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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the quarterly period ended June 30, 2022

Or

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
| For the transition period from ____________________to_______________________

Commission File Number: 000-11882

B2Digital, Incorporated

(Exact name of registrant as specified in its charter)

Delaware | 84-0916299
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
4522 West Village Drive, Suite 215, Tampa, FL | 33624
(Address of principal executive offices) | (Zip Code)

(813) 961-3051

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | ☐ | Accelerated filer | ☐
| Non-accelerated filer | ☒ | Smaller reporting company | ☒
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to section 12(b) of the Act:

Title of Each Class |  | Trading Symbol(s) |  | Name of each exchange on which registered
Not applicable |  | Not applicable |  | Not applicable

The number of shares outstanding of the registrant’s common stock, par value of $0.00001 on October 12, 2022, was 2,171,546,992.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION | F-1
Item 1. Financial Statements | F-1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 35
Item 4. Controls and Procedures | 35
PART II - OTHER INFORMATION | 36
Item 1A. Risk Factors | 36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 36
Item 6. Exhibits | 37
SIGNATURES | 38

| i |

PART I – FINANCIAL INFORMATION

| Item 1. | Financial Statements.

Consolidated Financial Statements

B2Digital, Incorporated

| Page
Consolidated Balance Sheets as of June 30, 2022 (unaudited) and March 31, 2022 | F-2
Consolidated Statements of Operations (unaudited) for the three months ended June 30, 2022 and 2021 | F-3
Consolidated Statements of Stockholders’ Deficit (unaudited) for the three months ended June 30, 2022 and 2021 | F-4
Consolidated Statements of Cash Flows (unaudited) for the three months ended June 30, 2022 and 2021 | F-5
Notes to the Unaudited Consolidated Financial Statements | F-6

| F-1 |

B2Digital, Incorporated

Consolidated Balance Sheets

|  | As of June 30, 2022 (unaudited) |  |  | As of March 31, 2022 |
Assets |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 16,946 |  |  | $ | 39,623 |
Notes receivable |  |  | – |  |  |  | 6,096 |
Prepaid expenses |  |  | 7,035 |  |  |  | 49,363 |
Total current assets |  |  | 23,981 |  |  |  | 95,082 |
Operating lease right-of-use asset |  |  | 69,971 |  |  |  | 73,085 |
Property and equipment, net of accumulated depreciation |  |  | 936,563 |  |  |  | 984,217 |
Intangible assets, net of accumulated amortization |  |  | 39,139 |  |  |  | 45,215 |
Deposits |  |  | 11,126 |  |  |  | 11,126 |
Net assets held for sale |  |  | 40,000 |  |  |  | 80,000 |
Notes receivable – long term |  |  | 35,400 |  |  |  | 35,400 |
Total Assets |  | $ | 1,156,180 |  |  | $ | 1,324,125 |
Liabilities & Stockholders' Deficit |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |
Accounts payable & accrued liabilities |  | $ | 1,294,705 |  |  | $ | 744,069 |
Deferred revenue |  |  | 48,786 |  |  |  | 104,704 |
Note payable- current maturity |  |  | 665,600 |  |  |  | 295,600 |
Note payable- in default |  |  | 44,000 |  |  |  | 14,000 |
Convertible notes payable, net of discount |  |  | 7,216,579 |  |  |  | 6,035,090 |
Derivative liabilities |  |  | 6,911,764 |  |  |  | 3,831,191 |
Due to shareholder |  |  | – |  |  |  | 2,800 |
Lease liability, current |  |  | 126,428 |  |  |  | 123,319 |
Total current liabilities |  |  | 16,307,862 |  |  |  | 11,150,773 |
Lease liability - long-term |  |  | 314,826 |  |  |  | 347,623 |
Note payable - long-term |  |  | – |  |  |  | 30,000 |
Total Liabilities |  |  | 16,622,688 |  |  |  | 11,528,396 |
Commitments and contingencies (Note 13) |  |  | – |  |  |  | – |
Stockholders' Deficit |  |  |  |  |  |  |  |
Preferred stock, 50,000,000 shares authorized, 8,000,000 shares are undesignated |  |  | – |  |  |  | – |
Series A: 2,000,000 shares convertible into 480,000,000 shares of common stock issued and outstanding at June 30, 2022 and March 31, 2022, respectively. |  |  | 20 |  |  |  | 20 |
Series B: 40,000,000 shares convertible into 320,000,000 shares of common stock and 40,000,000 shares issued and outstanding at June 30, 2022 and March 31, 2022, respectively; |  |  | 400 |  |  |  | 400 |
Common stock, $0.00001 par value; 20,000,000,000 shares authorized; 2,097,743,117 and 1,849,932,312 shares issued and outstanding at June 30, 2022 and March 31, 2022, respectively |  |  | 20,323 |  |  |  | 17,846 |
Additional paid in capital |  |  | 10,556,458 |  |  |  | 10,251,530 |
Accumulated deficit |  |  | (26,043,709 | ) |  |  | (20,474,067 | )
Total Stockholders' Deficit |  |  | (15,466,508 | ) |  |  | (10,204,271 | )
Total Liabilities and Stockholders' Deficit |  | $ | 1,156,180 |  |  | $ | 1,324,125 |

See accompanying notes to the unaudited consolidated financial statements

| F-2 |

B2Digital, Incorporated

Consolidated Income Statement

For the Three months Ended June 30, 2022 and 2021 (Unaudited)

|  | For the Three months ended |
|  | June 30, 2022 |  |  | June 30, 2021 |
Revenue: |  |  |  |  |  |
Live event revenue |  | $ | 337,822 |  |  | $ | 235,591 |
Gym revenue |  |  | 362,519 |  |  |  | 333,174 |
Total revenue |  |  | 700,341 |  |  |  | 568,765 |
Operating expenses |  |  |  |  |  |  |  |
Sales and marketing |  |  | 64,577 |  |  |  | 62,278 |
Utilities |  |  | 40,710 |  |  |  | 31,191 |
Leasing expense |  |  | 129,466 |  |  |  | 147,436 |
Payroll expenses |  |  | 648,429 |  |  |  | 415,628 |
General and administrative |  |  | 1,552,480 |  |  |  | 1,100,849 |
Depreciation and amortization expense |  |  | 71,759 |  |  |  | 88,049 |
Total operating expenses |  |  | 2,507,421 |  |  |  | 1,845,431 |
Loss from continuing operations |  |  | (1,807,080 | ) |  |  | (1,276,666 | )
Other income (expense): |  |  |  |  |  |  |  |
Gain on forgiveness of loan |  |  | – |  |  |  | 23,303 |
Gain on extinguishment of debt |  |  | 107,208 |  |  |  | 80,741 |
(Loss) gain on sale of assets |  |  | (6,427 | ) |  |  | 230 |
Financing expense |  |  | (39,196 | ) |  |  | – |
(Loss) gain on fair value of derivative liabilities |  |  | (2,809,276 | ) |  |  | 310,871 |
Initial derivative expense |  |  | (194,323 | ) |  |  | – |
Interest expense |  |  | (820,548 | ) |  |  | (199,826 | )
Total other income |  |  | (3,762,562 | ) |  |  | 215,319 |
Net loss |  | $ | (5,569,642 | ) |  | $ | (1,061,347 | )
Basic and diluted earnings per share on net loss |  | $ | (0.003 | ) |  | $ | (0.001 | )
Weighted average shares outstanding |  |  | 1,981,717,164 |  |  |  | 1,207,948,242 |

See accompanying notes to the unaudited consolidated financial statements

| F-3 |

B2Digital, Incorporated

Consolidated Statement of Changes in Stockholders' Deficit

For the Three months Ended June 30, 2022 and 2021 (Unaudited)

|  | Preferred Stock |  | Preferred Stock |  |  |  |  |  | Additional |  |  |  |  |
|  | Series A |  | Series B |  | Common Stock |  | Paid in |  | Accumulated |  |  |
|  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount |  | Capital |  | Deficit |  | Total |
Balance March 31, 2022 |  | 2,000,000 |  | $ | 20 |  | 40,000,000 |  | $ | 400 |  | 1,849,932,312 |  | $ | 17,846 |  | $ | 10,251,530 |  | $ | (20,474,067 | ) | $ | (10,204,271 | )
Issuance of common stock upon conversion of notes |  | – |  |  | – |  | – |  |  | – |  | 247,810,805 |  |  | 2,477 |  |  | 304,928 |  |  | – |  |  | 307,405 |
Net loss |  | – |  |  | – |  | – |  |  | – |  | – |  |  | – |  |  | – |  |  | (5,569,642 | ) |  | (5,569,642 | )
Balance June 30, 2022 |  | 2,000,000 |  | $ | 20 |  | 40,000,000 |  | $ | 400 |  | 2,097,743,117 |  | $ | 20,323 |  | $ | 10,556,458 |  | $ | (26,043,709 | ) | $ | (15,466,508 | )

|  | Preferred Stock |  | Preferred Stock |  |  |  |  |  | Additional |  |  |  |  |
|  | Series A |  | Series B |  | Common Stock |  | Paid in |  | Accumulated |  |  |
|  | Shares |  | Amount |  | Shares |  | Amount |  | Shares |  | Amount |  | Capital |  | Deficit |  | Total |
Balance March 31, 2021 |  | 2,000,000 |  | $ | 20 |  | 40,000,000 |  | $ | 400 |  | 1,081,390,550 |  | $ | 10,815 |  | $ | 7,652,677 |  | $ | (9,197,248 | ) | $ | (1,533,336 | )
Sale of common stock |  | – |  |  | – |  | – |  |  | – |  | 220,000,000 |  |  | 2,200 |  |  | 877,800 |  |  | – |  |  | 880,000 |
Issuance of common stock for services |  | – |  |  | – |  | – |  |  | – |  | 5,500,000 |  |  | 55 |  |  | 23,595 |  |  | – |  |  | 23,650 |
Issuance of convertible notes |  | – |  |  | – |  | – |  |  | – |  | – |  |  | – |  |  | 2,080 |  |  | – |  |  | 2,080 |
Net loss |  | – |  |  | – |  | – |  |  | – |  | – |  |  | – |  |  | – |  |  | (1,061,347 | ) |  | (1,061,347 | )
Balance June 30, 2021 |  | 2,000,000 |  | $ | 20 |  | 40,000,000 |  | $ | 400 |  | 1,306,890,550 |  | $ | 13,070 |  | $ | 8,556,152 |  | $ | (10,258,595 | ) | $ | (1,688,953 | )

See accompanying notes to the unaudited consolidated financial statements

| F-4 |

B2Digital, Incorporated

Consolidated Statements of Cash Flows

(Unaudited)

|  | For the Three months ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |
Cash Flows from Operating Activities |  |  |  |  |  |  |  |
Net Loss |  | $ | (5,569,642 | ) |  | $ | (1,061,347 | )
Adjustments to reconcile net loss to net cash used by operating activities: |  |  |  |  |  |  |  |
Stock compensation |  |  | – |  |  |  | 23,650 |
Depreciation and amortization |  |  | 71,759 |  |  |  | 88,049 |
Loss (gain) on sale of assets |  |  | 6,427 |  |  |  | (230 | )
Gain on forgiveness of loan |  |  | – |  |  |  | (23,303 | )
Gain on extinguishment of debt |  |  | (107,208 | ) |  |  | (80,741 | )
Financing expense |  |  | – |  |  |  | 8,246 |
Amortization of debt discount |  |  | 578,080 |  |  |  | 155,736 |
Initial derivative expense |  |  | 194,323 |  |  |  | – |
Loss (gain) on fair value of compound embedded derivative |  |  | 2,809,276 |  |  |  | (310,871 | )
Right-of-use asset/liability |  |  | (26,574 | ) |  |  | 24,376 |
Changes in operating assets & liabilities |  |  |  |  |  |  |  |
Prepaid expenses |  |  | 42,328 |  |  |  | (18,231 | )
Accounts payable and accrued liabilities |  |  | 598,247 |  |  |  | 183,736 |
Related party advances |  |  | (5,786 | ) |  |  | – |
Deferred revenue |  |  | (55,918 | ) |  |  | (34,896 | )
Net cash used by operating activities |  |  | (1,464,688 | ) |  |  | (1,045,826 | )
Cash Flows from Investing Activities |  |  |  |  |  |  |  |
Business acquisitions |  |  | 40,000 |  |  |  | (125,000 | )
Capital expenditures |  |  | (24,456 | ) |  |  | (174,184 | )
Net cash provided by investing activities |  |  | 15,544 |  |  |  | (299,184 | )
Cash Flows from Financing Activities |  |  |  |  |  |  |  |
Proceeds from notes payable |  |  | 367,608 |  |  |  | 153,000 |
Proceeds from convertible notes payable |  |  | 1,167,230 |  |  |  | 370,181 |
Repayments of convertible notes payable |  |  | (108,371 | ) |  |  | (65,372 | )
Repayments of notes payable |  |  | – |  |  |  | (2,347 | )
Payment of note payable |  |  | – |  |  |  | (843 | )
Issuance of common stock |  |  | – |  |  |  | 880,000 |
Net cash provided by financing activities |  |  | 1,426,467 |  |  |  | 1,334,619 |
Decrease in Cash |  |  | (22,677 | ) |  |  | (10,391 | )
Cash at beginning of period |  |  | 39,623 |  |  |  | 122,176 |
Cash (and equivalents) at end of period |  | $ | 16,946 |  |  | $ | 111,785 |
Supplemental Cash Flow Information |  |  |  |  |  |  |  |
Cash paid for interest |  | $ | 34,789 |  |  | $ | 2,319 |
Cash paid for income taxes |  | $ | – |  |  | $ | – |
Non-cash investing and financing activities: |  |  |  |  |  |  |  |
Conversion of note payable and accrued interest to common stock |  | $ | 162,795 |  |  | $ | – |
Initial recognition of derivative liability as debt discount |  | $ | 725,305 |  |  | $ | 2,038,843 |
Net assets disposed of |  | $ | 40,000 |  |  | $ | – |

See accompanying notes to the unaudited consolidated financial statements

| F-5 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS

We are the premier development league for mixed martial arts (“MMA”). We operate in two major branded businesses: The B2 Fighting Series and The ONE More Gym Official B2 Training Facilities Network. We primarily derive revenues from live event ticket sales, pay-per-view ticket sales, content media marketing, and fitness facility memberships.

Our Live Events business (the B2 Fighting Series) is primarily engaged with scheduling, organizing, and producing live MMA events, marketing those events, and generating both live audience and PPV ticket sales, as well as creatively marketing the archived content generated through its operations in this business. We also plan to generate additional revenues over time from endorsement deals with global brands as its audience grows. The B2 Fighting Series is licensed in 18 U.S. states to operate LIVE MMA Fights. Most B2 Fighting Series events sell out at the gate.

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 Fitness Facility business operates primarily through the ONE More Gym Official B2 Training Facilities Network. We currently operate two ONE More Gym locations.

Basis of Presentation and Consolidation

The Company has seven wholly owned subsidiaries. Hardrock Promotions LLC which owns Hardrock MMA in Kentucky, United Combat League MMA LLC, Pinnacle Combat LLC, Strike Hard Productions, LLC, One More Gym Tuscaloosa LLC, One More Gym Birmingham, Inc. and B2 Productions LLC.

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

| F-6 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

The Company changed the presentation of prior year cost of sales to operating expenses. It’s the opinion of management that with all of B2’s business expenses are operating in nature. The nature of the gym’s expenses for payroll, leasing and utilities do not directly derive income in the form of memberships and services generated by the gym on a daily basis. Secondarily, the nature of the MMA LIVE Fights’ expenses also does not directly affect or derive income in the form of ticket, merchandise and concession sales generated by live MMA events. Therefore, we believe the traditional cost of goods sold expense items should be eliminated from both business income statements and all expenses should be reported as operating expense to more accurately reflect the true nature of the business. Traditional line items such as raw materials, labor associated with the production of finished goods and depreciation and amortization of machinery and intangibles associated with converting raw materials into finished goods do not exist in either of these businesses. As such for the three months ended June 30, 2021, approximately $203,502 of cost of sales was reclassified as operating expense.

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”).

Use of Estimates

Management uses estimates and assumptions in preparing the consolidated 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, the valuation of long-lived and intangible assets 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 June 30, 2022 and 2021, 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:

| F-7 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

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.

Assets Held for Sale

We consider properties to be Assets held for sale when management approves and commits to a plan to dispose of a property or group of properties. The property held for sale prior to the sale date is separately presented on the balance sheets as Net assets held for sale. During the fourth quarter of fiscal 2022 management initiated the sale of the gyms located in Indiana: One More Gym, LLC, One More Gym Valparaiso and One More Gym Merrillville. During the three months ended June 30, 2022 the Company completed the sale of ONE More Gym, LLC for cash proceeds of $40,000.

Long-Lived Assets

Management reviews long-lived assets, including finite-lived intangible assets, for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related assets are estimated over the asset’s useful life on an undiscounted basis. For assets held for use, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. If the evaluation indicates that the carrying value of the asset may not be recoverable, the potential impairment is measured using fair value. Impairment losses for assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.

Revenue Recognition

Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

| F-8 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

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.

Live event revenue

The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Revenue associated with B2FS (Fight Club) consist primarily of 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

Revenues in connection with Company owned Fitness Clubs consist primarily of monthly membership dues and ancillary products. Monthly membership dues are recognized during the monthly membership period and any dues paid not correlating to the current period are recorded in deferred revenue. Ancillary products are recorded in the period the services or products are delivered.

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, 2022, 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, consequently, believes that its accounts receivable credit risk exposure beyond such allowance is limited. In addition, revenue processed through the Company's payment processor are guaranteed further mitigating Credit Risk.

| F-9 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

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, restricted stock awards 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 June 30, 2022, the convertible notes are indexed to 19,585,533,532 shares of common stock.

The following table sets for the computation of basic and diluted earnings per share for the three months ended June 30, 2022 and 2021:

Schedule of Earnings Per Share, Basic and Diluted |  |  |  |  |  |
|  | June 30, 2022 |  |  | June 30, 2021 |
Basic and diluted |  |  |  |  |  |  |  |
Net loss |  | $ | (5,569,642 | ) |  | $ | (1,061,347 | )
Net loss per share |  |  |  |  |  |  |  |
Basic |  | $ | (0.003 | ) |  | $ | (0.001 | )
Diluted |  | $ | (0.003 | ) |  | $ | (0.001 | )
Weighted average number of shares outstanding: |  |  |  |  |  |  |  |
Basic & diluted |  |  | 1,981,717,164 |  |  |  | 1,207,948,242 |

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 and stock awards, whether held by employees or others. As of June 30, 2022, 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.

| F-10 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

During the three months ended June 30, 2021, the Company recorded $23,650 in stock-compensation expense.

Leases

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606.

On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

Operating lease right of use (“ROU”) assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is presented on the statements of operations.

As permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of the new guidance to short term leases (leases with a lease term of twelve months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term.

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of the standard on the consolidated financial statements.

| F-11 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 – GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis. For the three months ended June 30, 2022, the Company had a net loss of $(5,569,642), had net cash used in operating activities of $1,464,688, had negative working capital of $(16,283,881), accumulated deficit of $(26,043,709) and stockholders’ deficit of $(15,466,508). 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 three months ended June 30, 2022 and 2021 are as follows:

Schedule of net sales by revenue type |  |  |  |  |  |
|  | For the three months ended |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |
Live events |  | $ | 337,822 |  |  | $ | 235,591 |
Gym revenue |  |  | 362,519 |  |  |  | 333,174 |
Net sales |  | $ | 700,341 |  |  | $ | 568,765 |

All revenue is derived in the United States.

| F-12 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

Information about the Company’s deferred revenue for the three months ended June 30, 2022 and 2021 are as follows:

Schedule of deferred revenue |  |  |  |  |  |
|  | As of |
|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |
Balance at beginning of year |  | $ | 104,704 |  |  | $ | 119,504 |
Deferral of revenue |  |  | 303,857 |  |  |  | 169,798 |
Recognition of unearned revenue |  |  | (359,775 | ) |  |  | (204,694 | )
Balance at June 30 |  | $ | 48,786 |  |  | $ | 84,608 |

Deferred revenue for the periods ended June 30, 2022 and March 31, 2022 was $48,786 and $104,704, respectively. This deferred revenue represents deferred gym memberships fees and tickets pre-sold for live events, which pertain to performance obligations not realized as of June 30, 2022 and March 31, 2022.

Revenue recognized for the three months ended June 30, 2022 and 2021, which was included in the unearned revenue liability balance at the beginning of the year, was $359,775 and $204,694, respectively. This revenue represents gym membership fees and live event sales for performance obligations met in the three months ended June 30, 2022 and 2021.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following at June 30, 2022 and March 31, 2022:

Schedule of property and equipment |  |  |  |  |  |
|  | June 30, 2022 |  |  | March 31, 2022 |
Gym equipment |  | $ | 229,821 |  |  | $ | 229,821 |
Cages |  |  | 151,009 |  |  |  | 151,009 |
Event assets |  |  | 122,795 |  |  |  | 122,795 |
Furniture and fixtures |  |  | 19,366 |  |  |  | 19,366 |
Production truck gear |  |  | 11,740 |  |  |  | 11,740 |
Production equipment |  |  | 80,965 |  |  |  | 80,965 |
Venue lighting system |  |  | 38,266 |  |  |  | 38,266 |
Leasehold improvements |  |  | 135,301 |  |  |  | 126,851 |
Electronics hardware and software |  |  | 191,299 |  |  |  | 181,720 |
Trucks trailers and vehicles |  |  | 289,028 |  |  |  | 289,028 |
|  |  | 1,269,590 |  |  |  | 1,251,561 |
Less: accumulated depreciation |  |  | (333,027 | ) |  |  | (267,344 | )
|  | $ | 936,563 |  |  | $ | 984,217 |

Depreciation expense related to these assets for the three months ended June 30, 2022 and 2021 amounted to $65,683 and $61,859, respectively.

| F-13 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

NOTE 6 – INTANGIBLE ASSETS

Intangible assets, net, consisted of the following at June 30, 2022 and March 31, 2021:

Schedule of intangible assets |  |  |  |  |  |
|  | As of |  |  | As of |
|  | June 30, 2022 |  |  | March 31, 2022 |
Licenses |  | $ | 142,248 |  |  | $ | 142,248 |
Software/website development |  |  | 12,585 |  |  |  | 12,585 |
Customer relationships |  |  | 60,322 |  |  |  | 60,322 |
|  |  | 215,155 |  |  |  | 215,155 |
Less: accumulated amortization |  |  | (176,016 | ) |  |  | (169,940 | )
|  | $ | 39,139 |  |  | $ | 45,215 |

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 three months ended June 30, 2022 and 2021 amounted to $6,076 and $26,190, respectively.

Estimated amortization expense for each of the next five years:

Schedule of amortization expense |  |  |
Fiscal year ended March 31, 2023 |  | $ | 18,227 |
Fiscal year ended March 31, 2024 |  |  | 20,912 |
Total |  | $ | 39,139 |

NOTE 7 – BUSINESS DISPOSITION

One More Gym, LLC

On June 2, 2022 the Company entered into an agreement to dispose of 100% of the equity interest in One More Gym, LLC. The value received for the disposition was $40,000 and during the quarter ended the Company removed the assets held for sale related to this entity. The Company recorded an impairment loss on the assets of One More Gym, LLC during the year ended March 31, 2022 in the amount of $86,099.

| F-14 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

NOTE 8 - NOTES PAYABLE

The following is a summary of notes payable as of June 30, 2022 and March 31, 2022:

Schedule of notes payable |  |  |  |  |  |  |  |
|  | As of June 30, 2022 |  |  | As of March 31, 2022 |
Notes Payable: |  |  |  |  |  |  |  |
SBA EIDL Loan |  | $ | 10,000 |  |  | $ | 10,000 |
SBA Loan Payable B2 Digital |  |  | 97,200 |  |  |  | 97,200 |
GS Capital, LLC |  |  | 303,000 |  |  |  | 153,000 |
SBA Loan (Hillcrest) |  |  | 35,400 |  |  |  | 35,400 |
Advantage Platform |  |  | 220,000 |  |  |  | – |
Notes Payable – in default |  |  |  |  |  |  |  |
Emry Capital $14,000, 4% loan with principal and interest due April, 2021 |  |  | 14,000 |  |  |  | 14,000 |
WLES LP LLC $60,000, 5% loan due January 15, 2022 |  |  | 30,000 |  |  |  | 30,000 |
Total notes payable |  |  | 709,600 |  |  |  | 339,600 |
Less: long-term |  |  | – |  |  |  | (30,000 | )
Total |  | $ | 709,600 |  |  | $ | 309,600 |

During the three months ended June 30, 2022, the Company entered into an Agreement for the Purchase and Sale of Future Receipts with Advantage Platform. In exchange for $300,000 the Company agreed to release future revenue to Advantage in the amount of $14,400 for 30 weeks. The Company accounted for this agreement as a debt under guidance from ASC 470-10-25-2. This transaction does not purport a sale of the Company, the Company continues to be involved in the daily operations and generation of cash flow, the transaction is cancelable by either party and with a lump sum payment or other transfer of assets to Advantage by the Company, the agreement explicitly limits Advantage’s rate of return, Advantage has several other entities in its portfolio and has any recourse to the Company relating to the payments due under the agreement.

As of June 30, 2022, the Emry Capital note is in default. However, the note is not subject to any default provisions.

As of June 30, 2022, the WLES LP LLC note is in default. However, the note is not subject to any default provisions.

| F-15 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

NOTE 9 – CONVERTIBLE NOTE PAYABLE

The following is a summary of convertible notes payable as of June 30, 2022:

Schedule of Convertible Notes Payable |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Note* |  | Issuance Date |  | Maturity |  | Coupon |  | Face Value |  |  | Unamortized Discount |  |  | Carrying Value |
Note 8 |  | 8/04/2020 |  | 12/31/2022 |  | 8% |  | $ | 97,000 |  |  | $ | – |  |  | $ | 97,000 |
Note 9 |  | 10/02/2020 |  | 12/31/2022 |  | 8% |  |  | 205,000 |  |  |  | – |  |  |  | 205,000 |
Note 10 |  | 10/15/2020 |  | 12/31/2022 |  | 8% |  |  | 172,000 |  |  |  | – |  |  |  | 172,000 |
Note 11 |  | 11/02/2020 |  | 12/31/2022 |  | 8% |  |  | 69,000 |  |  |  | – |  |  |  | 69,000 |
Note 12 |  | 11/12/2020 |  | 12/31/2022 |  | 8% |  |  | 69,000 |  |  |  | – |  |  |  | 69,000 |
Note 14 |  | 12/10/2020 |  | 12/31/2022 |  | 8% |  |  | 80,000 |  |  |  | – |  |  |  | 80,000 |
Note 16 |  | 1/14/2021 |  | 12/31/2022 |  | 8% |  |  | 107,000 |  |  |  | – |  |  |  | 107,000 |
Note 17 |  | 1/27/2021 |  | 12/31/2022 |  | 8% |  |  | 60,000 |  |  |  | – |  |  |  | 60,000 |
Note 20 |  | 4/30/2021 |  | 12/31/2022 |  | 8% |  |  | 104,000 |  |  |  | – |  |  |  | 104,000 |
Note 21 |  | 5/25/2021 |  | 12/31/2022 |  | 8% |  |  | 104,000 |  |  |  | – |  |  |  | 104,000 |
Note 22 |  | 6/24/2021 |  | 12/31/2022 |  | 8% |  |  | 185,652 |  |  |  | – |  |  |  | 185,652 |
Note 24 |  | 7/24/2021 |  | 12/31/2022 |  | 8% |  |  | 265,000 |  |  |  | 6,839 |  |  |  | 258,161 |
Note 25 |  | 8/04/2021 |  | 12/31/2022 |  | 8% |  |  | 129,800 |  |  |  | 3,542 |  |  |  | 126,258 |
Note 26 |  | 8/11/2021 |  | 12/31/2022 |  | 8% |  |  | 151,500 |  |  |  | 4,001 |  |  |  | 147,499 |
Note 28 |  | 8/20/2021 |  | 12/31/2022 |  | 8% |  |  | 151,500 |  |  |  | 4,584 |  |  |  | 146,916 |
Note 29 |  | 8/30/2021 |  | 12/31/2022 |  | 8% |  |  | 140,650 |  |  |  | 6,914 |  |  |  | 133,736 |
Note 30 |  | 9/02/2021 |  | 12/31/2022 |  | 8% |  |  | 216,385 |  |  |  | 11,947 |  |  |  | 204,438 |
Note 31 |  | 9/17/2021 |  | 12/31/2022 |  | 8% |  |  | 270,480 |  |  |  | 12,919 |  |  |  | 257,561 |
Note 32 |  | 9/30/2021 |  | 12/31/2022 |  | 8% |  |  | 270,480 |  |  |  | 17,595 |  |  |  | 252,885 |
Note 34 |  | 10/26/2021 |  | 12/31/2022 |  | 8% |  |  | 270,480 |  |  |  | 22,985 |  |  |  | 247,495 |
Note 36 |  | 11/03/2021 |  | 12/31/2022 |  | 8% |  |  | 270,480 |  |  |  | 16,069 |  |  |  | 254,411 |
Note 37 |  | 11/16/2021 |  | 12/31/2022 |  | 8% |  |  | 324,576 |  |  |  | 63,398 |  |  |  | 261,178 |
Note 38 |  | 11/30/2021 |  | 12/31/2022 |  | 8% |  |  | 270,480 |  |  |  | 39,344 |  |  |  | 231,136 |
Note 39 |  | 12/10/2021 |  | 12/31/2022 |  | 8% |  |  | 601,000 |  |  |  | 88,760 |  |  |  | 512,240 |
Note 40 |  | 12/15/2021 |  | 12/31/2022 |  | 8% |  |  | 270,480 |  |  |  | 44,017 |  |  |  | 226,463 |
Note 41 |  | 12/23/2021 |  | 12/23/2022 |  | 8% |  |  | 54,100 |  |  |  | 9,667 |  |  |  | 44,433 |
Note 42 |  | 1/04/2022 |  | 1/04/2023 |  | 8% |  |  | 270,480 |  |  |  | 23,045 |  |  |  | 247,435 |
Note 43 |  | 1/12/2022 |  | 1/12/2023 |  | 8% |  |  | 300,000 |  |  |  | 221,695 |  |  |  | 78,305 |
Note 44 |  | 1/19/2022 |  | 1/19/2023 |  | 8% |  |  | 270,480 |  |  |  | 33,573 |  |  |  | 236,907 |
Note 45 |  | 2/02/2022 |  | 2/02/2023 |  | 8% |  |  | 270,480 |  |  |  | 26,502 |  |  |  | 243,978 |
Note 46 |  | 2/03/2022 |  | 2/03/2023 |  | 8% |  |  | 425,000 |  |  |  | 314,068 |  |  |  | 110,932 |
Note 47 |  | 2/15/2022 |  | 2/15/2023 |  | 8% |  |  | 270,480 |  |  |  | 20,293 |  |  |  | 250,187 |
Note 48 |  | 2/24/2022 |  | 2/24/2023 |  | 8% |  |  | 211,640 |  |  |  | 156,399 |  |  |  | 55,241 |
Note 49 |  | 3/01/2022 |  | 3/01/2023 |  | 8% |  |  | 120,000 |  |  |  | 94,147 |  |  |  | 25,853 |
Note 50 |  | 3/01/2022 |  | 3/01/2023 |  | 8% |  |  | 270,480 |  |  |  | 27,771 |  |  |  | 242,709 |
Note 51 |  | 3/16/2022 |  | 3/16/2023 |  | 8% |  |  | 270,480 |  |  |  | 26,476 |  |  |  | 244,004 |
Note 52 |  | 3/22/2022 |  | 3/22/2023 |  | 8% |  |  | 120,000 |  |  |  | 98,661 |  |  |  | 21,339 |
Note 53 |  | 4/01/2022 |  | 4/01/2023 |  | 8% |  |  | 135,240 |  |  |  | 12,936 |  |  |  | 122,304 |
Note 54 |  | 4/01/2022 |  | 4/01/2023 |  | 8% |  |  | 270,480 |  |  |  | 25,402 |  |  |  | 245,078 |
Note 55 |  | 4/04/2022 |  | 4/04/2023 |  | 8% |  |  | 92,040 |  |  |  | 78,530 |  |  |  | 13,510 |
Note 56 |  | 4/15/2022 |  | 4/15/2023 |  | 8% |  |  | 270,480 |  |  |  | 27,618 |  |  |  | 242,862 |
Note 57 |  | 4/29/2022 |  | 4/29/2023 |  | 8% |  |  | 270,480 |  |  |  | 21,093 |  |  |  | 249,387 |
Note 58 |  | 5/05/2022 |  | 5/05/2023 |  | 8% |  |  | 66,100 |  |  |  | 56,398 |  |  |  | 9,702 |
Note 59 |  | 5/31/2022 |  | 5/31/2023 |  | 8% |  |  | 160,000 |  |  |  | 140,616 |  |  |  | 19,384 |
Total |  |  |  |  |  |  |  | $ | 8,974,383 |  |  | $ | 1,757,804 |  |  | $ | 7,216,579 |

| F-16 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

* Notes 1, 2, 3, 4, 5, 6 and 7 in the amounts of $82,000, $208,000, $27,000, $62,000, $202,400, $78,000 and $85,800 respectively, were fully converted as of June 30, 2022.

* On July 7, 2022, the maturity date of each of Notes 8, 9, 10, 11, 12, 14, 16, 17, 20, 21, 22, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34, 36, 37, 38, & 40 were extended to December 31, 2022, and the lender waived all penalty interest for non-payment.

*Note 27 in the amount of $88,400 was paid in cash on April 4, 2022. The Company recognized a gain on extinguishment of debt in the amount of $71,799, related to the write off of the derivative liability.

Between April 1, 2022, and June 30, 2022, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,264,820. The Company received an aggregate net proceeds of $1,167,230 after $90,590 in original note discount and $7,000 legal fees. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the dates on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration, prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment 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. The notes have varying conversion rates. After the six-month anniversary, the conversion price is equal to 63%-70% of the average of the three lowest trading prices of the Company’s common stock. Five of 40 notes outstanding have a fixed conversion rate of $0.002.

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

June 30, 2022 (Unaudited)

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 three months ended June 30, 2022, is as follows:

Schedule of amortization expense, interest expense and accrued interest on debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Note |  | Interest Expense |  |  | Accrued Interest |  |  | Amortization of Debt Discount |  |  | Unamortized |
Note 7 |  | $ | – |  |  | $ | 11,420 |  |  | $ | – |  |  | $ | – |
Note 8 |  |  | 10,991 |  |  |  | 36,746 |  |  |  | – |  |  |  | – |
Note 9 |  |  | 9,200 |  |  |  | 43,797 |  |  |  | – |  |  |  | – |
Note 10 |  |  | 7,719 |  |  |  | 35,644 |  |  |  | – |  |  |  | – |
Note 11 |  |  | 3,096 |  |  |  | 13,687 |  |  |  | – |  |  |  | – |
Note 12 |  |  | 3,096 |  |  |  | 13,346 |  |  |  | – |  |  |  | – |
Note 14 |  |  | 3,590 |  |  |  | 14,369 |  |  |  | – |  |  |  | – |
Note 15 |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Note 16 |  |  | 3,746 |  |  |  | 16,317 |  |  |  | – |  |  |  | – |
Note 17 |  |  | 2,693 |  |  |  | 9,357 |  |  |  | – |  |  |  | – |
Note 18 |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Note 19 |  |  | – |  |  |  | – |  |  |  | – |  |  |  | – |
Note 20 |  |  | 2,074 |  |  |  | 9,710 |  |  |  | 339 |  |  |  | – |
Note 21 |  |  | 2,074 |  |  |  | 9,141 |  |  |  | 1,039 |  |  |  | – |
Note 22 |  |  | 3,703 |  |  |  | 15,096 |  |  |  | 16,440 |  |  |  | – |
Note 24 |  |  | 5,285 |  |  |  | 19,632 |  |  |  | 19,476 |  |  |  | 6,839 |
Note 25 |  |  | 2,589 |  |  |  | 9,388 |  |  |  | 10,057 |  |  |  | 3,542 |
Note 26 |  |  | 3,022 |  |  |  | 10,725 |  |  |  | 11,379 |  |  |  | 4,001 |
Note 27 |  |  | 78 |  |  |  | – |  |  |  | 12,288 |  |  |  | – |
Note 28 |  |  | 3,022 |  |  |  | 10,427 |  |  |  | 12,936 |  |  |  | 4,584 |
Note 29 |  |  | 2,805 |  |  |  | 9,372 |  |  |  | 9,739 |  |  |  | 6,914 |
Note 30 |  |  | 4,316 |  |  |  | 14,275 |  |  |  | 16,695 |  |  |  | 11,947 |
Note 31 |  |  | 5,395 |  |  |  | 17,844 |  |  |  | 18,231 |  |  |  | 12,919 |
Note 32 |  |  | 5,395 |  |  |  | 16,184 |  |  |  | 16,450 |  |  |  | 17,595 |
Note 34 |  |  | 5,395 |  |  |  | 15,058 |  |  |  | 15,947 |  |  |  | 22,985 |
Note 35 |  |  | 200 |  |  |  | – |  |  |  | 34,584 |  |  |  | – |
Note 36 |  |  | 5,395 |  |  |  | 14,169 |  |  |  | 11,422 |  |  |  | 16,069 |
Note 37 |  |  | 6,474 |  |  |  | 16,078 |  |  |  | 31,928 |  |  |  | 63,398 |
Note 38 |  |  | 5,395 |  |  |  | 12,568 |  |  |  | 20,803 |  |  |  | 39,344 |
Note 39 |  |  | 11,987 |  |  |  | 27,926 |  |  |  | 46,833 |  |  |  | 88,760 |
Note 40 |  |  | 5,395 |  |  |  | 11,679 |  |  |  | 22,893 |  |  |  | 44,017 |
Note 41 |  |  | 1,079 |  |  |  | 2,241 |  |  |  | 4,165 |  |  |  | 9,667 |
Note 42 |  |  | 5,395 |  |  |  | 10,493 |  |  |  | 9,265 |  |  |  | 23,045 |
Note 43 |  |  | 5,984 |  |  |  | 11,178 |  |  |  | 34,271 |  |  |  | 221,695 |
Note 44 |  |  | 5,395 |  |  |  | 9,604 |  |  |  | 13,081 |  |  |  | 33,573 |
Note 45 |  |  | 5,395 |  |  |  | 8,774 |  |  |  | 10,548 |  |  |  | 26,502 |
Note 46 |  |  | 8,477 |  |  |  | 13,693 |  |  |  | 48,550 |  |  |  | 314,068 |
Note 47 |  |  | 5,395 |  |  |  | 8,003 |  |  |  | 8,224 |  |  |  | 20,293 |
Note 48 |  |  | 4,221 |  |  |  | 5,845 |  |  |  | 24,177 |  |  |  | 156,399 |
Note 49 |  |  | 2,393 |  |  |  | 3,182 |  |  |  | 11,315 |  |  |  | 94,147 |
Note 50 |  |  | 5,395 |  |  |  | 7,173 |  |  |  | 9,663 |  |  |  | 27,771 |
Note 51 |  |  | 5,395 |  |  |  | 6,284 |  |  |  | 9,246 |  |  |  | 26,476 |
Note 52 |  |  | 2,393 |  |  |  | 2,630 |  |  |  | 9,339 |  |  |  | 98,661 |
Note 53 |  |  | 2,668 |  |  |  | 2,668 |  |  |  | 4,031 |  |  |  | 12,936 |
Note 54 |  |  | 5,335 |  |  |  | 5,335 |  |  |  | 7,926 |  |  |  | 25,402 |
Note 55 |  |  | 1,755 |  |  |  | 1,755 |  |  |  | 4,306 |  |  |  | 78,530 |
Note 56 |  |  | 4,506 |  |  |  | 4,506 |  |  |  | 5,176 |  |  |  | 27,618 |
Note 57 |  |  | 3,676 |  |  |  | 3,676 |  |  |  | 4,028 |  |  |  | 21,093 |
Note 58 |  |  | 811 |  |  |  | 811 |  |  |  | 3,092 |  |  |  | 56,398 |
Note 59 |  |  | 1,052 |  |  |  | 1,052 |  |  |  | 3,384 |  |  |  | 140,616 |
Total |  | $ | 200,850 |  |  | $ | 542,858 |  |  | $ | 553,266 |  |  | $ | 1,757,804 |

| F-18 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

Debt conversions

The following table illustrates the debt converted and the associated gain or loss:

Schedule of Debt Conversions |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Note |  | Conversion Date |  | Shares issued in conversion |  | Fair value of shares |  | Face Value |  | Accrued Interest |  | Total Debt |  | Derivative liability |  | Net (gain) / loss |
Note 7 |  | April 14, 2022 |  | 35,873,156 |  | $ | 82,508 |  | $ | 40,000 |  | $ | 6,707 |  | $ | 46,707 |  | $ | 45,869 |  | $ | (10,068 | )
Note 35 |  | April 28, 2022 |  | 20,000,000 |  |  | 32,000 |  |  | 20,000 |  |  | – |  |  | 20,000 |  |  | 20,685 |  |  | (8,685 | )
Note 35 |  | May 5, 2022 |  | 37,631,579 |  |  | 48,921 |  |  | 26,800 |  |  | 1,800 |  |  | 28,600 |  |  | 33,022 |  |  | (12,701 | )
Note 8 |  | May 10, 2022 |  | 42,813,737 |  |  | 51,377 |  |  | 26,000 |  |  | 3,670 |  |  | 29,670 |  |  | 26,202 |  |  | (4,495 | )
Note 8 |  | May 25, 2022 |  | 47,230,793 |  |  | 28,338 |  |  | 13,000 |  |  | 1,877 |  |  | 14,877 |  |  | 10,638 |  |  | 2,823 |
Note 8 |  | June 6, 2022 |  | 64,261,540 |  |  | 64,262 |  |  | 20,000 |  |  | 2,941 |  |  | 22,941 |  |  | 41,730 |  |  | (409 | )
|  |  |  | 247,810,805 |  | $ | 307,406 |  | $ | 145,800 |  | $ | 16,995 |  | $ | 162,795 |  | $ | 178,146 |  | $ | (33,535 | )

During the three months ended June 30, 2022, the Company repaid Note 27 in cash. The principal balance was $88,400 and the accrued interest was $4,476. The prepayment fee was $15,495. The Company repaid $108,371. As of the repayment dates, the derivative liability related to Notes was $73,673. As a result, the Company recorded a gain of extinguishment in the amount of $73,673.

Between the gain on extinguishment of $33,535 related to the conversions above and the gain on extinguishment related to the repayment, the total gain was $107,208.

NOTE 10 –DERIVATIVE FINANCIAL INSTRUMENTS

The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2022:

Schedule of derivative liabilities |  |  |  |  |  |
|  | June 30, 2022 |
The financings giving rise to derivative financial instruments |  | Indexed Shares |  |  | Fair Values |
Compound embedded derivatives |  |  | 19,585,533,532 |  |  |  | (6,911,764 | )
Total |  |  | 19,585,533,532 |  |  |  | (6,911,764 | )

| F-19 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of March 31, 2022:

|  | March 31, 2022 |
The financings giving rise to derivative financial instruments |  | Indexed Shares |  |  | Fair Values |
Compound embedded derivatives |  |  | 559,931,126 |  |  | $ | (3,831,191 | )
Total |  |  | 559,931,126 |  |  | $ | (3,831,191 | )

The following table summarizes the effects on the Company’s (loss) gain associated with changes in the fair values of the derivative financial instruments by type of financing for the three months ended June 30, 2022 and 2021:

|  | June 30, |  |  | June 30, |
|  | 2022 |  |  | 2021 |
Compound embedded derivatives |  | $ | (2,809,276 | ) |  | $ | 310,871 |
Day one derivative loss |  |  | (194,323 | ) |  |  | – |
Total |  | $ | (3,003,599 | ) |  | $ | 310,871 |

The Company’s Convertible Promissory Notes issued between October 4, 2019 and June 30, 2022 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.

| F-20 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

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:

Schedule of significant inputs |  |
| June 30, 2022 |
Quoted market price on valuation date | $0.0006 |
Contractual conversion rate | $0.0003 - $0.01 |
Contractual term to maturity | 0.74 Years - 0.918 Years |
Market volatility: |  |
Equivalent Volatility | 69.86% - 282.23% |
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 June 30, 2022 March 31, 2022.

Schedule of changes in fair value of derivatives |  |  |  |  |  |
|  | June 30, |  |  | March 31, |
|  | 2022 |  |  | 2022 |
Beginning balance |  | $ | 3,831,191 |  |  | $ | 1,137,623 |
Issuances: |  |  |  |  |  |  |  |
Compound embedded derivatives |  |  | 326,921 |  |  |  | 2,038,843 |
Conversions |  |  | (178,146 | ) |  |  | (328,638 | )
Derivative extinguished / debt repaid in cash |  |  | (71,801 | ) |  |  | (243,300 | )
Loss on changes in fair value inputs and assumptions reflected in income |  |  | 2,809,276 |  |  |  | 1,181,178 |
Day one derivative expense |  |  | 194,323 |  |  |  | 45,485 |
Total |  | $ | 6,911,764 |  |  | $ | 3,831,191 |

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 480,000,000 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. All 40,000,000 of Series B are issued and outstanding. Series B is convertible into 320,000,000 shares of common stock. The 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 B Preferred Stock is entitled to 120 votes for each share of Series B Preferred Stock held by such shareholder.

| F-21 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

Common Stock Issuances for the three months ended June 30, 2022

On April 14, 2022, GS Capital converted $40,000 in principal and $6,707 in accrued interest in connection with Promissory Note dated March 10, 2020. Pursuant to the terms of the conversion, the Company issued 35,873,156 shares of common stock at $0.001302 per share.

On April 28, 2022, Sixth Street Lending converted $20,000 in principal in connection with Promissory Note dated October 26, 2021. Pursuant to the terms of the conversion, the Company issued 20,000,000 shares of common stock at $0.0010 per share.

On May 5, 2022, 1800 Diagonal Lending converted $26,800 in principal and $1,800 in accrued interest in connection with Promissory Note dated October 26, 2021. Pursuant to the terms of the conversion, the Company issued 37,631,579 shares of common stock at $0.00076 per share.

On May 10, 2022, GS Capital converted $26,000 in principal and $3,670 in accrued interest in connection with Promissory Note dated August 4, 2020. Pursuant to the terms of the conversion, the Company issued 42,813,737 shares of common stock at $0.000693 per share.

On May 25, 2022, GS Capital converted $13,000 in principal and $1,877 in accrued interest in connection with Promissory Note dated August 4, 2020. Pursuant to the terms of the conversion, the Company issued 47,230,793 shares of common stock at $0.000315 per share.

On June 6, 2022, GS Capital converted $20,000 in principal and $2,941 in accrued interest in connection with Promissory Note dated August 4, 2020. Pursuant to the terms of the conversion, the Company issued 64,261,540 shares of common stock at $0.000357 per share.

Common Stock Issuances for the three months ended June 30, 2021

On April 1, 2021, the Company issued 50,000,000 shares of stock to GS Capital in exchange for $200,000 or $0.004 per share.

On April 10, 2021, the Company issued 25,000,000 shares of stock to AES Capital in exchange for $100,000 or $0.004 per share.

On April 14, 2021, the Company issued 13,750,000 shares of stock to GS Capital in exchange for $55,000 or $0.004 per share.

On May 13, 2021, the Company issued 50,000,000 shares of stock to GS Capital in exchange for $200,000 or $0.004 per share.

On May 21, 2021, the Company issued 1,500,000 shares of common stock to Rex Chan in exchange for contractor services valued at $6,450 or $0.0043 per share representing the share price at the date of the transaction.

On May 21, 2021, the Company issued 2,000,000 shares of common stock to BM Giancarlo in exchange for management services valued at $8,600 or $0.0043 per share representing the share price at the date of the transaction.

| F-22 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

On May 21, 2021, the Company issued 2,000,000 shares of common stock to Carlos Diaz in exchange for management services valued at $8,600 or $0.0043 per share representing the share price at the date of the transaction.

On June 3, 2021, the Company issued 25,000,000 shares of stock to AES Capital in exchange for $100,000 or $0.004 per share.

On June 16, 2021, the Company issued 31,250,000 shares of stock to GS Capital in exchange for $125,000 or $0.004 per share.

On June 25, 2021, the Company issued 25,000,000 shares of stock to AES Capital in exchange for $100,000 or $0.004 per share.

NOTE 12 – LEASES

Tuscaloosa Lease

In connection with the acquisition of Hillcrest Fitness LLC on December 1, 2021, the Company acquired a facilities lease at 6551 Highway 69 South, Tuscaloosa, AL 35405. The monthly lease payments are $6,000 and the lease expires on March 6, 2024.

Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in operating expenses on the statements of operations.

Birmingham Lease

In connection with the acquisition of Club Fitness LLC on April 1, 2021, the Company acquired a facility lease at 2520 Moody Parkway, Mood, AL 35004. The monthly lease payments are $6,000 and the lease expires on April 30, 2026.

Tuscaloosa Additional Space Lease

On November 1, 2021, the Company entered into a facilities lease (“Tuscaloosa Additional Space”) in Tuscaloosa, Alabama. The initial lease term is for five years, and the lease commencement date is December 1, 2021. The monthly lease payments are fixed at $1,625 plus Common Area Maintenance of $125 per month for all five years.

Operating lease right-of-use asset and liability are recognized at the present value of the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 10%, as the interest rate implicit in most of our leases is not readily determinable. Operating lease expense is recognized on a straight-line basis over the lease term. Since the common area maintenance expenses are expenses that do not depend on an index or rate, they are excluded from the measurement of the lease liability and recognized in other operating expenses on the statements of operations.

| F-23 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

Right-of-use asset is summarized below:

Summary of right-of-use asset |  |  |
|  |  | June 30, 2022 |
|  | Tuscaloosa Additional Lease |
Office lease |  | $ | 77,119 |
Less: accumulated amortization |  |  | (7,148 | )
Right-of-use asset, net |  | $ | 69,971 |

Operating lease liability is summarized below:

Summary of operating lease liability |  |  |  |  |  |  |  |  |  |  |  |
|  | June 30, 2022 |
|  | Tuscaloosa Lease |  |  | Birmingham Lease |  |  | Tuscaloosa Additional Lease |  |  | Total |
Office lease |  | $ | 140,901 |  |  | $ | 230,382 |  |  | $ | 69,971 |  |  | $ | 441,254 |
Less: current portion |  |  | (61,268 | ) |  |  | (51,898 | ) |  |  | (13,262 | ) |  |  | (126,428 | )
Long term portion |  | $ | 79,633 |  |  | $ | 178,484 |  |  | $ | 56,709 |  |  | $ | 314,826 |

Maturity of the lease liability is as follows:

Schedule of maturity of the lease liability |  |  |  |  |  |  |  |  |  |  |  |
|  | June 30, 2022 |
|  | Tuscaloosa Lease |  |  | Birmingham Lease |  |  | Tuscaloosa Additional Lease |  |  | Total |
Fiscal year ending March 31, 2023 |  | $ | 54,000 |  |  | $ | 54,000 |  |  | $ | 14,625 |  |  | $ | 122,625 |
Fiscal year ending March 31, 2024 |  |  | 72,000 |  |  |  | 72,000 |  |  |  | 19,500 |  |  |  | 163,500 |
Fiscal year ending March 31, 2025 |  |  | 30,000 |  |  |  | 72,000 |  |  |  | 19,500 |  |  |  | 121,500 |
Fiscal year ending March 31, 2026 |  |  | – |  |  |  | 72,000 |  |  |  | 19,500 |  |  |  | 91,500 |
Fiscal year ending March 31, 2027 |  |  | – |  |  |  | 6,000 |  |  |  | 13,000 |  |  |  | 19,000 |
Present value discount |  |  | (15,099 | ) |  |  | (45,618 | ) |  |  | (16,154 | ) |  |  | (76,871 | )
Lease liability |  | $ | 140,901 |  |  | $ | 230,382 |  |  | $ | 69,971 |  |  | $ | 441,254 |

| F-24 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

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 June 30, 2022, the Company is not aware of any contingent liabilities that should be reflected in the consolidated financial statements.

The Company entered into an employment agreement with its Executive Vice President as of November 24, 2017. Under the terms of the agreement, the Company will be liable for severance and other payments under certain conditions. The employment agreement is for a period of 36 months and renews for a successive two years unless written notice is provided by either party under the terms of the agreement.

On March 1, 2022, with Greg P. Bell abstaining, the board of directors of the Company approved the Chairman of the Board and Chief Executive Officer & President Agreement dated effective March 1, 2022, with Mr. Bell, the Company’s Chairman of the Board, CEO, and President. The agreement supersedes the previous agreement of the same title dated effective November 23, 2020. The term of the agreement is until Mr. Bell is removed from his executive positions by 80% of the voting control of the Company unless Mr. Bell is legally incapacitated (until legal capacity is regained), as determined by a court of competent jurisdiction or upon Mr. Bell’s death. Mr. Bell can terminate the agreement upon three months’ prior written notice to the Company.

Pursuant to the agreement, Mr. Bell is entitled to an annual salary of $120,000 and Mr. Bell was also issued 40,000,000 shares of the Company’s Series B Convertible Preferred Stock (the “Series B Preferred Stock”).

Each of the acquisition agreements contain a Management Services Agreement (“MSA”) whereby the Company agrees to pay a management fee based on certain performance targets. The MSA agreements expire 10 years from the acquisition agreement dates.

NOTE 14 - SUBSEQUENT EVENTS

Convertible Promissory Notes

On August 16, 2022, the Company issued 73,803,875 shares of stock to GS Capital in exchange for the conversion of $20,000 of principal and $3,248 of accrued interest related to convertible notes payable.

Notes payable

On July 7, 2022, the Company entered into an Agreement with GS Capital Partners pursuant to which the Company issued to Mast Hill Fund, LP a Promissory Note in the aggregate principal amount of $483,000.00. The Note has a maturity date of July 7, 2023, and the Company has agreed to principal payments that shall be made in ten (10) installments each in the amount of $33,810.00 commencing on the ninetieth (90th) day anniversary following the issue date and continuing thereafter each thirty (30) days for ten (10) months.

| 25 |

B2Digital, Incorporated

Notes to Consolidated Financial Statements

June 30, 2022 (Unaudited)

On August 11, 2022, the Company entered into an Agreement with Mast Hill Fund, LP pursuant to which the Company issued to Mast Hill Fund, LP a Promissory Note in the aggregate principal amount of $57,777.78. The Note has a maturity date of August 11, 2023, and the Company has agreed to principal payments that shall be made in ten (10) installments each in the amount of $5,777.75 commencing on the ninetieth (90th) day anniversary following the issue date and continuing thereafter each thirty (30) days for ten (10) months.

On August 26, 2022, the Company entered into an Agreement with GS Capital Partners pursuant to which the Company issued to GS Capital Partners a Promissory Note in the aggregate principal amount of $66,000. The Note has a maturity date of August 26, 2023, and the Company has agreed to principal payments that shall be made in ten (10) installments each in the amount of $7,128 commencing on the ninetieth (90th) day anniversary following the issue date and continuing thereafter each thirty (30) days for ten (10) months.

On September 9, 2022, the Company entered into an Agreement with GS Capital Partners pursuant to which the Company issued to GS Capital Partners a Promissory Note in the aggregate principal amount of $55,000. The Note has a maturity date of September 9, 2023, and the Company has agreed to principal payments that shall be made in ten (10) installments each in the amount of $5,940 commencing on the ninetieth (90th) day anniversary following the issue date and continuing thereafter each thirty (30) days for ten (10) months.

On September 16, 2022, the Company entered into an Agreement with GS Capital Partners pursuant to which the Company issued to GS Capital Partners a Promissory Note in the aggregate principal amount of $55,000. The Note has a maturity date of September 16, 2023, and the Company has agreed to principal payments that shall be made in ten (10) installments each in the amount of $5,940 commencing on the ninetieth (90th) day anniversary following the issue date and continuing thereafter each thirty (30) days for ten (10) months.

On September 23, 2022, the Company entered into an Agreement with GS Capital Partners pursuant to which the Company issued to GS Capital Partners a Promissory Note in the aggregate principal amount of $135,000. The Note has a maturity date of September 23, 2023, and the Company has agreed to principal payments that shall be made in ten (10) installments each in the amount of $14,580 commencing on the ninetieth (90th) day anniversary following the issue date and continuing thereafter each thirty (30) days for ten (10) months.

Assets

On July 27, 2022, the Company disposed of One More Gym Merrillville, LLC in a sale of the assets. The Company received cash of $15,000 in exchange for the net assets totaling $36,299. This generated a loss on sale of assets of $21,299.

On July 27, 2022, the Company disposed of One More Gym Valparaiso, LLC in a sale of the assets. The Company received cash of 25,000 in exchange for the net assets totaling $71,452. This generated a loss on sale of assets of $46,452.

| F-26 |

| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed in the section titled “Risk Factors” of our Annual Report on Form 10-K for the year ended March 31, 2022 filed on September 28, 2022. 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, United Combat League MMA LLC, Pinnacle Combat LLC, Strike Hard Productions, LLC, One More Gym Tuscaloosa LLC, One More Gym Birmingham, Inc. and B2 Productions LLC.

The consolidated financial statements, which include the accounts of the Company and its 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.

Forward-Looking Statements

Some of the statements under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” and “would” or the negatives of these terms or other comparable terminology.

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

| · | The nature of our outstanding debt being senior secured and the risk of foreclosure on our assets by the lender;
| · | The unprecedented impact of COVID-19 pandemic on our business, customers, employees, consultants, service providers, stockholders, investors and other stakeholders;
| · | The speculative nature of the business we intend to develop;
| · | Our reliance on suppliers and customers;
| · | Our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a “going concern;”

| 27 |

| · | Our ability to effectively execute our business plan;
| · | Our ability to manage our expansion, growth and operating expenses;
| · | Our ability to finance our businesses;
| · | Our ability to service debt, when due and avoid defaults;
| · | Our ability to promote our businesses;
| · | Our ability to compete and succeed in highly competitive and evolving businesses;
| · | Our ability to respond and adapt to changes in technology and customer behavior; and
| · | Our ability to protect our intellectual property and to develop, maintain and enhance strong brands.

Although the forward-looking statements in this Quarterly Report on Form 10-Q are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made to any investor by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to update this Quarterly Report on Form 10-Q or otherwise make public statements updating our forward-looking statements.

Critical Accounting Policies

Basis of Accounting

The financial information furnished herein reflects all adjustments, consisting of normal recurring items that, in the opinion of management, are necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods. The results of operations for the three months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending March 31, 2023.

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 June 30, 2022 and March 31, 2022, respectively.

| 28 |

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their respective estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

Property and Equipment

Property and equipment are carried at cost. Depreciation is provided on the straight-line method over the assets’ estimated service lives. Expenditures for maintenance and repairs are charged to expense in the period in which they are incurred, and betterments are capitalized. The cost of assets sold or abandoned and the related accumulated depreciation are eliminated from the accounts and any gains or losses are reflected in the accompanying consolidated statement of operations of the respective period. The estimated useful lives range from 3-7 years.

Assets Held for Sale

We consider properties to be Assets held for sale when management approves and commits to a plan to dispose of a property or group of properties. The property held for sale prior to the sale date is separately presented on the balance sheet as Assets held for sale. During the fourth quarter of fiscal 2022 management initiated the sale of the gyms located in Indiana: One More Gym, LLC One More Gym Valparaiso and One More Gym Merrillville. The Company completed the sale of One More Gym, LLC during the first quarter of fiscal 2023 with proceeds of $40,000.

Long-Lived Assets

Management reviews long-lived assets, including finite-lived intangible assets, for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Cash flows expected to be generated by the related assets are estimated over the asset’s useful life on an undiscounted basis. For assets held for use, the Company groups assets and liabilities at the lowest level for which cash flows are separately identifiable. If the evaluation indicates that the carrying value of the asset may not be recoverable, the potential impairment is measured using fair value. Impairment losses for assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.

| 29 |

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.

Live Event Revenue

The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. The majority of revenues are received from ticket and beverage sales before and during the live events. Sponsorship revenue is also recognized when the live event takes place. Any revenue received for events that have yet to take place are recorded in deferred revenue.

Gym Revenue

The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. The majority of revenues are received for gym membership dues. Members pay their dues on the monthly anniversary of when they join the gym. Dues are recognized as revenue over the period they are earned. Any unearned dues are recorded in deferred revenue.

Income Taxes

The Company follows Section 740-10-30 of the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the consolidated Statements of Operations in the period that includes the enactment date. Through June 30, 2022, 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.

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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.

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, 2022 and 2021.

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, 2022 and March 31, 2022, the Company did not carry any finished goods inventory.

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 June 30, 2022, the convertible notes are indexed to 18,503,829,049 shares of common stock.

The following table sets for the computation of basic and diluted earnings per share the three months ended June 30, 2022 and 2021:

|  | June 30, 2022 |  |  | June 30, 2021 |
Basic and diluted |  |  |  |  |  |  |  |
Net loss |  | $ | (5,569,642 | ) |  | $ | (1,061,347 | )
Net loss per share |  |  |  |  |  |  |  |
Basic |  | $ | (0.003 | ) |  | $ | (0.001 | )
Diluted |  | $ | (0.003 | ) |  | $ | (0.001 | )
Weighted average number of shares outstanding: |  |  |  |  |  |  |  |
Basic & diluted |  |  | 1,981,717,164 |  |  |  | 1,207,948,242 |

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Stock Based Compensation

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

Topic 718, the Company recognizes an expense for the fair value of its stock awards at the time of grant and the fair value of its outstanding stock options as they vest, whether held by employees or others. As of June 30, 2022, there were no options outstanding.

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

During the three months ended June 30, 2022 and 2021, the Company recorded $0 and $23,650 in stock-compensation expense, respectively.

Leases

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The updated guidance requires lessees to recognize lease assets and lease liabilities for most operating leases. In addition, the updated guidance requires that lessors separate lease and non-lease components in a contract in accordance with the new revenue guidance in ASC 606.

On January 1, 2019, the Company adopted ASU No. 2016-02, applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases and; (ii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assessed whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether it has the right to direct the use of the asset. The Company will allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

Operating lease right of use (“ROU”) assets represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and is presented on the statements of operations.

As permitted under the new guidance, the Company has made an accounting policy election not to apply the recognition provisions of the new guidance to short term leases (leases with a lease term of twelve months or less that do not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise); instead, the Company will recognize the lease payments for short term leases on a straight-line basis over the lease term.

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Recently Adopted Accounting Pronouncements

In September 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. The new guidance was effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Recently, the FASB voted to delay the implementation date for this accounting standard, for smaller reporting companies, the new effective date is beginning after December 15, 2022, and early adoption is permitted. The Company is currently evaluating the impact of the adoption of this ASU on the consolidated financial statements and is collecting and analyzing data that will be needed to produce historical inputs into any models created as a result of adopting this ASU. At this time, the Company does not believe the adoption of this ASU will have a material effect on the financial statements.

Organization and Nature of Business

We are the premier development league for MMA. We operate in two major branded businesses: The B2 Fighting Series and The Official B2 Training Facilities Network, which is comprised of our two ONE MORE Gym Facilities. We primarily derive revenues from live event ticket sales, pay-per-view ticket sales, content media marketing, and fitness facility memberships.

The Live Events business (the B2 Fighting Series) is primarily engaged with scheduling, organizing, and producing live MMA events, marketing those events, and generating both live audience and PPV ticket sales, as well as creatively marketing the archived content generated through its operations in this business. We own all media rights, merchandising rights, digital distribution networks of the B2 Fighting Series. We also plan to generate additional revenues over time from endorsement deals with global brands as its audience grows. The B2 Fighting Series is licensed in 20 U.S. states to operate LIVE MMA Fights. Most B2 Fighting Series events sell out at the gate. We now operate at a pace of more than 40 events per year.

The B2 Training Facilities business operates primarily through our ONE More Gym Facilities brand. We currently operate two ONE More Gym locations.

For more information about B2Digital, visit our website at www.B2FS.com. We do not incorporate the information on or accessible through our website into this 10-Q. We have included our website address in this 10-Q solely as an inactive textual reference.

Results of Operations for the three months ended June 30, 2022 compared to the three months ended June 30, 2021

Revenue

We had total revenues of $700,341 for the three months ended June 30, 2022, versus revenues of $568,765 for the three months ended June 30, 2021. There was an increase in live event revenue of $102,231, or 43%, due to an increase in live events related to less restrictions resulting from the COVID-19 pandemic. There was an increase in gym revenue of $29,345 or 9%, due to the increase in the number of gym locations over the prior period.

Operating Expenses

Operating expenses are all expenses including merchant fees, payroll, utilities, professional fees, all costs associated with marketing, press releases, public relations, rent, sponsorships, and other expenses. We incurred operating expenses of $2,507,421 for the three months ended June 30, 2022, versus operating expenses of $1,845,431 for the three months ended June 30, 2021. The increase of $661,990 was primarily due to an increase in the number of live events, increased operations as a result of gym acquisitions, increased salaries, investor relations and professional fees due to the growth of the business.

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Depreciation and Amortization Expense

We incurred depreciation and amortization expense of $71,759 for the three months ended June 30, 2022, versus depreciation expense of $88,049 for the three months ended June 30, 2021. The decrease of $16,290 was due to a decrease in capitalized assets and intangible assets as a result of recording an impairment loss during the year ended March 31, 2022.

Other Income (Expense)

Our other income and expenses include gain on forgiveness of loan, loss on sale of assets, gain on extinguishment of debt, financing expense, change in fair value of derivative liabilities, day-one derivative expense and interest expense. We incurred other expenses of $3,762,562 for the three months ended June 30, 2022, versus other income of $215,319 for the three months ended June 30, 2021. The increase in other expenses of $3,977,881 was primarily due to increases in the fair value of derivatives, day-one derivative expense and interest expense.

Net Losses

We incurred a net loss of $5,569,642 for the three months ended June 30, 2022, versus a net loss of $1,061,347 for the three months ended June 30, 2021.

Current Liquidity and Capital Resources for the three months ended June 30, 2022 compared to the three months ended June 30, 2021

|  | June 30, |
|  | 2022 |  |  | 2021 |
Summary of Cash Flows: |  |  |  |  |  |
Net cash used by operating activities |  | $ | (1,464,688 | ) |  | $ | (1,045,826 | )
Net cash provided by investing activities |  |  | 15,544 |  |  |  | (299,184 | )
Net cash provided by financing activities |  |  | 1,426,467 |  |  |  | 1,334,619 |
Net increase in cash and cash equivalents |  |  | (22,677 | ) |  |  | (10,391 | )
Beginning cash and cash equivalents |  |  | 39,623 |  |  |  | 122,176 |
Ending cash and cash equivalents |  | $ | 16,946 |  |  | $ | 111,785 |

Operating Activities

Cash used in operations of $1,464,688 during the three months ended June 30, 2022 was primarily a result of our $5,569,642 net loss reconciled with our net non-cash expenses relating to depreciation expense, prepaid expenses, accounts payable, accrued liabilities, gain on extinguishment of debt, amortization of debt discount, initial derivative expense, changes in fair value of derivative liabilities and deferred revenue. Cash used in operations of $1,045,826 during the three months ended June 30, 2021 was primarily a result of our $1,061,347 net loss reconciled with our net non-cash expenses relating to stock compensation, depreciation expense, prepaid expenses, accounts payable, accrued liabilities, amortization of debt discount, changes in fair value of derivative liabilities and deferred revenue.

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Investing Activities

Net cash received in investing activities for the three months ended June 30, 2022 of $15,544 resulted from the sale of gym locations partially offset by capital expenditures. Net cash used in investing activities for the three months ended June 30, 2021 of $299,184 resulted from business acquisitions and capital expenditures.

Financing Activities

Net cash provided by financing activities was $1,426,467 for three months ended June 30, 2022, which consisted primarily of proceeds from notes payable less repayments of notes payable and from the conversion of existing notes payable, Net cash provided by financing activities was $1,334,619 for three months ended June 30, 2021, which consisted primarily of proceeds from notes payable less repayments of notes payable, proceeds from the conversion of existing notes payable and 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 the remainder of fiscal year 2022 and for 2023 will depend on numerous factors, including management’s evaluation of the timing of projects to pursue. Subject to our ability to generate revenues and cash flow from operations and our ability to raise additional capital (including through possible joint ventures and/or partnerships), we expect to incur substantial expenditures to carry out our business plan, as well as costs associated with our capital raising efforts and being a public company.

Our plans to finance our operations include seeking equity and debt financing, alliances or other partnership agreements, or other business transactions, that would generate sufficient resources to ensure continuation of our operations.

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

Inflation

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

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis. For the three months ended June 30, 2022, the Company had a net loss of $5,569,642, had net cash used in operating activities of $1,464,688, had negative working capital of $16,283,881, accumulated deficit of $26,043,709 and stockholders’ deficit of $15,466,508. 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.

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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.

| Item 3. | Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.

| Item 4. | Controls and Procedures.

Disclosure Controls and Procedures

The Company has established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to the Company’s Chief Executive Officer, Greg P. Bell, who serves as our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Mr. Bell, evaluated the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of June 30, 2022. Based on his evaluation, Mr. Bell concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022.

Changes in Internal Control Over Financial Reporting

There has been no change in the Company’s internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during the Company’s most recent fiscal quarter ended June 30, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

| Item 1A. | Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, 2022, which could materially affect our business, financial condition or future results. The risks described in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

Convertible Note Issuances

Between April 1, 2022, and June 30, 2022, the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,264,820. The Company received an aggregate net proceeds of $1,167,230 after $90,590 in original note discount and $7,000 legal fees. The Company has agreed to pay interest on the unpaid principal balance at the rate of eight percent (8%) per annum from the dates on which Notes are issued until the same becomes due and payable, whether at maturity or upon acceleration, prepayment or otherwise. The Company shall have the right to prepay the Notes, provided it makes a payment as set forth in the agreements.

These notes were issued without registration under the Securities Act of 1933, as amended, by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. We paid $11,700 in selling commissions to Moody Capital Solutions, Inc., a registered broker-dealer, in connection with the issuance of one of the notes.

Shares Issued Pursuant to Note Conversions

During the quarter ended June 30, 2022, a lender converted an aggregate of $162,795 in principal and accrued and unpaid interest of their promissory notes into an aggregate of 247,810,805 shares of our Common Stock. The securities were issued without registration under the Securities Act of 1933, as amended, by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof, and Rule 506(b) promulgated thereunder, as a transaction by an issuer not involving any public offering. No selling commissions were paid in connection with the issuance of the securities.

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| Item 6. | Exhibits.

SEC Ref. No. | Title of Document
31.1* | Rule 13a-14(a) Certification by Principal Executive and Financial Officer
32.1** | Section 1350 Certification of Principal Executive and Financial Officer
101.INS* | XBRL Instance Document
101.SCH* | XBRL Taxonomy Extension Schema Document
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document
104* | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

__________________

*Filed with this Report.

**Furnished with this Report.

| 38 |

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

| B2Digital, Incorporated
Date: October 14, 2022 | By | /s/ Greg P. Bell
|  | Greg P. Bell, Chief Executive Officer
|  | (Principal Executive Officer and Principal
|  | Financial Officer)

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