What Do B2Digital’s Risk Factors Tell Investors?

B2Digital (BTDG) is a live event sports company, which offers solutions for event management, digital ticketing, digital video distribution, digital marketing, Pay-Per-View (PPV), fighter management, merchandising, and brand management.

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The company’s strategy is to build a live event minor league for the mixed martial arts (MMA) marketplace, which is a billion-dollar market. B2Digital also plans to add additional sports, leagues, tournaments, and special events to its business model.

Let’s take a look at the company’s financial performance and understand what has changed in its key risk factors.

B2Digitak Risk Factors

According to the new Tipranks Risk Factors tool, B2Digital’s main risk category is Finance & Corporate, which accounts for 53% of the total 34 risks identified. The next two major risk factor contributors are Legal & Regulatory and Ability to Sell at 15% each. Since March, the company has not added any new risk factors and removed one.

Under the Legal & Regulatory category, B2Digital acknowledges that it has contractual indemnification obligations under its agreements with its directors, officers, and employees. This could result in substantial expenditures for B2Digital to cover the cost of settlement or damage awards against these parties. Further, the company may not be able to recoup these expenditures.

Additionally, if these parties breach their fiduciary duties, these provisions may discourage B2Digital or its shareholders from bringing a lawsuit against these parties even if such actions may be beneficial to B2Digital and its investors.

Financial Performance

Amidst the COVID-19 backdrop, B2Digital’s live event revenue dropped to $304 thousand in fiscal 2021 from $487 thousand in fiscal 2020. Its gym revenue, however, jumped six-fold to $647.5 thousand in the same period, owing to certain gym acquisitions.

The company’s gross profit jumped to $643.7 thousand in fiscal 2021 from $245.8 thousand in fiscal 2020. Its increased operating expenses in fiscal 2021 widened the company’s net loss to $5.38 million versus a net loss of $1.34 million in fiscal 2020. (See B2Digital stock chart on TipRanks)

Bottom Line

The Finance & Corporate risk factor’s sector average is 35%, compared to B2Digital’s 53%. Shares have doubled over the past six months.