**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549




**FORM
      10-KSB**




**ANNUAL
      REPORT UNDER SECTION 13 OR 15 (d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**




**FOR
      THE FISCAL YEAR ENDED MARCH 31, 2007**




*Commission
      File Number 0-11882*




**B2DIGITAL,
      INCORPORATED**


(Name
      of
      Small Business Issuer in its Charter)




**DELAWARE**


(State
      or
      Other Jurisdiction of Incorporation)




84-0916299


(I.R.S.
      Employer Identification No.)




4425
      Ventura Canyon Avenue, Suite 105


Sherman
      Oaks, California 91423


(Address
      of Principal Executive Offices)




**ISSUER'S
      TELEPHONE NUMBER ISSUER'S FACSIMILE NUMBER**


Telephone
      (310) 281-2571 Facsimile (818) 808-0133




Securities
      registered under Section 12(b) of the Exchange Act:


None




Securities
      registered under Section 12(g) of the Exchange Act:




**COMMON
      STOCK- $.00001 PAR VALUE**


(Title
      of
      Class)















Indicated
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. o




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the issuer was required to file such reports), and (2) has been subject
      to
      such filing requirements for the past 90 days. Yes o No x




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of Issuer's knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x




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




The
      Issuer's revenues for the year ended March 31, 2007 were $287,165




As
      of
      July 9, 2007, there were 164,373,971 shares of Common Stock issued and
      outstanding. The
      aggregate market value of the Issuer's common stock held by non-affiliates
      was
      $4,528,424, based on the closing price of the Issuer's common stock on July
      9,
      2007 of $0.05




As
      of
      July 9, 2007, the Issuer had approximately 164,373,971 shares of its $.00001
      par
      value common stock outstanding.




Transitional
      Small Business Disclosure Format (Check one): Yes o No x






2









**B2DIGITAL,
      INCORPORATED**


**TABLE
      OF CONTENTS**




PAGE
                NO.PART
                IITEM
                1
            
            DESCRIPTION
                OF BUSINESS
            
            4ITEM 2
            
            DESCRIPTION
                OF PROPERTY
            
            14ITEM 3
            
            LEGAL
                PROCEEDINGS
            
            14ITEM 4
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            15PART IIITEM 5
            
            MARKET
                FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND SMALL BUSINESS
                ISSUER
                PURCHASES OF EQUITY SECURITIES
            
            15ITEM 6
            
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            
            17ITEM 7
            
            FINANCIAL
                STATEMENTS
            
            27ITEM 8
            
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            28ITEM 8A
            
            CONTROLS
                AND PROCEDURES
            
            28ITEM 8B
            
            OTHER
                INFORMATION
            
            28PART
                IIIITEM 9
            
            DIRECTORS
                AND EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
                GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
            
            29ITEM 10
            
            EXECUTIVE
                COMPENSATION
            
            31ITEM 11
            
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            
            33ITEM 12
            
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
            
            34ITEM 13
            
            EXHIBITS
            
            35ITEM 14
            
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            37




3







**PART
      I**




**ITEM
      I. DESCRIPTION OF BUSINESS**




**OVERVIEW**




B2Digital,
      Incorporated (the "Company" or "B2Digital") is a provider of in-room, on-demand
      video entertainment and satellite services to the domestic lodging industry.
      B2Digital has a continued base of installed hotel rooms, which consists of
      contract rights of Hotel Movie Networks with Pay Per View and Cable/Satellite
      access, and associated Hardware and Peripherals. The purchase of Hotel Movie
      Network in March 2003, enabled B2Digital to provide in-room video entertainment
      and information services on several platforms. The Video On Call system allows
      hotel guests to select, at any time, movies through the television set in their
      hotel rooms. The PPV S-8 system is a reliable basic Pay Per View system that
      allows the Company to enter the mid to small hospitality market on a cost
      effective basis.




In
      addition to movies, B2Digital's platforms provide for in-room viewing of select
      cable channels (such as HBO, Starz Encore, ESPN, CNN and the Disney Channel)
      and
      other interactive and information services, which include the capability for
      high-speed Internet access. B2Digital primarily provides its services under
      long-term contracts to hotel chains, hotel management companies, and
      individually owned and franchised hotel properties. B2Digital offers services
      predominantly in the smaller franchise hotel categories serving business
      travelers and other unaffiliated hotels.




All
      of
      the installed rooms of Hotel Movie Network are located in the United States,
      United States Territories and Canada.







The
      Company’s web site is www.B2digital.net .
      The
      information found on this website is not a part of, and is not incorporated
      by
      reference into, this or any other report the Company files with or furnishes
      to
      the SEC.




4







**HISTORY**




B2Digital,
      Inc. (referred to herein as "B2Digital", the "Company", or "BTOD"), a
      technological development corporation, was incorporated in Colorado on June
      8,
      1983. It was administratively dissolved in 1997 and as a part of winding up
      of
      its affairs, the directors acting as trustees, entered into a Plan of Merger
      in
      1999 with Telecommunication Products, Inc. a newly formed entity, and merged
      into it and then purchased Interleisure S.A., a privately held company
      incorporated under the laws of the commonwealth of the Dominican Republic.
      The
      predecessor business was to act as a developer of data compression technology
      and video-conferencing software but then ventured into other market
      opportunities. The Company failed in its business efforts prior to 2002. On
      July
      20, 2004, Telecommunication Products, Inc. changed its name to B2Digital,
      Incorporated. With the filing of Articles of Merger with the Delaware Secretary
      of State, we were redomiciled from Colorado to Delaware, and our number of
      authorized common shares was increased to 500,000,000.




Effective
      January 12, 2005, we amended our Certificate of Incorporation to increase our
      authorized common stock to 900,000,000 shares of common stock and to authorize
      50,000,000 shares of preferred stock, which may be designated in series at
      the
      discretion of the board of directors. 2,000,000 shares of preferred stock have
      been designated as Series A Convertible Preferred Stock and 40,000,000 shares
      of
      preferred have been designated as Series B Convertible Preferred Stock.





Effective
      September 20, 2005, we amended our Certificate of Incorporation to increase
      our
      authorized common stock to 5,000,000,000 shares of common stock, $.00001 par
      value and to change the par value of preferred stock to $.00001. On June 16,
      2006, we amended our Certificate of Incorporation to effect a reverse split
      of
      our common shares in a ratio of one new share for every one thousand (1,000)
      existing shares.




In
      September 2002, we entered into a Letter of Intent with Coast Communications,
      Inc. for the acquisition of privately-held Hotel Movie Networks, Inc., a Nevada
      Corporation domiciled in Mesa, Arizona. Assets of Hotel Movie Networks, Inc.
      consist of inventory, contracts and contract rights with certain production
      studios. In March 2003, the Company entered into an agreement to purchase Hotel
      Movie Networks, Inc., which made the Company a supplier of Video On Demand
      ("VOD") and Satellite Guest Entertainment systems to the mid-market hospitality
      industry. The purchase included a customer base of over 8,000 rooms through
      contract rights. These contracts consist mainly of "Free-to-Guest" or
      "Pay-per-Stay" guest services. The transaction closed on August 1, 2003. The
      former shareholders of Hotel Movie Network received 2,000,000 shares of our
      common stock and $150,000 cash. Additionally, we issued a $1,400,000 Convertible
      note that pays 7.5% interest per annum.




Through
      the purchase of Hotel Movie Network, we supply Video On Demand and Satellite
      Guest Entertainment systems to the mid-market hospitality industry. The
      acquisition of Hotel Movie Networks, Inc. provides affiliation with an
      established network of professional guest systems installation contractors
      who
      are experienced and familiar with the Hotel Movie Network business model.




5







In
      January 2003, B2Digital purchased a complete inventory of guest entertainment
      systems from Omega Funding, Inc. consisting of hardware and peripherals for
      $100,000 in cash and 1,900,000 shares of common stock. This inventory can supply
      the necessary hardware for deployment into over 100,000 guest rooms at a savings
      over the current industry average installation cost per room.




In
      November 2003, the Company entered into an agreement with EchoStar and Dish
      Network, which enabled the Company to purchase programming at a favorable
      discount. We
      intend
      to bring consumers a quality experience through video on demand and through
      providing traditional cable, satellite and internet access to users of Hotel
      Movie Network.




On
      March
      6, 2004, we entered into a Letter of Agreement with B2 Networks, LLC, whereby
      B2
      Networks would provide data center facilities, management systems for video
      and
      set top services and assist with operating the B2digitaltv services. On April
      23, 2004, we agreed to purchase 20% of B2 Networks, LLC in exchange for
      1,667,667 shares of common stock and $500,000. On August 2004, we amended this
      agreement to reduce the amount of purchase to 10% of the LLC in exchange for
      $200,000 and 2,667,000 shares of common stock.




In
      June
      2004, the Company entered into a strategic alliance agreement with Powerlinx
      and
      Choice Hotels International, one of the largest hotel franchise companies in
      the
      world with more than 5,000 hotels, inns, all-suite hotels and resorts open
      and
      under development in 44 countries under the Comfort Inn, Comfort Suites,
      Quality, Clarion, Sleep Inn, Rodeway Inn, Econo Lodge and MainStay Suites brand
      names.




Pursuant
      to the agreement, B2 Networks and B2Digital were supplying Point-to-Point
      Wireless Local Loop internet connectivity in each hotel room through the B2
      Wireless Access Point (B2WAP) which was connecting to the in-room
      Hotellinktv.com for laptop users and the B2Digital TV set top box and handheld
      remote control for in-room television. These products allowed Powerlinx to
      market a large variety of in-room digital services, which included making
      airline reservations, ordering pizza, event ticketing, and transportation
      services, along with delivery of Hollywood movies, sports and live events,
      and
      distinct genres of Pay-Per-View content. We were also actively marketing the
      B2Wap service and the B2Digital TV Broadband Set Top Television System with
      our
      complete Hotel and MDU Connectivity products through our business-to-business
      marketing partner, Powerlinx, Inc. On December 15, 2004, we entered into a
      Letter of Agreement with B2 Networks, LLC whereby B2 Networks was providing
      certain operations assistance to the company in exchange for a portion of the
      gross revenue or $10,000 per month. In January 2006, B2Digital decided to
      terminate this agreement and the B2digitaltv services as it was not generating
      revenue and was not viable to continue.





6








On
      January 20, 2005, B2Digital, Inc. entered into a Purchase Agreement with
      EuroSwiss Equities, Ltd., a privately-held Caribbean company, whereby B2Digital
      agreed to purchase certain online casinos from EuroSwiss, including marketing
      rights and back office support (the "Assets"). In exchange for the Assets,
      we
      agreed to pay EuroSwiss $300,000 and 1,000,000 shares of Series A Convertible
      Preferred Stock, payable over three months. This agreement was subsequently
      terminated on May 4, 2005. No consideration was given to Euroswiss.





On
      March
      13, 2007, the Company acquired through its wholly owned subsidiary, Hotel Movie
      Network, Inc., a Nevada corporation, certain assets of Creative Domain
      Investments Ltd, an Alberta, Canada company (“Creative Domain”). Pursuant to the
      Asset Purchase Agreement with Creative Domain dated March 13, 2007 (the
“Agreement”), the Company purchased from Creative Domain certain assets utilized
      for Pay per View, wireless Internet and Voice over IP (VoIP) services in the
      hospitality industry and other applications. In consideration for the assets,
      the Company agreed to pay $200,000, in the form of 400,000 restricted shares
      of
      common stock of B2Digital, Incorporated valued at $0.50 per share.







**INDUSTRY
      OVERVIEW**




The
      provision of in-room entertainment and information services to the lodging
      industry includes offering pay-per-view motion pictures, archived television
      content, games, music, internet connectivity, guest programming of select pay
      cable channels, and an increasing array of interactive programs and information
      services. Pay-per-view services were introduced in the early 1970's and have
      since become a standard amenity offered by many hotels to their guests.
      Historically, providers of programming to hotels delivered their content on
      a
      fixed time schedule that did not provide the hotel guest flexibility in choosing
      when to watch a movie. Typically, a guest would be offered a choice of four
      to
      eight movies, each of which would be shown once every two to four hours. The
      development of video switches enabled providers of pay-per-view services to
      offer scheduling flexibility to the viewer. Depending on the type of system
      installed and the size of the hotel, guests can choose up to 50 different movies
      with an on-demand system. Changes in technology have also led to the ability
      to
      provide a number of on-demand interactive services such as guest folio review,
      automatic checkout, survey completion, guest messaging, video games, and
      internet service. The market for in-room entertainment and information is
      characterized as a highly competitive environment among several
      industry-dedicated companies and a number of new entrants including cable
      companies, telecommunications companies, laptop connectivity companies and
      others.




**OUR
      BUSINESS**




Manual
      functions of the equipment and system are limited to changing videocassettes
      once per month and will be all handled by B2Digital's service personnel, who
      also update the system's movie titles screens. Hotel Movie Network's information
      system is capable of generating regular reports of guests' entertainment
      selections, permitting to adjust its programming to respond to viewing patterns.
      The number of guests that can view a particular movie at the same time varies
      from hotel to hotel depending upon the popularity of the movie and by providing
      more copies of the most popular programming titles to the hotels.




Increased
      deployment of high-speed, two-way digital communications capability may enable
      B2Digital to provide more advanced interactive and information features, such
      as
      video games, in addition to basic guest services such as video checkout, room
      service ordering and guest satisfaction surveys. The system also enables hotel
      owners to broadcast informational and promotional messages and to monitor room
      availability.




7







For
      example, in a typical hotel with 200 rooms, the central head-end video rack
      would consist of approximately 30 videocassette recorders containing up to
      four
      copies of the most popular movies and a total of up to 15 different titles.
      The
      system includes a computerized in-room on-screen menu that offers guests a
      list
      of only those movie selections available to the guest at that time. As a result,
      even though the on-screen menu may not include a list of all titles available
      in
      the particular hotel, the list includes all movies currently available to the
      guest, thus eliminating the possibility of a guest being disappointed when
      the
      guest's selection is not available.




B2Digital
      undertakes a significant investment when it installs its system in a hotel
      property, sometimes rewiring part of the hotel. Depending on the size of the
      hotel property, the quality of the cabling and antenna system at the hotel,
      and
      the configuration of the system installed, the installation cost of a new,
      on-demand system with movies, guest services, including the head-end equipment
      averages from approximately $80 to $120 per room.




The
      installation cost of a system with digital content storage is approximately
      $45
      per room higher than the system in the same size hotel. The system can be
      modified to enable On Call functionality for movies, games, Internet, and guest
      services at a cost of $280 per room. Video On Call will only be installed in
      association with videocassette players, rather than digital content storage,
      in
      certain markets due to constraints placed on B2Digital by most movie studios
      that provide B2Digital with movie content.




The
      Video
      System is the Company's primary platform. It consists of a microprocessor
      controlling the television in each room, and a central video rack and system
      computer located elsewhere in the hotel. Programming signals originate from
      videocassette players located within the head-end rack and are transmitted
      to
      individual rooms by way of video technology. The system computer controls movie
      starts automatically. The system computer also records the purchase by a guest
      of any title and reports billing data to the hotel's accounting system, which
      posts the charge to the guest's bill.




**SERVICES**




**Pay-Per-View
      Movie Services**




B2Digital
      provides on-demand and, in some cases, scheduled in-room television viewing
      of
      major motion pictures and independent non-rated motion pictures for mature
      audiences, for which a hotel guest pays on a per-view basis. Depending on the
      type of system installed and the size of the hotel, guests can choose up to
      30
      different movies with a Video On Call system, or from eight to twelve movies
      with a scheduled system.




8







B2Digital
      obtains non-exclusive rights to show recently released motion pictures from
      major motion picture studios generally pursuant to a master agreement with
      each
      studio. The license period and fee for each motion picture are negotiated
      individually with each studio, which typically receives a percentage of that
      picture's gross revenues generated by the pay-per-view system. Typically,
      B2Digital obtains rights to exhibit major motion pictures during the
      "Hotel/Motel Pay-Per-View Window," which is the time period after initial
      theatrical release and before release for home video distribution or cable
      television exhibition. B2Digital attempts to license pictures as close as
      possible to the motion pictures' theatrical release date to benefit from the
      studios' advertising and promotional efforts. B2Digital also obtains independent
      motion pictures, most of which are non-rated and are intended for mature
      audiences, for a one-time flat fee that is nominal in relation to the licensing
      fees paid for major motion pictures.




B2Digital
      provides service under contracts with hotels that generally provide for a term
      of five to seven years. Under these contracts, B2Digital installs its system
      into the hotel at B2Digital's cost and B2Digital retains ownership of all of
      the
      equipment used in providing the service. B2Digital has required the hotels
      to
      provide televisions. B2Digital's contracts with hotels generally provide that
      B2Digital will be the exclusive provider of in-room, pay-per-view video
      entertainment services to the hotel and generally permit B2Digital to set the
      movie price. Under certain circumstances, certain hotels may have the right
      to
      prior approval of the price increases, which approval may not be unreasonably
      withheld. The hotels collect movie-viewing charges from their guests and retain
      a commission equal to a negotiated percentage of the total pay-per-view revenue,
      which varies in relationship with the size and profitability of the system.
      Some
      contracts also require B2Digital to upgrade systems to the extent that new
      technologies and features are introduced during the term of the contract. At
      the
      scheduled expiration of a contract, B2Digital generally seeks to extend the
      agreement on terms that are based upon the competitive situation in the market.




The
      revenue which is generated from pay-per-view service is dependent on the
      occupancy rate at the property, the "buy rate" or percentage of occupied rooms
      that buy movies or other services at the property, and the price of the movie
      or
      service. Occupancy rates vary based on the property's location, its competitive
      position within the marketplace and, over time, based on seasonal factors and
      general economic conditions. For instance, occupancy rates and revenues per
      room
      typically are higher during the summer months and lower during the winter months
      due to seasonal travel patterns. Buy rates generally reflect the hotel's guest
      mix profile, the popularity of the motion pictures or services available at
      the
      hotel, and the guests' other entertainment alternatives. Buy rates also vary
      over time with general economic conditions and the business of B2Digital is
      closely related to the performance of the business and mid-sized hotel segments
      of the lodging industry. Movie price levels are set based on the guest mix
      profile at each property and overall economic conditions. Currently, movie
      prices typically range from $8.95 to $9.95 for a purchase by the hotel
      guest.




9







**Guest
      Programming Services**




B2Digital
      also markets guest-programming services pursuant to which a hotel may elect
      to
      receive one or more programming channels, such as HBO, CNN, ESPN, TBS, Disney
      Channel, Discovery Channel, and other cable networks, which the hotel provides
      to guests at no additional cost. B2Digital provides hotels with guest
      programming services through a variety of arrangements, including having the
      hotel pay the Company a monthly fee per room for each programming channel
      selected, or including the cost or part of the cost of such programming within
      the Company's overall contractual arrangements with the hotel or hotels.
      B2Digital has a unique contract with each network vendor (approximately 30
      vendors, serving 50-60 channels). Payment to network vendors is based on
      subscriber/room count but also use variables such as the combination of channels
      received, occupancy, volume, and penetration. The term of the contracts with
      network vendors average three to five years.




**SUPPLIERS**




In
      some
      cases B2Digital contracts directly with various electronics firms for the
      manufacture and assembly of its systems hardware. Historically, these suppliers
      have been dependable and able to meet delivery schedules on time. The Company
      believes that, in the event of a termination of any of its sources, alternate
      suppliers could be located without incurring significant costs or delays.
      However, certain electronic component parts used with the Company's products
      are
      available from a limited number of suppliers and can be subject to temporary
      shortages. In such event, the Company could experience a temporary reduction
      in
      the rate of new installations and/or an increase in the cost of such
      installations. If the Company were to experience a shortage of any given
      electronic part, the Company believes that alternative parts could be obtained
      or system design changes could be made.




The
      head-end electronics for the Company's systems is assembled at the Company's
      facilities for testing prior to shipping. Following assembly and testing of
      equipment designed specifically for a particular hotel, the system is shipped
      to
      each location, where Hotel Movie Network’s trained technicians will install the
      system, typically assisted by independent contractors.




B2Digital,
      through its acquisition of Hotel Movie Network, maintains direct contractual
      relations with various suppliers of pay-per-view and guest programming services,
      including the motion picture studios and/or their domestic and international
      distributors and programming networks. B2Digital believes its relationships
      with
      all suppliers are adequate.




**SALES
      AND MARKETING**




Substantially
      all revenue is derived from obtaining contracts with hotels in the United States
      who are not under contract with existing vendors or whose contracts with other
      vendors are expiring or have expired. B2Digital believes that opportunities
      for
      additional growth in the markets in the United States are more limited than
      in
      the past. The Company strategy for new customers is to target both smaller
      hotels and lower cost hotels. Management anticipates that the lower costs and
      flexibility afforded by the Company's products will make marketing to smaller
      hotels and some lower cost hotels more economically attractive than in the
      past.




10







**CUSTOMERS**




The
      Company typically negotiates and enters into a separate contract with each
      hotel
      for the services provided. However, for some of the large hotel management
      companies the Company will negotiate and enter into a single master contract
      for
      the provision of services for all of the corporate-managed hotels of such
      management company. In the case of franchised or independently owned hotels,
      the
      contracts are generally negotiated separately with each hotel.




Existing
      contracts generally have a term of five to seven years from the date the system
      becomes operational. At expiration, B2Digital typically seeks to extend the
      term
      of the contract on then current market terms.




**COMPETITION**




In
      the
      U.S., taking into account the various providers of cable television services,
      there are numerous providers of in-room video entertainment to the lodging
      industry, and at least two of our competitors, LodgeNet Entertainment
      Corporation, and Inn Room Video, Inc., provide on-demand pay-per-view, guest
      programming and guest services by means of in-room television. Internationally,
      there are more companies competing in the pay-per-view lodging industry than
      in
      the United States.




Pay-per-view,
      the most profitable component of the services currently offered, competes for
      a
      guest's time and entertainment resources with broadcast television, guest
      programming, and cable television services. In addition, there are a number
      of
      competitors that are developing ways to use their existing infrastructure to
      provide in-room entertainment and/or information services to the lodging
      industry, including cable companies (including wireless cable)
      telecommunications companies, internet and high-speed connectivity companies,
      and direct-to-home and direct broadcast satellite companies. Some of these
      competitors have been providing guest programming services to hotels and are
      beginning to provide video-on-demand, Internet and high-speed connectivity
      to
      hotels.




B2Digital
      is a competitive provider of in-room video entertainment services to the United
      States lodging industry. Domestically, B2Digital competes with smaller providers
      for the mid size to small size lodging market.




Competition
      with respect to the provision of in-room video entertainment and information
      systems centers on a variety of factors, depending upon the circumstances
      important to a particular hotel. Among the more important factors are (i) the
      features and benefits of the entertainment and information systems, (ii) the
      quality of the vendor's technical support and maintenance services, and (iii)
      the financial terms and conditions of the proposed contract. With respect to
      hotel properties already receiving in-room entertainment services, the current
      provider may have certain informational and installation cost advantages
      compared to outside competitors.




11







Furthermore,
      while the Company is addressing the likelihood of increased demand for Internet
      services in the hotel guestroom, B2Digital may face additional competition
      in
      this area from traditional as well as new competitors. In addition, there are
      a
      number of potential competitors that could utilize their existing infrastructure
      to provide in-room entertainment to the lodging industry, including cable
      companies (including wireless cable), telecommunications companies, and
      direct-to-home and direct broadcast satellite companies. Some of these potential
      competitors already are providing guest programming services to hotels and
      testing on-demand video. Some of these competitors may be better funded from
      public capital or private venture capitals markets and have access to additional
      capital resources that B2Digital does not have.




B2Digital
      believes its competitive advantages include: (i) low price; and (ii) system
      reliability and high quality service.




B2Digital
      may compete with local cable television operators by customizing packages of
      programming to provide only those channels desired by the hotel subscriber,
      which typically reduces the overall cost of the service provided. B2Digital
      anticipates substantial competition in obtaining new contracts with major hotel
      chains. The Company believes that hotels view the provision of in-room on-demand
      entertainment and information both as a revenue source and as a source of
      competitive advantage because sophisticated hotel guests are increasingly
      demanding a greater range of quality entertainment and information alternatives.
      At the same time, B2Digital believes that certain major hotel chains have
      awarded contracts based primarily on the level and nature of financial and
      other
      incentives offered by the service provider. While the Company believes its
      competitive position could enable B2Digital to continue to enter into
      contractual arrangements that are attractive to hotels, its competitors may
      attempt to maintain or gain market share at the expense of profitability.
      B2Digital may not always be willing to match incentives provided by its
      competitors.




The
      communications industry is subject to rapid technological change. New
      technological developments could adversely effect B2Digital's operations unless
      the Company is able to provide equivalent services at competitive prices.




**INTERNATIONAL
      MARKETS**




In
      addition to its intended operations in the United States, B2Digital may in
      the
      future offer its services in Canada, Latin America, Puerto Rico, the U.S. Virgin
      Islands, Hong Kong, Singapore, Thailand, Australia, the Bahamas, Europe, and
      elsewhere in the Asia-Pacific region. However, the Company generally would
      also
      incur greater capital expenditures and operating and servicing costs outside
      the
      United States.




12







The
      competition to provide pay-per-view services to hotels is greater in
      international markets than in the United States. Expansion of B2Digital's
      operations into foreign markets involves certain risks that are not associated
      with further expansion in the United States, including availability of
      programming, government regulation, currency fluctuations, language barriers,
      differences in signal transmission formats, local economic and political
      conditions, and restriction on foreign ownership and investment. Consequently,
      these risks may hinder B2Digital's ability to create any base of hotel rooms
      in
      foreign markets.




**REGULATION**




The
      Communications Act of 1934, as amended by the Cable Communications Policy Act
      of
      1984, the Cable Television Consumer Protection and Competition Act of 1992
      and
      the Telecommunications Act of 1996, governs the distribution of video
      programming by cable, satellite or over-the-air technology, through regulation
      by the Federal Communications Commission, or FCC. However, because our video
      distribution systems do not use any public rights of way, they are not
      classified as cable systems and are subject to minimal regulation. Thus, the
      FCC
      does not directly regulate the pay-per-view or free-to-guest services provided
      by us to hotel guests.




Various
      laws and governmental regulations may affect the internet-based services
      potentially offered by us. There are currently few laws or regulations directly
      applicable to access to or commerce on commercial online services or the internet.
      However, because of the increasing popularity and use of commercial online
      services and the Internet, a number of laws and regulations may be adopted
      with
      respect to commercial online services and the Internet. The adoption of such
      laws or regulations in the future may slow the growth of commercial online
      services and the internet, which could in turn cause a decline in the demand
      for
      our internet-based services and products or otherwise have an adverse effect
      on
      us. Moreover, the applicability to commercial online services and the internet
      of existing laws governing issues such as property ownership, libel, personal
      privacy and taxation is uncertain and could expose us to liability.




On
      January 18, 2001, the FCC released a Notice of Inquiry regarding interactive
      television services, or ITV, over cable television. The FCC seeks comment on,
      among other things, an appropriate definition of ITV services, whether access
      to
      a high -speed connection is necessary to realize ITV capabilities, and whether
      a
      nondiscrimination rule is necessary and/or appropriate. The outcome of this
      proceeding and any rules ultimately adopted by the FCC could affect the ITV
      services currently offered by us and the ITV services which we may offer in
      the
      future.




Although
      the FCC generally does not directly regulate the services provided by us, the
      regulation of video distribution and communications services is subject to
      the
      political process and has been in constant flux over the past decade. Further
      material changes in the law and regulatory requirements must be anticipated
      and
      our business could be adversely affected by future legislation or new
      regulations.




13








We
      do not
      purport to describe all present and proposed federal, state and local
      regulations and legislation relating to the video programming industry
      applicable to us. Other existing federal, state and local laws and regulations
      currently are, or may be, the subject of a variety of judicial proceedings,
      legislative hearings, and administrative and legislative proposals that could
      change in varying degrees the manner in which private cable operators, other
      video programming distributors, and Internet service providers operate. We
      cannot predict the outcome of these proceedings or their impact upon our
      operations at this time.




**PATENTS,
      TRADEMARKS AND COPYRIGHTS**




We
      have
      one patent registered in the Dominican Republic for our video technology. We
      own
      and, through our acquisition of Hotel Movie Network, acquired our various trade
      names, trademarks, service marks, and logos to be used in our businesses, which
      we intend to actively protect.




**EMPLOYEES**




As
      of
      March 31, 2007, we employed 6 full-time employees and 2 consultants. None of
      the
      employees are subject to a collective bargaining agreement, and there is no
      union representation. We believe our employee relationships are good.




**RESEARCH
      AND DEVELOPMENT COSTS**




Over
      the
      last two years, we spent approximately $10,000 on research and development.




**ITEM
      2. DESCRIPTION OF PROPERTY**




We
      took
      over a yearly renewable lease through the acquisition of Hotel Movie Network.
      The facilities are located at 1030 S. Mesa Drive, Mesa, Arizona 85210. These
      premises have 30,000 square feet of storage and 5,000 square feet of offices
      and
      work shops, with a rent of $3,200 per month. We believe these facilities are
      adequate in size to handle all operations in the United States and the Caribbean
      for the foreseeable future.




Our
      administrative offices are located at 4425 Ventura Canyon Avenue, Suite 105,
      Sherman Oaks, California 91423, which is owned by our interim Chief Financial
      Officer. This space is being utilized on a temporary basis free of charge to
      save costs. There is no guarantee that this arrangement will continue.




**ITEM
      3. LEGAL PROCEEDINGS**




In
      July
      2003, we were served with a lawsuit from William B. Krusheski in United States
      District Court for Southern District of California. The complaint sought in
      excess of $75,000 on a note allegedly due and $135,000 in other compensatory
      damages. In June 2004, the county court of San Diego, California awarded a
      default judgment in favor of Mr. Krusheski in the amount of $135,000. The
      company has offered payments of $5,000 per month until the debt is settled.
      We
      have to date had no response or contact from Mr. Krusheski.




In
      July
      2006, we were advised that Golden Gate Investors, Inc. holds a default judgment
      in the amount of $93,148 (including costs and attorney’s fees), awarded in the
      Superior Court of California, County of San Diego, against the Company allegedly
      pursuant to a stock sale agreement dated January 14, 2005, as amended. The
      Company is in negotiations to settle this matter with Golden Gate.




14








**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**




Not
      applicable.




**PART
      II**







**ITEM
      5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES**




Our
      common stock began trading on the Over-The-Counter Bulletin Board under the
      symbol "BTWO" on November 10, 2001. Prior to November 10, 2001, our common
      stock
      was quoted under the symbol "TLCR."  After June 16, 2006, following a
      1-1,000 reverse split of our common stock, we began to trade under the symbol
      “BTOD.” As set forth below, prices have been adjusted retroactively as
      applicable to reflect the reverse stock split effective June 16,
      2006.





The
      following table sets forth the high and low bid prices for shares of our common
      stock for the periods noted, based on quote information from NASDAQ.com.
      Quotations reflect inter-dealer prices, without retail mark-up, mark-down or
      commission and may not represent actual transactions.




LOW
            
            HIGH2005*First
                Quarter (April 1-June 30)
            
            2.20
            
            13.00Second
                Quarter (July 1-September 30)
            
            1.20
            
            4.90Third
                Quarter (October 1-December 31)
            
            .30
            
            4.00Fourth
                Quarter (January 1-March 31)
            
            .30
            
            4.002006First
                Quarter*(April 1-June 30)
            
            .11
            
            4.00Second
                Quarter (July 1-September 30)
            
            .06
            
            .51Third
                Quarter (October 1-December 31)
            
            .08
            
            .18Fourth
                Quarter (January 1-March 31)
            
            .06
            
            .872007First
                Quarter (April 1-June 30)
            
            .05
            
            .35


*Prices
      have been retroactively adjusted for the 1-1,000 reverse stock split on June
      16,
      2006





As
      of
      March 31, 2007, our common stock was held by approximately 407 stockholders
      of
      record. We believe that the number of beneficial owners is substantially greater
      than the number of record holders because a significant portion of our
      outstanding common stock is held of record in broker "street names" for the
      benefit of individual investors. The transfer agents of our common stock are
      Manhattan Stock Transfer (telephone number (631) 928 -7655) and First American
      Stock Transfer, Inc. (also handling Series B Preferred stock, (telephone number
      (602) 485-1346)).




15







**DIVIDEND
      POLICY**




Our
      Board
      of Directors determines any payment of dividends. We do not expect to authorize
      the payment of cash dividends on common stock in the foreseeable future. Any
      future decision with respect to dividends will depend on future earnings,
      operations, capital requirements and availability, restrictions in future
      financing agreements, and other business and financial considerations. Series
      of
      Preferred Stock when authorized with rights and privileges could require
      dividends. The Company has not paid any dividends in the past several years.




**RECENT
      SALES OF UNREGISTERED SECURITIES**




During
      the year ended March 31, 2007 the Company issued 3,180,000 shares for of common
      stock for services rendered. In addition, the Company issued 41,356,118 shares
      for cash and subscriptions receivable, The shares were sold to a non-U.S.
      investor in reliance on Section 4(2) and/or Regulation S, with the investor
      representing that, among other things, it is not a U.S. person within the
      meaning of Regulation S, with appropriate legends contained within the offering
      documents and placed on the shares, and with no selling efforts made within
      the
      U.S. 25,200,000 shares for debt, and 400,000 shares as consideration for the
      purchase of certain intellectual property assets valued at $200,000. The Company
      also issued 72,000,000 shares to two officers upon conversion of preferred
      stock, and 1,000,000 shares upon conversion of cashless
      options.




**EQUITY
      COMPENSATION PLANS**




The
      following table sets forth as of March 31, 2007 compensation plans (including
      individual compensation arrangements) under which equity securities of the
      Company are authorized for issuance.




Equity
      Compensation Plan Information




Plan
                Category
            Number
                of securities to be
              issued
                upon exercise of
              outstanding
                options,
              warrants
                and rights
              
              (a)
            Weighted-average
              exercise
                price of outstanding
              options,
                warrants and rights
              
              (b)
            Number
                of securities remaining
              available
                for future issuance
              under
                equity compensation plans(excluding securities reflected
              in
                column (a))
              
              (c)Equity
                compensation plans approved by security holders
            0
            0
            0Equity
                compensation plans not approved by security holders
            5,000,000
            $.0427
            180,000Total
            5,000,000
            $.0427
            180,000(1)*




*
      Post
      1-1,000 reverse on June 16, 2006.


(1)
      Shares remaining under the August 2005 Non-Qualified Stock Compensation
      Plan.




16







On
      October 12, 2004, the Company entered into a Fee Agreement for Professional
      Services with Weed & Co. LLP (the “Agreement”). Per the Agreement, at March
      31, 2007, Richard O. Weed, as designee for Weed & Co. LLP, owned the
      following options to purchase common stock of the Company: (1) options to
      purchase 1,000,000 common shares at an exercise price of $.03 per share,
      expiring December 31, 2010; (2) options to purchase 1,000,000 common shares
      at
      an exercise price of $.0093 per share, expiring December 31, 2010; (3) options
      to purchase 1,000,000 common shares at an exercise price of $.002 per share,
      expiring December 31, 2010; (4) options to purchase 1,000,000 common shares
      at
      an exercise price of $.0011 per share, expiring March 9, 2011; and (5) options
      to purchase 1,000,000 shares of common stock at an exercise price of $.1713
      per
      share, expiring September 9, 2011. The options are not subject to dilution
      (i.e., no adjustment to the number of shares or the exercise price) based upon
      any reverse split of the common stock. The options are exercisable in whole
      or
      in part with a promissory note of less than 45 days duration or upon common
      “cashless exercise” terms.




In
      August
      2005, we adopted the August 2005 Non-Qualified Stock Compensation Plan whereby
      the corporation may compensate key employees, advisors and consultants by
      issuing them shares of its capital stock in exchange for services rendered
      and
      to be rendered and thereby conserve the corporation's cash resources. We
      reserved 300,000,000 shares of our $.001 par value common stock for issuance
      under the Plan and registered the shares on a Form S-8 registration statement
      with the Securities and Exchange Commission on August 19, 2005. On March 31,
      2007, there were no shares remaining for issuance (post 1-1,000 reverse on
      June
      16, 2006).




**ITEM
      6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**




You
      should read this section together with our consolidated financial statements
      and
      related notes thereto included elsewhere in this report.




**CAUTIONARY
      STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS**




This
      report contains forward-looking statements that involve risks and uncertainties.
      We generally use words such as "believe," "may," "could," "will," "intend,"
      "expect," "anticipate," "plan," and similar expressions to identify
      forward-looking statements, including statements regarding our expansion plans.
      You should not place undue reliance on these forward-looking statements. Our
      actual results could differ materially from those anticipated in the
      forward-looking statements for many reasons, including the risks described
      in
      our "Risk Factors" section and elsewhere in this report. Although we believe
      the
      expectations reflected in the forward-looking statements are reasonable, they
      relate only to events as of the date on which the statements are made, and
      our
      future results, levels of activity, performance or achievements may not meet
      these expectations. We do not intend to update any of the forward-looking
      statements after the date of this document to conform these statements to actual
      results or to changes in our expectations, except as required by law.




17







**CRITICAL
      ACCOUNTING POLICIES**




Cash
      and Cash Equivalents - For
      purposes of the statement of cash flows, the Company considers all highly liquid
      instruments with original maturities of ninety days or less, to be cash
      equivalents.




Accounts
      Receivable - The
      Company follows the allowance method of recognizing uncollectible accounts
      receivable. The allowance method recognizes bad debt expense as a percentage
      of
      accounts receivable based on a review of accounts receivable outstanding and
      the
      Company's prior history of uncollectible accounts receivable.




Fair
      Value of Financial Instruments - The
      Company's financial instruments includes accounts receivable, accounts payable,
      notes payable and long-term debt. The fair market value of accounts receivable
      and accounts payable approximate their carrying values because their maturities
      are generally less than one year. Long-term notes receivable and debt
      obligations are estimated to approximate their carrying values based upon their
      stated interest rates.




Property
      and equipment -
      Property and equipment are stated at cost, net of accumulated depreciation.
      Depreciation is provided primarily by the straight-line method over the
      estimated useful lives of the related assets generally of five to seven years.




Income
      Taxes -The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards No. 109, "Accounting for Income Taxes", which requires
      an
      asset and liability approach to financial accounting and reporting for income
      taxes. Deferred income tax assets and liabilities are computed annually for
      differences between the financial statement and tax basis of assets and
      liabilities that will result in taxable or deductible amounts in the future
      based on enacted tax laws and rates applicable to the periods in which the
      differences are expected to affect taxable income. Valuation allowances are
      established when necessary to reduce the deferred tax assets to the amount
      expected to be realized. Income tax expense is payable or refundable for the
      period plus or minus the change during the period in deferred tax assets and
      liabilities.




18







Use
      of
      Estimates - The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect reported amounts of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual results
      could differ from those estimates.




Revenue
      Recognition - The
      Company's revenues are derived principally from the sale of satellite systems
      and pay-per-view movies to hotels. Revenue from the sale of satellite systems
      is
      recognized after the system has been installed, and there are no longer any
      material commitments to the customer. The Company recognizes revenue from the
      pay-per-view movies on the accrual basis. The Company bills its customers for
      the month that services are performed.




Stock
      Options - The
      Company accounts for stock options issued to employees in accordance with APB
      No.25.




The
      Company has elected to adopt the disclosure requirements of SFAS No.123
      "Accounting for Stock-based Compensation". This statement requires that the
      Company provide proforma information regarding net income (loss) and
      income (loss) per share as if compensation cost for the Company's stock
      options granted had been determined in accordance with the fair value based
      method prescribed in SFAS No. 123. Additionally, SFAS No. 123 generally requires
      that the Company record options issued to non-employees, based on the fair
      value
      of the options.




Income
      (Loss) per Share - Basic
      earnings per share includes no dilution and is computed by dividing net earnings
      (loss) available to stockholders by the weighted number of common shares
      outstanding for the period. Diluted earnings per share reflect the potential
      dilution of securities that could share in the Company's earnings. During the
      years ended March 31, 2007 and 2006, there were no dilutive securities.




RECENT
      ACCOUNTING PRONOUNCEMENTS




In
      February, 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition or results of operation.





In
      June
      2006, the Financial Accounting Standards Board issued FASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition
      threshold and measurement attribute for the financial statement recognition
      and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. FIN 48
      is
      effective for fiscal years beginning after December 15, 2006. The Company does
      not expect the adoption of FIN 48 to have a material impact on its financial
      reporting, and the Company is currently evaluating the impact, if any, the
      adoption of FIN 48 will have on its disclosure requirements.





In
      September 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87,88,106, and 132(R)” (hereinafter :SFAS No. 158”). This statement requires
      an employer to recognize the overfunded or underfunded statues of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a not
      for
      profit organization. This statement also requires an employer to measure the
      funded status of a plan as of the date of its year end statement of financial
      position, with





19








limited
      exceptions. The Company does not expect the adoption of this statement to have
      a
      material impact on its financial reporting.





In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“SFAS No. 157”). This statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (GAAP), and
      expands disclosure about fair value measurements. This statement applies under
      other accounting pronouncements that require or permit fair value measurements.
      This statement does not require any new fair value measurements, but for some
      entities, the application of this statement may change current practice. The
      adoption of this statement had no immediate material effect on the Company’s
      financial condition or results of operations.





In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 156, "Accounting for Servicing of Financial Assets-an
      amendment of FASB Statement No. 140."  This statement requires an entity to
      recognize a servicing asset or servicing liability each time it undertakes
      an
      obligation to service a financial asset by entering into a servicing contract
      in
      any of the following situations: a transfer of the servicer's financial assets
      that meets the requirements for sale accounting; a transfer of the servicer's
      financial assets to a qualifying special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale securities or trading
      securities; or an acquisition or assumption of an obligation to service a
      financial asset that does not relate to financial assets of the servicer or
      its
      consolidated affiliates.  The statement also requires all separately
      recognized servicing assets and servicing liabilities to be initially measured
      at fair value, if practicable and permits an entity to choose either the
      amortization or fair value method for subsequent measurement of each class
      of
      servicing assets and liabilities.  The statement further permits, at its
      initial adoption,  a one-time reclassification of available for sale
      securities to trading securities by entities with recognized servicing rights,
      without calling into question the treatment of other available for sale
      securities under Statement 115, provided that the available for sale securities
      are identified in some manner as offsetting the entity's exposure to changes
      in
      fair value of servicing assets or servicing liabilities that a servicer elects
      to subsequently measure at fair value and requires separate presentation of
      servicing assets and servicing liabilities subsequently measured at fair value
      in the statement of financial position and additional disclosures for all
      separately recognized servicing assets and servicing liabilities. This statement
      became effective for fiscal years beginning after September 15, 2006. The
      adoption of this statement has had no material impact on the Company's financial
      condition or results of operations for the year ended December 31,
      2006.





In
      February 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial
      Instruments, an Amendment of FASB Standards No. 133 and 140" (hereinafter "SFAS
      No. 155"). This statement established the accounting for certain derivatives
      embedded in other instruments.  It simplifies accounting for certain hybrid
      financial instruments by permitting fair value remeasurement for any hybrid
      instrument that contains an embedded derivative that otherwise would require
      bifurcation under SFAS No. 133 as well as eliminating a restriction on the
      passive derivative instruments that a qualifying special-purpose entity ("SPE")
      may hold under SFAS No. 140.  This statement allows a public entity to
      irrevocably elect to initially and subsequently measure a hybrid instrument
      that
      would be required to be separated into a host contract and derivative in its
      entirety at fair value (with changes in fair value recognized in earnings)
      so
      long as that instrument is not designated as a hedging instrument pursuant
      to
      the statement.  SFAS No. 140 previously prohibited a qualifying
      special-purpose entity from holding a derivative financial instrument that
      pertains to a beneficial interest other than another derivative financial
      instrument.  This statement became effective for fiscal years beginning
      after September 15, 2006. The adoption of this statement has had no material
      impact on the Company's financial condition or results of operations for the
      year ended December 31, 2006 or 2005.





In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 154, "Accounting Changes  and Error
 Corrections," (hereinafter "SFAS No. 154") which replaces Accounting
 Principles Board Opinion No. 20, "Accounting  Changes," and SFAS No.
      3, "Reporting Accounting Changes in Interim Financial Statements - An Amendment
      of APB Opinion No. 28."  SFAS No. 154 provides guidance on accounting for
      and reporting changes in accounting principle and error corrections.  SFAS
      No. 154 requires that changes in accounting principle be applied retrospectively
      to prior period financial statements and is effective for





20








fiscal
      years beginning after December 15, 2005.  The Company has adopted SFAS No.
      154, which had no material affect on the Company’s financial statements for the
      year ended December 31, 2006.





In
      March
      2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 47 ("FIN 47"), "Accounting for Conditional Asset Retirement Obligations."
       FIN 47 clarifies that the term "conditional asset retirement obligation,"
      which as used in SFAS No. 143, "Accounting for Asset Retirement Obligations,"
      refers to a legal obligation to perform an asset retirement activity in which
      the timing and (or) method of settlement are conditional on a future event
      that
      may or may not be within the control of the entity.  The entity must record
      a liability for a "conditional" asset retirement obligation if the fair value
      of
      the obligation can be reasonably estimated.  FIN 47 also clarifies when an
      entity would have sufficient information to reasonably estimate the fair value
      of an asset retirement obligation. FIN 47 became effective no later than the
      end
      of fiscal years ending after December 15, 2005.  The adoption of this
      statement has had no impact on the Company's financial condition or results
      of
      operations at December 31, 2006.





In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error - an
      amendment of APB Opinion No. 29." This Statement applies to all voluntary
      changes in accounting principle. It also applies to changes required by an
      accounting pronouncement in the usual instance that the pronouncement does
      not
      include specific transition provisions. When a pronouncement includes specific
      transition provisions, those provisions should be followed.  Opinion 20
      previously required that most voluntary changes in accounting principle be
      recognized by including in net income of the period of the change the cumulative
      effect of changing to the new accounting principle. This Statement requires
      retrospective application to prior period financial statements of changes in
      accounting principle, unless it is impracticable to determine either the
      period-specific effects of the cumulative effect of the change. This
      Statement is effective for accounting changes and corrections of errors
      made in fiscal years beginning after December 15, 2005. The Company does not
      expect application of SFAS No. 154 to have a material affect on its
      financial statements.





In
      February 2006, the FASB issued SFAS No. 155. This Statement amends FASB
      Statements No. 133, Accounting for Derivative Instruments and Hedging
      Activities, and No. 140, Accounting for Transfers and Servicing of Financial
      Assets and Extinguishments of Liabilities *.* This
      Statement resolves issues addressed in Statement 133 Implementation Issue No.
      D1, “Application of Statement 133 to Beneficial Interests in Securitized
      Financial Assets.” The Company does not expect application of SFAS No. 155
      to have a material affect on its financial statements.





In
      March
      2006, the FASB issued SFAS No. 156. This Statement amends FASB Statement No.
      140, Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities, with respect to the accounting for separately
      recognized servicing assets and servicing liabilities. This statement is
      effective as of the beginning of its first fiscal year that begins after
      September 15, 2006. An entity should apply the requirements for recognition
      and
      initial measurement of servicing assets and servicing liabilities prospectively
      to all transactions after the effective date of this Statement. The Company
      does
      not expect application of SFAS No. 156 to have a material affect on its
      financial statements.




21







**GOING
      CONCERN OPINION**




Our
      audited financial statements for the fiscal year ended March 31, 2007, reflect
      a
      net loss of $1,190,425. These conditions raised substantial doubt about our
      ability to continue as a going concern.




**YEAR
      ENDED MARCH 31, 2007 AS COMPARED TO THE YEAR ENDED MARCH 31,
      2006**




**NET
      REVENUES**




Net
      revenues for the year ended March 31, 2007 were $287,165 compared to $511,463
      for the year ended March 31, 2006. The decrease is due in part to less intense
      sales and marketing efforts during the 2007 fiscal year.




**COST
      OF SALES**




Cost
      of
      sales for the year ended March 31, 2007 were $137,778 compared to $191,525
      for
      the year ended March 31, 2006. Our cost of sales decreased due in part to a
      concentrated effort to reduce unnecessary expenses, which also resulted in
      an
      increased gross margin percentage for the 2007 fiscal year.




**OPERATING
      EXPENSES**




Operating
      expenses for the year ended March 31, 2007 were $1,247,437 compared to
      $1,566,754 for the year ended March 31, 2006. This decrease was due in part
      to a
      decrease in general and administrative expenses in the amount of $95,071
      ($1,175,432 for the year ended March 31, 2007 compared to $1,270,503 for the
      year ended March 31, 2006). Further, the Company recognized an impairment of
      assets in the amount of $286,251 during the 2006 fiscal year. No similar expense
      was recorded during the 2007 fiscal year.




**NET
      LOSS**




Net
      loss
      for the year ended March 31, 2007 was $1,190,425 compared to $1,363,316 for
      the
      year ended March 31, 2006. This change was due primarily to a decrease in
      general and administrative expenses, partially offset by a significant inventory
      impairment recognized during the 2006 fiscal year.




22







**BASIC
      LOSS PER SHARE**




Our
      basic
      loss per share for the year ended March 31, 2007 was $0.02 compared to $2.04
      for
      the year ended March 31, 2006.




**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      March 31, 2007, our current assets were $172,708 and current liabilities were
      $1,222,916. Cash and cash equivalents were $140,135. Our stockholder's deficit
      at March 31, 2007 was $1,652,886. We had a net usage of cash by operating
      activities for the twelve months periods ended March 31, 2007 and 2006 of
      $739,586 and $195,758, respectively. We had net cash provided by financing
      activities of $871,518 and $198,250 for the twelve months periods ended March
      31, 2007 and 2006, respectively.




Our
      obligations include:




A
      Promissory note based on the purchase agreement of our subsidiary, Hotel Movie
      Network, which pays 7.5% per annum. This note has no due date and may be paid
      anytime in stock or when funds are readily available. At March 31, 2007.
      $6 62,500.00
      principal was due under this note. On November , 2006, the Company’s board of
      directors approved an amendment to this Agreement, whereby $400,000 of the
      Notes
      would be converted into common stock at $.04 per share. The Company issued 10 5 ,000,000
      shares of common stock On Feburary , 2007, the Company’s decreased the note a
      further $400,000 by issuing an additional 10,000,000 shares of common stock
      at
      $.04 per share.




A
      promissory note for $800,000 payable for monies lent to company by our President
      and CEO Robert Russell which pays 7.5% per annum. This note is due on or before
      March 31, 2007. At March 31, 2007, $980,000 principal and interest was due
      under
      this note.




**Material
      Agreements**




On
      March
      6, 2004, we entered into a Letter of Agreement with B2 Networks, LLC, whereby
      B2
      Networks would provide data center facilities, management systems for video
      and
      set top services and assist with operating the Hotel Link services. On April
      23,
      2004, we agreed to purchase 20% of B2 Networks, LLC in exchange for 1,667,667
      shares of common stock and $500,000. On August 2004, we amended this agreement
      to reduce the amount of purchase to 10% of the LLC in exchange for $200,000
      and
      2,667,000 shares of common stock.




23







On
      December 15, 2004, we entered into a Letter of Agreement with B2 Networks
      whereby B2 Networks will provide certain operations assistance to the company
      in
      exchange for a portion of gross revenue or $10,000 per month. This agreement
      was
      terminated in January 2006.




The
      amounts paid to B2 Networks have been recorded as research and development
      since
      the project has not achieved technical feasibility.




On
      March
      13, 2007, the Company entered into an Asset Purchase Agreement (the “Agreement”)
      with Creative Domain Investments Ltd, an Alberta, Canada company (“Creative
      Domain”). Pursuant to the Agreement, the Company agreed to purchase from
      Creative Domain certain assets utilized for Pay per View, wireless Internet
      and
      Voice over IP (VoIP) services in the hospitality industry and other
      applications. In consideration for the assets purchased under the Agreement,
      the
      Company agreed to pay $200,000, in the form of 400,000 restricted shares of
      its
      common stock valued at $0.50 per share.





On
      March
      19, 2007, the Company entered into an Asset Purchase Agreement (the “Agreement”)
      with Eagle West Communications, Inc., a Nevada corporation and Arizona based
      cable provider (“Eagle West”). Pursuant to the Agreement, the Company agreed to
      purchase from Eagle West substantially all of the assets relating to the
      operation of five cable franchises in North Eastern Arizona. In consideration
      for the assets purchased under the Agreement, the Company agreed to pay Eagle
      West a total of $1,200,000 as follows: $100,000 as an earnest money deposit
      due
      within five days of the execution of the Agreement and payable against certain
      debt of Eagle West; 2,500,000 shares of restricted common stock of the Company
      valued at $.20 per share (the “Shares”); and a $600,000 convertible promissory
      note (the “Note”). The Note bears interest of 7.5% until due at the end of one
      year and is convertible into common stock of the Company at $0.20 per share.
      The
      Note is secured by the assets purchased under the Agreement. Paul D.H. LaBarre
      is an officer and majority shareholder of Eagle West and an officer, director
      and majority shareholder of the Company. Mr. LaBarre abstained from voting
      on
      this transaction. Other than with respect to Mr. LaBarre and the transaction,
      there is no material relationship between Eagle West and the Company or any
      of
      its affiliates, or any director or officer of the Company, or any associate
      of
      any such director or officer. The parties are working through the final closing
      items for this Agreement, which was originally scheduled to close on or about
      April 16, 2007. both parties agreed to reschedule the closing until July 15.
      2007




**Employment
      Agreements**




On
      January 25, 2005, we entered into a new employment agreement with Robert Russell
      whereby Mr. Russell agreed to serve as Chief Executive Officer of the company
      for a period of three years for $240,000 per annum. Mr. Russell also received
      a
      signing bonus of 1,000,000 shares of Series A Convertible Preferred
      Stock.


On
      December 23, 2003, we entered into a consulting agreement with Marcia
      Pearlstein, whereby Ms. Pearlstein would act as Interim Chief Financial Officer
      and corporate secretary for one year for $60,000 per annum. On February 9,
      2005,
      we extended this agreement until December 31, 2005 and issued Ms. Pearlstein
      a
      signing bonus of 200,000 shares of Series A Convertible Preferred Stock. On
      January 4, 2006, we extended this agreement until December 31, 2006, decreasing
      Ms. Pearlstein’s salary to $30,000 per year. On January 2007 the Company
      extended the agreement for a further year until January 2008 with a minimum
      salary of $60,000 per year




On
      September 12, 2005, we entered into an employment agreement with Paul La Barre,
      whereby Mr. La Barre would serve as Vice-President and Chief Operation Officer
      for a period of three years. In exchange for services, Mr. La Barre is to
      receive a minimum base salary of $60,000 per annum and a one time grant of
      800,000 shares of Series A Preferred Stock.







24







**RISK
      FACTORS**




An
      investment in our common stock involves a high degree of risk. You should
      carefully consider the following risk factors, other information included in
      this filing and information in our periodic reports filed with the SEC. If
      any
      of the following risks actually occur, our business, financial condition or
      results of operations could be materially and adversely affected, and you may
      lose some or all of your investment.




**RISKS
      ABOUT OUR BUSINESS**




**WE
      HAVE A HISTORY OF LOSSES AND AN ACCUMULATED DEFICIT WHICH MAY CONTINUE IN THE
      FUTURE AND WHICH MAY PREVENT US FROM OPERATING AND EXPANDING OUR BUSINESS.**




We
      have
      incurred significant net operating losses in each of the years ended March
      31,
      2007 and 2006. We realized a net loss of $1,190,425 for the twelve months
      ended March 31, 2007, as compared to net loss of $1,363,316 for the twelve
      months ended March 31, 2006. Our accumulated deficit through March 2007 was
      $12,389,264. We may continue to incur losses and may never achieve or sustain
      profitability. An extended period of losses and negative cash flow may prevent
      us from operating and expanding our business.




**OUR
      INDEPENDENT AUDITORS HAVE ISSUED A GOING CONCERN OPINION DUE TO OUR RECURRING
      LOSSES AND WORKING CAPITAL SHORTAGES, WHICH MEANS WE MAY NOT BE ABLE TO CONTINUE
      OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING.**




Our
      audited financial statements for the fiscal year ended March 31, 2007, reflect
      a
      net loss of $1,190,425. These conditions raised substantial doubt about our
      ability to continue as a going concern if we do not acquire sufficient
      additional funding or alternative sources of capital to meet our working capital
      needs. If we do not obtain additional funding, we may not be able to continue
      our operations.




**WE
      NEED AND MAY BE UNABLE TO OBTAIN ADDITIONAL FUNDING ON SATISFACTORY TERMS,
      WHICH
      COULD DILUTE OUR STOCKHOLDERS' INTERESTS OR IMPOSE BURDENSOME FINANCIAL
      RESTRICTIONS ON OUR BUSINESS.**




Historically,
      we have relied upon cash from financing activities to fund all of the cash
      requirements of our activities. We have not been able to generate any cash
      from
      our operating activities in the past and we may not be able to generate any
      significant cash in the future. Deteriorating global economic conditions and
      the
      effects of ongoing military actions against terrorists may cause prolonged
      declines in investor confidence in and accessibility to capital markets. Future
      financing may not be available on a timely basis, in sufficient amounts or
      on
      terms acceptable to us. Any future equity financing may also dilute existing
      stockholders' equity. Any debt financing or other financing of securities senior
      to common stock will likely include financial and other covenants that will
      restrict our flexibility. At a minimum, we expect these covenants to include
      restrictions on our ability to pay dividends on our common stock. If we find
      additional financing with satisfactory terms, your interests may be diluted
      and
      we may have to accept restrictions on our business.




25







**IF
      WE CAN NOT IMPLEMENT OUR BUSINESS PLANS REGARDING HOTEL MOVIE NETWORK, WE MAY
      NEVER BECOME PROFITABLE.**




Our
      business model includes leveraging the assets we acquired from Hotel Movie
      Network, Inc.. Accordingly, we are unable to predict the demand for our services
      and are therefore unable to predict whether our business model may be sustained.
      If we are unable to generate significant revenues under our current business
      model, we may never become profitable and, if we become profitable, we may
      not
      be able to sustain profitability.




**OUR
      REVENUES, IF ANY, MAY BE AFFECTED BY THE SEASONAL OCCUPANCY RATES OF HOTELS
      WE
      DO BUSINESS WITH.**




Our
      revenue, if any, will partly depend on the occupancy rate of the hotel
      properties we serve. Occupancy rates can vary season to season based on the
      property's location and attractions nearby. Generally, occupancy rates are
      higher during the summer and lower during the winter. Occupancy rates affect
      our
      potential number of customers, which affects our revenue. Because we do not
      control occupancy rates, we may not be able to significantly influence negative
      trends or seasonality in our revenues, if any.




**OUR
      REVENUES, IF ANY, WILL BE AFFECTED BY FACTORS OUT OF OUR CONTROL.**




In
      addition to occupancy rates, our revenues will be affected by many factors
      out
      of our control including:




-
            the
                rate at which hotel guests buy our services;-
            the
                popularity of movies we license;





-
            the
                amount of marketing studios used to promote their movies; and-
            other
                entertainment options at the hotel property.




While
      we
      may decide which hotels we enter into contracts with, many factors out of our
      control will ultimately affect the rate at which guests buy our services. We
      do
      not control all of the factors that could influence guests to make a decision
      to
      buy our services and therefore we can not control the amount of revenues we
      generate.




26







**WE
      DEPEND ON THIRD PARTIES FOR OUR PROGRAMMING CONTENT AND IF THEY INCREASE THEIR
      FEES, OUR PROFITABILITY COULD BE AFFECTED.**




Our
      programming content is provided by third parties. We currently pay a fee for
      the
      right to broadcast their programming. If these third parties increase their
      fees, we will have to either pass the increased costs on to our customers,
      which
      could adversely affect our revenues, or our profitability may decrease.




**IF
      WE DO NOT MANAGE OUR GROWTH EFFECTIVELY, WE MAY NOT BE ABLE TO IMPLEMENT OUR
      BUSINESS PLAN AND BECOME PROFITABLE.**




Our
      business strategy envisions a period of rapid growth that may strain our
      administrative and operational resources. Our ability to effectively manage
      growth will require us to continue to expand the capabilities of our operational
      and management systems and to attract, train, manage and retain qualified
      engineers, technicians, salespersons and other personnel. We may not be able
      to
      manage our growth, particularly if our losses continue or if we are unable
      to
      obtain sufficient financing. If we are unable to successfully manage our growth,
      we may not be able to implement our business plan and become profitable.




**IF
      WE CAN NOT PROTECT OUR PROPRIETARY RIGHTS AND INTELLECTUAL PROPERTY, WE MAY
      NOT
      BE ABLE TO COMPETE EFFECTIVELY IN THE MARKETPLACE.**




We
      will
      rely on a combination of trade secrets and contractual provisions to protect
      our
      proprietary rights and products. These protections may not be adequate and
      competitors may independently develop technologies that are similar or identical
      to our products. We may experience delays in the introduction and market
      acceptance of new products due to the expense of adopting new technology and
      customer resistance to learning new technology. If we can not protect our
      proprietary rights and intellectual property, we may not be able to compete
      effectively in the marketplace.




**IF
      COMMUNICATIONS TO OUR PRIMARY SERVERS ARE INTERRUPTED, OUR OPERATIONS MAY NOT
      GENERATE REVENUE.**




Although
      our servers are maintained by our host, all of our primary servers are
      vulnerable to interruption by damage from fire, flood, power loss,
      telecommunications failure, break-ins, terrorist attacks and other events beyond
      our control. We do not maintain business interruption insurance. A significant
      system disruption would adversely affect our business, because we would be
      unable to deliver our services during the disruption and may therefore lose
      existing and potential customers.




**WE
      OPERATE WITHIN A HIGHLY COMPETITIVE MARKET AND IF WE DO NOT SUCCEED IN
      ATTRACTING CUSTOMERS, WE WILL NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN.**




The
      market for on-demand video entertainment and satellite services is extremely
      competitive and can be significantly affected by many factors, including changes
      in local, regional or national economic conditions, changes in consumer
      preferences, brand name recognition and marketing and the development of new
      and
      competing technologies. We expect that existing businesses that compete with
      us
      have greater financial resources than we do and will be able to undertake more
      extensive marketing campaigns and adopt more aggressive advertising sales
      policies than we can. If we can not compete successfully, we may not be able
      to
      implement our business plan.




27







**ITEM
      7. FINANCIAL STATEMENTS**




B2Digital,
      Incorporated


Financial
      Statements


March
      31,
      2007




Contents




PageReport
                of independent Registered Public Accounting Firm
            
            F-1Financial
                StatementsBalance
                Sheets
            
            F-2-F-3Statements
                of Operations
            
            F-4Statements
                of Stockholders' Equity (Deficit)
            
            F-5-F-6Statements
                of Cash Flows
            
            F-7Notes
                to the Financial Statements
            
            F-8
                to F-14




28








**MOORE
      & ASSOCIATES, CHARTERED**


** *ACCOUNTANTS
      AND ADVISORS*


*PCAOB
      REGISTERED*








REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








To
      the
      Board of Directors


B2Digital,
      Inc.




We
      have
      audited the accompanying balance sheet of B2Digital, Inc. as of March 31, 2007,
      and the related statements of operations, stockholders’ equity and cash flows
      through March 31, 2007 and 2006. These financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audits.





We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of B2Digital, Inc. as of March 31,
      2007 and the results of its operations and its cash flows through March 31,
      2007
      and 2006, in conformity with accounting principles generally accepted in the
      United States of America.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 8 to the financial
      statements, the Company has incurred losses from operations resulting in an
      accumulated deficit of $12,389,264, both of which raises substantial doubt
      about
      its ability to continue as a going concern. Management’s plans concerning these
      matters are also described in Note 8. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.








***/s/
      Moore & Associates, Chartered***





Moore
      & Associates Chartered


Las
      Vegas, Nevada


June
      28,
      2007








F-1







**B2
                DIGITAL, INCORPORATED**Consolidated
                Balance SheetASSETSMarch
                31,2007CURRENT
                ASSETSCash
            
            $
            140,135Accounts
                receivable
            
            
            32,573Total
                Current Assets
            
            
            172,708PROPERTY
                AND EQUIPMENTHotel
                equipment
            
            
            150,000Office
                furniture and equipment
            
            
            955,226Less:
                accumulated depreciation
            
            
            (1,030,226
            )Total
                Property and Equipment
            
            
            75,000OTHER
                ASSETSDeposits
            
            
            50,000Other
                assets (Note 6)
            
            
            200,000Total
                Other Assets
            
            
            250,000TOTAL
                ASSETS
            
            $
            497,708


The
      accompanying notes are an integral part of these financial
      statements.


F-2







**B2
                DIGITAL, INCORPORATED**Consolidated
                Balance Sheet (Continued)LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)March
                31,2007CURRENT
                LIABILITIESAccounts
                payable and accrued expenses
            
            $
            482,344Related
                party loans payable
            
            
            14,500Notes
                payable
            
            
            120,000Bonds
                payable
            
            
            71,250Total
                Current Liabilities
            
            
            688,094LONG-TERM
                LIABILITIESConvertible
                notes payable - related party
            
            
            662,500Note
                payable - related party
            
            
            800,000Total
                Long Term Liabilities
            
            
            1,462,500TOTAL
                LIABILITIES
            
            
            2,150,594STOCKHOLDERS'
                EQUITY (DEFICIT)Preferred
                stock, Series A; $0.00001 par value; 2,000,000shares
                authorized, 1,700,000 shares issued and outstanding
            
            
            -Preferred
                stock, Series B; $0.00001 par value; 40,000,000shares
                authorized; 12,000,000 shares outstanding
            
            
            -Common
                stock; $0.00001 par value; 5,000,000,000 sharesauthorized;
                144,373,971 shares issued and outstanding
            
            
            1,444Additional
                paid-in capital
            
            
            11,059,316Stock
                subscriptions receivable
            
            
            (324,382
            )Accumulated
                deficit
            
            
            (12,389,264
            )Total
                Stockholders' Equity (Deficit)
            
            
            (1,652,886
            )TOTAL
                LIABILITIES AND STOCKHOLDERS'EQUITY
                (DEFICIT)
            
            $
            497,708


The
      accompanying notes are an integral part of these financial
      statements.





F-3







**B2
      DIGITAL, INCORPORATED**


Consolidated
      Statements of Operations (Unaudited)









For
                the Years EndedMarch
                31,2007
            
            2006REVENUES
            
            $
            287,165
            
            $
            511,463COST
                OF SALES
            
            
            137,778
            
            
            191,525GROSS
                PROFIT
            
            
            149,387
            
            
            319,938EXPENSESGeneral
                and administrative
            
            
            1,175,432
            
            
            1,270,503Bad
                debts
            
            
            72,005
            
            
            -Impairment
                of assets
            
            
            
            
            
            286,251Research
                and development
            
            
            -
            
            
            10,000Total
                Expenses
            
            
            1,247,437
            
            
            1,566,754OPERATING
                LOSS
            
            
            (1,098,050
            )
            
            (1,246,816
            )OTHER
                INCOME (EXPENSES)Interest
                expense
            
            
            (97,375
            )
            
            (116,500
            )Other
                income
            
            
            5,000
            
            
            -Total
                Other Income (Expense)
            
            
            (92,375
            )
            
            (116,500
            )NET
                LOSS
            
            $
            (1,190,425
            )
            $
            (1,363,316
            )BASIC
                LOSS PER SHARE
            
            $
            (0.02
            )
            $
            (2.04
            )WEIGHTED
                AVERAGENUMBER
                OF SHARESOUTSTANDING
            
            
            96,118,330
            
            
            667,020


The
      accompanying notes are an integral part of these financial
      statements.




F-4







**B2
                DIGITAL, INCORPORATED**Consolidated
                Statements of Stockholders' Equity (Deficit)Additional
            
            StockPreferred
                Stock
            
            Common
                Stock
            
            Paid-In
            
            Subscriptions
            
            AccumulatedShares
            
            Amount
            
            Shares
            
            Amount
            
            Capital
            
            Receivable
            
            DeficitBalance,
                March 31, 2005
            
            
            1,200,000
            
            
            1
            
            
            336,871
            
            
            337
            
            
            7,184,672
            
            
            -
            
            
            (9,835,523
            )Common
                shares issuedfor
                services rendered
            
            
            -
            
            
            -
            
            
            171,600
            
            
            172
            
            
            286,678
            
            
            -
            
            
            -Common
                shares issuedfor
                debt
            
            
            -
            
            
            -
            
            
            20,000
            
            
            20
            
            
            29,980
            
            
            -
            
            
            -Common
                shares cancelled
            
            
            -
            
            
            -
            
            
            (4,500
            )
            
            (5
            )
            
            5
            
            
            -
            
            
            -Common
                shares issuedfor
                note payable
            
            
            -
            
            
            -
            
            
            440,000
            
            
            440
            
            
            749,560
            
            
            (40,000
            )
            
            -Preferred
                shares issuedfor
                cash
            
            
            800,000
            
            
            1
            
            
            -
            
            
            -
            
            
            191,999
            
            
            -
            
            
            -Exchange
                of $0.001 parvalue
                shares for $0.00001par
                value shares
            
            
            -
            
            
            (2
            )
            
            -
            
            
            (954
            )
            
            956
            
            
            -
            
            
            -Net
                loss for the year endedMarch
                31, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,363,316
            )Balance,
                March 31, 2006
            
            
            2,000,000
            
            $
            -
            
            
            963,971
            
            $
            10
            
            $
            8,443,850
            
            $
            (40,000
            )
            $
            (11,198,839
            )


The
      accompanying notes are an integral part of these financial
      statements.




F-5







**B2
        DIGITAL, INCORPORATED**


Consolidated
        Statements of Stockholders' Equity (Deficit)


(Continued)


Additional
              
              StockPreferred
                  Stock
              
              Common
                  Stock
              
              Paid-In
              
              Subscriptions
              
              AccumulatedShares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Receivable
              
              DeficitBalance,
                  March 31, 2006
              
              2,000,000
              
              $-
              
              963,971
              
              $10
              
              $8,443,850
              
              $(40,000)
              
              $(11,198,839)Common
                  shares issuedfor
                  services rendered
              
              -
              
              -
              
              3,180,000
              
              32
              
              209,968
              
              -
              
              -Common
                  shares issuedfor
                  cash and subscriptionsreceivable
              
              -
              
              -
              
              41,630,000
              
              416
              
              1,195,484
              
              (603,562)
              
              -Cash
                  received onsubscriptions
                  receivable
              
              -
              
              -
              
              -
              
              -
              
              -
              
              279,180
              
              -Stock
                  subscriptionswritten-off
                  due
                  touncollectibility
              
              -
              
              -
              
              -
              
              -
              
              -
              
              40,000
              
              -Common
                  shares issuedupon
                  exercise of options
              
              -
              
              -
              
              1,000,000
              
              10
              
              (10)
              
              -
              
              -Common
                  shares issuedfor
                  debt
              
              -
              
              -
              
              25,200,000
              
              252
              
              1,010,748
              
              -
              
              -Common
                  shares issuedupon
                  conversion ofpreferred
                  stock
              
              (300,000)
              
              -
              
              72,000,000
              
              720
              
              (720)
              
              -
              
              -Common
                  shares issuedfor
                  intellectual property
              
              -
              
              -
              
              400,000
              
              4
              
              199,996
              
              -
              
              -Net
                  loss for the year endedMarch
                  31, 2007
              
              -
              
              -
              
              -
              
              -
              
              -
              
              -
              
              (1,190,425)Balance,
                  March 31, 2007
              
              1,700,000
              
              $-
              
              144,373,971
              
              $1,444
              
              $11,059,316
              
              $(324,382)
              
              $(12,389,264)
  The
          accompanying notes are an integral part of these financial
          statements.




F-6


**B2
        DIGITAL, INCORPORATED**


Consolidated
        Statements of Cash Flows




For
                  the Years EndedMarch
                  31,2007
              
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              $
              (1,190,425
              )
              $
              (1,363,316
              )Adjustments
                  to reconcile net loss to net cashprovided
                  (used) by operating activities:Impairment
                  of inventories
              
              -
              
              
              286,251Disposal
                  of fixed assets
              
              -
              
              
              25,258Depreciation
              
              20,000
              
              
              -Common
                  stock issued for services
              
              210,000
              
              
              286,849Bad
                  debt expense
              
              40,000
              
              
              -Changes
                  in operating assets and liabilitiesDecrease
                  in accounts receivable
              
              7,670
              
              
              36,501(Increase)
                  decrease in inventory
              
              -
              
              
              1,050(Increase)
                  decrease in other assets
              
              (50,000
              )
              
              12,790Increase
                  (decrease) in accounts payableand
                  accrued expenses
              
              223,169
              
              
              518,859Net
                  Cash Used by Operating Activities
              
              (739,586
              )
              
              (195,758
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES
              
              -
              
              
              -CASH
                  FLOWS FROM FINANCING ACTIVITIESCash
                  received on subscriptions receivable
              
              279,180
              
              
              10,000Decrease
                  in bonds payable
              
              -
              
              
              (3,750
              )Sale
                  of common stock for cash
              
              592,338
              
              
              192,000Net
                  Cash Provided byFinancing
                  Activities
              
              871,518
              
              
              198,250NET
                  DECREASE IN CASH
              
              131,932
              
              
              2,492CASH
                  AT BEGINNING OF PERIOD
              
              8,203
              
              
              5,711CASH
                  AT END OF PERIOD
              $
              140,135
              
              $
              8,203CASH
                  PAID FOR:Interest
              $
              -
              
              $
              -Income
                  Taxes
              $
              -
              
              $
              -SUPPLIMENTAL
                  SCHEDULE OF NON-CASH ANDINVESTING
                  ACTIVITIESCommon
                  stock issued for services
              $
              210,000
              
              $
              286,849Common
                  stock issued for debt
              $
              1,011,000
              
              $
              156,000Accounts
                  payable converted topreferred
                  stock
              $
              -
              
              $
              800,000


**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements




1.
      Summary of Significant Accounting Policies




Nature
      of Operations - The
      Company was incorporated in Colorado on June 8, 1983 as Telecommunication
      Products, Inc. (referred to herein as "Telecommunication Products," the
      "Company" or "Telpro"), a technological development corporation. The company
      was
      established as a developer of data compression technology. On July 20, 2004,
      Telecommunication Products, Inc. changed its name to B2Digital, Inc. and
      reincorporated in the State of Delaware.




The
      acquisition of Hotel Movie Networks Inc. which closed on August 1, 2003 provided
      a revenue-positive operations infrastructure and an extensive network of
      contractors throughout the United States to both deploy new technology and
      expand product lines. Operations consist of ongoing pay-per-view movie rentals
      from hotel establishments and related services with these hotel establishments.




On
      March
      6, 2004, the Company entered into a Letter of Agreement with B2 Networks, LLC,
      whereby B2 Networks would provide data center facilities, management systems
      for
      video and set top services and assist with operating the Hotel Link services.




Cash
      and Cash Equivalents - For
      purposes of the statement of cash flows, the Company considers all highly liquid
      instruments with original maturities of ninety days or less, to be cash
      equivalents.




Accounts
      Receivable - The
      Company follows the allowance method of recognizing uncollectible accounts
      receivable. The allowance method recognizes bad debt expense as a percentage
      of
      accounts receivable based on a review of accounts receivable outstanding and
      the
      Company's prior history of uncollectible accounts receivable.




Fair
      Value of Financial Instruments - The
      Company's financial instruments includes accounts receivable, accounts payable,
      notes payable and long-term debt. The fair market value of accounts receivable
      and accounts payable approximate their carrying values because their maturities
      are generally less than one year. Long-term notes receivable and debt
      obligations are estimated to approximate their carrying values based upon their
      stated interest rates.




Property
      and equipment -
      Property and equipment are stated at cost, net of accumulated depreciation.
      Depreciation is provided primarily by the straight-line method over the
      estimated useful lives of the related assets generally of five to seven years.




Income
      Taxes -The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards No. 109, "Accounting for Income Taxes", which requires
      an
      asset and liability approach to financial accounting and reporting for income
      taxes. Deferred income tax assets and liabilities are computed annually for
      differences between the financial statement and tax basis of assets and
      liabilities that will result in taxable or deductible amounts in the future
      based on enacted tax laws and rates applicable to the periods in which the
      differences are expected to affect taxable income. Valuation allowances are
      established when necessary to reduce the deferred tax assets to the amount
      expected to be realized. Income tax expense is payable or refundable for the
      period plus or minus the change during the period in deferred tax assets and
      liabilities.




Use
      of
      Estimates - The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect reported amounts of assets and liabilities and disclosure of contingent
      assets and liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual results
      could differ from those estimates.







F-7








**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements




1.
      Summary of Significant Accounting Policies (Continued)





Revenue
      Recognition - The
      Company's revenues are derived principally from the sale of satellite systems
      and pay-per-view movies to hotels. Revenue from the sale of satellite systems
      is
      recognized after the system has been installed, and there are no longer any
      material commitments to the customer. The Company recognizes revenue from the
      pay-per-view movies on the accrual basis. The Company bills its customers for
      the month that services are performed.




Stock
      Options - The
      Company accounts for stock options issued to employees in accordance with APB
      No.25.




The
      Company has elected to adopt the disclosure requirements of SFAS No.123
      "Accounting for Stock-based Compensation". This statement requires that the
      Company provide proforma information regarding net income (loss) and
      income (loss) per share as if compensation cost for the Company's stock
      options granted had been determined in accordance with the fair value based
      method prescribed in SFAS No. 123. Additionally, SFAS No. 123 generally requires
      that the Company record options issued to non-employees, based on the fair
      value
      of the options.




Income
      (Loss) per Share - Basic
      earnings per share includes no dilution and is computed by dividing net earnings
      (loss) available to stockholders by the weighted number of common shares
      outstanding for the period. Diluted earnings per share reflect the potential
      dilution of securities that could share in the Company's earnings. During the
      years ended March 31, 2007 and 2006, there were no dilutive securities.




Recent
      Accounting Pronouncements




In
      February, 2007, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (hereinafter SFAS No. 159”). This statement permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This Statement is expected to expand the use of fair
      value measurement, which is consistent with the Board’s long-term measurement
      objectives for accounting for financial instruments. This statement is effective
      as of the beginning of an entity’s first fiscal year that begins after November
      15, 2007, although earlier adoption is permitted. Management has not determined
      the effect that adopting this statement would have on the Company’s financial
      condition or results of operation.





In
      June
      2006, the Financial Accounting Standards Board issued FASB Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB
      Statement No. 109” (hereinafter “FIN 48”), which prescribes a recognition
      threshold and measurement attribute for the financial statement recognition
      and
      measurement of a tax position taken or expected to be taken in a tax return.
      FIN
      48 also provides guidance on de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure and transition. FIN 48
      is
      effective for fiscal years beginning after December 15, 2006. The Company does
      not expect the adoption of FIN 48 to have a material impact on its financial
      reporting, and the Company is currently evaluating the impact, if any, the
      adoption of FIN 48 will have on its disclosure requirements.





F-8








**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements




1.
      Summary of Significant Accounting Policies (Continued)





Recent
      Accounting Pronouncements (Continued)





In
      September 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87,88,106, and 132(R)” (hereinafter :SFAS No. 158”). This statement requires
      an employer to recognize the overfunded or underfunded statues of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position and to recognize changes in
      that funded status in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a not
      for
      profit organization. This statement also requires an employer to measure the
      funded status of a plan as of the date of its year end statement of financial
      position, with limited exceptions. The Company does not expect the adoption
      of
      this statement to have a material impact on its financial
      reporting.





In
      September, 2006, the Financial Accounting Standards Board issued Statement
      of
      Financial Accounting Standards No. 157, “Fair Value Measurements” (hereinafter
“SFAS No. 157”). This statement defines fair value, establishes a framework for
      measuring fair value in generally accepted accounting principles (GAAP), and
      expands disclosure about fair value measurements. This statement applies under
      other accounting pronouncements that require or permit fair value measurements.
      This statement does not require any new fair value measurements, but for some
      entities, the application of this statement may change current practice. The
      adoption of this statement had no immediate material effect on the Company’s
      financial condition or results of operations.





In
      March
      2006, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 156, "Accounting for Servicing of Financial Assets-an
      amendment of FASB Statement No. 140."  This statement requires an entity to
      recognize a servicing asset or servicing liability each time it undertakes
      an
      obligation to service a financial asset by entering into a servicing contract
      in
      any of the following situations: a transfer of the servicer's financial assets
      that meets the requirements for sale accounting; a transfer of the servicer's
      financial assets to a qualifying special-purpose entity in a guaranteed mortgage
      securitization in which the transferor retains all of the resulting securities
      and classifies them as either available-for-sale securities or trading
      securities; or an acquisition or assumption of an obligation to service a
      financial asset that does not relate to financial assets of the servicer or
      its
      consolidated affiliates.  The statement also requires all separately
      recognized servicing assets and servicing liabilities to be initially measured
      at fair value, if practicable and permits an entity to choose either the
      amortization or fair value method for subsequent measurement of each class
      of
      servicing assets and liabilities.  The statement further permits, at its
      initial adoption,  a one-time reclassification of available for sale
      securities to trading securities by entities with recognized servicing rights,
      without calling into question the treatment of other available for sale
      securities under Statement 115, provided that the available for sale securities
      are identified in some manner as offsetting the entity's exposure to changes
      in
      fair value of servicing assets or servicing liabilities that a servicer elects
      to subsequently measure at fair value and requires separate presentation of
      servicing assets and servicing liabilities subsequently measured at fair value
      in the statement of financial position and additional disclosures for all
      separately recognized servicing assets and servicing liabilities. This statement
      became effective for fiscal years beginning after September 15, 2006. The
      adoption of this statement has had no material impact on the Company's financial
      condition or results of operations for the year ended March 31,
      2007.





F-9








**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements




1.
      Summary of Significant Accounting Policies (Continued)





Recent
      Accounting Pronouncements (Continued)





In
      February 2006, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 155, "Accounting for Certain Hybrid Financial
      Instruments, an Amendment of FASB Standards No. 133 and 140" (hereinafter "SFAS
      No. 155"). This statement established the accounting for certain derivatives
      embedded in other instruments.  It simplifies accounting for certain hybrid
      financial instruments by permitting fair value remeasurement for any hybrid
      instrument that contains an embedded derivative that otherwise would require
      bifurcation under SFAS No. 133 as well as eliminating a restriction on the
      passive derivative instruments that a qualifying special-purpose entity ("SPE")
      may hold under SFAS No. 140.  This statement allows a public entity to
      irrevocably elect to initially and subsequently measure a hybrid instrument
      that
      would be required to be separated into a host contract and derivative in its
      entirety at fair value (with changes in fair value recognized in earnings)
      so
      long as that instrument is not designated as a hedging instrument pursuant
      to
      the statement.  SFAS No. 140 previously prohibited a qualifying
      special-purpose entity from holding a derivative financial instrument that
      pertains to a beneficial interest other than another derivative financial
      instrument.  This statement became effective for fiscal years beginning
      after September 15, 2006. The adoption of this statement has had no material
      impact on the Company's financial condition or results of operations for the
      year ended March 31, 2007 or 2007.





In
      May
      2005, the Financial Accounting Standards Board issued Statement of Financial
      Accounting Standards No. 154, "Accounting Changes  and Error
 Corrections," (hereinafter "SFAS No. 154") which replaces Accounting
 Principles Board Opinion No. 20, "Accounting  Changes," and SFAS No.
      3, "Reporting Accounting Changes in Interim Financial Statements - An Amendment
      of APB Opinion No. 28."  SFAS No. 154 provides guidance on accounting for
      and reporting changes in accounting principle and error corrections.  SFAS
      No. 154 requires that changes in accounting principle be applied retrospectively
      to prior period financial statements and is effective for fiscal years beginning
      after December 15, 2005.  The Company has adopted SFAS No. 154, which had
      no material affect on the Company’s financial statements for the year ended
      March 31, 2007.





In
      March
      2005, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
      No. 47 ("FIN 47"), "Accounting for Conditional Asset Retirement Obligations."
       FIN 47 clarifies that the term "conditional asset retirement obligation,"
      which as used in SFAS No. 143, "Accounting for Asset Retirement Obligations,"
      refers to a legal obligation to perform an asset retirement activity in which
      the timing and (or) method of settlement are conditional on a future event
      that
      may or may not be within the control of the entity.  The entity must record
      a liability for a "conditional" asset retirement obligation if the fair value
      of
      the obligation can be reasonably estimated.  FIN 47 also clarifies when an
      entity would have sufficient information to reasonably estimate the fair value
      of an asset retirement obligation. FIN 47 became effective no later than the
      end
      of fiscal years ending after December 15, 2005.  The adoption of this
      statement has had no impact on the Company's financial condition or results
      of
      operations at March 31, 2007.





In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error - an
      amendment of APB Opinion No. 29." This Statement applies to all voluntary
      changes in accounting principle. It also applies to changes required by an
      accounting pronouncement in the usual instance that the pronouncement does
      not
      include specific transition provisions. When a pronouncement includes specific
      transition provisions, those provisions should be followed.  Opinion 20
      previously required that most voluntary changes in accounting principle be
      recognized by including in net income of the period of the change the cumulative
      effect of changing to the new accounting principle. This Statement requires
      retrospective application to prior period financial statements of changes in
      accounting principle, unless it is impracticable to determine either the
      period-specific effects of the cumulative effect of the change. This
      Statement is effective for accounting changes and corrections of errors
      made in fiscal years beginning after December 15, 2005. The Company does not
      expect application of SFAS No. 154 to have a material affect on its
      financial statements.





F-10







**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements




1.
      Summary of Significant Accounting Policies (Continued)





Recent
      Accounting Pronouncements (Continued)





In
      February 2006, the FASB issued SFAS No. 155. This Statement amends FASB
      Statements No. 133, Accounting for Derivative Instruments and Hedging
      Activities, and No. 140, Accounting for Transfers and Servicing of Financial
      Assets and Extinguishments of Liabilities *.* This
      Statement resolves issues addressed in Statement 133 Implementation Issue No.
      D1, “Application of Statement 133 to Beneficial Interests in Securitized
      Financial Assets.” The Company does not expect application of SFAS No. 155
      to have a material affect on its financial statements.





In
      March
      2006, the FASB issued SFAS No. 156. This Statement amends FASB Statement No.
      140, Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities, with respect to the accounting for separately
      recognized servicing assets and servicing liabilities. This statement is
      effective as of the beginning of its first fiscal year that begins after
      September 15, 2006. An entity should apply the requirements for recognition
      and
      initial measurement of servicing assets and servicing liabilities prospectively
      to all transactions after the effective date of this Statement. The Company
      does
      not expect application of SFAS No. 156 to have a material affect on its
      financial statements.




2.
      Notes
      payable - related parties




Officer
      Note - On
      April 2004 the Company converted 800,000 shares of Series A preferred stock
      owned by the Company's president and CEO Robert Russell to a note payable in
      the
      amount of $800,000. The note accrues interest at a rate of 7.5% per annum,
      and
      is due March 31, 2008.





Convertible
      Note Payable - At
      March 31, 2007, the Company holds a convertible note payable to a third party
      entity, of which a Company officer has a controlling interest. This note is
      convertible into common stock at any time, at the market rate at the time of
      conversion. This note accrues interest at a rate of 7 .5%
      per
      annum. At March 31, 2007 the outstanding principal balance on the note was
      $662,500.




5.
      Bond
      payable




The
      Company has a bond payable which bears interest at ten percent and is unsecured.
      The bond was due July, 2004. The Company has negotiated the right to pay the
      bond when it has adequate source of funding. As of March 31, 2007 the
      outstanding balance on the bond was $71,250.




6.
      Stockholders Equity




During
      the year ended March 31, 2006 the Company issued 171,600 shares of common stock
      for services rendered. In addition, the Company issued 20,000 shares for debt,
      440,000 shares for cash and subscriptions receivable.





During
      the year ended March 31, 2007 the Company issued 3,180,000 shares for of common
      stock for services rendered. In addition, the Company issued 41,356,118 shares
      for cash and subscriptions receivable, 25,200,000 shares for debt, and 400,000
      shares as consideration for the purchase of certain intellectual property assets
      valued at $200,000. The Company also issued 72,000,000 shares to two officers
      upon conversion of preferred stock, and 1,000,000 shares upon conversion of
      cashless options.





F-11











**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements





6.
      Stockholders Equity (Continued)





Stock
      Options




On
      October 12, 2004, the Company entered into a Fee Agreement for Professional
      Services with Weed & Co. LLP (the “Agreement”). Terms of the Agreement
      provided for, among other things, the issuance to Richard O. Weed, as designee
      of Weed & Co. LLP, 2,000,000 shares of common stock, and options to purchase
      2,000,000 shares of the Company's common stock at an exercise price of $.03
      per
      share. These options expire December 31, 2010. Further, pursuant to the
      Agreement, Mr. Weed was granted additional options to purchase common stock
      on
      the following dates: (1) on March 9, 2005, options to purchase 1,000,000 common
      shares at an exercise price of $.0093 per share, expiring December 31, 2010,
      (2)
      on October 9, 2005, options to purchase 1,000,000 common shares at an exercise
      price of $.002 per share, expiring December 31, 2010, and (3) on March 9, 2006,
      options to purchase 1,000,000 common shares at an exercise price of $.0011
      per
      share, expiring March 9, 2011. The options are not subject to dilution (i.e.,
      no
      adjustment to the number of shares or the exercise price) based upon any reverse
      split of the common stock. The options are exercisable in whole or in part
      with
      a promissory note of less than 45 days duration or upon common “cashless
      exercise” terms.





The
      following is a schedule of the activity relating to the Company’s stock options
      and warrants.




Year
                Ended March 31, 2007
            
            
            Year
                Ended March 31, 2006Weighted
                Avg.Shares
              (x
                1,000)
            
            
            Exercise
                Price
            
            
            Weighted
                Avg.Shares
              (x
                1,000)
            
            
            Exercise
                PriceOptions
                outstanding at beginning of year
            
            
            5,000,000
            
            $
            0.231
            
            
            3,000,000
            
            $
            0.231Granted:Options
            
            
            --
            
            $
            .002-$.0011
            
            
            2,000,000
            
            $
            .002-$.0011Exercised
            
            
            1,000,000
            
            $
            --
            
            
            --
            
            $
            --Expired:
            
            
            (--)
            
            $
            --
            
            
            --
            
            $
            --Options
                outstanding and exercisable at eend of period
            
            
            4,000,000
            
            $
            0.0145
            
            
            5,000,000
            
            $
            0.0145Weighted
                average fair value of options aand warrants granted during the
                year
            
            
            
            
            $
            --
            
            
            
            
            $
            --





The
      following table summarizes information about the Company’s stock options
      outstanding at March 31, 2007, all of which are exercisable.




Range
                of Average
              Exercise
                Prices
            
            Weighted
                Average Number
              Outstanding
            
            Remaining
              Contractual
                Life
            
            Weighted
                Average
              Exercise
                Price$0.0093-0.0011
            
            4,000,000
            
            4
                years
            
            $
                0. 0145





F-12










**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements





7.
      Income
      Taxes




There
      is
      no provision for income taxes since the Company has incurred net operating
      losses. Income taxes at the federal statutory rate is reconciled to the
      Company's actual income taxes as follows:




2007
            
            2006Federal
                income tax benefit at statutory rate (34%)
            
            $
            (372,562
            )
            $
            (409,000
            )State
                income tax benefit net of federal tax effect
            
            
            --
            
            
            (87,000
            )Deferred
                income tax valuation allowance
            
            
            372,562
            
            
            496,000$
            --
            
            $
            --




The
      Company's deferred tax assets are as follows:




Net
                operating loss carryforward
            
            $
            3,744,000
            
            $
            3,371,000Valuation
                allowance
            
            
            (3,744,000
            )
            
            (3,371,000
            )$
            --
            
            $
            --





At
      March
      31, 2007, the Company has net operating loss carryforwards of approximately
      $8.4
      million which may be available to offset future taxable income through 2027.





8.
      Litigation





In
      July
      2003, we were served with a lawsuit from William B. Krusheski in United States
      District Court for Southern District of California. The complaint sought in
      excess of $75,000 on a note allegedly due and $135,000 in other compensatory
      damages. In June 2004, the county court of San Diego, California awarded a
      default judgment in favor of Mr. Krusheski in the amount of $135,000. The
      company has offered payments of $5,000 per month until the debt is settled.
      We
      have to date had no response or contact from Mr. Krusheski.




In
      July
      2006, we were advised that Golden Gate Investors, Inc. holds a default judgment
      in the amount of $93,148 (including costs and attorney’s fees), awarded in the
      Superior Court of California, County of San Diego, against the Company allegedly
      pursuant to a stock sale agreement dated January 14, 2005, as amended. The
      Company is in negotiations to settle this matter with Golden Gate.





9.
      Going
      Concern




The
      Company's financial statements are prepared using generally accepted accounting
      principles applicable to a going concern which contemplates the realization
      of
      assets and liquidation of liabilities in the normal course of business. The
      Company has incurred losses from operations which have resulted in an
      accumulated deficit of $12,389,264 at March 31, 2007, which together raises
      substantial doubt about the Company's ability to continue as a going concern.
      The accompanying financial statements do not include any adjustments relating
      to
      the recoverability and classification of asset carrying amounts or the amount
      and classification of liabilities that might result from the outcome of this
      uncertainty. Management believes that the Company will generate sufficient
      revenue and commissions through its licensing agreements and hotel pay-per-view
      to cover operating expenses in the future, although no assurance of this can
      be
      given.




10.
      Significant Event





On
      March
      13, 2007, the Company entered into an Asset Purchase Agreement (the “Agreement”)
      with Creative Domain Investments Ltd, an Alberta, Canada Ltd (“Creative
      Domain”). Pursuant to the Agreement, the Company agreed to purchase from
      Creative Domain certain assets utilized for Pay per View, wireless Internet
      and
      Voice over IP (VoIP) services in the hospitality industry and other
      applications. In consideration for the assets purchased under the Agreement,
      the
      Company agreed to pay $200,000, in the form of 400,000 restricted shares of
      its
      common stock valued at $0.50 per share.




F-13







**B2Digital,
      Incorporated**


Notes
      to
      the Consolidated Financial Statements





11.
      Subsequent Event




Subsequent
      to period ending March 31 2007, the Company consummated into an Asset Purchase
      Agreement (the “Agreement”) with Eagle West Communications, Inc., a Nevada
      corporation and Arizona based cable provider (“Eagle West”). Pursuant to the
      Agreement, the Company agreed to purchase from Eagle West substantially all
      of
      the assets relating to the operation of five cable franchises in North Eastern
      Arizona. In consideration for the assets purchased under the Agreement, the
      Company agreed to pay Eagle West a total of $1,200,000 as follows: $100,000
      as
      an earnest money deposit due within five days of the execution of the Agreement
      and payable against certain debt of Eagle West; 2,500,000 shares of restricted
      common stock of the Company valued at $.20 per share (the “Shares”); and a
      $600,000 convertible promissory note (the “Note”). The Note bears interest of
      7.5% until due at the end of one year and is convertible into common stock
      of
      the Company at $0.20 per share. The Note is secured by the assets purchased
      under the Agreement.





F-14








**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




As
      previously reported on Form 8-K, on May 14, 2007, Larry O’Donnell, CPA, P.C.
      (“O’Donnell”) resigned as the Company’s independent registered public accounting
      firm due to Securities and Exchange Commission (“SEC”) partner rotation rules,
      which required O’Donnell to resign after serving as the Company’s auditor for
      five consecutive years.





O’Donnell’s
      report on the Company’s financial statements for each of the past two fiscal
      years did not contain an adverse opinion or disclaimer of opinion, and were
      not
      modified as to uncertainty, audit scope or accounting principles, except that
      the reports contained a disclosure expressing substantial doubt about the
      Company’s ability to continue as a going concern due to significant operating
      losses. The financial statements did not include any adjustments that might
      result from the outcome of this uncertainty.





During
      the Company’s two most recent fiscal years and the subsequent interim period
      preceding O’Donnell’s resignation, there were no disagreements with O’Donnell on
      any matter of accounting principles or practices, financial statement
      disclosure, or auditing scope or procedure, which, if not resolved to
      O’Donnell’s satisfaction, would have caused O’Donnell to make reference to the
      subject matter of the disagreements in connection with its report.





The
      Company provided O’Donnell with a copy of the disclosure on Form 8-K prior to
      filing it with the SEC, and requested that O’Donnell furnish the Company with a
      letter addressed to the SEC stating whether it agrees with the statements made
      in the disclosure, and if not, stating the aspects with which it does not agree.
      A copy of the letter provided by O’Donnell, dated May 18, 2007, was filed with
      the Form 8-K.





As
      previously reported on Form 8-K, on May 14, 2007, the Company engaged Moore
      & Associates, Chartered Accountants and Advisors (“Moore & Associates”)
      as its independent registered public accounting firm. The change in auditors
      was
      approved by the Company’s board of directors. Prior to their engagement, Moore
& Associates was not consulted on any matter relating to the application of
      accounting principles to a specific transaction, whether completed or
      contemplated, or the type of audit opinion that might be rendered on the
      Company’s financial statements.





**ITEM
      8A. CONTROLS AND PROCEDURES**




An
      evaluation was performed under the supervision and with the participation of
      our
      management, including our Chief Executive Officer and our Interim Chief
      Financial Officer, of the effectiveness of our disclosure controls and
      procedures as of March 31, 2007. Based on that evaluation, our management,
      including the CEO and CFO, concluded that our disclosure controls and procedures
      are effective to ensure that information required to be disclosed by us in
      reports that we file or submit under the Securities Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC's rules and forms.




During
      the last fiscal quarter, there were no changes in our internal control over
      financial reporting that have materially affected, or that are reasonably likely
      to materially affect our internal control over financial reporting.




**ITEM
      8B. OTHER INFORMATION**


On
      July
      5, 2006, the Board of Directors designated 40,000,000 shares of preferred stock,
      $.00001 par value, as Series B Convertible Preferred Stock. The Series B does
      not have any voting rights with the common stockholders and does not have a
      liquidation preference, does not accrue, earn or participate in any dividends
      and is not subject to redemption. Twelve months after the original issuance
      date, but not before, each outstanding share of Series B Convertible Preferred
      Stock may be converted at the option of the holder into five (5) shares of
      common stock. Subsequent to September 30, 2006, on or





29








about
      October 19, 2006, the Company began an overseas offering of the Series B at
      $.03
      per share pursuant to Regulation S. As of the date of this filing, the Company
      has issued an aggregate of 12,000,000 shares of Series B to two overseas
      investors, but has not delivered or received payment for the shares, which
      is
      dependant on certain conditions including DTC eligibility for the shares. There
      is no assurance that the Company will be able to obtain DTC eligibility for
      the
      Series B and/or complete this offering.




On
      March 13, 2007, the Company entered into an Asset Purchase Agreement (the
“Agreement”) with Creative Domain Investments Ltd, an Alberta, Canada company
      (“Creative Domain”). Pursuant to the Agreement, the Company agreed to purchase
      from Creative Domain certain assets utilized for Pay per View, wireless Internet
      and Voice over IP (VoIP) services in the hospitality industry and other
      applications. In consideration for the assets purchased under the Agreement,
      the
      Company agreed to pay $200,000, in the form of 400,000 restricted shares of
      its
      common stock valued at $0.50 per share. The Company has not yet filed the
      required financial statements for this transaction and will file them by
      amendment to its Form 8-K dated March 13, 2007 once they are
      complete.




On
      March
      19, 2007, the Company entered into an Asset Purchase Agreement (the “Agreement”)
      with Eagle West Communications, Inc., a Nevada corporation and Arizona based
      cable provider (“Eagle West”). Pursuant to the Agreement, the Company agreed to
      purchase from Eagle West substantially all of the assets relating to the
      operation of five cable franchises in North Eastern Arizona. In consideration
      for the assets purchased under the Agreement, the Company agreed to pay Eagle
      West a total of $1,200,000 as follows: $100,000 as an earnest money deposit
      due
      within five days of the execution of the Agreement and payable against certain
      debt of Eagle West; 2,500,000 shares of restricted common stock of the Company
      valued at $.20 per share (the “Shares”); and a $600,000 convertible promissory
      note (the “Note”). The Note bears interest of 7.5% until due at the end of one
      year and is convertible into common stock of the Company at $0.20 per share.
      The
      Note is secured by the assets purchased under the Agreement. Paul D.H. LaBarre
      is an officer and majority shareholder of Eagle West and an officer, director
      and majority shareholder of the Company. Mr. LaBarre abstained from voting
      on
      this transaction. Other than with respect to Mr. LaBarre and the transaction,
      there is no material relationship between Eagle West and the Company or any
      of
      its affiliates, or any director or officer of the Company, or any associate
      of
      any such director or officer. As of May 11, 2007, the Company paid the $100,000
      earnest money deposit and on May 15, 2007, issued 2,500,000 shares to Eagle
      West. The issuance of shares is exempt from registration pursuant to Section
      4(2) of the Securities Act of 1933, as amended, and/or Regulation D thereunder,
      as a transaction not involving any public offering. The shares were issued
      to an
      accredited investor. No general solicitation or advertising was used in
      connection with the sale of the shares and all shares were issued with a
      restrictive legend. The parties are working through the final closing items
      for this Agreement, which was originally scheduled to close on or about April
      16, 2007. both parties agreed to reschedule the closing until July 15.
      2007





PART
      III




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
      ACT**




NAME
            
            AGE
            
            POSITIONRobert
                C. Russell
            
            40
            
            CEO
                and DirectorIgor
                Loginov  *
            
            45
            
            Chief
                Technical Officer, DirectorMarcia
                A. Pearlstein
            
            51
            
            Interim
                Chief Financial Officer, Corporate Secretary, DirectorPaul
                La Barre
            
            61
            
            Vice-President,
                Chief Operation Officer, Director


*
      Mr. Loginov resigned as a director on May 15, 2007




30







Robert
      C.
      Russell has been our Chief Executive Officer and director since January 2002
      and
      is responsible for managing our overall business affairs. Prior to this, Mr.
      Russell was President and Chief Executive Officer of Interleisure S.A. from
      January 1999 to January 2002 when InterLeisure was purchased by
      Telecommunication Products Inc. Interleisure S.A. was a technology company
      developing data compression software and systems for the internet market. He
      is
      a native of Northern Ireland who attended Damelin College in South Africa,
      where
      he obtained a National diploma in financial management.




Igor
      Loginov, PhD has been our Chief Technological Officer, and formerly a director,
      beginning May 2002 and is responsible for the design, development, and
      deployment of our technology. Prior to this, Mr. Loginov was a Senior Project
      Manager for Interleisure S.A. from July 2000 until July 2002 when InterLeisure
      was purchased by Telecommunication Products, Inc. From 1998 to 2000 Mr. Loginov
      held a role as a Senior Software Engineer for Semantica, Ltd, where he led
      development of accounting and business software applications. Mr. Loginov has
      over fifteen years of experience in computer and Internet-related technologies
      and holds a Doctorate degree in physics obtained from Belarussian State
      University. Mr. Loginov resigned as a director on May 15, 2007.




Marcia
      A.
      Pearlstein has been the Corporate Secretary and Interim Chief Financial Officer
      since December 21, 2003. Ms. Pearlstein joined B2Digital in 2002. A native
      of
      the United States she obtained her B.S. and M.B.A. in Business Administration
      with a concentration in Finance from the University of Pennsylvania graduating
      Summa Cum Laude. Prior to joining B2Digital, Ms. Pearlstein worked at an
      executive placement service in which she was General Manager and Controller
      over
      a seven-year period.





Paul
      LaBarre was appointed Vice President and Chief Operation Officer and director
      on
      September 12, 2005. **** His
      education includes: **** A.A.S.,
      Paralegal Studies, University of San Gabriel; B.A., 1966; B.S.E.E., 1970,
      A.S.U.; M.B.A., Alameda College, From 1997 until present, Mr. La Barre has
      served as President/CEO of Hotel Movie Network and Coast Communications,
      Inc.




The
      Company does not have any independent directors, have a separately-designated
      audit committee or a person designated as an audit committee financial expert.
      The Company does not have any independent directors, have a
      separately-designated audit committee or a person designated as an audit
      committee financial expert **** because
      the cost of identifying, interviewing, appointing, educating and compensating
      such persons would outweigh the benefits to its stockholders at this time.
      If
      additional financial resources become available, the Company may be able to
      appoint additional directors.








**SECTION
      16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**




Section
      16(a) of the Securities Exchange Act of 1934 requires the Corporation's
      executive officers and directors and holders of greater than 10% of our
      outstanding common stock to file initial reports of their ownership of our
      equity securities and reports of changes in ownership with the Securities and
      Exchange Commission. Based solely on a review of the copies of such reports
      furnished to us and written representations from such persons, we believe that
      all Section 16(a) filing requirements were complied with in the fiscal year
      ended March 31, 2007.




31







**CODE
      OF ETHICS**




The
      Company has adopted a code of ethics that applies to its principal executive
      officers, principal financial officers and principal accounting officers or
      controllers and those performing similar functions.




**ITEM
      10. EXECUTIVE COMPENSATION**




The
      following table sets forth certain information regarding our Executive Officers’
compensation earned for fiscal years ending March 31, 2007, 2006 and 2005:




SUMMARY
      COMPENSATION TABLE




Name
                & Principal Position
              Year
              Salary
                  ($)
              Bonus($)
              Stock
                  Awards($)
              OptionsAwards($)
              Non-Equity
                  Incentive Plan Compensation ($)
              Non-Qualified
                  Deferred Compensation Earnings ($)
              All
                  OtherCompensation
                  ($)
              Total
                  ($)Robert
                C. Russell,
              2007
              240,000
              0
              0
              0
              0
              0
              0
              240,000President
              2006
              240,000
              0
              0
              0
              0
              0
              0
              240,0002005
              150,000
              0
              430,000(1)
              0
              0
              0
              0
              580,000Marcia
                A. Pearlstein
              2007
              30,000
              0
              0
              0
              0
              0
              0
              30,000Secretary,
                Interim CFO
              2006
              30,000
              0
              0
              0
              0
              0
              0
              30,0002005
              60,000(2)
              4,000
              86,000(3)
              0
              0
              0
              0
              150,000Igor
                  Loginov,
              2007
              0
              0
              0
              0
              0
              0
              0
              0Chief
                Technology Officer
              2006
              0
              0
              0
              0
              0
              0
              0
              02005
              0
              0
              0
              0
              0
              0
              0
              0Paul
                La Barre,
              2007
              60,000
              0
              0
              0
              0
              0
              0
              60,000VP,
                Chief Operation Officer
              2006*
              30,000(4)
              0
              192,000(5)
              0
              0
              0
              0
              222,000




*
            Mr.
                La Barre was appointed September 12,
                2005




(1)
            On
                February 10, 2005, Mr. Russell received a signing bonus of 1,000,000
                shares of Series A Convertible Preferred Stock. These shares were
                valued
                at $.43 per share.(2)
            Payable
                in common stock, valued at $.001 per share.(3)
            On
                February 10, 2005, Ms. Pearlstein received a signing bonus of 200,000
                shares of Series A Convertible Preferred Stock. These shares were
                valued
                at $.43 per share.





(4)
            This
                amount has been accrued but not paid.(5)
            On
                September 12, 2005, Mr. La Barre received 800,000 shares of Series
                A
                Convertible Preferred Stock. These shares were valued at $.24 per
                share.




32







**EMPLOYMENT
      AGREEMENTS**




We
      entered into a formal written employment agreement with Mr. Russell effective
      January 25, 2002 which provides payments aggregating $125,000 per year. The
      agreement was suspended and was reinstated in September 2003. On January 25,
      2005, we entered into a new agreement with Robert Russell whereby Mr. Russell
      agreed to serve as Chief Executive Officer of the company for a period of two
      years for $240,000 per annum. Mr. Russell also received a signing bonus of
      1,000,000 shares of Series A Convertible Preferred Stock.




On
      December 23, 2003, we entered into a consulting agreement with Marcia
      Pearlstein, whereby Ms. Pearlstein would act as Interim Chief Financial Officer
      and corporate secretary for one year for $60,000 per annum. On February 9,
      2005,
      we extended this agreement until December 31, 2005 and issued Ms. Pearlstein
      a
      signing bonus of 200,000 shares of Series A Convertible Preferred Stock. On
      January 4, 2006, we extended this agreement until December 31, 2006 decreasing
      Ms. Pearlstein’s salary to $30,000 per annum. In January 2007 the Company
      extended the agreement for a further year until January 2008 with a minimum
      salary of $60,000 per year




On
      September 12, 2005, we entered into an employment agreement with Paul La Barre,
      whereby Mr. La Barre would serve as Vice-President and Chief Operation Officer
      for a period of three years. In exchange for services, Mr. La Barre is to
      receive a minimum base salary of $60,000 per annum and a one time grant of
      800,000 shares of Series A Preferred Stock.




**OPTIONS**




For
      our
      fiscal year ending March 31, 2007, we did not issue options to our executive
      officers or directors and they did not exercise any options.




**COMPENSATION
      OF DIRECTORS**




We
      do not
      currently compensate our directors although the company intends to do so in
      accordance with industry standards when cash flow resulting so dictates. There
      are no stock options, stock grants, plans, LTIPS or Stock Appreciation Rights
      in
      which any directors, have participated in the past fiscal year.




33







**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**




As
      of
      July 9, 2007, 164,373,971 shares of common stock of B2Digital, Incorporated
      were
      issued and outstanding and 1,700,000 shares of Series A Convertible Preferred
      Stock of B2Digital were issued and outstanding. The following table sets forth,
      as of such date, certain information regarding beneficial ownership of our
      shares as of July 9, 2007 (i) by each person who is known by us to beneficially
      own more than 5% of our voting securities; (ii) by each of our officers and
      directors; and (iii) by all of our officers and directors as a group.





Beneficial
      ownership has been determined in accordance with Rule 13d-3 of the Exchange
      Act.
      Under this rule, shares may be deemed to be beneficially owned by more than
      one
      person (if, for example, persons share the power to vote or the


power
      to
      dispose of the shares). In addition, shares are deemed to be beneficially owned
      by a person if the person has the right to acquire shares within 60 days of
      the
      date of this table pursuant to options, warrants, conversion privileges or
      other
      rights. In computing the percentage ownership of any person or group, the amount
      of shares includes the amount of shares beneficially owned by the person or
      group by reason of these acquisition rights.




To
      our
      knowledge, except as otherwise indicated and pursuant to applicable community
      property laws, the persons named in the table have sole voting and investment
      power with respect to all shares shown as beneficially owned by them. Each
      person's address is c/o B2Digital, Inc., 4425 Ventura Canyon Ave., Suite 105,
      Sherman Oaks, CA 91423.





Name
                and Address
              of
                Beneficial Owner
            Shares
                of Common Stock Beneficially Owned (1)
            Shares
                of Series A Convertible Preferred Beneficially Owned (2)
            Total
                Percentage of Voting Power(3)Number
            %
            Number
            %
            Number
            %Robert
                Russell
              CEO,
                Director
            24,018,140
            14.61%
            900,000
            52.94%
            240,018,140(4)
            63.10%(4)Paul
                LaBarre
              Vice-President,
                Chief Operation Officer, Director
            1,782,910(5)
            1.08%
            800,000
            47.06%
            193,782,910(5)(6)
            54.38%(6)Igor
                Loginov
              Chief
                Technology Officer*
            240
            <1%
            0
            0
            240
            <1%Marcia
                A. Pearlstein
              Chief
                Financial Officer, Director
            48,004,200
            29.20%
            0
            0
            48,004,200
            29.20%Shares
                of all directors and
              executive
                officers
              as
                a group (4 persons)
            73,805,490
            44.9%
            1,700,000
            100%
            481,805,490(7)
            84.18%(7)




*
            Mr.
                Loginov resigned as a director of the company on May 15,
                2007.(1)
            This
                column does not include the shares of common stock issuable upon
                conversion of the Series A Preferred Stock.(2)
            Series
                A Convertible Preferred Stock is convertible into common stock at
                a rate
                of 240 shares per each share of Series A held. The Series A votes
                with the
                common stock on an as converted basis.(3)
            This
                column includes the common stock and Series A Preferred Stock held
                by each
                person or group on an as converted basis. For the purpose of calculating
                the percentage ownership of any person or group, any security which
                such
                person or group has the right the acquire within 60 days is deemed
                to be
                outstanding but not deemed to be outstanding for the purpose of computing
                the percentage of ownership of any other person or
                group.(4)
            Includes
                24,018,140 shares of common stock currently held by Mr. Russell and
                216,000,000 shares of common stock that Mr. Russell has the right
                to
                acquire within 60 days upon conversion of 900,000 shares of Series
                A
                Preferred Stock. The Series A votes with the common stock on an as
                converted basis.(5)
            1,225,000
                shares of common stock are held by Eagle West Communications, Inc.
                Paul
                LaBarre is an officer of Eagle West and owns 49% of Eagle West’s
                outstanding common stock.





(6)
            Includes
                1,782,910 shares of common stock currently held by Mr. LaBarre and
                192,000,000 shares of common stock that Mr. La Barre has the right
                to
                acquire within 60 days upon conversion of 800,000 shares of Series
                A
                Preferred Stock. The Series A votes with the common stock on an as
                converted basis.(7)
            Assuming
                conversion of all shares of Series A Preferred held by Mr. Russell
                and Mr.
                LaBarre.




34







**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE**




On
      April
      2004, the Company converted 800,000 shares of Series A preferred stock owned
      by
      the Company's president and CEO Robert Russell to a note payable. Mr. Russell
      had previously converted the note payable into the preferred stock. The
      conversion is back to a note payable that reverts the capital back to its
      previous condition which pays 7.5% per annum. This note is due on or before
      March 31, 2007. At March 31, 2007, $800,000 principal and interest was due
      under
      the note.




For
      the
      year ended March 31, 2005, Mr. Russell, our Chief Executive Officer, received
      a
      signing bonus of 1,000,000 shares of Series A Convertible Preferred Stock,
      valued at $.43 per share. The shares convert into common stock at a rate of
      240
      shares per one share of common stock. On January 2, 2007, Mr. Russell converted
      100,000 shares of Series A Preferred into 24,000,000 shares of common
      stock.




For
      the
      year ended March 31, 2005, Ms. Pearlstein, our Interim Chief Financial Officer,
      received a signing bonus of 200,000 shares of Series A Convertible Preferred
      Stock, valued at $.43 per share. The shares convert into common stock at a
      rate
      of 240 shares per one share of common stock. We also issued Ms. Pearlstein
      4,000,000 shares of common stock; which was expensed at $4,000. On January
      4,
      2006, we extended this agreement until December 31, 2006 decreasing Ms.
      Pearlstein’s salary to $30,000. On July 19, 2006, Ms. Pearlstein converted
      200,000 shares of Series A Preferred into 48,000,000 shares of common stock.
      In
      January 2007 the Company extended the agreement for a further year until January
      2008 with a minimum salary of $60,000 per year




For
      the
      year ended March 31, 2006, Mr. La Barre, our Chief Operation Officer, received
      800,000 shares of Series A Convertible Preferred Stock, valued at $.24 per
      share. The shares convert into common stock at a rate of 240 shares per one
      share of common stock.




On
      March
      19, 2007, the Company entered into an Asset Purchase Agreement (the “Agreement”)
      with Eagle West Communications, Inc., a Nevada corporation and Arizona based
      cable provider (“Eagle West”). Pursuant to the Agreement, the Company agreed to
      purchase from Eagle West substantially all of the assets relating to the
      operation of five cable franchises in North Eastern Arizona. In consideration
      for the assets, the Company agreed to pay Eagle West a total of $1,200,000
      as
      follows: $100,000 as an earnest money deposit due within five days of the
      execution of the Agreement and payable against certain debt of Eagle West;
      2,500,000 shares of restricted common stock of the Company valued at $.20 per
      share (the “Shares”); and a $600,000 convertible promissory note (the “Note”).
      The Shares have piggy back registration rights. The Note bears interest of
      7.5%
      until due at the end of one year and is convertible into common stock of the
      Company at $.20 per share. The Note is secured by the assets purchased under
      the
      Agreement. Paul D.H. LaBarre is an officer and majority shareholder of Eagle
      West and an officer, director and majority shareholder of the Company. As of
      May
      11, 2007, the Company paid the $100,000 earnest money deposit and on May 15,
      2007, issued 2,500,000 shares to Eagle West. The parties are working through
      the
      final closing items for this Agreement, which was originally scheduled to close
      on or about April 16, 2007. both parties agreed to reschedule the closing until
      July 15. 2007





**DIRECTOR
      INDEPENDENCE**





None
      of
      the Company’s members of the board of directors are deemed to be
      independent.


35








**ITEM
      13. EXHIBITS**




The
      following exhibits are included as part of this Form 10-KSB. Reference to "the
      Company" in this Exhibit List means B2Digital, Incorporated, a Delaware
      corporation.




Number
            Description




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 Certificate 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, 2006)




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, as amended (filed as Exhibit
                10.1
                to the Company's Form S-8 filed on February 10, 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
            Employment
                Agreement dated January 25, 2005, with Robert C. Russell (Incorporated
                by
                reference from 10QSB dated December 31,
                2004).




10.2
            Marketing
                and Services Agreement between the company and InnNovations Multimedia
                Systems Inc dated April 12, 2004 (Incorporated by reference to 8-K
                filed
                April 12, 2004).




10.3
            Member
                Interest Purchase Agreement between the company and B2Networks, Inc.
                dated
                April 23, 2004 (Incorporated by reference to 8-K filed April 23,
                2004).




36







10.4
            Consultant
                Agreement with Marcia A. Pearlstein (incorporated by reference from
                Form
                10-QSB dated September 30, 2004).




10.5
            Membership
                Interest Agreement with B2 Networks, LLC, as amended (incorporated
                by
                reference to Form 8-K filed August 12,
                2004)




10.6
            Operations
                Agreement with B2 Networks LLC (Incorporated by reference from Form
                10-QSB
                dated December 31, 2004).




10.7
            Fee
                Agreement with Richard O. Weed of Weed & Co. LLP (Filed as Exhibit
                10.2 to Form S-8 filed January 11, 2005).




10.8
            Settlement
                Agreement between B2Digital and Coast Communications dated 9-12-05
                (Incorporated by reference from Exhibit 16.1 of Form 8-K dated 10-25-05).




10.9
            Employment
                Agreement with Paul La Barre (Filed as Exhibit 10.2 and incorporated
                by
                reference to Form 8-K filed October 4,
                2005).




10.10
            Trust
                Agreement (incorporated by reference from Form 10-KSB filed July
                14,
                2006).10.11
            Amendment
                to Settlement Agreement between the Company and Coast Communications
                dated
                November 24, 2006 (incorporated by reference from Form 8-K dated
                November
                24, 2006).10.12
            Asset
                Purchase Agreement dated March 13, 2007 between Hotel Movie Network,
                Inc.,
                a Nevada corporation, B2Digital, Incorporated and Creative Domain
                Investments, Ltd, an Alberta, Canada Ltd. (Filed as Exhibit 10.1
                and
                incorporated by reference to Form 8-K dated March 13, 2007)10.13
            Asset
                Purchase Agreement dated March 19, 2007 between Eagle West Communications,
                Inc., a Nevada corporation, and B2Digital, Incorporated (Filed as
                Exhibit
                10.1 and incorporated by reference to Form 8-K dated March 19,
                2007)10.14
            Promissory
                Note (Filed as Exhibit 10.2 and incorporated by reference to Form
                8-K
                dated March 19, 2007)10.15
            Security
                Agreement (Filed as Exhibit 10.3 and incorporated by reference to
                Form 8-K
                dated March 19, 2007)21.1
            List
                of Subsidiaries




14.1
            Code
                of Ethics (Incorporated by reference to 10KSB filed June 19,
                2004)




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




37







**ITEM
      14. PRINCIPAL ACCOUNTANT FEES & SERVICES**




**Audit
      Fees**




The
      aggregate fees billed by Larry O'Donnell, CPA, P.C. for professional services
      rendered for the audit of the Company's annual financial statements on Form
      10-KSB and the reviews of the financial statements included in the Company's
      Form 10-QSB's for the fiscal years ended March 31, 2007 was $8,000 and March
      31,
      2006 was $10,490, respectively.




**Audit
      Related Fees, Tax Fees or All Other Fees**




There
      were no other fees for the years ended March 31, 2007 or March 31, 2006.




**POLICY
      ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES
      OF
      INDEPENDENT AUDITORS**




The
      Company currently does not have a designated Audit Committee, and accordingly,
      the Company's Board of Directors' policy is to pre-approve all audit and
      permissible non-audit services provided by the independent auditors. These
      services may include audit services, audit-related services, tax services and
      other services. Pre-approval is generally provided for up to one year and any
      pre-approval is detailed as to the particular service or category of services
      and is generally subject to a specific budget. The independent auditors and
      management are required to periodically report to the Company's Board of
      Directors regarding the extent of services provided by the independent auditors
      in accordance with this pre-approval, and the fees for the services performed
      to
      date. The Board of Directors may also pre-approve particular services on a
      case-by-case basis.




**SIGNATURES**




In
      accordance with Section 13 and 15 (d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.






38







In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the registrant in the capacities and on the
      dates
      indicated.




*SIGNATURE*
            *TITLE*
            *DATE**/s/
                Robert C. Russell*
              *____________________________*
              *Robert
                C. Russell*
            *President,
                Chief Executive Officer, Director*
            *July
                16, 2007**/s/
                Marcia A. Pearlstein*
              *____________________________*
              *Marcia
                A. Pearlstein*
            *Interim
                Chief Financial Officer, Secretary, Director*
            *July
                16, 2007*




*/s/
                Igor Loginov*
              *____________________________*
              *Igor
                Loginov*
            *Chief
                Technical Officer,*
            *July
                16, 2007**/s/
                Paul La Barre*
              *____________________________*
              *Paul
                La Barre*
            *Vice
                President, Chief Operation Officer, Director*
            *July
                16, 2007*




39