See accompanying condensed notes to the unaudited
consolidated financial statements
See accompanying condensed notes to the unaudited
consolidated financial statements
continued..
See accompanying condensed notes to the unaudited
consolidated financial statements
See accompanying condensed notes to the unaudited
consolidated financial statements
Condensed Notes to Consolidated Financial Statements
December 31, 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.
The Company’s 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 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 unaudited, consolidated financial statements,
which include the accounts of the Company and its seven wholly owned subsidiaries, are prepared in conformity with generally accepted
accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany balances and transactions
have been eliminated. The consolidated financial statements, which include the accounts of the Company and its seven wholly owned subsidiaries,
and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
The Financial Statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) and presented in U.S. dollars. The fiscal year end is March 31.
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 and nine months ended December 31, 2021, approximately $327,682 and $531,184 of cost of
sales was reclassified as operating expense, respectively.
NOTE 2 – ACCOUNTING POLICIES
The significant accounting policies of the
Company are as follows:
Basis of Accounting
The interim consolidated financial statements
should be read in conjunction with the Company’s latest annual financial statements; interim disclosures generally do not repeat
those in the annual statements. The interim unaudited consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America (“GAAP”).
In the opinion of management, the unaudited interim
consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the
results for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
Use of Estimates
Management uses estimates and assumptions in preparing
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 December 31, 2022 and March 31, 2022, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist
primarily of accounts payable and accrued liabilities. The carrying amounts of such financial instruments approximate their respective
estimated fair value due to the short-term maturities and approximate market interest rates of these instruments. The three levels of
valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology
are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology
include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability,
either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology
are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments
with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
Property and Equipment
Property and equipment are carried at cost. Depreciation
is provided on the straight-line method over the assets’ estimated service lives. Expenditures for maintenance and repairs are charged
to expense in the period in which they are incurred, and betterments are capitalized. The cost of assets sold or abandoned, and the related
accumulated depreciation are eliminated from the accounts and any gains or losses are reflected in the accompanying consolidated statement
of operations of the respective period. The estimated useful lives range from 3 to 7 years.
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 third quarter of fiscal
2023 management initiated the sale of the gyms located in Alabama: One More Gym Tuscaloosa, LLC and One More Gym Birmingham, LLC.
Discontinued Operations
Discontinued operations comprise those activities
disposed of during the period or classified as held for sale at the end of the period. It represents a separate, major line of business
clearly distinguished for operational and financial reporting purposes. Due to the efforts of the Company to sell One More Gym Tuscaloosa,
LLC and One More Gym Birmingham, LLC the assets and liabilities were written down to fair value and an impairment loss was recognized.
At this time the Company does not intend to continue the fitness business. See Note 3.
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.
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.
Reclassifications
Certain reclassifications have been made to the comparative period
amounts in order to conform to the current period presentation. The assets, liabilities, income, and cash flows of the Company have been
separated from the comparative period amounts to conform to the current period presentation as discontinued operations as the result of
the Company’s reclassification of the fitness business to discontinued operations. The reclassifications had no effect on the reported
financial position, results of operations or cash flows of the Company.
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 December 31, 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.
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 December 31, 2022, the convertible notes are indexed to 86,458,200,000 shares of common stock.
The following table sets for the computation of
basic and diluted earnings per share for the nine months ended December 31, 2022 and 2021:
| Schedule of Earnings Per Share calculation | |
| | |
| |
| | |
December 31, 2022 | | |
December 31, 2021 | |
| Basic and diluted | |
| | | |
| | |
| Net loss from continuing operations | |
$ | (19,221,411 | ) | |
$ | (5,959,714 | ) |
| Net loss from discontinued operations | |
$ | (648,299 | ) | |
| (351,926 | ) |
| Net loss from operations | |
$ | (19,869,710 | ) | |
$ | (6,311,640 | ) |
| | |
| | | |
| | |
| Net loss per share from continuing operations | |
| | | |
| | |
| Basic | |
$ | (0.008 | ) | |
$ | (0.004 | ) |
| Diluted | |
$ | (0.008 | ) | |
$ | (0.004 | ) |
| Net loss per share from discontinued operations | |
| | | |
| | |
| Basic | |
$ | (0.000 | ) | |
$ | (0.001 | ) |
| Diluted | |
$ | (0.000 | ) | |
$ | (0.001 | ) |
| Net loss per share from operations | |
| | | |
| | |
| Basic | |
$ | (0.008 | ) | |
$ | (0.005 | ) |
| Diluted | |
$ | (0.008 | ) | |
$ | (0.005 | ) |
| | |
| | | |
| | |
| Weighted average number of shares outstanding: | |
| | | |
| | |
| Basic & diluted | |
| 2,446,125,019 | | |
| 1,341,287,504 | |
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 December 31, 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.
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.
Recent 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, 2022, 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.
In June 2016, the FASB issued the ASU 2016-13
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Among other things, the
amendments in this ASU requires the measurement of all expected credit losses for financial instruments held at the reporting date based
on historical experience, current conditions and reasonable and supportable forecasts. Financial institutions and other organizations
will now use forward-looking information to better inform their credit loss estimates. Many of the loss estimation techniques applied
today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses.
The ASU also requires additional disclosures related to estimates and judgments used to measure all expected credit losses. The new guidance
was originally 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 for fiscal years beginning after December 15, 2022, and early adoption is permitted. At this time, the Company believes the adoption
of this ASU will have no effect on the consolidated financial statements.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the consolidated financial statements unless
otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that
might have a material impact on its financial position or results of operations.
NOTE 3 – DISCONTINUED OPERATIONS
Discontinued operations comprise those activities
disposed of during the period or classified as held for sale at the end of the period. It represents a separate, major line of business
clearly distinguished for operational and financial reporting purposes. Due to the efforts of the Company to sell One More Gym Tuscaloosa,
LLC and One More Gym Birmingham, LLC the assets and liabilities were written down to fair value and an impairment loss was recognized.
The revenues and expenses associated with discontinued
operations included in the Company’s consolidated income statement for the three and nine months ended December 31, 2022 and 2021
were as follows:
| Schedule of revenues and expenses associated with discontinued
operations | |
| | | |
| | | |
| | | |
| | |
| | |
For the three months ended | | |
For the nine months ended | |
| | |
December 31, | | |
December 31, | | |
December 31, | | |
December 31, | |
| | |
2022 | | |
2021 | | |
2022 | | |
2021 | |
| Revenue from discontinued operations | |
| | | |
| | | |
| | | |
| | |
| Gym revenue | |
| 63,688 | | |
| 348,850 | | |
| 501,214 | | |
| 1,058,863 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses from discontinued operations | |
| | | |
| | | |
| | | |
| | |
| Sales and marketing | |
| – | | |
| 5,170 | | |
| 5,102 | | |
| 14,178 | |
| Utilities | |
| 9,514 | | |
| 42,268 | | |
| 60,737 | | |
| 126,611 | |
| Leasing expense | |
| 8,069 | | |
| 138,859 | | |
| 132,492 | | |
| 417,296 | |
| Payroll expense | |
| 30,229 | | |
| 174,179 | | |
| 226,392 | | |
| 456,461 | |
| General and administrative | |
| 322,351 | | |
| 124,560 | | |
| 417,357 | | |
| 401,904 | |
| Loss on impairment of assets | |
| 300,475 | | |
| – | | |
| 300,475 | | |
| – | |
Total general and administrative corporate expenses
from discontinued operations | |
| 670,638 | | |
| 485,036 | | |
| 1,142,555 | | |
| 1,416,450 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss from discontinued operations | |
| (606,950 | ) | |
| (136,186 | ) | |
| (641,341 | ) | |
| (357,587 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | | |
| | | |
| | |
| Gain on forgiveness of loan | |
| – | | |
| – | | |
| – | | |
| 7,704 | |
| Gain (loss) on sale of assets | |
| – | | |
| 100 | | |
| (6,958 | ) | |
| 1,240 | |
| Interest expense | |
| – | | |
| (929 | ) | |
| – | | |
| (3,283 | ) |
| Total other expense | |
| – | | |
| (829 | ) | |
| (6,958 | ) | |
| 5,661 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net loss on discontinued operations | |
$ | (606,950 | ) | |
$ | (137,015 | ) | |
$ | (648,299 | ) | |
$ | (351,926 | ) |
| | |
| | | |
| | | |
| | | |
| | |
Basic and diluted earnings per share on
net loss from discontinued operations | |
$ | (0.000 | ) | |
$ | (0.000 | ) | |
$ | (0.000 | ) | |
$ | (0.001 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average shares outstanding | |
| 3,207,338,338 | | |
| 1,452,481,989 | | |
| 2,446,125,019 | | |
| 1,341,287,504 | |
NOTE 4 – GOING CONCERN
The accompanying consolidated financial statements
have been prepared on a going concern basis. For the nine months ended December 31, 2022, the Company had a net loss from operations of
$19,869,710, had net cash used in operating activities of $2,786,451 had negative working capital of $29,223,126, accumulated deficit
of $40,343,777 and stockholders’ deficit of $28,828,556. 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 5 – 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 and nine months ended December 31, 2022 and 2021 are as follows:
| Schedule of net sales by revenue type | |
| | |
| |
| | |
For the three months ended | |
| | |
December 31, | | |
December 31, | |
| | |
| 2022 (Unaudited) | | |
| 2021 (Unaudited) | |
| Live events | |
$ | 77,847 | | |
$ | 263,782 | |
| | |
For the nine months ended | |
| | |
December 31, | | |
December 31, | |
| | |
2022 (Unaudited) | | |
2021 (Unaudited) | |
| Live events | |
$ | 576,138 | | |
$ | 782,544 | |
All revenue is derived in the United States.
Information about the Company’s deferred
revenue for the nine months ended December 31, 2022 and 2021 are as follows:
| Schedule of deferred revenue | |
| | |
| |
| | |
As of | |
| | |
December 31, | | |
December 31, | |
| | |
2022 | | |
2021 | |
| Balance at beginning of fiscal year | |
$ | 104,704 | | |
$ | 119,504 | |
| Deferral of revenue | |
| 559,775 | | |
| 711,281 | |
| Recognition of unearned revenue | |
| (656,321 | ) | |
| (766,049 | ) |
| Balance at December 31 | |
$ | 8,158 | | |
$ | 64,736 | |
Deferred revenue for the periods ended December
31, 2022 and March 31, 2022 was $8,158 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 December 31, 2022 and March 31, 2022.
Revenue recognized for the nine months ended December
31, 2022 and 2021, which was included in the unearned revenue liability balance at the beginning of the year, was $656,321 and $766,049,
respectively. This revenue represents gym membership fees and live event sales for performance obligations met in the nine months ended
December 31, 2022 and 2021.
NOTE 6 – PROPERTY AND EQUIPMENT
Property and equipment, net, consisted
of the following at December 31, 2022 and March 31, 2022:
| Schedule of property and equipment | |
| |
| | |
December 31, 2022 | | |
March 31, 2022 | |
| | |
| | |
| |
| Gym equipment | |
$ | – | | |
$ | 229,821 | |
| Cages | |
| 151,009 | | |
| 151,009 | |
| Event assets | |
| 122,795 | | |
| 122,795 | |
| Furniture and fixtures | |
| – | | |
| 19,366 | |
| Production truck gear | |
| 11,740 | | |
| 11,740 | |
| Production equipment | |
| 80,965 | | |
| 80,965 | |
| Venue lighting system | |
| 38,266 | | |
| 38,266 | |
| Leasehold improvements | |
| 4,452 | | |
| 126,851 | |
| Electronics hardware and software | |
| 191,299 | | |
| 181,720 | |
| Trucks trailers and vehicles | |
| 289,028 | | |
| 289,028 | |
| | |
| 889,554 | | |
| 1,251,561 | |
| Less: accumulated depreciation | |
| (361,304 | ) | |
| (267,344 | ) |
| | |
$ | 528,250 | | |
$ | 984,217 | |
Depreciation expense related to these assets for
the three months ended December 31, 2022 and 2021 amounted to $66,015 and $76,523, respectively. Depreciation expense related to these
assets for the nine months ended December 31, 2022 and 2021 amounted to $197,490 and $210,663, respectively.
As of December 31, 2022 the Company has deemed
the assets of One More Gym Birmingham LLC and One More Gym Tuscaloosa LLC to be impaired. The Company recorded a loss of $300,475 on the
impairment.
NOTE 7 – INTANGIBLE ASSETS
Intangible assets, net, consisted of
the following at December 31, 2022 and March 31, 2021:
| Schedule of intangible assets | |
| | |
| |
| | |
As of | | |
As of | |
| | |
December 31,
2022 | | |
March 31,
2022 | |
| | |
| | |
| |
| Licenses | |
$ | – | | |
$ | 142,248 | |
| Software/website development | |
| 12,585 | | |
| 12,585 | |
| Customer relationships | |
| – | | |
| 60,322 | |
| | |
| 12,585 | | |
| 215,155 | |
| Less: accumulated amortization | |
| (9,563 | ) | |
| (169,940 | ) |
| | |
$ | 3,022 | | |
$ | 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 December 31, 2022 and 2021 amounted to $6,075 and $26,190, respectively. Amortization expense related to these
assets for the nine months ended December 31, 2022 and 2021 amounted to $18,227 and $78,569, respectively.
Estimated amortization expense for each of the next five years:
| Schedule of future amortization expense |
|
|
|
| Fiscal year ended March 31, 2023 |
|
$ |
1,049 |
|
| Fiscal year ended March 31, 2024 |
|
|
1,973 |
|
| Total |
|
$ |
3,022 |
|
NOTE 8 – BUSINESS DISPOSITION
One More Gym Merrillville, LLC
On July 27, 2022, the Company disposed of One
More Gym Merrillville, LLC in a sale of the assets. The Company received relief of $15,000 in payables exchange for the net assets totaling
$36,299. The Company had previously recorded an impairment loss on assets of $21,299.
One More Gym Valparaiso, LLC
On July 27, 2022, the Company disposed of One
More Gym Valparaiso, LLC in a sale of the assets. The Company received relief of $25,000 in payables in exchange for the net assets totaling
$71,452. The Company had previously recorded an impairment loss on assets of $46,452.
NOTE 9 – NOTES PAYABLE
The following is a summary of notes payable as of December
31, 2022 and March 31, 2022:
| Schedule of notes payable | |
| | |
| |
| | |
As of
December 31, 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 | |
| 1,352,500 | | |
| 153,000 | |
| SBA Loan (Hillcrest) | |
| 35,400 | | |
| 35,400 | |
| Advantage Platform | |
| 222,650 | | |
| – | |
| | |
$ | 1,717,750 | | |
$ | 295,600 | |
| | |
| | | |
| | |
| 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 | |
| | |
$ | 44,000 | | |
$ | 44,000 | |
| | |
| | | |
| | |
| Total notes payable | |
| 1,761,750 | | |
| 339,600 | |
| Less: long-term | |
| – | | |
| (30,000 | ) |
| Less: discount on notes payable | |
| (93,310 | ) | |
| – | |
| Total notes payable, current portion | |
$ | 1,668,440 | | |
$ | 309,600 | |
During the nine months ended December 31, 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 December 31, 2022, the Company has paid
$77,350 to Advantage Platform and has not received notice of default from the lender.
As of December 31, 2022, the Emry Capital note
is in default. However, the note is not subject to any default provisions.
As of December 31, 2022, the WLES LP LLC note
is in default. However, the note is not subject to any default provisions.
NOTE 10 – CONVERTIBLE NOTE PAYABLE
The following is a summary of convertible notes payable:
| Schedule of Convertible Notes Payable | |
| | | |
| | |
| | |
December 31, 2022 | | |
March 31, 2022 | |
| Face value | |
$ | 8,946,968 | | |
$ | 7,951,563 | |
| Unamortized discount | |
| (478,997 | ) | |
| (1,916,473 | ) |
| Carrying value | |
$ | 8,467,971 | | |
$ | 6,035,090 | |
Between April 1, 2022, and December 31, 2022,
the Company issued to “accredited investors,” Convertible Promissory Notes aggregating a principal amount of $1,588,598. The
Company received an aggregate net proceeds of $1,434,450 after $122,998 in original note discount and $31,150 legal fees. The Company
has agreed to pay interest on the unpaid principal balance at the rates ranging from eight percent (8%) per annum to twelve percent (12%)
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 notes have varying conversion rates. The outstanding
principal amount of the Notes is convertible into the Company’s common stock at a contractual conversion rate depending on the Note
terms, number of months held and conversion prices exercised by other Convertible Promissory Note holders.
On October 1, 2022, the Notes having maturity
dates prior to March 1, 2023 were extended to July 31, 2023, and the lender waived all penalty interest for non-payment.
During the nine months ended December 31, 2023
a Note 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.
The Company was notified during the three
months ended December 31, 2022, of a note in default. The default provision of the note provided the note holder a penalty fee of $118,818.
The penalty was recorded to interest expense. The note was subsequently, fully converted into shares of common stock. The Company has
not received notice of default from any of the other note holders.
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.
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 the Notes based on
an effective interest rate. Amortization expense and interest expense for the nine months ended December 31, 2022, is as follows:
| Schedule of interest expense | |
| | | |
| | |
| | |
December 31, 2022 | | |
December 31, 2021 | |
| Interest Expense | |
$ | 620,905 | | |
$ | 91,752 | |
| | |
| | | |
| | |
| Amortization of debt discount | |
$ | 2,185,141 | | |
$ | 221,228 | |
Debt conversions
During the nine months ended December 31, 2022,
the Company repaid a Note 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.
During the nine months ended December 31, 2022,
$615,812 of principal balance and $38,536 of accrued interest associated with Notes was converted into 3,366,581,899 shares of common
stock having a fair value of $1,240,425. The derivative liability related to the notes converted was $544,881. As a result, the Company
recorded a loss on extinguishment of debt of $30,196 and legal fees of $11,000.
Between the loss on extinguishment of debt related
to the conversions above and the gain on extinguishment related to the repayment, the total gain was $43,477.
NOTE
11 – DERIVATIVE FINANCIAL INSTRUMENTS
The following tables summarize the components
of the Company’s derivative liabilities and linked common shares as of December 31, 2022:
| Schedule of fair value of derivative liabilities | |
| | |
| |
| | |
December 31, 2022 | |
| The financings giving rise to derivative financial instruments | |
Indexed
Shares | | |
Fair
Values | |
| Compound embedded derivatives | |
| 86,458,200,000 | | |
| (17,291,640 | ) |
| Total | |
| 86,458,200,000 | | |
| (17,291,640 | ) |
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 | |
| 4,418,910,016 | | |
$ | (3,831,191 | ) |
| Total | |
| 4,418,910,016 | | |
$ | (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 December 31, 2022 and 2021:
| | |
December 31, | | |
December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Change in fair value of compound embedded derivatives | |
$ | (8,688,144 | ) | |
| (66,894 | ) |
| Initial derivative expense | |
| (98,877 | ) | |
| (45,485 | ) |
| Total | |
$ | (8,787,021 | ) | |
| (112,379 | ) |
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 nine months ended December 31, 2022 and 2021:
| | |
December 31, | | |
December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Change in fair value of compound embedded derivatives | |
$ | (12,980,720 | ) | |
| (421,836 | ) |
| Initial derivative expense | |
| (478,090 | ) | |
| (45,485 | ) |
| Total | |
$ | (13,458,810 | ) | |
| (467,321 | ) |
The Company’s Convertible Promissory Notes
issued between October 4, 2019 and December 31, 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.
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 |
|
|
| |
December 31, 2022 |
|
| Quoted market price on valuation date |
$0.0002 |
|
| Contractual conversion rate |
$0.0001 - $0.0002 |
|
| Contractual term to maturity |
0 – 0.91 Years |
|
| Equivalent Volatility |
268.22% - 399.05% |
|
| Interest rate |
8% - 12% |
|
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 December 31,
2022 and March 31, 2022.
| Schedule of changes in fair value of derivatives | |
| | |
| |
| | |
December 31, | | |
March 31, | |
| | |
2022 | | |
2022 | |
| | |
| | |
| |
| Beginning balance | |
$ | 3,831,191 | | |
$ | 1,137,623 | |
| Issuances: | |
| | | |
| | |
| Compound embedded derivatives | |
| 618,321 | | |
| 2,038,843 | |
| Conversions | |
| (544,881 | ) | |
| (328,638 | ) |
| Derivative extinguished / debt repaid in cash | |
| (71,801 | ) | |
| (243,300 | ) |
| Loss on changes in fair value inputs and assumptions reflected in income | |
| 12,980,720 | | |
| 1,181,178 | |
| Initial derivative expense | |
| 478,090 | | |
| 45,485 | |
| Total | |
$ | 17,291,640 | | |
$ | 3,831,191 | |
NOTE 12 – EQUITY
Preferred Stock
There are 50,000,000 shares authorized as preferred
stock, of which 40,000,000 are designated as Series B and 2,000,000 are designated as Series A. 8,000,000 shares have yet to be designated.
All 2,000,000 shares of Series A preferred are issued and outstanding. Each share of Series A preferred is convertible into 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.
Common Stock Issuances for the nine months
ended December 31, 2022
Common Stock Issued for Conversion of Notes
Between April 1, 2022 and December 31, 2022, the
Company issued 3,366,581,899 shares in exchange for $615,810 in principal and $38,537 in accrued interest in connection with Promissory
Notes with conversion prices ranging from a low of $0.000063 to a high of $0.0013020.
Common Stock Issued for Services
On December 12, 2022, Company issued 25,000,000
shares of stock to New to the Street Group in exchange for services valued at $5,000.
Common Stock Issuances for the nine months
ended December 31, 2021
Common Stock Issued for Cash
Between April 1, 2021 and December 31, 2021, the
Company issued 295,000,000 shares of stock to various investors for $1,180,000.
Common Stock Issued for Services
Between April 1, 2021 and December 31, 2021, the
Company issued 5,500,000 shares of common stock in exchange for services valued at $23,650.
NOTE 13 – 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.
The Tuscaloosa facility was classified in discontinued
operations as December 31, 2022. The lease has a noncancelable term through March 6, 2024. The Company will continue to lease the facility
until operations end or the business unit is sold.
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.
The Birmingham facility was classified in discontinued
operations as December 31, 2022. The lease has a noncancelable term through April 30, 2026. The Company will continue to lease the facility
until operations end or the business unit is sold.
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.
Right-of-use asset is summarized below:
| Summary of right-of-use asset | |
| |
| | |
December 31, 2022 | |
| | |
Tuscaloosa Additional Lease | |
| Office lease | |
$ | 77,119 | |
| Less: accumulated amortization | |
| (13,614 | ) |
| Right-of-use asset, net | |
$ | 63,505 | |
Operating lease liability is summarized below:
| Summary of operating lease liability | |
| | |
| | |
| |
| | |
December 31, 2022 | |
| | |
Discontinued
Operations | | |
Tuscaloosa Additional Lease | | |
Total | |
| Office lease | |
$ | 316,109 | | |
| 63,505 | | |
| 379,614 | |
| Less: current portion | |
| (118,942 | ) | |
| (13,939 | ) | |
| (132,881 | ) |
| Long term portion | |
$ | 197,167 | | |
| 49,566 | | |
| 246,733 | |
Maturity of the lease liability is as follows:
| Schedule of maturity of the lease liability | |
| |
|
| | |
| |
| | |
December 31, 2022 | |
| | |
Discontinued
Operations | |
|
Tuscaloosa Additional Lease | | |
Total | |
| Fiscal year ending March 31, 2023 | |
$ | 36,000 | |
|
| 4,875 | | |
| 40,875 | |
| Fiscal year ending March 31, 2024 | |
| 144,000 | |
|
| 19,500 | | |
| 163,500 | |
| Fiscal year ending March 31, 2025 | |
| 102,000 | |
|
| 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 | |
| (43,891 | ) |
|
| (12,870 | ) | |
| (56,761 | ) |
| Lease liability | |
$ | 316,109 | |
|
| 63,505 | | |
| 379,614 | |
NOTE 14 – COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company
may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance
with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and
the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated,
it establishes the necessary accruals. As of December 31, 2022, the Company is not aware of any contingent liabilities that should be
reflected in the consolidated financial statements.
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 $180,000 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 15 – SUBSEQUENT EVENTS
Convertible Promissory Notes
On January 3, 2023, the Company entered into an
agreement with Mast Hill pursuant to which the company issued to Mast Hill a Promissory Note in the aggregate principal amount of $335,000.
The Note has a maturity date of January 3, 2024, and the Company has agreed to pay interest on the unpaid principal balance of the note
at the rate of (12%) per annum from the date on which the note is issued until the same becomes due and payable, whether at maturity or
upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the note, provided it makes a payment to Mast
Hill as set forth in the note.
On February 10, 2023, the Company entered into
an agreement with Mast Hill pursuant to which the company issued to Mast Hill a Promissory Note in the aggregate principal amount of $221,500.
The Note has a maturity date of February 10, 2024, and the Company has agreed to pay interest on the unpaid principal balance of the note
at the rate of (12%) per annum from the date on which the note is issued until the same becomes due and payable, whether at maturity or
upon acceleration or by prepayment or otherwise. The Company shall have the right to prepay the note, provided it makes a payment to Mast
Hill as set forth in the note.
Stock
Between January 1, 2023, and the filing date the
Company has issued 2,657,682,155 shares of common stock in connection with the conversion of $220,560 in principal and $11,293 in accrued
interest pursuant to various notes outstanding as of December 31, 2022.
On January 24, 2023, with Mr. Bell abstaining,
the board of directors of the Company approved the filing of an amendment to the Certificate of Designation of the Series B Convertible
Stock pursuant to which the section titled “Voting, Liquidation, Dividends, and Redemption” was revised to the following:
“Voting, Liquidation, Dividends, and Redemption. On all matters to be voted on by the holders of Common Stock, the Holders
of Series B Preferred Stock shall be entitled to three hundred and sixty (360) votes for each share of Series B Preferred Stock held of
record. On all such matters, the holders of Common Stock and the Holders of Series B Preferred Stock shall vote together as a single class.
If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and entitled
to vote, the voting rights of the Series B Preferred Stock shall not be subject to adjustments unless specifically authorized. The shares
of Series B Convertible Preferred Stock shall (i) not have a liquidation preference; (ii) not accrue, earn, or participate in any dividends;
and (iii) not be subject to redemption by the Corporation.”
