**B2DIGITAL,      INCORPORATED**

| Delaware                                       | 84-0916299                         |
|------------------------------------------------|------------------------------------|
| (State                or other jurisdiction of | (I.R.S.                Employer    |
| incorporation                or organization)  | Identification                No.) |

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| Balance                Sheets as of June 30, 2006 (Unaudited) and March 31, 2006. |   |   | 4      |   |
|-----------------------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                              |   |   |   |   |
| Statements                of Operations (Unaudited) for the Three Months Ended    |   |   |   |   |
| June                30, 2006 and June 30, 2005                                    |   |   | 5      |   |
|                                                                              |   |   |   |   |
| Statement                of Cash Flows (Unaudited) for the Three Months Ended     |   |   |   |   |
| June                30, 2006 and 2005                                             |   |   | 6      |   |
|                                                                              |   |   |   |   |
| Notes                to Financial Statements (Unaudited)                          |   |   | 7      |   |
|                                                                              |   |   |   |   |

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**B2      DIGITAL, INCORPORATED**

**FINANCIAL      STATEMENTS**

**June      30, 2006 and March 31, 2006**

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**B2      DIGITAL, INCORPORATED**

| ASSETS                                                                  |   |                    |        |                     |   |
|-------------------------------------------------------------------------|--------|-------------------------|-------------|--------------------------|--------|
|                                                                    |   | June                30, |        | March                31, |   |
|                                                                    |   | 2006                    |        | 2006                     |   |
|                                                                    |   | (Unaudited)             |        |                |   |
| CURRENT                ASSETS                                           |   |                    |        |                |   |
|                                                                    |   |                    |        |                |   |
| Cash                                                                    |   | $                       | 4,366       |                     | $      | 8,203 |   |
| Accounts                receivable                                      |   |                    | 44,601      |                     |   | 40,243 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Total                Current Assets                                     |   |                    | 48,967      |                     |   | 48,446 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| PROPERTY                AND EQUIPMENT                                   |   |                    |        |                     |   |   |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Hotel                equipment                                          |   |                    | 150,000     |                     |   | 150,000 |   |
| Office                furniture and equipment                           |   |                    | 955,226     |                     |   | 955,226 |   |
| Less:                accumulated depreciation                           |   |                    | (1,015,583  | )                        |   | (1,010,226 | ) |
|                                                                    |   |                    |        |                     |   |   |   |
| Total                Property and Equipment                             |   |                    | 89,643      |                     |   | 95,000 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| TOTAL                ASSETS                                             |   | $                       | 138,610     |                     | $      | 143,446 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY (DEFICIT)           |   |                    |        |                     |   |   |   |
|                                                                    |   |                    |        |                     |   |   |   |
| CURRENT                LIABILITIES                                      |   |                    |        |                     |   |   |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Accounts                payable and accrued expenses                    |   | $                       | 1,080,303   |                     | $      | 894,407 |   |
| Related                party loans payable                              |   |                    | 14,500      |                     |   | 14,500 |   |
| Notes                payable                                            |   |                    | 120,000     |                     |   | 120,000 |   |
| Bonds                payable                                            |   |                    | 71,250      |                     |   | 71,250 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Total                Current Liabilities                                |   |                    | 1,286,053   |                     |   | 1,100,157 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| LONG-TERM                LIABILITIES                                    |   |                    |        |                     |   |   |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Convertible                notes payable                                |   |                    | 1,038,678   |                     |   | 1,038,678 |   |
| Note                payable related party                               |   |                    | 800,000     |                     |   | 800,000 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Total                Long Term Liabilities                              |   |                    | 1,838,678   |                     |   | 1,838,678 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| TOTAL                LIABILITIES                                        |   |                    | 3,124,731   |                     |   | 2,938,835 |   |
|                                                                    |   |                    |        |                     |   |   |   |
| STOCKHOLDERS'                EQUITY (DEFICIT)                           |   |                    |        |                     |   |   |   |
|                                                                    |   |                    |        |                     |   |   |   |
| Preferred                stock;$0.00001 par value; 50,000,000 shares    |   |                    |        |                     |   |   |   |
| authorized;                2,000,000 shares issued and outstanding      |   |                    | -           |                     |   | - |   |
| Common                stock; $0.00001 par value; 5,000,000,000 shares   |   |                    |        |                     |   |   |   |
| authorized;                1,493,971 shares issued and 1,751,341 shares |   |                    |        |                     |   |   |   |
| outstanding                at June 30, 2006, 963,971 shares issued and  |   |                    |        |                     |   |   |   |
| outstanding                at March 31, 2006                            |   |                    | 15          |                     |   | 10 |   |
| Additional                paid-in capital                               |   |                    | 8,653,844   |                     |   | 8,443,850 |   |
| Stock                subscriptions receivable                           |   |                    | (27,378     | )                        |   | (40,000 | ) |
| Accumulated                deficit                                      |   |                    | (11,612,602 | )                        |   | (11,199,249 | ) |
|                                                                    |   |                    |        |                     |   |   |   |
| Total                Stockholders' Equity (Deficit)                     |   |                    | (2,986,121  | )                        |   | (2,795,389 | ) |
|                                                                    |   |                    |        |                     |   |   |   |
| TOTAL                LIABILITIES AND STOCKHOLDERS'                      |   |                    |        |                     |   |   |   |
| EQUITY                (DEFICIT)                                         |   | $                       | 138,610     |                     | $      | 143,446 |   |
|                                                                    |   |                    |        |                     |   |   |   |
|                                                                    |   |                    |        |                     |   |   |   |

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| **B2                DIGITAL, INCORPORATED**         |
|-----------------------------------------------------|
| Statements                of Operations (Unaudited) |

|                                              |   | For                  the ThreeMonths                    EndedJune                      30, |      |
|---------------------------------------------------|--------|--------------------------------------------------------------------------------------------|-----------|
|                                              |   | 2006                                                                                       |      | 2005 |   |
|                                              |   |                                                                                       |      |    |   |
| REVENUES                                          |   | $                                                                                          | 84,358    |   | $ | 130,687 |   |
|                                              |   |                                                                                       |      |   |   |   |   |
| COST                OF SALES                      |   |                                                                                       | 38,155    |   |   | 48,739 |   |
|                                              |   |                                                                                       |      |   |   |   |   |
|  GROSS                PROFIT                 |   |                                                                                       | 46,203    |   |   | 81,948 |   |
|                                              |   |                                                                                       |      |   |   |   |   |
| EXPENSES                                          |   |                                                                                       |      |   |   |  |   |
|                                              |   |                                                                                       |      |   |   |   |   |
| General                and administrative         |   |                                                                                       | 399,806   |   |   | 10,000 |   |
| Bad                debts                          |   |                                                                                       | 40,000    |   |   | - |   |
| Research                and development           |   |                                                                                       | -         |   |   | 428,224 |   |
|                                              |   |                                                                                       |      |   |   |   |   |
|  Total                Expenses               |   |                                                                                       | 439,806   |   |   | 438,224 |   |
|                                              |   |                                                                                       |      |   |   |   |   |
|  OPERATING                LOSS               |   |                                                                                       | (393,603  | ) |   | (356,276 | ) |
|                                              |   |                                                                                       |      |   |   |   |   |
| OTHER                INCOME (EXPENSES)            |   |                                                                                       |      |   |   |   |   |
|                                              |   |                                                                                       |      |   |   |   |   |
| Interest                expense                   |   |                                                                                       | (19,750   | ) |   | (15,250 | ) |
|                                              |   |                                                                                       |           |   |   |  |   |
|  Total                Other Income (Expense) |   |                                                                                       | (19,750   | ) |   | (15,250 | ) |
|                                              |   |                                                                                       |      |   |   |   |   |
|                                              |   |                                                                                       |      |   |   |   |   |
|  NET                LOSS                     |   | $                                                                                          | (413,353  | ) | $ | (371,526 | ) |
|                                              |   |                                                                                       |      |   |   |   |   |
|                                              |   |                                                                                       |      |   |   |   |   |
|  BASIC                LOSS PER SHARE         |   | $                                                                                          | (0.34     | ) | $ | (1.01 | ) |
|                                              |   |                                                                                       |      |   |   |   |   |
|                                              |   |                                                                                       |      |   |   |   |   |
|  WEIGHTED                AVERAGE NUMBER      |   |                                                                                       |      |   |   |   |   |
|  OF                SHARES OUTSTANDING        |   |                                                                                       | 1,228,971 |   |   | 367,000 |   |
|                                              |   |                                                                                       |      |   |   |   |   |

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**B2      DIGITAL, INCORPORATED**

|                                                         |   | For                the ThreeMonths                  EndedJune                    30, |     |
|--------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|----------|
|                                                         |   | 2006                                                                                 |     | 2005 |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES          |   |                                                                                 |     |   |   |
|                                                         |   |                                                                                 |     |    |   |
| Net                loss                                      |   | $                                                                                    | (413,353 | ) | $ | (371,526 | ) |
| Adjustments                to reconcile net loss to net cash |   |                                                                                 |     |   |   |   |   |
| provided                (used) by operating activities:      |   |                                                                                 |     |   |   |   |   |
| Depreciation                                                 |   |                                                                                 | 5,357    |   |   | 6,731 |   |
| Bad                debt expense                              |   |                                                                                 | 40,000   |   |   |   |   |
| Common                stock issued for services              |   |                                                                                 | 90,000   |   |   | 450,810 |   |
| Changes                in operating assets and liabilities   |   |                                                                                 |     |   |   |   |   |
| Increase                in accounts receivable               |   |                                                                                 | (4,358   | ) |   | 1,548 |   |
| Increase                in inventory                         |   |                                                                                 | -        |   |   | 1,050 |   |
| Increase                in prepaid expenses                  |   |                                                                                 | -        |   |   | 12,790 |   |
| Increase                (decrease) in accounts payable       |   |                                                                                 | 185,896  |   |   | (107,055 | ) |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Net                Cash Used by Operating Activities         |   |                                                                                 | (96,458  | ) |   | (5,652 | ) |
|                                                         |   |                                                                                 |     |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES          |   |                                                                                 |     |   |   |   |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Payment                for B2 Digital                        |   |                                                                                 | -        |   |   | (50,000 | ) |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Net                Cash Used in Investing Activities         |   |                                                                                 | -        |   |   | (50,000 | ) |
|                                                         |   |                                                                                 |     |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES          |   |                                                                                 |     |   |   |   |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Contributed                capital                           |   |                                                                                 | -        |   |   | - |   |
| Sale                of common stock for cash                 |   |                                                                                 | 92,621   |   |   | 50,000 |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Net                Cash Provided by                          |   |                                                                                 |     |   |   |   |   |
| Financing                Activities                          |   |                                                                                 | 92,621   |   |   | 50,000 |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| NET                DECREASE IN CASH                          |   |                                                                                 | (3,837   | ) |   | (5,652 | ) |
|                                                         |   |                                                                                 |     |   |   |   |   |
| CASH                AT BEGINNING OF PERIOD                   |   |                                                                                 | 8,203    |   |   | 5,711 |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| CASH                AT END OF PERIOD                         |   | $                                                                                    | 4,366    |   | $ | 59 |   |
|                                                         |   |                                                                                 |          |   |   |   |   |
| SUPPLEMENTAL                DISCLOSURES OF                   |   |                                                                                 |     |   |   |   |   |
| CASH                FLOW INFORMATION                         |   |                                                                                 |     |   |   |   |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| CASH                PAID FOR:                                |   |                                                                                 |     |   |   |   |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Interest                                                     |   | $                                                                                    | -        |   | $ | - |   |
| Income                Taxes                                  |   | $                                                                                    | -        |   | $ | - |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| SUPPLEMENTAL                SCHEDULE OF NON-CASH AND         |   |                                                                                 |     |   |   |   |   |
| INVESTING                ACTIVITIES                          |   |                                                                                 |     |   |   |   |   |
|                                                         |   |                                                                                 |     |   |   |   |   |
| Common                stock issued for services              |   | $                                                                                    | 318,685  |   | $ | 450,810 |   |

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**B2      DIGITAL, INCORPORATED**

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**B2      DIGITAL, INCORPORATED**

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| 2.1 | Asset                Purchase Agreement between the Company and Hotel Movie Network, Inc.,                dated March 31, 2003 (incorporated by reference to Exhibit 10 of                the Form                8-K filed on April 18, 2003). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1(a) | Restated                Articles of Incorporation (filed as an exhibit to the company's Form                8-K                filed on October 19, 2001 and incorporated by reference                herein) |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1(b) | Amendment                  to Articles of Incorporation (Incorporated by reference from 10QSB                  dated                  December 31, 2004). |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1(c) | Certificate                of Designation of Series A Convertible Preferred Stock (incorporated                by                reference to Form 10-KSB for March 31,                2005) |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1(d) | Certificate                of Amendment to Certificate of Incorporation (incorporated by reference                from Schedule 14C filed November 28,                2005) |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1(e) | Certificate                of Amendment to Certificate of Incorporation (incorporated                by reference from Form 8-K filed June 16,                2005) |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.1(f) | Certificate                of Designation of Series B Convertible Preferred Stock (incorporated                by                reference from Form 10-KSB filed July 14,                2006) |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Bylaws                (incorporated by reference to Exhibit 3.2 of the company's Registration                Statement on Form S-18, Registration No.                2-86781-D) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | 2005                Non-Qualified Stock Compensation Plan (filed as Exhibit 10.1 to the                Company's Form S-8 filed on January 11, 2005 and incorporated by                reference                herein). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | August                2005 Non-Qualified Stock Compensation Plan (filed as Exhibit 10.1                to the                Company's Form S-8 filed on August 19, 2005 and incorporated by                reference) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Consultant                Agreement with Marcia A. Pearlstein (incorporated by reference from                Form                10-QSB dated September 30, 2004). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Employment                Agreement with Robert Russell (Effective January 25, 2005) (Incorporated                by reference from 10QSB dated December 31,                2004). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | Employment                  Agreement with Robert Russell (Effective January 25, 2005) (Incorporated                  by reference from 10QSB dated December 31,                  2004). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Employment                        Agreement with Paul La Barre (Filed as Exhibit 10.2 and incorporated                        by                        reference to Form 8-K filed October 4,                        2005). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Trust                    Agreement (incorporated by reference from Form 10-KSB filed July                    14,                    2006) |
|------|-------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1 | Section                302 Certification of the Chief Executive                Officer. |
|------|-----------------------------------------------------------------------------------------|

| 31.2 | Section                302 Certification of the Interim Chief Financial                Officer. |
|------|-------------------------------------------------------------------------------------------------|

| 32.1 | Section                906 Certification of the Chief Executive Officer and Interim Chief                Financial Officer |
|------|----------------------------------------------------------------------------------------------------------------------------|

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