE 13 – 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.

 

NOTE 14 – 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 March 31, 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 15 – INCOME TAXES

 

The Company accounts for income taxes in accordance with the provisions of FASB ASC 740, Accounting for Uncertainty in Income Taxes. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Income tax expense for income tax is as follows:

 

    Year ended
March 31, 2020
    Year ended
March 31, 2019
 
Federal   $     $  
Current            
Deferred            
Total Federal            
State                
Current            
Deferred            
Total State            
Total income tax expense   $     $  

 

 

  F-47  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

 

A reconciliation of the statutory tax rates and the effective tax rates for the years ended March 31, 2020 and 2019 is as follows

 

    Year ended
March 31, 2020
    Year ended
March 31, 2019
 
             
Statutory rate     -21.0%       -21.0%  
Change in valuation allowance     23.7%       24.5%  
State income taxes (net of federal tax benefit)     -3.5%       -3.5%  
Permanent differences (primarily gain from bargain purchase)     0.8%       0.0%  
Effective rate     0.0%       0.0%  

 

The tax effects of temporary difference that give rise to significant portions of the Company’s deferred tax assets and liabilities as of March 31:

 

    Year ended     Year ended  
    March 31, 2020     March 31, 2019  
Deferred tax assets:                
Net operating loss carryover   $ 473,374     $ 249,845  
Total     473,374       249,845  
Valuation allowance     (459,538 )     (249,845 )
Net deferred assets     13,836        
Deferred tax liabilities:                
Property and equipment     (10,683 )      
Intangible assets     (3,153 )      
Net deferred assets and liabilities     (13,836 )      
Total deferred tax liabilities   $     $  

 

A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowances for the years ended March 31, 2020, and 2019 have been applied to offset the deferred tax assets in recognition of the uncertainty that such tax benefits will be realized as the Company continues to incur losses. The differences between book income and tax income primarily relate to the temporary differences from depreciation and amortization.

 

At March 31, 2020 the Company has available net operating loss carry forwards for federal and state income tax reporting purposes of $402,408 which expire at various dates between 2033 and 2038. Additionally at March 31, 2020 the Company has available net operation loss carry forwards for federal and state income tax reporting purposes of $1,528,012 which have an indefinite life.

 

NOTE 16 – SUBSEQUENT EVENTS

 

Loan Payment

 

On May 8, 2020, the Company entered into an agreement with WLES LP to repay $30,000 in principal with 12,000,000 shares of its common stock.

 

 

 

  F-48  

 

 

B2DIGITAL, INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2020

 

Convertible Promissory Note

 

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

 

The outstanding principal amount of the note is convertible into the Company’s common stock at the lender’s option at $0.01 per share for the first six months of the term of the note. After the six-month anniversary, the conversion price is equal to 63% of the average of the three lowest trading prices of the Company’s common stock. The initial accounting for this note is not completed.

 

Common Stock Issuances

 

On April 23, 2020, the Company issued 4,292,915 shares of stock to GS Capital in exchange for the conversion of $7,341 in convertible note principal.

 

On May 8, 2020, the Company issued 12,000,000 shares of stock to WLES LP LLC in exchange for the conversion of $30,000 in convertible note principal.

 

On June 16, 2020, the Company issued 4,000,000 shares of common stock to Veyo Partners LLC in exchange for investor relation services valued at $14,400 or $0.0036 per share.

 

On August 18, 2020, the Company sold 13,333,334 shares of common stock to GHS INVESTMENTS LLC for $100,000, or $0.0075 per share.

 

On August 18, 2020, the Company issued 5,071,885 shares of common stock to GS Capital in conversion of $7,500 in principal and $488 of accrued interest.

 

 

 

 

 

 

 

 

 

  F-49  

 

 

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13 - Other Expenses of Issuance and Distribution

 

We estimate that expenses in connection with the distribution described in this Registration Statement (other than brokerage commissions, discounts or other expenses relating to the sale of the shares by the Selling Security Holder) will be as set forth below. We will pay all of the expenses with respect to the distribution, and such amounts, with the exception of the Securities and Exchange Commission registration fee, are estimates.

 

   

Amount

To be Paid

 
SEC registration fee   $ 545.50  
State filing fees   $ 1,000.00  
Edgarizing costs   $ 1,000.00  
Accounting fees and expenses   $ 5,000.00  
Legal fees and expenses   $ 5,000.00  
Total   $ 12,545.50  

 

Item 14 - Indemnification of Directors and Officers

 

We have entered into indemnification agreements with each of our directors, executive officers and other key employees. The indemnification agreements will require us to indemnify our directors to the fullest extent permitted by Delaware law. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

We do not maintain any policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment under any circumstances.

 

Item 15 - Recent Sales of Unregistered Securities

 

Shares Sold for Acquisitions

 

On November 20, 2017, the Company completed its acquisition of 100% of the equity interest in Colosseum Combat LLC in exchange for 8,000,000 shares of the Company’s Common Stock.

 

 

 

 

  II-1  

 

 

Effective May 1, 2019, the Company completed its acquisition of 100% of the equity interest in United Combat League, LLC for $20,000 in cash and 6,000,000 shares of the Company’s Common Stock.

 

Effective June 29, 2019, the Company completed an acquisition of 100% of the equity interest in Pinnacle Combat LLC. The purchase price was $20,000 in cash and 8,000,000 shares of the Company’s Common Stock

 

On September 1, 2019, the Company completed an acquisition of 100% of the equity interest in Strike Hard Productions LLC. The purchase price was $20,000 in cash and 9,000,000 shares of the Company’s Common Stock.

 

On January 6, 2020, the Company completed an acquisition of 100% of the equity interest in One More Gym LLC. The purchase price was $30,000 in cash and 6,000,000 shares of the Company’s Common Stock.

 

The shares to be issued pursuant to these acquisitions were sold and will be sold in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act.

 

Shares Sold Under Regulation A

 

From May 22, 2019 until the present, the Company sold an aggregate 128,900,002 shares of its Common Stock in exchange for an aggregate $898,000 in cash and services.

 

These sales were made without registration under the Securities Act by reason of the exemption from registration afforded by the provisions of Regulation A of the Securities Act. There were no sales commissions paid pursuant to this transaction.

 

Convertible Notes

 

From October 4, 2019 to the present, the Company issued an aggregate of $1,532,500 convertible notes to two separate investors. Each of the notes is convertible into shares of the Company’s Common Stock based on a discount to the market price. The Company has agreed to pay interest on the unpaid principal balance at the rate of 8% per annum from the date on which each of the notes are issued until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. The Company has the right to prepay each of the notes, provided it makes a payment to the note holder as set forth in the agreements. The outstanding principal amount of each 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 each 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.

 

The Notes were sold in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act, based in part on the representations of the investor. There were no sales commissions paid pursuant to this transaction.

 

Note Conversions

 

On April 19, 2018, the Company issued 3,478,400 shares of common stock in exchange for the conversion of a note in the amount of $38,020.

 

On February 21, 2019, the Company issued 12,816,666 shares of common stock in exchange for the conversion of a Note in the amount of $19,454.

 

On May 8, 2020, a note holder converted $30,000 of its $60,000 notes payable into 12,000,000 shares of common stock.

 

From August 20, 2020 to the present, a note holder has converted an aggregate of $308,722 in accrued and unpaid interest into 89,639,643 shares of the Company’s Common Stock.

 

 

 

 

  II-2  

 

 

On November 25, 2020, a note holder converted $38,103 of its notes payable into 15,120,623 shares of common stock.

 

On December 22, 2020, a note holder converted $22,042 of its notes payable into 8,330,328 shares of common stock.

 

The shares issued pursuant to the note conversions were issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act, based in part on the representations of the investor. There were no sales commissions paid pursuant to this transaction.

 

Shares Issued for Services

 

On April 25, 2018, the Company issued 65,000,000 shares of common stock in exchange for services valued at $6,500 or $0.0001 per share.

 

On September 10, 2018, the Company issued 9,000,000 shares of common stock in exchange for services valued at $45,000 or $0.005 per share.

 

On February 6, 2019, the Company issued 6,000,000 shares of common stock in exchange for services valued at $600 or $0.00001 per share.

 

On March 19, 2019, the Company issued 750,000 shares of common stock in exchange for services valued at $75 or $0.00001 per share.

 

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 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 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 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 June 16, 2020, the Company issued 4,000,000 shares of common stock to a consultant in exchange for investor relation services valued at $14,400 or $0.0036 per share.

 

On November 29, 2020, the Board of Directors (with Mr. Bell abstaining) approved the issuance of 40,000,000 shares of Series B Preferred Stock to Greg Bell.

 

These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

 

Shares Issued for Cancellation of Notes

 

On September 27, 2019, the Company canceled 7,500,000 shares of Common Stock in exchange for the cancellation of $75,000 in notes receivable owed to a related party.

 

The shares issued pursuant to the note conversions were issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act, based in part on the representations of the investor. There were no sales commissions paid pursuant to this transaction.

 

 

 

 

  II-3  

 

 

Triton Funds LP

 

On December 22, 2020, we entered into the Common Stock Purchase Agreement with Triton. Triton agreed to invest $2,500,000 in the Company in the form of common stock purchases. Subject to the terms and conditions set forth in the CSPA, the Company agreed to sell to Triton common shares of the Company having an aggregate value of 2,500,000. The Company may, in its sole discretion, deliver a Purchase Notice to Triton which states the dollar amount of shares which the Company intends to sell to Triton.

The price of the shares to be sold will be $0.005 per share.

 

Triton’s obligation to purchase securities is conditioned on certain factors including, but not limited, to the Company having an effective registration available for sale of the securities being purchased, a minimum closing price of $0.0075 is met on the date Triton receives the purchased shares as DWAC shares by Triton’s custodian, and Triton’s ownership not exceeding 9.99% of the issued and outstanding shares of the Company at any time.

 

In connection with the CSPA, the Company also issued to Triton warrants to purchase 125,000,000 of the Company’s Common Stock at $0.02 per share (the “Warrants”), subject to adjustments. The Warrants terminate five years from the date of issuance. In the event that the S-1 Registration Statement registering the resales of the shares underlying the exercise of the Warrant (the “Warrant Shares”) is not deemed effective within 90 days of the issuance of the Warrants, 100,000,000 Warrants will terminate and 25,000,000 Warrants will remain which shall either be registered by the Company in an S-1 Registration Statement or will be available for cashless exercise pursuant to the terms of the Warrant Agreement.

 

The Warrants were sold in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act, based in part on the representations of Triton. There were no sales commissions paid pursuant to this transaction.

 

Miscellaneous Share Issuances

 

On December 10, 2018, the Company sold 6,250,000 shares of common stock for $50,000 or $0.008 per share.

 

On January 15, 2019, the Company sold 6,250,000 shares of common stock for $50,000 or $0.008 per share.

 

On March 19, 2019, the Company sold 3,125,000 shares of common stock for $25,000 or $0.008 per share.

 

On March 26, 2019, the Company sold 1,875,000 shares of common stock for $10,000 or $0.008 per share.

 

The shares issued pursuant to the note conversions were issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act. There were no sales commissions paid pursuant to this transaction.

 

 

 

 

 

 

  II-4  

 

 

Item 16 - Exhibits

 

(a)(3)   Exhibits
     
    The following exhibits are filed as part of this Registration Statement:

  

(b) Exhibits

 

Incorporated by Reference            
Exhibit
Number
  Exhibit Description   Form   File No.   Exhibit   Filing Date   Filed
Herewith
3.1   Amended Articles of Incorporation   1-A POS   000-50773   99.1   10/1/19    
3.2   Certificate of Designation for Series A Convertible Stock                   X
3.3   Certificate of Designation for Series B Convertible Stock                   X
3.4   Amendment to Certificate of Designation for Series B Convertible Preferred Stock   8-K   000-11882   3.1   12/3/20    
3.5   Bylaws   1-A POS   000-50773   99.2   10/1/19    
4.1   Specimen Stock Certificate   1-A POS   000-50773   99.3   10/1/19    
5.1   Legal Opinion of Business Legal Advisors, LLC                   X
10.1   Employment Agreement of Greg P. Bell   1-A POS   000-50773   99.3   10/1/19    
10.2   Employment Agreement with Greg Bell dated November 23, 2020                   X
10.3   Indemnification Agreement of Greg P. Bell   1-A POS   000-50773   99.4   10/1/19    
10.4   Employment Agreement of Paul D.H. LaBarre   1-A POS   000-50773   99.5   10/1/19    
10.5   Indemnification Agreement of Andrew Georgens   1-A POS   000-50773   99.6   10/1/19    
10.6   Indemnification Agreement of Paul Labarre   1-A POS   000-50773   99.7   10/1/19    
10.7   Indemnification Agreement of Hugh Darryl Metz   1-A POS   000-50773   99.8   10/1/19    
10.8   Repurchase of Shares Agreement between B2Digital, Incorporated and GS Capital Partners LLC dated January 28, 2020   8-K   000-11882   99.1   2/3/20    
10.9   Repurchase of Shares Agreement between B2Digital, Incorporated and GS Capital Partners LLC dated November 22, 2019   8-K   000-11882   99.1   12/5/19    
10.10   Common Stock Purchase Agreement dated December 23, 2020                   X
10.11   Warrant Agreement dated December 23, 2020                   X
16.1   Letter from Accell Audit & Compliance, P.A. Dated January 9, 2020 Regarding Change in Certifying Accountant   8-K   000-11882   16.1   1/9/20    
21.1   List of Subsidiaries   10-K   000-11882   21.1   8/19/20    
23.1   Consent of Assurance Dimensions                   X
23.2   Consent of Accell Audit and Compliance, PA                   X
23.3   Consent of Business Legal Advisors, LLC (included in Exhibit 5.1)                   X
101   XBRL data files of Financial Statements and Notes relating to this Form S-1*                    

 

*In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 relating to this Form S-1 shall be deemed “furnished” and not “filed.”

 

 

 

 

 

  II-5  

 

 

Item 17 - Undertakings

 

(A) The undersigned Registrant hereby undertakes:

 

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:
   
  (i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
     
  (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
     
  (iii) Include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

 

   
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
   
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
   
(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

 

(B) The issuer is subject to Rule 430C (ss. 230. 430C of this chapter): Each prospectus filed pursuant to Rule 424(b)(ss. 230.424(b) of this chapter) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A (ss. 230. 430A of this chapter), shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

 

 

 

 

  II-6  

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly authorized this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, State of Florida on December 31, 2020.

 

  B2DIGITAL, INCORPORATED  
       
  By: /s/ Greg P. Bell  
    Greg P. Bell, CEO  
    (Principal Executive and Financial Officer)  

 

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

 

         
Signature   Title   Date
         
         
/s/ Greg P. Bell   CEO and Director   December 31, 2020
Greg P. Bell   (Principal Executive and Financial Officer)    
         
         
/s/ Paul LaBarre   Director   December 31, 2020
Paul LaBarre        
         
         
/s/ Hugh Darryl Metz   Director   December 31, 2020
Hugh Darryl Metz        
         
         
/s/ Andrew Georgens   Director   December 31, 2020
Andrew Georgens        

 

 

 

 

 

 

 

 

 

  II-7  

 

 

625,000,000 Shares of Common Stock

 

B2DIGITAL, INCORPORATED

 

PROSPECTUS

 

_____________, 2021

 

[ c o v e r p a g e ]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

Exhibit 3.2

 

State of Delaware
Secretary of State
Division of Corporations
Delivered 10:26 PM 01/18/2005
FILED 10:26 PM 01/18/2005
SRV 050042979 - 3813471 FILE

 

CERTIFICATE OF DESIGNATIONS, POWERS

PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK

 

-OF-

 

B2DIGITAL, INCORPORATED
a Delaware Corporation

 

Pursuant to Section 151 of the General Corporation Law of the State of Delaware, the undersigned DOES HEREBY CERTIFY that the following resolution was duly adopted by the Board of Directors (the "Board of Directors") of B2Digital, Incorporated., a Delaware corporation (the "Corporation"), by a written consent to action dated January 12, 2005:

 

RESOLVED, that there be, and hereby is, created out of the class of 50,000,000 shares of preferred stock of the Corporation, par value $.001 per share, a series of preferred stock with the following designations, powers, preferences and relative, participating, optional or other special rights, qualifications, limitations or restrictions (this instrument hereinafter referred to as the " Designation"):

 

1. DEFINITIONS

 

Common Stock. The term "Common Stock" shall mean all shares now or hereafter authorized of any class of Common Stock of the Company and any other stock of the Company, howsoever designated, authorized after the Issue Date, which has the right (subject always to prior rights of any class or series of Preferred Stock) to participate in the distribution of the assets and earnings of the Company without limit as to per share amount.

 

Issue Date. The term "Issue Date" shall mean the date that shares of Series A Preferred are first issued by the Company.

 

Junior Stock. The term "Junior Stock" shall mean, for purposes of these resolutions, any class pr series of stock of the Company authorized after the Issue Date not entitled to receive any dividends in any dividend period unless any dividends required to have been paid or declared and set apart for payment on the Series A Preferred shall have been so paid or declared and set apart for payment and, for purposes of these resolutions, shall mean Common Stock and any other class or series of stock of the Company authorized after the Issue Date not entitled to receive any assets upon liquidation, dissolution or winding up of the affairs of the Company until the Series A Preferred shall have received the entire amount to which such stock is entitled upon such liquidation, dissolution or winding up.

 

Parity Stock. The term "Parity Stock" shall mean, for purposes of these resolutions the Common Stock and any other class or series of stock of the Company authorized after the Issue Date entitled to receive payment of dividends subject only to those preferential rights of dividends granted to the Series A Preferred, if any, and, for purposes of these resolutions, shall mean any class or series of stock of the Company authorized after the Issue Date entitled to receive assets upon liquidation, dissolution or winding up of the affairs of the Company subject to only those preferential rights and preference granted to the Series A Preferred.

 

 

 

  1  

 

 

Senior Stock. The term "Senior Stock" shall mean, for purposes of these resolutions, any class or series of stock of the Company authorized before the Issue Date of the Series A Preferred except for those preferential rights as granted herein but the right to receive dividends providing any dividends granted to the Series A Preferred shall have been paid or set aside to be paid, and, for purposes of these resolutions, shall mean any class or series of stock of the Company authorized after the Issue Date ranking equal to the Series A Preferred and the right to participate in any distribution upon liquidation, dissolution or winding up of the affairs of the Company except for those preferential rights granted to the Series A Preferred herein.

 

2. Rights, Powers and Preferences

 

The Series A Preferred shall have the voting powers, preferences and relative, participating, optional and other special rights, qualifications, limitations and restrictions as follows:

 

  A. Designation and Amount. Out of the Fifty Million (50,000,000) shares of the $.001 par value authorized preferred stock, Two Million (2,000,000) shares shall be designated as shares of "Series A Convertible Preferred Stock."

 

  B. Rank. The Series A Preferred shall be senior to the Common Stock and any other series or class of the Company's Preferred Stock.

 

  C. Liquidation Rights.

 

  (i) In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of the Series A Preferred then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, before any payment or declaration and setting apart for payment of any amount shall be made in respect of any outstanding capital stock of the Company, an amount equal to Two Dollars and Forty Cents ($2.40) per share, plus the Redemption provision (as defined below). Then all of the assets of the Company available to be distributed shall be distributed ratably to the holders of the Series A Preferred and then to the holders of other outstanding shares of capital stock of the Company. If upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the holders of the Series A Preferred shall be insufficient to permit the payment to the holders thereof the full preferential amount as provided herein, then such available assets shall be distributed ratably to the holders of the Series A Preferred.
     
  (ii) None of the following events shall be treated as or deemed to be a liquidation hereunder:

 

  (a) A merger, consolidation or reorganization of the Company;
     
  (b) A sale or other transfer of all or substantially all of the Company's assets;
     
  (c) A sale of 50% or more of the Company's capital stock then issued and outstanding;
     
  (d) A purchase or redemption by the Company of stock of any class; or
     
  (e) Payment of a dividend or distribution from funds legally available therefor.

 

  D. Voting Rights. On all matters to be voted on by the holders of Common Stock, the Holders of the Series A Preferred shall be entitled to Two Hundred and Forty (240) votes for each share of Series A Preferred held of record. On all such matters, the holders of Common Stock and the Holders of Series A Preferred shall vote together as a single class. If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series A Preferred shall not be subject to adjustment unless specifically authorized.

 

 

 

  2  

 

 

3. Conversion

 

The Series A Preferred shall have the following conversion rights (the "Conversion Rights"):

 

  A. Holder's Optional Right to Convert. Each share of Series A Preferred shall be convertible, at the option of the holder(s), on the Conversion Basis (as set forth below) in effect at the time of conversion. Such right to convert shall commence as of the Issue Date and shall continue thereafter for a period of Ave years, such period ending on the fifth anniversary*of the Issue Date. In the event that the holder(s) of the Series A Preferred elect to convert such shares into Common Stock, the holder(s) shall have sixty (60) days from the date of such notice in which to tender their shares of Series A Preferred to the Company.
     
  B. Conversion Basis. Each share of Series A Preferred shall be convertible into two hundred and forty (240) shares of the Company's Common Stock.
     
  C. Mechanics of Conversion. Before any holder of Series A Preferred shall be entitled to convert the same into shares of Common Stock, such holder shall (i) give written notice to the Company, at the office of the Company or of its transfer agent for the Common Stock or the Preferred Stock, that he elects to convert the same and shall state therein the number of shares of Series A Preferred being converted; and (ii) surrender the certificate or certificates therefor, duly endorsed. Thereupon the Company shall promptly issue and deliver to such holder of Series A Preferred a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled. The conversion shall be deemed to have been made and the resulting shares of Common Stock shall be deemed to have been issued immediately prior to the close of business on the date of such notice and surrender of the shares of Series A Preferred.
     
  D. Adjustments to the Conversion Basis.

 

  (i) Stock Splits and Combinations. Subject to the Protective Provisions (as defined below), if at any time after the Company first issues the Series A Preferred and while any of the shares of Series A Preferred remain outstanding, if the Company shall effect a subdivision or combination of the Common Stock, the Conversion Basis then in effect immediately before that subdivision or combination shall be proportionately adjusted. Any adjustment shall become effective at the close of business on the date the subdivision or combination becomes effective.
     
 ) (ii) Reclassification, Exchange or Substitution. At any time after the Company first issues the Series A Preferred and while any of the shares of Series A Preferred remain outstanding, if the Common Stock issuable upon the conversion of the Series A Preferred shall be changed into the same or a different number of shares of any class or classes of stock, whether by capital reorganization, reclassification, or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a reorganization, merger, consolidation, or sale of assets), then and in each such event the holder of each share of Series A Preferred shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification, or other change, by holders of the number of shares of Common Stock into which such shares of Series A Preferred might have been converted immediately prior to such reorganization, reclassification, or change, all subject to further adjustments as provided herein.
     
  (iii) Reorganization, Mergers, Consolidations or Sales of Assets. At any time after the Company first issues the Series A Preferred and while any of such shares remain outstanding, if there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification, or exchange of shares), or a merger or consolidation of the Company with or into another Company, or the sale of all or substantially all of the Company's assets to any other person, then as a part of such reorganization, merger, consolidation, or sale, provision shall be made so that the holders of the Series A Preferred thereafter shall be entitled to receive upon conversion of the Series A Preferred, the number of shares of stock or other securities or property of the Company, or of the successor Company resulting from such merger or consolidation or sale, to which a holder of Series A Preferred deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale.

 

 

 

  3  

 

 

  E. Notices of Record Date. In the event of any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company, or any transfer of all or substantially all of the assets of the Company to any other Company, entity, or person, or any voluntary or involuntary dissolution, liquidating, or winding up of the Company, the Company shall mail to each holder of Series A Preferred at least 30 days prior :a the record date specified therein, a notice specifying the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up is expected to become effective, and the time, if any is to be fixed, as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation, or winding up.
     
  F. Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred. In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one share of the Company's Common Stock on the date of conversion, as determined in good faith by the Company's directors.
     
  G. Reservation of Stock Issuable Upon Conversion. At such time as the Company increases its authorized capital resulting in a sufficient number of shares of Common Stock becoming available for the conversion of the Series A Preferred, the Company shall reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Preferred, a number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred.

 

4 Protective Provisions

 

Notwithstanding anything contained herein to the contrary, so long its any of the Series A Preferred shall be outstanding, the Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of at least two-thirds of the total number of shares of Series A Preferred outstanding:

 

  A. Alter or change the rights, preferences or privileges of the Series A Preferred by way of reverse stock split, reclassification, merger consolidation or otherwise, so as to adversely affect in any manner the voting rights including number of votes presently allowed or the conversion basis by which the shares of Series A Preferred are presently converted into shares of Common Stock.
     
  B. Increase the authorized number of Series A Preferred.
     
  C. Create any new class of shares having preferences over or being on a parity with the Series A Preferred as to dividends or assets, unless the purpose of creation of such class is, and the proceeds to be derived from the sale and issuance thereof are to be used for, the retirement of all Series A Preferred then outstanding.
     
  D. Repurchase any of the Company's Common Stock.
     
  E. Merge or consolidate with any other Company, except into or with a wholly-owned subsidiary of the Company with the requisite shareholder approval.
     
  F. Sell, convey or otherwise dispose of, or create or incur any mortgage, lien, charge or encumbrance on or security interest in or pledge of, or sell and leaseback, all or substantially all of the property or business of the Company.
     
  G. Incur, assume or guarantee any indebtedness (other than such as may be represented by the obligation to pay rent under leases) maturing more than 18 months after the date on which it is incurred, assumed or guaranteed by the Company, except purchase money obligations, obligations assumed as part of the price of property purchased, or the extension, renewal or refunding of any thereof.

 

 

 

  4  

 

 

5 Redemption

 

Subject to the applicable provisions of Delaware law, the Company, at the option of its directors, may at any time or from time to time redeem the whole or any part of the outstanding Series A Preferred. Upon redemption the Company shall pay for each share redeemed the amount of Two Dollars and Forty Cents ($2.40) per share, payable in cash, plus a premium to compensate the original purchaser(s) for the investment risk and cost of capital equal to the greater of (a) Two Dollars and Forty Cents ($2.40) per share, or (b) an amount per share equal to fifty percent (50%) of the market capitalization of the Company on the date of notice of such redemption divided by 2,000,000 (the "Redemption Premium"), the redemption amount and the Redemption Premium hereinafter being referred to as the "Redemption Price." Such redemption shall be on an all-or-nothing basis.

 

At least thirty (30) days previous notice by mail, postage prepaid, shall be given to the holders of record of the Series A Preferred to be redeemed, such notice to be addressed to each such shareholder at the address of such holder appearing on the books of the Company or given to such holder to the Company for the purpose of notice, or if no such address appears or is given, at the place where the principal office of the Company is located. Such notice shall state the date fixed for redemption and the redemption price, and shall call upon the holder to surrender to the Company on said date at the place designated in the notice such holder's certificate or certificates representing the shares to be redeemed. On or after the date fixed for redemption and stated in such notice, each holder of Series A Preferred called for redemption shall surrender the certificate evidencing such shares to the Company at the place designated in such notice and shall thereupon be entitled to receive payment of the redemption price. If less than all the shares represented by any such surrendered certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. If such notice of redemption shall have been duly given, and if on the date fixed for redemption funds necessary for the redemption shall be available therefore, notwithstanding that the certificates evidencing any Series A Preferred called for redemption shall not have been surrendered, the dividends, if any, with respect to the shares so called for redemption shall forthwith after such date cease and determine, except only the right of the holders to receive the redemption price without interest upon surrender of their certificates therefore.

 

If, on or prior to any date fixed for redemption or Series A Preferred, the Company deposits, with any bank or trust cornpany as n. trust fund, the number of shares of Common Stock of a sum sufficient to redeem, on the date fixed for redemption thereof, the shares called for redemption, with irrevocable instructions and authority to the bank or trust company to give the notice of redemption thereof (or to complete the giving of such notice if theretofore commenced) and to pay, or deliver, on or after the date fixed for redemption or prior thereto, the redemption price of the shares to their respective holders upon the surrender of their share certificates, then from and after the date of the deposit (although prior to the date fixed for redemption), the shares so called shall be redeemed and any dividends on those shares shall cease to accrue after the date fixed for redemption. The deposit shall constitute full payment of the shares to their holders and from and after the date of the deposit the shares shall no longer be outstanding and the holders thereof shall cease to be shareholders with respect to such shares, and shall have no rights with respect thereto except the right to receive from the bank or trust company payment of the redemption price of the shares without interest, upon the surrender of their certificates therefore. Any interest accrued on any funds so deposited shall be the property of, and paid to, the Company. If the holders of Series A Preferred so called for redemption shah not, at the end of six years from the date fixed for redemption thereof, have claimed any funds so deposited, such bank or trust company shall thereupon pay over to the Company such unclaimed funds, and such bank or trust company shall thereafter be relieved of all responsibility in respect thereof to such holders and such holders shall look only to the Company for payment of the redemption price.

 

6 Reissuanee

 

No share or shares of Series A Preferred acquired by the Company by reason of conversion or otherwise shall be reissued as Series A Preferred, and all such shares thereafter shall be returned to the status of undesignated and unissued shares of Preferred Stock of the Company.

 

7 Headings or Subdivisions

 

The heading of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereto.

 

 

 

  5  

 

 

8 Severability of Provisions

 

If any right, preference or limitation of the Series A Preferred set forth in this resolution (as such resolution may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other rights, preferences and limitations set forth in this resolution (as so amended) which can be given effect without the invalid, unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force and effect and no right, preference or limitation herein set forth shall be deemed dependent upon any other such right, preference or limitation unless so expressed herein.

 

9 Status of Reacquired Stock

 

Shares of Series A Preferred which have been issued and reacquired in any manner shall, upon compliance with any applicable provisions of Delaware law, have the status of authorized and unissued shares of Preferred Stock may be redesignated and reissued in any series or class.

 

 

 

 

 

 

 

 

 

 

  6  

 

 

IN WITNESS WHEREOF, the undersigned officers of B2Digital, Incorporated, a Delaware corporation, did hereby execute this Certificate effective this 12th day of January, 2005.

 

 

  /s/ Robert Russell
  Robert Russell, Chief Executive Officer
   
  /s/ Marcia Pearlstein
  Marcia Pearlstein, Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

  7  

 

Exhibit 3.3

 

State of Delaware        
Secretary of State          
Division of Corporations     
Delivered 09:21 PM 07/05/2006
FILED 08:34
PM 07/05/2006
SRV 060641395 - 3813471 FILE

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND RIGHTS
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
OF
B2DIGITA L ,INCORPORATED

 

B2Digital, Incorporated, a corporation organized under the and existing under the General Corporation Law of the State of Delaware (the "Corporation"),

 

DOES HEREBY CERTIFY:

 

The Corporation's Certificate of Incorporation, as amended, authorizes Fifty Million (50,000,000) shares of preferred stock, 5.00001 par value (the "Preferred Stock") and states the Board of Directors shall have the authority to divide the Preferred Stock into series and to fix and determine the voting powers, other powers, designations, preferences, rights, qualifications, limitations and restrictions of any series of Preferred Stock so established.

 

NOW THEREFORE pursuant to the authority contained in the Certificate of Incorporation, as amended, and in accordance with the provisions of the applicable law of Delaware, the Corporation's directors on June 26, 2006 have duly adopted the following resolutions determining the Designations, Rights and Preferences of a special class of its authorized Preferred Stock, herein designated as Series B Convertible Preferred Stock.

 

RESOINBD, that a special class of preferred stock of the Corporation be and are hereby created out of the Fifty Million (50,000,000) shares of preferred stock available for issuance, such series to be designed as Series B Convertible Preferred Stock, consisting of Forty Million (40,000,000) shares, of which the preferences and relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Corporation's Certificate of

 

Incorporation), shall be as stated below:

 

The powers. preferences and rights granted to the Series B Preferred (ai defined below) or the holders thereof are as follows:

 

Designtion and Rank. The series of Preferred Stock shall be designated the "Series B Convertible Preferred Stock" and shall consist of Forty Million (40,000,000) shares, The Series B Preferred shall be senior to the common stock and all other shares of Preferred Stock that may be later authorized.

 

Voting, Liquidation, Dividends, and Redemption. Each outstanding share of Series B Convertible Preferred Stock shall have no voting rights on matters submitted to the common stockholders of the Corporation. The shares of Series B Convertible Preferred Stock shall (i) not

 

have a liquidation preference; (ii) not accrue, earn, or participate in any dividends; and (iii) not be subject to redemption by the Corporation.

 

Conversion. Twelve months following the original issuance date, but not before, each outstanding share of Series B Convertible Preferred Stock may be converted, at the option of the owner, into five (5) shares of the Corporation's common stock.

 

 

 

  1  

 

 

The undersigned being the President and Secretary of the Corporation hereby declares under penalty of perjury that the foregoing is a true and correct copy of the Certificate of Designation of the Rights and Preferences of the Series B Convertible Preferred Stock of B2Digital, Incorporated duly adopted by the Board of Directors of the Corporation on June 26, 2006.

 

  By: /s/ Robert Russell
  Name: Robert Russell
  Title: President
   
   

 

 

 

 

 

 

 

 

 

  2  

 

Exhibit 5.1

 

BUSINESS LEGAL ADVISORS, LLC

14888 Auburn Sky Drive, Draper, UT 84020

(801) 634-1984

brian@businesslegaladvisor.com

 

 

Brian Higley

Attorney at Law

Licensed in Utah

 

December 31, 2020

 

 

Greg P. Bell, CEO

B2Digital, Incorporated

4522 West Village Drive

Tampa, FL 33624

 

  Re: Registration Statement on Form S-1

 

Dear Mr. Bell:

 

I have acted as outside counsel for B2Digital, Incorporated, a Delaware corporation (the “Company”) in connection with the Company’s Registration Statement on Form S-1 (the “Registration Statement”) filed with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended.

 

I have reviewed the Registration Statement, including the prospectus (the “Prospectus”) that is a part of the Registration Statement. The Registration Statement registers the offering and sale of up to 500,000,000 shares of the Company’s Common Stock and the resales by a certain selling stockholder of the Company of 125,000,000 shares of the Company’s common stock (the “Shares”).

 

In connection with this opinion, I have reviewed originals or copies (certified or otherwise identified to my satisfaction) of the Company’s Certificate of Incorporation, the Company’s Bylaws, resolutions adopted by the Company’s Board of Directors, the Registration Statement, the exhibits to the Registration Statement, and such other records, documents, statutes and decisions, and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such inquiries of such officers and representatives, as I have deemed relevant in rendering this opinion.

 

In such examination, I have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents.

 

The opinions expressed below are limited to the laws of the State of Delaware (including the applicable provisions of the Delaware Constitution, applicable judicial and regulatory decisions interpreting these laws, and applicable rules and regulations underlying these laws) and the federal laws of the United States.  

  

Based on the foregoing and in reliance thereon and subject to the assumptions, qualifications and limitations set forth herein, I am of the opinion that pursuant to the corporate laws of the State of Delaware, including all relevant provisions of the state constitution and all judicial interpretations interpreting such provisions, the Shares are legally issued, fully paid and non-assessable.

 

I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of my firm’s name in the related Prospectus under the heading “Legal Matters.”

 

  Very truly yours,
   
  /s/ Brian Higley

 

Exhibit 10.2

 

CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER & PRESIDENT AGREEMENT

 

 

This CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER AND PRESIDENT AGREEMENT (the “Agreement”) is made effective as November 24, 2020, (the “Effective Date”) by and between B2Digital, Incorporated, a Delaware corporation (the “Company”), and Greg P. Bell (the “COB/CEO”).

 

RECITALS

 

A.             Effective November 24, 2017, the Company entered into a Chairman of the Board and Chief Executive Officer & President Agreement (the “2017 Agreement”) with the COB/CEO.

 

B.             Company has spent significant time, effort, and money to develop certain Proprietary Information (as defined below), which Company considers vital to its business.

 

C.             The Proprietary Information may necessarily be communicated to or received by COB/CEO in the course of serving as Chairman of the Board, Chief Executive Officer and President of the Company and Company desires to retain the services of COB/CEO, only if, in doing so, it can protect its Proprietary Information and goodwill.

 

D.             Company desires to continue to retain the services of COB/CEO to serve on the Company’s Board (the “Board”), as the Chairman of The Board, Chief Executive Officer and President of the Company and to enter into the Agreement which shall supersede and replace the 2017 Agreement. COB/CEO desires to continue to serve as the Chairman of the Board, Chief Executive Officer and President of the Company and enter into the Agreement, upon the following terms and conditions.

 

AGREEMENT

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1.             Term. The term of this Agreement (the “Term”) shall be the period commencing on the Effective Date and the COBCCEO cannot be removed from his COB/CEO position without 80% of the votes of all Stockholders of the Company approving the termination, unless by reason of legal incapacity as determined by a court of competent jurisdiction in Nevada, and in such event, such removal shall only be until capacity has been regained, or except by reason of the death. The director can terminate this Agreement upon three (3) months’ prior written notice to the Company, whereupon this Agreement shall terminate except that the provisions set forth in Sections 3.b, 3.c., 4 and 6 of this Agreement shall survive such termination.

 

2.              Supersede and Replace. This Agreement shall supersede and replace the 2017 Agreement and the 2017 Agreement shall be terminated as of the Effective Date.

 

3.              Position, Duties, Responsibilities.

 

a.              Duties. COB/CEO shall perform those service (the “Services”) as may be reasonably requested by the Company from time to time, including but not limited to the Services described on Exhibit A attached hereto. COB/CEO shall devote his commercially reasonable efforts and attention to the performance of the Services for the Company on a timely basis. COB/CEO shall also make himself available to answer questions, provide advice and provide Services to the Company upon reasonable request and notice from the Company. COB/CEO will perform the Services faithfully, diligently and to the best of his skill and ability.

 

 

 

 

  1  

 

 

b.              COB/CEO Representations and Covenants.

 

 

(i) COB/CEO hereby represents, warrants and covenants that COB/CEO has the right, power and authority to enter into this Agreement and that neither the execution nor delivery of this Agreement, nor the performance of the Services by COB/CEO, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which COB/CEO is now, or hereafter becomes, obligated.

 

c.               Company Representations and Covenants.

 

(i) Company hereby agrees that it shall be solely responsible for the impact of any and all taxes arising out of the COB/CEO’s receipt of any equity compensation payable under this Agreement.

 

(ii) Company hereby represents, warrants and covenants that it has the right, power and authority to enter into this Agreement and that neither the execution nor delivery of this Agreement, nor the performance of the this Agreement, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which Company is now, or hereafter becomes, obligated.

 

4.              Compensation, Benefits, Expenses.

 

a.              Compensation. As full and complete consideration for the Services to be rendered hereunder, the Company shall pay COB/CEO the Compensation described on Exhibit A attached hereto.

 

b.              Reimbursement of Expenses. Company shall promptly reimburse COB/CEO for any reasonable costs and expenses incurred by COB/CEO in connection with any Services specifically requested by Company and actually performed by COB/CEO pursuant to the terms of this Agreement. Each such expenditure or cost shall be reimbursed only if: (i) with respect to costs and expenses in excess of $100, individually, and (ii) with respect to costs and expenses of less than $100, individually, COB/CEO furnishes to Company adequate records and other documents reasonably acceptable to Company evidencing such expense or cost.

 

5.              Proprietary Information; Work Product; Non-Disclosure.

 

a.              Defined. Company has conceived, developed and owns, and continues to conceive and develop, certain property rights and information, including but not limited to its business plans and objectives, client and customer information, financial projections, marketing plans, marketing materials, logos, and designs, and technical data, inventions, processes, know-how, algorithms, formulae, franchises, database’s, computer programs, computer software, user interfaces, source codes, object codes, architectures and structures, display screens, layouts, development tools and instructions, templates, and other trade secrets, intangible assets and industrial or proprietary property rights which may or may not be related directly or indirectly to Company’s software business and all documentation, media or other tangible embodiment of or relating to any of the foregoing and all proprietary rights therein of Company (all of which are hereinafter referred to as the “Proprietary Information”). Although certain information may be generally known in the relevant industry, the fact that Company uses it may not be so known. In such instance, the knowledge that Company uses the information would comprise Proprietary Information. Furthermore, the fact that various fragments of information or data may be generally known in the relevant industry does not mean that the manner in which Company combines them, and the results obtained thereby, are known. In such instance, that would also comprise Proprietary Information.

 

 

 

  2  

 

 

b.              General Restrictions on Use. COB/CEO agrees to hold all Proprietary Information in confidence and not to, directly or indirectly, disclose, use, copy, publish, summarize, or remove from Company’s premises any Proprietary Information (or remove from the premises any other property of Company), except to the extent authorized and necessary to carry out COB/CEO’s responsibilities under this Agreement. Notwithstanding the foregoing, such restrictions shall not apply to: (x) information which COB/CEO can show was rightfully in COB/CEO’s possession at the time of disclosure by Company; (y) information which COB/CEO can show was received from a third party who lawfully developed the information independently of Company or obtained such information from Company under conditions which did not require that it be held in confidence; or (z) information which, at the time of disclosure, is generally available to the public.

 

c.               Ownership of Work Product. All Work Product (as defined below) shall belong exclusively to Company and its designees. If by operation of law, any of the Work Product, including all related intellectual property rights, is not owned in its entirety by Company automatically upon creation thereof, then COB/CEO agrees to assign, and hereby assigns, to Company and its designees the ownership of such Work Product, including all related intellectual property rights. “Work Product” shall mean any writings (including excel, power point, emails, etc.), programming, documentation, data compilations, reports, and any other media, materials, or other objects produced as a result of COB/CEO’s work or delivered by COB/CEO in the course of performing that work.

 

d.              Further Assurances. COB/CEO agrees to take sure further actions and execute and deliver such further agreements and other instruments as Company may reasonably request to give effect to this Section 4.

 

e.               Return of Proprietary Information. Upon termination of this Agreement, COB/CEO shall upon request by the Company promptly deliver to Company at Company’s sole cost and expense, all Proprietary Information, and all other materials in its possession or under its control relating to the Proprietary Information and/or Services, as well as all other property belonging to Company which is then in COB/CEO’s possession or under its control. Notwithstanding the foregoing, COB/CEO shall retain ownership of all works owned by COB/CEO prior to commencing Services for Company hereunder, subject to Company’s nonexclusive, perpetual, paid-up right and license to use such works in connection with its use of the Services and any Work Product.

 

f.               Remedies/Additional Confidentiality Agreements. Nothing in this Section 4 is intended to limit any remedy of Company under applicable state or federal law. At the request of Company, COB/CEO shall also execute Company’s standard “Confidentiality Agreement” or similarly named agreement as such agreement is currently applied to and entered into by Company’s most recent employees.

 

6.              Non-Compete. During the Term, COB/CEO shall not compete directly with the Company. During the period that is six (6) months after the termination of this Agreement, COB/CEO shall provide the Company with written notice any time that COB/CEO provides any services, as an employee, consultant or otherwise, to any person, company or entity that competes directly with the Company. Notwithstanding anything to the contrary contained herein.

 

7.              Miscellaneous.

 

a.              Notices. All notices required under this Agreement shall be deemed to have been given or made for all purposes upon receipt of such written notice or communication. Notices to each party shall be sent to the address set forth below the party’s signature on the signature page of this Agreement. Either party hereto may change the address to which such communications are to be directed by giving written notice to the other party hereto of such change.

 

b.              Entire Agreement. This Agreement and any documents attached hereto as exhibits constitute the entire agreement and understanding between the parties with respect to the subject matter herein and therein, and supersede and replace any and all prior agreements and understandings, whether oral or written with respect to such matters. The provisions of this Agreement may be waived, altered, amended or replaced in whole or in part only upon the written consent of both parties to this Agreement.

 

 

 

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c.               Severability, Enforcement. If, for any reason, any provision of this Agreement shall be determined to be invalid or inoperative, the validity and effect of the other provisions herein shall not be affected thereby, provided that no such severability shall be effective if it causes a material detriment to any party.

 

d.              Governing Law. The validity, interpretation, enforceability, and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without regard to its conflict of law rules that would require the application of the laws of any other jurisdiction. Venue for any and all disputes arising out of this Agreement shall be the state and Federal courts sitting in the City of Tampa, Florida.

 

e.               Injunctive Relief. The parties agree that in the event of any breach or threatened breach of any of the covenants in Section 4, the damage or imminent damage to the value and the goodwill of Company’s business will be irreparable and extremely difficult to estimate, making any remedy at law or in damages inadequate. Accordingly, the parties agree that Company shall be entitled to injunctive relief against COB/CEO in the event of any breach or threatened breach of any such provisions by COB/CEO, in addition to any other relief (including damages) available to Company under this Agreement or under applicable state or Federal law.

 

f.               Publicity. The Company shall have the right to use the name, biography and picture of COB/CEO on the Company’s website, marketing and advertising materials.

 

g.              Counterparts. This Agreement may be executed in two or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

h.              Severability. The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect. If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

 

i.               Legal Costs. In any action to enforce this Agreement, the prevailing party shall be entitled to recover all court costs and expenses and reasonable legal fees and outlay, in addition to any other relief to which it may be entitled.

 

[Signature page follows.]

 

 

 

 

  4  

 

 

IN WITNESS WHEREOF, each party hereto has duly executed this Agreement as of the Effective Date.

 

B2DIGITAL, INCORPORATED COB/CEO
   
   
   
Signature: /s/ Paul LaBarre Signature: /s/ Greg P. Bell
Name: Paul LaBarre Name: Greg P. Bell
Title: Director Address: 4522 West Village Dr.
Address: 4522 West Village Drive                  Tampa, Florida 33624
                 Suite 215  
                 Tampa, Florida 33624  
   
   
Signature: /s/ Andrew Georgens  
Name: Andrew Georgens  
Title: Director  
Date:  
   
   
Signature: /s/ Darryl Metz  
Name: Darryl Metz  
Title: Director  
Date:  

 

 

 

 

  5  

 

 

Exhibit A

 

Services.

 

As the COB/CEO, you shall:

 

v Call and Manage Board Meetings As needed by the Company
v Participate in Board Meetings and calls as requested by “Company”
v Perform the duties of Chairman & CEO of the Company as per industry standards
v Operate all matters of the Company

 

Compensation.

 

A. Management Time
1. The Company shall issue COB/CEO 40,000,000 (Fifty Million) Preferred Series B “Shares” of the “Company”' to Greg P. Bell, the “Shares” for the COB/CEO management time in managing the Company.
2. A Salary of $120,000 per year
3. Participation in the Executive Level Benefit Package as adopted and approved by the Company Board of Directors.

 

 

 

 

 

 

 

 

 

  6  

 

Exhibit 10.10

 

COMMON STOCK PURCHASE AGREEMENT

 

This Common Stock Purchase Agreement (the “Agreement”), dated as of December 23, 2020 (the “Execution Date”), is entered into by and between B2Digital, Incorporated, a Delaware corporation (the “Company”), and Triton Funds LP, a Delaware limited partnership (the “Investor”).

 

RECITAL

 

WHEREAS, upon the terms and subject to the conditions contained herein, the Investor agrees to purchase, and the Company agrees to sell, up to Two Million Five Hundred Thousand Dollars ($2,500,000) of common stock, par value $0.00001 per share (the “Common Stock”), of the Company, the resales of which shares of Common Stock shall be registered under the Securities Act of 1933, as amended (“1933 Act”) pursuant to an effective Registration Statement on Form S-1.  

  

NOW THEREFORE, in consideration of the foregoing recital, which shall be considered an integral part of this Agreement, the covenants and agreements set forth hereafter, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investor hereby agree as follows:

 

AGREEMENT

 

SECTION I

DEFINITIONS

 

For all purposes of and under this Agreement, the following terms shall have the respective meanings below, and such meanings shall be equally applicable to the singular and plural forms of such defined terms.

  

“1934 Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the SEC thereunder, all as the same will then be in effect.

 

“Administrative Fee” shall mean $15,000 payable by the Company to the Investor from the Initial Closing.

 

“Business Day” shall mean any day on which the Principal Market for the Purchased Shares is open for trading from the hours of 9:30 am until 4:00 pm eastern time.

 

“Closing” shall mean the date that is no later than five (5) Business Days after the Purchase Notice Date.

 

“Commitment Period” shall mean the period beginning on the Business Day immediately following the Execution Date and ending on the expiration of this Agreement.

 

“Minimum Closing Price” shall mean the closing price of the Common Stock that is equal to or greater than $0.0075.

 

“Principal Market” shall mean the New York Stock Exchange, the NYSE Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the OTC Markets, whichever is the market on which the Common Stock is listed.

 

“Purchase Notice” shall mean the written notice sent to the Investor by the Company, which Purchase Notice shall state the total amount of Purchased Shares that the Company intends to sell to the Investor pursuant to the terms of this Agreement based on the formula set forth in Section 2.1 hereof.

 

 

 

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“Purchased Shares” shall mean shares of Common Stock issued pursuant to the terms of this Agreement.

 

“Investment Amount” shall mean the total dollar amount to be sold by the Company at a Closing, not to exceed Two Hundred and Fifty Thousand Dollars ($250,000).

 

“Registration Statement” means the Registration Statement on Form S-1 to be filed with the SEC registering the Purchased Shares issuable hereunder.

 

“SEC” shall mean the U.S. Securities and Exchange Commission.

 

 

SECTION II

PURCHASE AND SALE OF COMMON STOCK

 

2.1 PURCHASE AND SALE OF PURCHASED SHARES. Subject to the terms and conditions set forth herein, the Company shall sell to the Investor, and the Investor shall purchase from the Company, that number of Purchased Shares equal to the Investment Amount. The Investment Amount shall be calculated based on the total number of Purchased Shares set forth in the Purchase Notice delivered to Investor as more particularly set forth in Section 2.2 below, multiplied by $0.005.

 

2.2 DELIVERY OF PURCHASE NOTICE. Subject to the terms and conditions herein, the Company may deliver the Purchase Notice to the Investor during the Commitment Period setting forth the total number of Purchased Shares to be purchased by Investor, which Purchase Notice shall be in the form attached hereto as Exhibit A and incorporated herein by reference. During the Commitment Period, the Company shall not submit a Purchase Notice until the previous Closing has been completed. No Purchase Notice will be made in an amount less than twenty-five thousand dollars ($25,000) or greater than two hundred and fifty thousand dollars ($250,000).

 

2.3 CONDITIONS TO INVESTOR’S OBLIGATIONS. Notwithstanding anything to the contrary in this Agreement, the Investor shall not be obligated to purchase any Purchased Shares at the Closing unless each of the following conditions are satisfied:

 

(i) the Registration Statement shall remain effective and available for sale of the Purchased Shares at all times until the Closing;

 

(ii) at the Closing, the Common Stock shall have been listed or quoted for trading on the Principal Market and shall not have been suspended from trading, at any time, after the Execution Date and the Company shall not have been notified of any pending or threatened proceeding or other action to suspend the trading of the Common Stock;

 

(iii) no injunction shall have been issued and remain in force, or action commenced by a governmental authority which has not been stayed or abandoned, prohibiting the purchase or the issuance of the Purchased Shares; and

 

(iv) the issuance of the Purchased Shares will not violate any requirements of the Principal Market.

 

(v) Minimum Closing Price is met on the date Investor receives the Purchased Shares as DWAC Shares by custodian.

 

If any of the events described in clauses (i) through (v) above occurs prior to the Closing, then the Investor shall have no obligation to purchase the Purchased Shares set forth in the Purchase Notice.

 

 

 

 

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2.4 MECHANICS OF PURCHASE OF PURCHASED SHARES BY INVESTOR. The Closing of the purchase of the Purchased Shares set forth in the Purchase Notice shall occur no later than five (5) Business Days following the receipt by Investor’s custodian of the Purchased Shares (the “Purchase Notice Date”); it being understood that the Investor shall deliver the Purchase Notice to Investor’s custodian on the Purchase Notice Date. In the event the closing price of the Company’s Common Stock falls below the Minimum Closing Price from the time the Investor receives the Purchase Notice until the end of the Business Day on the Purchase Notice Date, the Investor may, through prompt written notice to the Company, elect to reduce the Investment Amount and DWAC the balance of the Purchased Shares not elected to be purchased back to the Company’s Transfer Agent within three (3) business days from receipt of written notice provided by the Investor to the Company. In the event that the Investor elects to reduce the Investment Amount pursuant to this provision and the balance of the Purchased Shares not elected to be purchased by the Investor are not received by the Company’s transfer agent within three (3) business days of the receipt of written notice from the Investor to the Company, the Company is hereby entitled to request reasonable restrictions on the transferability and sale of the shares and the Investor hereby consents to those restrictions. The Purchase Notice Date shall be deemed delivered (i) on the day it is delivered to Investor on a Business Day prior to 9:30 am eastern time; (ii) if it is delivered on a day other than a Business Day or on a Business Day after 9:30 am eastern time, it shall be on the day that is the next subsequent Business Day. The Investor shall deliver the Investment Amount by wire transfer of immediately available funds to an account designated by the Company set forth in the Purchase Notice. In addition, on or prior to the Closing, each of the Company and Investor shall deliver to each other all documents, instruments and writings required to be delivered or reasonably requested by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein.

 

2.5 LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the contrary in this Agreement, in no event shall the Investor be entitled to purchase that number of Purchased Shares, which when added to the sum of the number of shares of Common Stock beneficially owned (as such term is defined under Section 13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 9.99% of the number of shares of Common Stock outstanding on the Purchase Notice Date, as determined in accordance with Rule 13d-1(j) of the 1934 Act.

 

SECTION III

INVESTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS

 

By executing this Agreement, the Investor represents, warrants and agrees that:

 

3.1 POWER AND AUTHORITY. The undersigned has full power and authority to act on behalf of and bind the Investor to its obligations as set forth herein and making these representations, warranties and agreements.

 

3.2 EFFECTIVE REGISTRATION STATEMENT. The Purchased Shares are being offered pursuant to the Registration Statement and Investor is solely relying on the Registration Statement and all periodic filings made by the Company under the 1934 Act (“SEC Filings”), in determining whether to purchase the Purchased Shares.

 

3.3 REVIEW OF SEC FILINGS. Investor has had full opportunity to read and review the Registration Statement, the documents incorporated therein by reference, and consult with an attorney regarding such Registration Statement.

 

3.4 ACCURACY OF REPRESENTATIONS. The information provided herein and these representations, warranties and agreements are accurate and complete, and shall remain so until the undersigned notifies the Company otherwise.

 

3.5 NO SHORT SALES. Neither Investor or its affiliates shall engage in any short sales or similar transactions following the date of execution of this Agreement until termination of the Commitment Period.  

 

 

 

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SECTION IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as disclosed on the Company’s SEC Filings, the Company represents and warrants to the Investor that:

 

4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and has the requisite corporate power and authorization to own its properties and to carry on its business as now being conducted. Both the Company and the companies it owns or controls (“Subsidiaries”) are duly qualified to do business and are in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means a change, event, circumstance, effect or state of facts that has had or is reasonably likely to have, a material adverse effect on the business, properties, assets, operations, results of operations, financial condition or prospects of the Company and its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform its obligations under the Agreement.

 

4.2 AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.

 

(i) The Company has the requisite corporate power and authority to enter into the Agreement and to issue the Purchased Shares in accordance with the terms hereof and thereof.

 

(ii) The execution and delivery of the Agreement by the Company and the consummation by it of the  transactions contemplated hereby and thereby, including without limitation the issuance of the Purchased Shares pursuant to this Agreement, have been duly and validly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors, or its shareholders.
(iii) The Agreements have been duly and validly executed and delivered by the Company.

 

(iv) The Agreements constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.

 

4.3 ISSUANCE OF SHARES. The Company has reserved the amount of Purchased Shares included in the Registration Statement for issuance pursuant to the Agreement, which have been duly authorized and reserved (subject to adjustment pursuant to the Company’s covenant set forth in Section 5.5 below) pursuant to this Agreement. Upon issuance in accordance with this Agreement, the Purchased Shares will be validly issued, fully paid for and non-assessable and free from all taxes, liens and charges with respect to the issuance thereof. In the event the Company cannot register a sufficient number of Purchased Shares for issuance pursuant to this Agreement, the Company will use its best efforts to authorize and reserve for issuance the number of Purchased Shares required for the Company to perform its obligations hereunder as soon as reasonably practicable.

 

4.4 INSURANCE. Each of the Company’s Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company reasonably believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has been refused any insurance coverage sought or applied for and neither the Company nor its Subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.

 

 

 

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4.5 DILUTIVE EFFECT. The Company’s executive officers and directors have studied and fully understand the nature of the transactions contemplated by this Agreement and recognize that the issuance of the Purchased Shares will have a dilutive effect on the shareholders of the Company. The Board of Directors of the Company has concluded, in its good faith business judgment, and with full understanding of the implications, that such issuance is in the best interests of the Company. The Company specifically acknowledges that, subject to such limitations as are expressly set forth in the Agreement, its obligation to issue shares of Common Stock pursuant to this Agreement is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

  

SECTION V

COVENANTS OF THE COMPANY

 

5.1 BEST EFFORTS. The Company shall use all commercially reasonable efforts to timely satisfy each of the conditions set forth in this Agreement.

 

5.2 REPORTING STATUS. Until one of the following occurs, the Company shall file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status, or take an action or fail to take any action, which would terminate its status as a reporting company under the 1934 Act: (i) this Agreement terminates pursuant to Section 8 and the Investor has the right to sell all of the Purchased Shares, or (ii) the date on which the Investor has sold all the Purchased Shares.

 

5.3 USE OF PROCEEDS. The Company will use the proceeds from the sale of the Purchased Shares for general corporate and working capital purposes and acquisitions or assets, businesses or operations or for other purposes that the Board of Directors, in good faith deem to be in the best interest of the Company.

 

5.4 FINANCIAL INFORMATION. During the Commitment Period, the Company agrees to make available to the Investor via EDGAR or other electronic means the following documents and information on the forms set forth: (i) its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and any Registration Statements or amendments filed pursuant to the 1933 Act; (ii) copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders; and (iii) within two (2) calendar days of filing or delivery thereof, copies of all documents filed with, and all correspondence sent to, the Principal Market, any securities exchange or market, or the Financial Industry Regulatory Association, unless such information is material nonpublic information.

 

5.5 RESERVATION OF PURCHASED SHARES. The Company shall take all action necessary to at all times have authorized and reserved the amount of Purchased Shares included in the Registration Statement for issuance pursuant to the Agreement. In the event that the Company determines that it does not have a sufficient number of authorized shares of Common Stock to reserve and keep available for issuance as described, the Company shall use all commercially reasonable efforts to increase the number of authorized shares of Common Stock by seeking shareholder approval for the authorization of such additional shares.

 

5.6 LISTING. The Company shall maintain the listing of all of the Purchased Shares on the Principal Market and each other national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and shall maintain, such listing of all Purchased Shares issuable under the terms of the Agreement. Neither the Company nor any of its Subsidiaries shall take any action which would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market (excluding suspensions of not more than one (1) Business Day resulting from business announcements by the Company). The Company shall promptly provide to the Investor copies of any notices it receives from the Principal Market regarding the continued eligibility of the Common Stock for listing on such automated quotation system or securities exchange. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 5.6.

 

5.7 CORPORATE EXISTENCE. The Company shall use all commercially reasonable efforts to preserve and continue the corporate existence of the Company.

 

 

 

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5.8 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION. The Company shall promptly notify the Investor upon the occurrence of any of the following events in respect of a Registration Statement or related prospectus in respect of an offering of the Purchased Shares: (i) receipt of any request for additional information by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or related prospectus; (ii) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Purchased Shares for sale in any jurisdiction or the initiation or notice of any proceeding for such purpose; (iv) the happening of any event that makes any statement made in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, related prospectus or documents so that, in the case of a Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (v) the Company’s reasonable determination that a post-effective amendment or supplement to the Registration Statement would be appropriate, and the Company shall promptly make available to Investor any such supplement or amendment to the related prospectus.

 

5.9 TRANSFER AGENT. The Company shall deliver instructions to its transfer agent to issue Purchased Shares to the Investor that are issued to the Investor pursuant to the Agreement.

 

5.10 ACKNOWLEDGEMENT OF TERMS. The Company hereby represents and warrants to the Investor that: (i) it is voluntarily entering into this Agreement of its own free will, (ii) it is not entering this Agreement under economic duress, (iii) the terms of this Agreement are reasonable and fair to the Company, and (iv) the Company has had independent legal counsel of its own choosing review this Agreement, advise the Company with respect to this Agreement, and represent the Company in connection with this Agreement.

 

SECTION VI

EXPIRATION

 

This Agreement shall expire upon the earlier to occur of:

 

6.1 that date when the Investor has purchased an aggregate of Two Million Five Hundred Thousand Dollars ($2,500,000) in Purchased Shares pursuant to this Agreement; or

 

6.2 June 30, 2021.

 

Any and all Purchased Shares issuable to Investor, or penalties or other amounts, if any, due under this Agreement shall be immediately payable and due Investor upon expiration of this Agreement.

 

SECTION VII

INDEMNIFICATION

 

In consideration of the parties mutual obligations set forth in the Agreement, the Company (the “Indemnitor”) shall defend, protect, indemnify and hold harmless the Investor and all of the investor’s shareholders, officers, directors, employees, counsel, and direct or indirect investors and any of the foregoing person’s agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and reasonable expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (I) any misrepresentation or breach of any representation or warranty made by the Indemnitor or any other certificate, instrument or document contemplated hereby or thereby; (II) any breach of any covenant, agreement or obligation of the Indemnitor contained in the Agreement or any other certificate, instrument or document contemplated hereby or thereby; or (III) any cause of action, suit or claim brought or made against such Indemnitee by a third party and arising out of or resulting from the execution, delivery, performance or enforcement of the Agreement or any other certificate, instrument or document contemplated hereby or thereby, except insofar as any such misrepresentation, breach or any untrue statement, alleged untrue statement, omission or alleged omission is made in reliance upon and in conformity with information furnished to Indemnitor which is specifically intended for use in the preparation of any such Registration Statement, preliminary prospectus, prospectus or amendments to the prospectus. To the extent that the foregoing undertaking by the Indemnitor may be unenforceable for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. The indemnity provisions contained herein shall be in addition to any cause of action or similar rights Indemnitor may have, and any liabilities the Indemnitor or the Indemnitees may be subject to.

 

 

 

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SECTION VIII

GOVERNING LAW; DISPUTES SUBMITTED TO ARBITRATION

 

8.1 LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state or federal courts located in Los Angeles, California. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

8.2 LEGAL FEES; AND MISCELLANEOUS FEES. Except as otherwise set forth in the Agreement, each party shall pay the fees and expenses of its advisers, counsel, the accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Any attorneys’ fees and expenses incurred by either the Company or the Investor in connection with the preparation, negotiation, execution and delivery of any amendments to this Agreement or relating to the enforcement of the rights of any party, after the occurrence of any breach of the terms of this Agreement by another party or any default by another party in respect of the transactions contemplated hereunder, shall be paid on demand by the party which breached this Agreement and/or defaulted, as the case may be. The Company shall pay all stamp and other taxes and duties levied in connection with the issuance of any Purchased Shares.

 

8.3 SURVIVAL. Sections 8.1, 8.2, 8.3, 8.4, and 8.5 of this Agreement shall survive the Commitment Period and the expiration of this Agreement.

 

8.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement terminates and supersedes in its entirety the Common Stock Purchase Agreement dated October 15, 2020 between the parties and is the FINAL AGREEMENT between the Company and the Investor with respect to the terms and conditions set forth herein, and, the terms of this Agreement may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the Parties. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the Investor, and no provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

 

8.5 SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

8.6 PRICING OF COMMON STOCK. For purposes of this Agreement, the price of the Common Stock shall be determined by the formula set forth in Section 2.1 hereof.

 

 

 

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SECTION IX

NON-DISCLOSURE OF NON-PUBLIC INFORMATION

 

The Company shall not disclose non-public information to the Investor.

 

Your signature on this Signature Page evidences your agreement to be bound by the terms and conditions of this Agreement as of the date first written above. The undersigned signatory hereby certifies that he has read and understands this Agreement, and the representations made by the undersigned in this Agreement are true and accurate and agrees to be bound by its terms.

 

 

TRITON FUNDS LP

By: /s/ Ashkan Mapar

Name: Ashkan Mapar

Title: Authorized Signatory

 

 

 

B2DIGITAL, Incorporated

By:/s/ Greg Bell

Name: Greg Bell

Title: Chief Executive Officer and Chairman

 

 

 

 

 

 

 

 

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EXHIBIT A

 

PURCHASE NOTICE

 

Date: _____, 202_

 

TRITON FUNDS LP,

 

This is to inform you that as of today the Company hereby elects to exercise its right pursuant to this Agreement to require you to purchase _____ Purchased Shares for an Investment Amount not to exceed Two Hundred and Fifty Thousand Dollars ($250,000). The Company’s wire instructions are as follows:

 

[Insert Wire Instructions]

 

The total Investment Amount and price per Purchased Shares shall be calculated in accordance with the terms and conditions set forth in Section 2.1 of the Agreement.

 

Regards,

 

 

 

B2DIGITAL, Incorporated

By:

Name: Greg Bell

Title: Chief Executive Officer and Chairman

 

 

 

 

 

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Exhibit 10.11

 

NEITHER THIS SECURITY NOR THE SECURITIES AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

B2DIGITAL, INCORPORATED

 

Warrant Shares: 125,000,000

Date of Issuance: December 23, 2020 (the “Issuance Date”)

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received (in connection with the funding of that common stock purchase agreement dated December 23, 2020, between the Company (as defined below) and the Investor (as defined below)) (the “CSPA”), TRITON FUNDS, LP, a Delaware limited partnership (the “Investor” and including any permitted and registered assigns), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time during the Exercise Period, to purchase from B2DIGITAL, INCORPORATED, a Delaware corporation (the “Company”), up to 125,000,000 shares of Common Stock (as defined below) (the “Warrant Shares”) at the Exercise Price per share then in effect. The number of Warrant Shares for which this Warrant may be exercised is subject to adjustment in accordance with the terms hereof. This Warrant is issued by the Company as of the date hereof pursuant to the CSPA.

 

Capitalized terms used in this Warrant shall have the meanings set forth in the CSPA unless otherwise defined in the body of this Warrant or in Section 14 below. For purposes of this Warrant, the term “Exercise Price” shall mean $0.02 per share, subject to adjustment as provided herein (including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary of such date. In the event that the S-1 Registration Statement registering the resales of the Warrant Shares is not deemed effective within ninety (90) days of the Issuance Date, one hundred million (100,000,000) Warrants shall terminate and twenty-five million (25,000,000) Warrants shall remain which shall either be registered by the Company in an S-1 Registration Statement or shall be available for cashless exercise pursuant to the terms herein.

 

1. EXERCISE OF WARRANT.

 

(a) Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Investor’s election to exercise this Warrant. The Investor shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before the second Trading Day (the “Warrant Share Delivery Date”) following the date on which the Company shall have received the Exercise Notice, which Exercise Notice must be received by the Company prior to 11 a.m., New York, New York time to count as received on such date, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”) in cash or by wire transfer of immediately available funds (or by cashless exercise if permitted under the terms of this Warrant, in which case there shall be no Aggregate Exercise Price provided), the Company shall (or direct its transfer agent to) issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Investor or its designee, for the number of shares of Common Stock to which the Investor is entitled pursuant to such exercise. Upon delivery of the Exercise Delivery Documents, the Investor shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) business days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

 

 

 

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If the Company fails to cause its transfer agent to transmit to the Investor the respective shares of Common Stock by the respective Warrant Share Delivery Date, then the Investor will have the right to rescind such exercise in Investor’s sole discretion, and such failure shall be deemed an “Event of Default” under the CSPA. Without in any way limiting the Investor’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Warrant is not delivered by the Warrant Share Delivery Date the Company shall pay to the Investor $3,000 per day, for each day beyond the Warrant Share Delivery Date that the Company fails to deliver such Common Stock (unless such failure results from war, acts of terrorism, an epidemic, or natural disaster). Such amount shall be paid to Investor in cash by the fifth day of the month following the month in which it has accrued. The Company agrees that the right to exercise is a valuable right to the Investor. The damages resulting from a failure, attempt to frustrate, interference with such exercise right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 1(a) are justified.

 

The Warrants may not be exercised on a cashless basis until the effectiveness of an S-1 Registration Statement registering the Warrant Shares or after ninety (90) days from the date hereof. If, at any time from the effectiveness of the S-1 Registration Statement through the end of the Exercise Period or after ninety (90) days from the date hereof, there is no effective registration statement of the Company covering the Investor’s immediate resale of the Warrant Shares without any limitations, then the Investor may elect to receive Warrant Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise, in which event the Company shall issue to Investor a number of Common Stock computed using the following formula:

 

X = Y (A-B)

A

 

Where   X = the number of Shares to be issued to Investor.
     
  Y = the number of Warrant Shares that the Investor elects to purchase under this Warrant (at the date of such calculation).
     
  A = the Market Price (at the date of such calculation).
     
  B = Exercise Price (as adjusted to the date of such calculation).

 

(b) No Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay to the Investor otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a Warrant Share by such fraction.

 

(c) Investor’s Exercise Limitations. The Company shall not affect any exercise of this Warrant, and the Investor shall not have the right to exercise any portion of this Warrant, to the extent that after giving effect to issuance of Warrant Shares upon exercise as set forth on the applicable Notice of Exercise, the Investor (together with the Investor’s Affiliates (as such term is defined under the Exchange Act), and any other persons acting as a group together with the Investor or any of the Investor’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation, as defined below. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Investor and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Investor or any of its Affiliates and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including without limitation any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Investor or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this paragraph (d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged by the Investor that the Company is not representing to the Investor that such calculation is in compliance with Section 13(d) of the Exchange Act and the Investor is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this paragraph applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Investor together with any affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Investor, and the submission of a Notice of Exercise shall be deemed to be the Investor’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Investor together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.

 

 

 

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For purposes of this Section 1(c), in determining the number of outstanding shares of Common Stock, the Investor may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding. Upon the request of the Investor, the Company shall within two (2) Trading Days confirm to the Investor the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Investor or its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The limitations contained in this paragraph shall apply to a successor Investor of this Warrant.

 

2. ADJUSTMENTS. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a) Distribution of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

 

(i) any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one (1) share of Common Stock, and (ii) the denominator of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date; and

 

(ii) the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided, however, that in the event that the Distribution is of shares of common stock of a company (other than the Company) whose common stock is traded on a national securities exchange or a national automated quotation system (“Other Shares of Common Stock”), then the Investor may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Investor pursuant to the Distribution had the Investor exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding clause (i) and the number of Warrant Shares calculated in accordance with the first part of this clause (ii).

 

(b) Stock Splits. If the Company, at any time while this Warrant is outstanding: (i) subdivides outstanding shares of Common Stock into a larger number of shares, or (ii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2(b) shall become effective immediately after the effective date in the case of a subdivision or combination.

 

 

 

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3. FUNDAMENTAL TRANSACTIONS. If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving entity, the “Successor Entity”), (ii) the Company effects any sale of all or substantially all of its assets in one (1) or a series of related transactions, (iii) any tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Investor shall have the right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event (disregarding any limitation on exercise contained herein solely for the purpose of such determination). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one (1) share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Investor shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the Investor a new warrant consistent with the foregoing provisions and evidencing the Investor’s right to exercise such warrant into Alternate Consideration.

 

4. NON-CIRCUMVENTION. The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Investor. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved, free from preemptive rights, three (3) times the number of shares of Common Stock issuable under the Warrant, or as otherwise required under the CSPA, to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise).

  

5. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not entitle the Investor to any voting rights or other rights as a stockholder of the Company. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Investor to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

6. REISSUANCE.

 (a) Lost, Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

 

(b) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.

 

 

 

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7. TRANSFER.

 

(a) Notice of Transfer. The Investor agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Investor’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel. If the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Investor thereof, whereupon the Investor shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Investor to the Company; provided, however, that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute the Assignment of Warrant attached hereto as Exhibit B and such other documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

 

(b) If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Investor will limit its activities in respect to such transfer or disposition as are permitted by law.

 

(c) Any transferee of all or a portion of this Warrant shall succeed to the rights and benefits of the initial Investor of this Warrant under the CSPA (registration rights, expenses, and indemnity).

 

8. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance with the notice provisions contained in the CSPA. The Company shall provide the Investor with prompt written notice (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment and (ii) at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Investor.

 

9. AMENDMENT, WAIVER, AND TERMINATION. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Investor. By entering into this Warrant each party agrees that this Warrant shall terminate and supersede, in its entirety, the Warrant issued October 15, 2020 by the Company to the Investor.

  

10. Governing Law. This Warrant shall be governed by and interpreted in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law (whether of the State of Delaware or any other jurisdiction).

 

11. Arbitration. Any disputes, claims, or controversies arising out of or relating to this Warrant, or the transactions, contemplated thereby, or the breach, termination, enforcement, interpretation, or validity thereof, including the determination of the scope or applicability of this Warrant to arbitrate, shall be referred to and resolved solely and exclusively by binding arbitration to be conducted before the Judicial Arbitration and Mediation Service (“JAMS”), or its successor pursuant the expedited procedures set forth in the JAMS Comprehensive Arbitration Rules and Procedures (the “Rules”), including Rules 16.1 and 16.2 of those Rules. The arbitration shall be held in Los Angeles, California, before a tribunal consisting of three (3) arbitrators each of whom will be selected in accordance with the “strike and rank” methodology set forth in Rule 15. Either party to this Warrant may, without waiving any remedy under this Warrant, seek from any federal or state court sitting in the State of California any interim or provisional relief that is necessary to protect the rights or property of that party, pending the establishment of the arbitral tribunal. The costs and expenses of such arbitration shall be paid by and be the sole responsibility of the Company, including but not limited to the Investor’s attorneys’ fees and each arbitrator’s fees. The arbitrators’ decision must set forth a reasoned basis for any award of damages or finding of liability. The arbitrators’ decision and award will be made and delivered as soon as reasonably possible and in any case within sixty (60) days’ following the conclusion of the arbitration hearing and shall be final and binding on the parties and may be entered by any court having jurisdiction thereof.

 

 

 

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12. JURY TRIAL WAIVER. THE COMPANY AND THE INVESTOR HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS WARRANT.

 

13. ACCEPTANCE. Receipt of this Warrant by the Investor shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

 

14. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

  

(a) “Closing Sale Price” means, for any security as of any date, (i) the last closing trade price for such security on the Trading Market, as reported by the Trading Market, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by the Trading Market, or (ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security as reported by the Trading Market, or (iii) if no last trade price is reported for such security by the Trading Market, the average of the bid and ask prices of any market makers for such security as reported by the Trading Market. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company and the Investor. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

(b) “Common Stock” means the Company’s common stock, par value $0.00001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

(c) “Common Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

(d) “Market Price” means the highest traded price of the Common Stock during the thirty (30) Trading Days prior to the date of the respective Exercise Notice.

 

(e) “OTC Markets” means OTCQX, OTCQB, OTC Pink, the OTC Bulletin Board.

 

(f) “Trading Day” means (i) any day on which the Common Stock is listed or quoted and traded on its Trading Market, (ii) if the Common Stock is not then listed or quoted and traded on any national securities exchange, then a day on which trading occurs on any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any business day.

 

(g) “Trading Market” means the OTC Markets or any equivalent principal securities exchange or other securities market on which the Common Stock is being traded or quoted.

 

15. PIGGYBACK REGISTRATION RIGHTS. The Company shall include on any registration statement filed with the SEC, all shares issuable upon exercise of this Warrant. Failure to do so will result in liquidated damages of $50,000, being immediately due and payable to the Investor at its election in the form of cash payment.

 

16. FORCE MAJEURE. Neither Party will be liable for any failure or delay in performing an obligation under this Agreement that is due (including the effectiveness within ninety (90) days from the date hereof of the registration of the Warrant Shares on an S-1 Registration Statement filed with the SEC) to any of the following causes, to the extent beyond its reasonable control: acts of God, accident, riots, war, terrorist act, epidemic, pandemic, quarantine, civil commotion, breakdown of communication facilities, breakdown of web host, breakdown of internet service provider, natural catastrophes, governmental acts or omissions, changes in laws or regulations, national strikes, fire, explosion, generalized lack of availability of raw materials or energy.

 

 

 

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For the avoidance of doubt, Force Majeure shall not include (a) financial distress nor the inability of either party to make a profit or avoid a financial loss, (b) changes in market prices or conditions, or (c) a party's financial inability to perform its obligations hereunder.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.

 

B2DIGITAL, INCORPORATED

 

/s/ Greg P. Bell

Chairman and CEO

 

TRITON FUNDS LP

 

/s/ Ashkan Mapar

Authorized Signatory

 

 

 

 

 

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EXHIBIT A

 

EXERCISE NOTICE

 

(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)

 

The Undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of B2DIGTIAL, INCORPORATED, a Delaware corporation (the “Company”), evidenced by the attached copy of the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.

Form of Exercise Price.  The Investor intends that payment of the Exercise Price shall be made

as (check one):

 

  a cash exercise with respect to _________________ Warrant Shares; or
  by cashless exercise pursuant to the Warrant.

 

2.

Payment of Exercise Price.  If cash exercise is selected above, the holder shall pay the applicable Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

3.

Delivery of Warrant Shares.  The Company shall deliver to the holder __________________ Warrant Shares in accordance with the terms of the Warrant.

  

Date:                                              

 

(Print Name of Registered Holder)  
     
By:    
Name:    
Title:    

 

 

 

 

 

 

 

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EXHIBIT B

 

ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer of the Warrant)

 

For Value Received, the undersigned hereby sells, assigns, and transfers unto ____________________ the right to purchase _______________ shares of common stock of B2DIGITAL, INCORPORATED to which the within Common Stock Purchase Warrant relates and appoints ____________________, as attorney-in-fact, to transfer said right on the books of B2DIGITAL, INCORPORATED. with full power of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.

  

Date:                                              

 

   
(Signature) *  
   
   
(Name)  
   
   
(Address)  
   
   
(Social Security or Tax Identification No.)  

 

* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

 

 

 

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Exhibit 23.1

 

CONSENT OF INDEPENDENT ACCOUNTANTS

 

We hereby consent to the incorporation in this Registration Statement on Form S-1 of B2Digital Incorporated of our report dated August 19, 2020, relating to our audit of the consolidated financial statements, which appears in the Annual Report on Form 10-K of B2Digital Incorporated for the year ended March 31, 2020.

 

We also consent to the reference to our firm under the caption “Experts” in the Prospectus, which is part of this Registration Statement.

 

/s/ Assurance Dimensions, Inc.

Assurance Dimensions

Margate, FL

 

December 30, 2020

 

 

Exhibit 23.2

 

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in this Form S-1 of B2Digital, Incorporated of our report dated August 2, 2019, relating to the audited consolidated balance sheets of B2Digital, Incorporated and its subsidiaries as of March 31, 2019, and the related statements of operations, changes in stockholders’ equity and cash flows for the year then ended.

 

 

/s/ Accell Audit & Compliance, P.A.

Tampa, Florida

December 30, 2020