U.S.
        SECURITIES AND EXCHANGE COMMISSION
 Washington,
        D.C. 20549
 
 Form
        10-KSB
 
 (Mark
        One)
  |
                X
                |
              ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 
  For
        the
        fiscal year ended: February 28, 2005
  
 |__|
              TRANSITION
                  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF
                  1934
 
 For
        the
        transition period from March 1, 2004 to February 28, 2005
 
 Commission
        file number: *000-27225*
  
 BDC Capital,
        Inc.
 (Name
        of
        small business issuer in its charter)
 
 Minnesota
              41-1427445(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)11974
                  Portland Avenue,Burnsville,
                  Minnesota
              55337(Address
                  of principal executive offices)
              (Zip
                  Code)Issuer's
                  telephone number:(952)
                  890-2362
 
 Securities
        registered under Section 12(g) of the Exchange Act:
 
 Common
        Stock
 (Title
        of
        Class)
 
 Check
        whether the issuer (1) has 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 registrant was required to file such reports), and (2) has
        been
        subject to such filing requirements for the past 90 days.
 
 Yes
              X
              
              No
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not contained in this form, and no disclosure will be
        contained, to the best of registrant'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. |___|
 
 State
        issuer's revenues for its most recent fiscal
        year: $  
        111,409 .
 
  
  
 State
        the
        aggregate market value of the voting stock held by non-affiliates computed
        by
        reference to the price at which the stock was sold, or the average bid and
        asked
        prices of such stock, as of a specified date within the past 60 days: $2,603,185
        based on shares held by non-affiliates as of June 3, 2005, and the closing
        sale
        price for said shares in the NASDAQ National Market as of such
        date.
 
 State
        the
        number of shares outstanding of each of the issuer's classes of common equity,
        as of the latest practicable date: 17,702,582 shares of Common Stock, as
        of June
        3, 2005.
 
 Preferred
        Stock
 (Title
        of
        Class)
  The
        Series A Preferred Stock (Series A Preferred) is non-interest bearing, does
        not
        have voting rights and is not entitled to receive dividend. Each share of
        Series
        A Preferred issued can be converted into common stock on a 1:1 basis after
        a
        twelve month period. Should a liquidation event occur, the Series A Preferred
        automatically converts into common stock based on the foregoing formula.
        Further, the Series A Preferred is not affected by forward or reverse splits
        on
        the Corporation's common stock or other adjustments to the Corporation's
        capital
        structure. Finally, Series A Preferred is entitled to elect a majority of
        the
        Corporation's board of directors at all times, provided that a majority of
        the
        board of directors is, at all times, independent.
   The
        Corporation has currently 10,000,000 Series A Preferred issued and outstanding
        as of June 3, 2005.
  
 DOCUMENTS
        INCORPORATED BY REFERENCE
 
 There
        are
        incorporated by reference in this report on Form 10-KSB certain previously
        filed
        exhibits identified in Part III, Item 13 hereof.
 
   ii
  
 
 TABLE
        OF
        CONTENTS
 
  PART
                  I
              
              1Item
                  1.
              Description
                  of Business
              1Item
                  2.
              Description
                  of Property
              2Item
                  3.
              Legal
                  Proceedings
              2Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              2PART
                  II
              
              2Item
                  5.
              Market
                  for the Common Equity and Related Stockholder Matters
              2Item
                  6.
              Management's
                  Discussion and Analysis or Plan of Operation
              3Item
                  7.
              Financial
                  Statements
              6Item
                  8.
              Changes
                  in and Disagreement with Accountants on Accounting and Financial
                  Disclosure
              6Item
                  8A.
              Controls
                  and Procedures
              7Item
                  8B.
              Other
                  Information
              7PART
                  III
              
              8Item
                  9.
              Directors,
                  Executive Officers, Promoters and Control Persons; Compliance with
                  Section
                  16(a) of the Exchange Act
              8Item
                  10.
              Executive
                  Compensation
              9Item
                  11.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              10Item
                  12.
              Certain
                  Relationships and Related Transactions
              11Item
                  13.
              Exhibits
              11Item
                  14.
              Principle
                  Accountants and Fees and Services
              11SIGNATURES
              13
 
   iii
  PART
        I
 
 
 ITEM
        1.
         DESCRIPTION OF BUSINESS
 
 GENERAL
 
 The
        Company was founded in 1982 under the laws of the State of Minnesota as Command
        Small Computer Learning Center, Inc., a computer training company. Over a
        period
        of years, the Company became involved in the sale of computer components
        and,
        eventually, became a value added reseller (VAR) of major computer brands.
        In
        1987, the Company changed its name to Command Electronics, Inc. In February
        1995, the Company acquired CyberStar Computer Systems, a manufacturer and
        marketer of microcomputers and servers, and in 1997 it changed its name to
        CyberStar Computer Corporation. In August of 2000 the Company changed its
        name
        to eNetpc, Inc. In December 2004 the Company elected to be regulated as a
        business development company under the Investment Company Act of 1940 and
        changed its name to BDC Capital Inc. Company headquarters are located at
        11974
        Portland Avenue, Burnsville, MN 55337, and its telephone and facsimile numbers
        are (952) 890-2362 and (952) 890-7451, respectively. The Company's Internet
        addresses are www.bdccapital.com and www.bdcpartners.com .
 
 BDC
        Capital, Inc. is now a company that intends to build an investment portfolio
        consisting of revenue generating assets and emerging companies well positioned
        for future growth. A business development company is a unique kind of investment
        company that primarily focuses on investing in or lending to small private
        companies and making managerial assistance available to them. A business
        development company may use capital provided by public stockholders and from
        other sources to invest in growing small businesses.
 
 A
        business development company provides stockholders the ability to retain
        the
        liquidity of a publicly traded stock while sharing in the possible benefits
        of
        investing in privately owned small-and medium-sized companies.
 
 BDC
        Capital, Inc. currently has one investment portfolio company, 100% wholly
        own
        BDC Partners, Inc. which has its website at www.bdcpartners.com
 
 BDC
        Partners, Inc. is a private company founded in 2004. Located in Minneapolis
        it
        is a wholly own subsidiary of BDC Capital, Inc ( www.bdccapital.com ).
        It has
        a unique, multidisciplinary technology process paired with an intellectual
        property revenue-focused business model. While most company's are in
        the business of technology products (including start-ups that
        design
        and manufacture products), BDC Partners owns pure intellectual property
        with recurring revenues, creating, funding and commercializing innovative
        new
        ideas.
 
 Current
        Intellectual Property of BDC Partners, Inc.
 
 PC
        Related domains:  BuildtoOrderPc series, including Laptopcomputers.com
        and
        Notebookcomputers.com.
 
 GoSchools.com 
        domains: **S** pecializing
        in College, Universities (Division I II and III, NAIA) and High School
        domain names.
 
  1
  
 EMPLOYEES
 
 As
        of May
        31, 2005, BDC Capital, Inc. had 2 employees. None of these employees are
        represented by a union. BDC Capital, Inc. believes that its relations with
        its
        employees are good.
  ITEM
        2.  DESCRIPTION OF PROPERTY
 
 BDC
        Capital, Inc. sub-leases from a director of the Company approximately 1,000
        square feet of space used for offices and operations equipment storage at
        11974
        Portland Avenue, Burnsville, Minnesota at a monthly rent of $750 renewable monthly.
 
 ITEM
        3.
         LEGAL PROCEEDINGS
 
 BDC
        Capital, Inc. is, from time to time, a party to litigation arising in the
        normal
        course of its business. BDC believes that none of these actions will have
        a
        material adverse effect on its financial condition or results of
        operations.
  ITEM
        4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None
 
 
 PART
        II
 
 ITEM
        5.  MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS
 
 BDC's
        Common Stock has been traded on the OTC Bulletin Board ("OTCBB") since June
        12,
        1998. The following table sets forth the quarterly high and low sales prices
        as
        reported by the Nasdaq National Market during the last two fiscal years ended
        February 28, 2005 and February 29, 2004.
 
 
 Fiscal
                  Year 2005
              
              Low
              
              HighFirst
                  Quarter
              
              $
              0.10
              
              $
              0.55Second
                  Quarter
              
              
              0.10
              
              
              0.10Third
                  Quarter
              
              
              0.10
              
              
              0.55Fourth
                  Quarter
              
              
              0.02
              
              
              0.28Fiscal
                  Year 2004
              
              
              Low
              
              
              HighFirst
                  Quarter
              
              $
              0.125
              
              $
              0.75Second
                  Quarter
              
              
              0.125
              
              
              1.35Third
                  Quarter
              
              
              0.30
              
              
              0.55Fourth
                  Quarter
              
              
              0.10
              
              
              0.65
 
   2
  
 These
        quotations represent inter dealer prices, without retail markup, markdown,
        or
        commission, and may not reflect actual transactions. As of May 28, 2005,
        there
        were approximately 72 record holders of the Company's Common Stock.
 
 DIVIDEND
        POLICY
 
 The
        Company has never paid cash dividends on any of its securities. The Company
        currently intends to retain any earnings for use in its operations and does
        not
        anticipate paying cash dividends in the foreseeable future. Future dividend
        policy will be determined by the Company's Board of Directors based upon
        the
        Company's earnings, if any, it's capital needs and other relevant
        factors.
 
 
 ITEM
        6.
         MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 
 The
        following is a discussion of the financial condition and results of operations
        of the Company for the year ended February 28, 2005 and for the year ended
        February 28, 2004, which should be read in conjunction with, and is qualified
        in
        its entirety by, the financial statements and notes thereto included elsewhere
        in this report.
 
 The
        results of operations for 2005 are divided into two periods. The nine-month
        period, representing the period March 1, 2004 through November 30, 2004,
        reflects the Company's results prior to operating as a business development
        company under the Investment Company Act of 1940, as amended. The three-month
        period ended February 28, 2005, reflects the Company's results as a business
        development company under the Investment Company Act of 1940, as amended.
        Accounting principles used in the preparation of the financial statements
        beginning December 1, 2004 are different than those of prior periods and,
        therefore, the financial position and results of operations of these periods
        are
        not directly comparable. The primary differences in accounting principles
        relate
        to the carrying value of investments and consolidations.
 
 Changes
        in unrealized gains (losses) on the change in value of portfolio investments
        for
        business development companies are recognized each period. Prior to becoming
        a
        business development company, unrealized gains (losses) on the change in
        value
        of investments were recorded as accumulated comprehensive income in the
        statement of stockholders equity. Gains (losses) on investment would only
        be
        recognized when realized or when an investment was permanently
        impaired.
 
 As
        a
        business development company, consolidation of portfolio companies is not
        required in which the Company has a controlling interest. In contrast, prior
        to
        operating as a business development corporation, entities in which the Company
        had controlling interest would have been required to be
        consolidated.
  3
  RESULTS
        OF OPERATIONS
 
 YEARS
        ENDED FEBRUARY 28, 2005 AND FEBRUARY 29, 2004
 
 The
        results of operations for fiscal year 2005 are divided into two periods.
        The
        nine-month period, representing the period March 1, 2004 through November
        30,
        2004 reflects the Company’s results prior to operating as a business development
        company under the Investment Company Act of 1940. The three-month period
        ended
        February 28, 2005 reflects the Company’s results as a business development
        company under the Investment Company Act of 1940.
 
 For
        the
        three months ended February 28, 2005, the Company incurred an operating loss
        of
        $217,353. The main components of this loss related to $69,901 of professional
        fees with a majority of these fees relate to setting up the Company as a
        business development company and $139,171 for interest expense on convertible
        debt. On the interest expense, $132,727 relates to the amortization of original
        debt discount with originated from the beneficial conversion feature related
        to
        the debt. In addition the Company record an increase in unrealized appreciation
        on it investment in BDC Partners, Inc. of $607,597.
 
 For
        the
        nine months ended November 30, 2004, the Company incurred loss from operations
        of $148,074, compared to $136,707 for the year ended February 29, 2004. The
        change in the net loss in 2005 is primarily attributable to the continued
        decline in revenues from computer sales division. The net assets and operations
        of the computer sales division was transferred to the BDC Partners, Inc.
        when
        the Company became a business development company.
 
 LIQUIDITY
        AND CAPITAL RESOURCES
 
 ***As
        a business development company***
 
 BDC
        Capital, Inc. cash position at February 28, 2005 was $260,179 , an increase
        of
        $243,846 from $16,333 at November 30, 2004. During the three months ended
        February 28, 2005, net cash used by operating activities was $(146,154).
        Net
        cash provided by financing activities of $390,000 for the year ended February
        28, 2005 consisted primarily of issuance of convertible debentures during
        the 3
        month period.
 
 Our
        current monthly operating expenses are approximately $16,270 per month. Our
        current cash reserves are sufficient to enable us to operate for the next
        12
        months. We anticipate that any additional financing would be through the
        sales
        of our common stock or other equity-based securities. We do have in place
        a
        $16.5 million equity line from new and exciting investors. BDC Capital, Inc.
        signed agreements for the equity line in February. Under the terms of the
        agreement, BDC Capital may elect to receive as much as $16.5 million from
        the
        investors in common stock purchases over the next two years.
 
 ***Prior
        to becoming a business development company***
 
 BDC
        Capital , Inc cash position at November 30, 2004 was $16,333, an increase
        of
        $6,650 from $9,683 at February 29, 2004. During the nine months ended November
        30, 2004, net cash used by operating activities was $113,873.
  Net
        cash
        provided by financing activities of $120,523 for the nine months ended November
        30, 2004.
  4
  
 **Recent
        Developments — Portfolio Companies**
 
 During
        the quarter ended May 31, 2005, BDC Capital, Inc. invested $278,000 equity
        in
        BDC Partners, Inc bringing the total investment in BDC Partners, Inc. to
        $345,403 as of May 31, 2005. The additional investment was funded by issuance
        of
        convertible debentures.
  **Critical
        Accounting Policies**
 
 Critical
        accounting policies are those that are both important to the presentation
        of our
        financial condition and results of operations and those that require
        management’s most difficult, complex or subjective judgments. Our critical
        accounting policies are those applicable to the valuation of investments.
 
 Valuation
        of Portfolio Investments
 
 As
        a
        business development company, we invest primarily in illiquid securities
        including debt and equity securities of private companies. The investments
        are
        generally subject to restrictions on resale and generally have no established
        trading market. We value substantially all of our equity investments at fair
        value as determined in good faith by our valuation committee on a quarterly
        basis. The valuation committee, comprised of three or more non-interested
        board
        members, reviews and approves the valuation of our investments within the
        guidelines established by the board of directors. Fair value is generally
        defined as the amount that an investment could be sold for in an orderly
        disposition over a reasonable time. Generally, to increase objectivity in
        valuing our assets, external measures of value, such as public markets or
        third
        party transactions, are utilized whenever possible. Valuation is not based
        on
        long term work-out value, nor immediate liquidation value, nor incremental
        value
        for potential changes that may take place in the future.
 
 ***Recently
        issued accounting pronouncements:***
 
 In
        December 2004, the FASB issued SFAS No. 123(R) “Share-Based Payment”.
        SFAS 123(R) requires the recognition of compensation cost relating
        to
        share-based payment transactions in financial statements. That cost will
        be
        measured based on the fair value of the equity or liability instruments issued
        as of the grant date, based on the estimated number of awards that are expected
        to vest. SFAS 123(R) covers a wide range of share-based compensation
        arrangements including share options, restricted share plans, performance-based
        awards, share appreciation rights, and employee share purchase plans.
        Statement 123(R) replaces FASB Statement No. 123, “Accounting for
        Stock-Based compensation,” and supersedes APB Opinion No. 25, “Accounting
        for Stock Issued to Employees”. Statement 123(R) is effective for us
        beginning March 1, 2006. We are in the process of evaluating the impact of
        SFAS 123(R) on our financial position and results of
        operations.
  5
  FORWARD-LOOKING
        INFORMATION
 
 Any
        statements contained herein related to future events are forward-looking
        statements and are made pursuant to the safe harbor provisions of the Private
        Securities Litigation Reform Act of 1995. Readers are cautioned not to place
        undue reliance on forward-looking statements. BDC Capital, Inc. undertakes
        no
        obligation to update any such statements to reflect actual events.
  ITEM
        7.  FINANCIAL STATEMENTS
 
 PageReport
                  of Independent Registered Public Accounting Firms
              15Financial
                  StatementsBalance
                  Sheets
              17Statements
                  of Operations
              18Statements
                  of Stockholders' Equity (Deficit)
              20Statements
                  of Cash Flows
              21Notes
                  to Financial Statements
              23
 
 ITEM
        8.
        CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE
 
 (a)
        Previous independent registered public accountants:
 
 On
        February 7, 2005 Virchow, Krause & Company, LLP ('VK") resigned from its
        position as BDC Capital, Inc.'s (the 'Registrant") independent registered
        public
        accountant.
 
 The
        audit
        reports of VK on the Registrant's financial statements for the years ended
        February 29, 2004 and February 28, 2003 did not contain any adverse opinion
        or
        disclaimer of opinion, nor were these opinions qualified or modified as to
        uncertainty, audit scope or accounting principles: except that the audit
        reports
        on the financial statements for the years ended February 29, 2004 and February
        28, 2003, contained a qualification as the Registrant's ability to continue
        as a
        going concern. VK did not, during the applicable periods, advise the Registrant
        of any of the enumerated items described in Item 304(a)(1) of Regulation
        S-B.
 
 The
        Registrant and VK have not (through February 7, 2005 and in connection with
        the
        audits of the Registrant's financial statements for the years ended February
        29,
        2004 and February 28, 2003) had any disagreement on any matter of accounting
        principles or practices, financial statement disclosure, or auditing scope
        or
        procedure, which disagreement, if not resolved to VK's satisfaction, would
        have
        caused VK to make reference to the subject matter of the disagreement in
        connection with its reports.
 
 During
        the period from March 1, 2004 to February 7, 2005, VK did not audit the
        registrant's financial statements, but did review its quarterly reports for
        the
        three quarters of 2005.
 
 During
        the years ended February 29, 2004 and February 28, 2003 and through February
        7,
        2005, none of the events specified in Item 304(a)(1)(iv)(B) of Regulation
        S-B
        have occurred.
  6
  The
          Registrant requested that VK furnish it with a letter addressed to the
          SEC
          stating whether or not it agrees with the above statements. A copy of such
          letter issued regarding this change was filed as Exhibit 16.1 on Form 8-K
          filed
          February 15, 2005.
  (b)
        New
        independent accountants:
 
 On
        February 7, 2005, the Registrant engaged Carver Moquist & O'Connor, LLC
        (“CMO") to audit its financial statements for the year ending February 28,
        2005.
        During the two most recent fiscal years and to February 7, 2005, the Registrant
        has not consulted with CMO regarding either (i) the application of accounting
        principles to a specified transaction, either completed or proposed; or the
        type
        of audit opinion that might be rendered on the Registrant's financial
        statements, and no written report or oral advice was provided by CMO that
        was
        considered an important factor by the Registrant in reaching a decision as
        to an
        accounting, auditing or financial reporting issue or any matter that was
        the
        subject of a disagreement.
 
 ITEM
        8A.
        CONTROLS AND PROCEDURES
 
 (a)
        Evaluation of Disclosure Controls and Procedures.
 
 An
        evaluation made at the end of the period covered by this report was performed
        under the supervision and with the participation of the Company's president,
        chief executive officer ("CEO") and the chief financial officer ("CFO") of
        the
        effectiveness of the design and operation of the Company's disclosure controls
        and procedures to insure that the Company records, processes, summarizes
        and
        reports in a timely and effective manner the information required to be
        disclosed in reports filed with or submitted to the Securities and Exchange
        Commission. Based on that evaluation, the Company's management, including
        the
        CEO and CFO, concluded that the Company's disclosure controls and procedures
        were effective in timely bringing to their attention material information
        related to the Company required to be included in the Company's periodic
        Securities and Exchange Commission filings. Since the date of this evaluation,
        there have been no significant changes in the Company's internal controls
        or in
        other factors that could significantly affect those controls.
 
 However,
        due to the limited number of Company employees engaged in the authorization,
        recording, processing and reporting of transactions, there is inherently
        a lack
        of segregation of duties. The Company periodically assesses the cost versus
        benefit of adding the resources that would remedy or mitigate this situation,
        and currently does not consider the benefits to outweigh the costs of adding
        additional staff in light of the limited number of transactions related to
        the
        Company's operations.
 
 (b)
        Changes in Internal Controls Over Financial Reporting.
 
 There
        have been no significant changes in internal control over financial reporting
        that occurred during the fiscal period covered by this report that have
        materially affected or are reasonably likely to materially affect the Company’s
        internal control over financial reporting.
 
 ITEM
        8B.  OTHER
        INFORMATION
 
 None.
 
  7
  
 PART
        III
 
 ITEM
                9.
              DIRECTORS,
                  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                  SECTION
                  16(A) OF THE EXCHANGE ACT
 
 Set
        forth
        below is certain information concerning each of the directors and executive
        officers of BDC Capital, Inc.
 
 
 Name
              Age
              
              PositionRichard
                  A. Pomije
              50
              
              Chairman,
                  President, CEO & Secretary/TreasurerJeff
                  Mills
              48
              
              DirectorDan
                  Janisch
              57
              
              Director
 
 
 RICHARD
        A. POMIJE has been with eNetpc and BDC since 1982 and has served as President,
        Secretary, Treasurer, and a director since 1996. He had previously served
        in
        such positions from 1983 through 1992. Mr. Pomije's primary responsibilities
        include overall strategic planning. Mr. Pomije holds a degree in Communication
        Technology, Audio Technology and Technical Services from Brown Institute.
        Mr.
        Pomije also received a First Class FCC license with radar
        endorsement.
 
 JEFF
        MILLS became a director in December 2003. Mr. Mills has worked for Xerox
        Corporation for the past 17 years in various operation and sales positions.
        He
        has also served as director for one private company and has served as president,
        owner and operator of various business ventures. Mr. Mills is a 1984 graduate
        of
        the University of Northern Iowa and has held several security
        licenses.
 
 DAN
        JANISCH became a director in March 2005. Mr. Janisch is President and CEO
        of
        Black Diamond Capital, a private equity firm based in Minneapolis, Minnesota.
        He
        has more than 30 years of experience in business strategy development and
        operational execution in a wide range of industries, including manufacturing,
        technology, telecommunications, professional service, distribution and
        healthcare ranging from privately held emerging firms to Fortune 500 Companies.
        He has led the start-up and sale of two companies, and held corporate and
        or
        operational positions with Holiday Inns International, Honeywell Inc., and
        Cray
        Research. As president of Black Diamond Capital, Janisch is responsible for
        raising capital, due diligence, strategic acquisitions and operational oversight
        of portfolio companies. Prior to Black Diamond he was Vice President, Strategic
        Advisory & Turnaround group, one of the top five turnaround firms in the
        U.S.
 
 Directors
        are elected at the annual meeting of the shareholders and serve until their
        successors are elected and qualified. Officers are elected by the Board of
        Directors and serve at the discretion of the Board of Directors or until
        their
        earlier resignation or removal.
 
  8
  
 Section
        16 Beneficial Ownership Reporting Compliance
 
 Section
        16 of the Securities Exchange Act of 1934, as amended, and the rules promulgated
        there under require the Company's officers, directors, and holders of 10%
        or
        more of its outstanding common stock to file certain reports with the Securities
        and Exchange Commission (the "Commission"). To the company's best knowledge,
        based solely on information provided by the reporting individuals, all of
        the
        reports required to be filed by these individuals were filed.
 
 Audit
        Committee
 
 Mills,
        and Janisch currently serve as members of the Audit Committee. This committee
        met twice during the last fiscal year. The Audit Committee is responsible
        for
        assisting the Board of Directors with respect to its oversight of corporate
        accounting, reporting practices of the Company, and the quality and integrity
        of
        the financial reports of the Company. The Board has named Jeff Mills as the
        "audit committee financial expert" as defined by Item 401(h)(2) of Regulation
        S-K under the Securities Act of 1933. The Company acknowledges that the
        designation of Mr. Mills as the audit committee financial expert does not
        impose
        on Mr. Mills any duties, obligations or liability that are greater than the
        duties, obligations and liability imposed on Mr. Mills as a member of the
        Audit
        Committee and the Board of Directors in the absence of such designation or
        identification.
 
 ITEM
        10.  EXECUTIVE COMPENSATION
 
 The
        following table sets forth the compensation paid for services rendered during
        the fiscal years ended February 28, 2005, February 29, 2004, and February
        28,
        2003 to the Chairman and Chief Executive Officer. No other officers earned
        cash
        compensation in excess of $100,000 in fiscal 2005.
 
 
 **Summary
        Compensation Table**
 Name
                  and Principal Position
              
              Fiscal
                  Year
              
              Salary
              
              Other
                  AnnualCompensationRichard
                  A. Pomije, Chairman and CEO
              
              2005
              
              $
              96,650
              
              $
              500
              (2)2004
              
              $
              5,643
              
              $
              14,815
              (1)2003
              
              $
              86,000
              
              $
              13,000
              (1)
 
 (1)
              Automobile
                  expenses.
 (2)
              Board
                  member fees
 
 **OPTION
        GRANTS IN THE LAST FISCAL YEAR**
 
 The
        following table sets forth information regarding options granted to the Named
        Executive Officer during the 2005 fiscal year.
 
 No
        options were granted in fiscal 2005.
 
  9
  
 **AGGREGATED
        OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
        VALUES**
 
 The
        following table provides information relating to option exercises during
        fiscal
        year 2003 and the number and value of shares of Common Stock subject to options
        held by the Named Executive Officer as of **February
        28, 2005.**
 
 
 **Name**
              **Number
                  of shares - Underlying options granted**
              **Exercise
                  Price**
                **($/share)**
              **Expiration
                  date**Richard
                  A. Pomije
              200,000
              $1.00
              ------Jeff
                  Mills
              200,000
              $1.00
              ------
 
 **DIRECTORS'
        COMPENSATION**
 To
        date,
        BDC Capital, Inc. currently pays it's director’s a $500.00 monthly
        fee.
 
 
 ITEM
                11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                  STOCKHOLDER MATTERS
 
 The
        following table sets forth certain information as of
        **February 28, 2005** with
        respect to the number of shares of Common Stock beneficially owned by (i)
        each
        person known by BDC Capital to own beneficially 10% or more of the Common
        Stock;
        (ii) each director; (iii) the Chief Executive Officer, and (iv) all directors
        and executive officers as a group. Unless otherwise noted, each person listed
        below has sole voting and investment power with respect to his shares. The
        address for each individual set forth below is 11974 Portland, Burnsville,
        MN
        55337.
 
 
 Name
                  of Beneficial Owner (1)
              Number
                  of shares
              Percentage
                  of
                Outstanding
                  SharesRichard
                  A. Pomije
              2,870,811(2)
              41.12%Jeff
                  Mills
              200,000(3)
              2.86%All
                  directors and executive officers as a group (5 persons)
              3,139,482
              43.9%
 
  10
  
 Common
        shares issued and outstanding as of 2/28/2005 were 6,980,117
 
 (1)
        The
        securities "beneficially owned" by a person are determined in accordance
        with
        the definition of "beneficial ownership" set forth in the regulations of
        the
        Commission and, accordingly, may include securities owned by or for, among
        others, the spouse, children or certain other relatives of such person as
        well
        as other securities as to which the person has or shares voting or investment
        power or has the right to acquire within 60 days.
 
 (2)
        excludes 200,000 shares of Common Stock purchasable pursuant to the exercise
        of
        currently exercisable options.
 
 (3)
        excludes 200,000 shares of Common Stock purchasable pursuant to the exercise
        of
        currently exercisable options.
 
 
 ITEM
        12.
        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 BDC
        Capital, Inc. sub-leases from a director of the Company approximately 1,000
        square feet of space used for offices and operations equipment storage at
        11974
        Portland Avenue, Burnsville, Minnesota at a monthly rent of $750 renewable
        monthly.
 
 
 ITEM
        13.
         EXHIBITS
  3.1
              Articles
                  of Incorporation, as amended (1)3.2
              Bylaws
                  (1)10.2
              1996
                  Employee Stock Option Plan, as amended to date (1)31
              Certifications
                  of Chief Executive Officer and Chief Financial Officer under Rule
                  13a-14(a)/15d-14(a)32
              Certifications
                  under Section 1350
 
 (1)
        Incorporated by reference to exhibit filed as a part of Registration Statement
        on Form 10-SB (Commission File No. 000-27225).
  
 ITEM
        14.  Principal Accountant Fees and Services.
 
 During
        the prior two fiscal years, the following paid for accountant and related
        services:
  2005
              
              2004(1)Audit
                  fees (2)
              
              
              14,758
              
              
              1,990Tax
                  fees (3)
              
              $
              2,570
              
              
              500All
                  other fees
              
              
              -
              
              
              -
 
 (1)
        net
        of fee adjustment for 2002 year end audit
 (2)audit
          fees paid only to VK. No fees were paid to CMO during the year ended February
          28, 2005
 (3)tax
          fees paid to Century Small Business Solutions
  11
  
 *Audit
        Committee Policies and Procedures* ***:***
 
 The
        primary responsibility of the Audit Committee is to oversee the Company’s
        financial reporting process on behalf of the Board and report the results
        of
        their activities to the Board. Management is responsible for preparing the
        Company’s financial statements, and the independent auditors are responsible for
        auditing those financial statements. The Committee in carrying out its
        responsibilities believes its policies and procedures should remain flexible
        in
        order to best react to changing conditions and circumstances.
 
 The
        following shall be the principal recurring processes of the Audit Committee
        in
        carrying out its oversight responsibilities. The processes are set forth
        as a
        guide with the understanding that the Committee may supplement them as
        appropriate.
 
 ·
              The
                  Committee shall have a clear understanding with management and
                  the
                  independent auditors that the independent auditors are ultimately
                  accountable to the board and the Audit Committee, as representatives
                  of
                  the Company’s shareholders. The Committee shall have the ultimate
                  authority for and responsibility to evaluate and annually recommend
                  the
                  selection, retention, and, where appropriate, the replacement of
                  the
                  independent auditors. The Committee shall review and approve the
                  performance by the independent auditors of any non-audit-related
                  service
                  if the fees for such service are projected to exceed 15% of the
                  most
                  recently completed fiscal year’s combined audit fees and audit-related
                  service fees. The Committee shall review and discuss with the auditors
                  their independence from management and the Company and the matters
                  included in the written disclosures required by professional independence
                  standards applicable to the independent auditors. Annually, the
                  Committee
                  shall review and assess whether the independent auditor’s performance of
                  non-audit services is compatible with the auditor’s independence. In
                  addition, the Audit Committee shall review any candidate for the
                  senior
                  accounting and/or financial executive position prior to his or
                  her
                  appointment by the Company.
 
 ·
              The
                  Committee shall review and discuss with the independent auditors
                  and with
                  the head of the Company’s finance or internal audit department the overall
                  scope and plans for the audits. Also, the Committee shall discuss
                  with
                  management and the independent auditors the adequacy and effectiveness
                  of
                  the accounting and financial controls, including the Company’s system to
                  monitor and manage business risk, and legal and ethical compliance
                  programs. Further, the Committee shall meet separately with the
                  independent auditors, without management present, to discuss the
                  results
                  of their respective audit
                  procedures.
 
 ·
              The
                  Committee shall review and discuss the results of the quarterly
                  review and
                  any other matters required to be communicated to the committee
                  by the
                  independent auditors under generally accepted auditing standards.
                  The
                  chair of the Committee may represent the entire Committee for the
                  purpose
                  of this review.
 
 ·
              The
                  Committee shall review and discuss with management and the independent
                  auditors the financial statements to be included in the Company’s annual
                  report on Form 10-K, including their judgment about the quality,
                  not just
                  the acceptability, of accounting principles, the reasonableness
                  of
                  significant judgments, the basis and appropriateness of any change
                  in
                  significant accounting policies and the clarity of the disclosures
                  in the
                  financial statements. Also, the Committee shall review and discuss
                  the
                  results of the annual audit and any other matters required to be
                  communicated to the Committee by the independent auditors under
                  generally
                  accepted auditing standards.
 
 ·
              The
                  Committee shall review and discuss with management and the independent
                  auditors any material financial or non-financial arrangements of
                  the
                  Company which do not appear on the financial statements of the
                  Company and
                  any transactions or courses of dealing with parties related to
                  the Company
                  which transactions are significant in size or involve terms or
                  other
                  aspects that differ from those that would likely be negotiated
                  with
                  independent parties, in each case where such arrangements or transactions
                  are relevant to an understanding of the Company’s financial
                  statements.
 
  12
  
 SIGNATURES
 
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
        duly
        caused this report to be signed on its behalf by the undersigned, thereunto
        duly
        authorized.
 
 
 
 BDC
                  CAPITAL, INC.Dated:
                  June 15, 2005
              By:
                  /s/ Richard A.
                  PomijeRichard
                  A. Pomije, Chief Executive Officer(Principal
                  executive officer)
 
 
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the Company and in the
        capacities and on the dates indicated.
 
 
 Dated:
                  June 15, 2005
              By:
                  /s/ Richard A.
                  PomijeRichard
                  A. Pomije, Director, Chief Executive Officer,
                Chief
                  Financial Officer and President (Principal executive
                  officer)Dated:
                  June 15, 2005
              By:
                  /s/ Dan
                  JanischDan
                  Janisch, DirectorDated:
                  June 15, 2005
              By:
                  /s/ Jeff
                  MillsJeff
                  Mills, Director
 
 
 
 
 
 
  13
  
 
 
 
 
 
 
 
 
 
 
 **BDC
        Capital, Inc. formerly eNetpc, Inc.**
 
 
 **FINANCIAL
        REPORT**
 
 **FEBRUARY
        28, 2005 AND FEBRUARY 29, 2004**
 
 
 
 
 
 
 
 
 
 
  14
  
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
  To
        the
        Board of Directors and Stockholders
 BDC
        Capital, Inc.
 
 
 We
        have
        audited the accompanying balance sheet of BDC Capital, Inc. as of February
        28,
        2005, including the schedule of investments and the related statements of
        operations, stockholders' deficit and cash flows for the three months ended
        February 28, 2005 and the nine months ended November 30, 2004. 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 audit.
 
 We
        conducted our audit in accordance with the standards of the Public Accounting
        Oversight Board (United States). Those standards require that we plan and
        perform the audit 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 audit provides 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 BDC Capital, Inc. as of February
        28, 2005, and the results of its operations and its cash flows for the three
        months ended February 28, 2005 and the nine months ended November 30, 2004,
        in
        conformity with accounting principles generally accepted in the United States
        of
        America.
 
 
 /s/
        Carver Moquist & O’Connor, LLC
 
 
 
 Minneapolis,
        Minnesota
 May
        24,
        2005
 (Registered
        with the PCAOB as Carver Moquist & Associates LLC)
  15
  
 **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 
 
 To
        the
        Board of Directors and Stockholders
 BDC
        Capital, Inc.
 
 
 We
        have
        audited the accompanying balance sheet of BDC Capital, Inc. as of February
        29,
        2004, and the related statements of operations, stockholders' deficit and
        cash
        flows for the year then ended. 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 audit.
 
 We
        conducted our audit in accordance with the standards of the Public Accounting
        Oversight Board (United States). Those standards require that we plan and
        perform the audit 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 audit provides 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 BDC Capital, Inc. as of February
        29, 2004, and the results of its operations and its cash flows for the year
        then
        ended, 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 1 to the
        2004 financial statements, the Company has suffered recurring losses
        from
        operations and its current liabilities exceed its current assets. These
        conditions raise substantial doubt about the Company's ability to continue
        as a
        going concern. Management's plans in regard to these matters are also described
        in Note 1. The financial statements do not include any adjustments that might
        result from the outcome of this uncertainty.
 
 
 
 /s/
        Virchow Krause & Company, LLP
 
 
 
 Minneapolis,
        Minnesota
 June
        3,
        2004
 
  16
  BDC
        Capital, Inc.
 (formerly
        eNetpc, Inc.)
  BALANCE
        SHEETS
 February
        28, 2005 and February 29, 2004
  **ASSETS**2005
              
              2004**Assets**Cash
              
              $
              260,179
              
              $
              9,683Trade
                  accounts receivable
              
              
              -
              
              
              21,880Investment
                  in securities, at fair value, identified costs $67,403
              
              
              675,000
              
              
              -Property
                  and equipment
              
              
              -
              
              
              -Total
                  Assets
              
              $
              935,179
              
              $
              31,563**LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)****Liabilities**Accounts
                  payable
              
              $
              -
              
              $
              61,441Convertible
                  debentures, net of original issue discount of $377,051
              
              
              108,308
              
              
              -Convertible
                  debentures, net of original issue discount of $189,295
              
              
              9,697
              
              
              -Accrued
                  liabilities
              
              
              7,038
              
              
              880Due
                  to stockholder
              
              
              -
              
              
              16,977Due
                  to BDC Partners, Inc.
              
              
              2,100
              
              
              -Total
                  Liabilities
              
              
              127,143
              
              
              79,298**Stockholders’
                  Equity (Deficit)**Preferred
                  stock, $.01 par value, 20,000,000 shares authorized 3,939,000 and
                  0 issued
                  and outstanding
              
              
              39,390
              
              
              -Common
                  stock, $.01 par value, 2,020,000,000 shares authorized 6,980,117
                  and
                  3,939,000 shares issued and outstanding
              
              
              69,801
              
              
              39,390Additional
                  paid-in-capital
              
              
              4,762,773
              
              
              4,217,841Stockholder
                  subscription receivable
              
              
              -
              
              
              (22,500
              )Accumulated
                  deficit
              
              
              (4,063,928
              )
              
              (4,282,466
              )Total
                  Stockholders’ Equity (Deficit)
              
              
              808,036
              
              
              (47,735
              )Total
                  Liabilities and Stockholders’ Equity (Deficit)
              
              $
              935,179
              
              $
              31,563
 
 The
        accompanying notes are an integral
        part of these financial statements
  17
  BDC
        Capital, Inc.
 (formerly
        eNetpc, Inc.)
 
 STATEMENT
        OF OPERATIONS
 
 As
                  a Business Development CompanyThree
                  months ended February 28, 2005**Investment
                  income**
              
              $
              -**Operating
                  Expenses:**Professional
                  fees
              
              
              69,901Administrative
                  expenses
              
              
              6,885Rent
              
              
              750Printing
                  and reproduction
              
              
              413Other
              
              
              233Interest
                  expense
              
              
              139,171Total
                  Operating expenses
              
              
              217,353**Net
                  investment loss**
              
              
              (217,353
              )**Net
                  change in unrealized appreciation on investment**
              
              
              607,597**Net
                  increase in net assets resulting from operation**
              
              $
              390,244Income
                  per common share - basic
              
              $
              .07Income
                  per common share -diluted
              
              $
              .01Weighted
                  average shares outstanding - basic
              
              
              5,222,212Weighted
                  average shares outstanding - diluted
              
              
              35,661,227
 
 The
        accompanying notes are an integral part of these financial
        statements .
  18
  BDC
        Capital, Inc.
 (formerly
        eNetpc, Inc.)
  STATEMENTS
        OF OPERATIONS
  Prior
                  to becoming a Business Development CompanyNine
                  months ended November 30, 2004
              
              Year
                  ended February 29, 2004Revenues
              
              $
              111,409
              
              $
              188,977Cost
                  of sales
              
              
              76,997
              
              
              130,371Gross
                  profit
              
              
              34,412
              
              
              58,606Selling,
                  general and administrative expenses
              
              
              182,486
              
              
              195,213Loss
                  from operations
              
              
              (148,074
              )
              
              (136,607
              )Other
                  income (expense)Gain
                  on forgiveness of trade payables
              
              
              -
              
              
              45,897Other
                  income
              
              
              -
              
              
              23,203Interest
                  expense
              
              
              (23,632
              )
              
              (16,976
              )Total
                  other income (expense)
              
              
              (23,632
              )
              
              52,124Net
                  loss
              
              $
              (171,706
              )
              $
              (84,483
              )Loss
                  per common share - basic and diluted
              
              $
              (.04
              )
              $
              (.05
              )Weighted
                  average shares outstanding - basic and diluted
              
              
              3,939,000
              
              
              1,671,675
 
 The
        accompanying notes are an integral part of these financial
        statements
 
  19
  BDC
        Capital, Inc.
 (formerly
        eNetpc, Inc.)
 
 STATEMENTS
        OF STOCKHOLDERS' DEFICIT
 Years
        Ended February 28, 2005 and February 29, 2004
 
 
 **Preferred
                  Stock**
                **Series
                  A**
              
              
              **Common
                  Stock**
              
              
              **Additional**
                **Paid-In******
              
              
              **Subscription**
              
              
              **Accumulated****Shares**
              
              
              **Amount**
              
              
              **Shares**
              
              
              **Amount**
              
              
              ******Capital**
              
              
              **Receivable**
              
              
              **Deficit**
              
              
              **Total**Balance
                  February 28, 2003
              
              
              -
              
              $
              -
              
              
              971,456
              
              $
              9,715
              
              $
              4,033,205
              
              $
              (15,165
              )
              $
              (4,197,983
              )
              $
              (170,228
              )Debt
                  to equity conversion
              
              
              -
              
              
              -
              
              
              2,467,544
              
              
              24,675
              
              
              160,392
              
              
              -
              
              
              -
              
              
              185,067Issuance
                  of common stock
              
              
              -
              
              
              -
              
              
              500,000
              
              
              5,000
              
              
              32,500
              
              
              (37,500
              )
              
              -
              
              
              -Payments
                  on stock subscription receivable
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              15,499
              
              
              -
              
              
              15,499Compensation
                  expense related to options issued
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              6,410
              
              
              -
              
              
              -
              
              
              6,410Write
                  down of stock subscription
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (14,666
              )
              
              14,666
              
              
              -
              
              
              -Net
                  loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (84,483
              )
              
              (84,483
              )Balance
                  February 29, 2004
              
              
              -
              
              
              -
              
              
              3,939,000
              
              
              39,390
              
              
              4,217,841
              
              
              (22,500
              )
              
              (4,282,466
              )
              
              (47,735
              )Payments
                  on stock subscription receivable
              
              
              -
              
              
              -
              
              
              
              
              
              
              
              
              
              
              
              22,500
              
              
              
              
              
              22,500Net
                  loss - 9 months ended 11/30/05
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (171,706
              )
              
              (171,706
              )Balance
                  November 30, 2004
              
              
              -
              
              
              -
              
              
              3,939,000
              
              
              39,390
              
              
              4,217,841
              
              
              -
              
              
              (4,454,172
              )
              
              (196,941
              )Debt
                  to equity conversion
              
              
              -
              
              
              -
              
              
              3,041,117
              
              
              30,411
              
              
              -
              
              
              -
              
              
              -
              
              
              30,411OID
                  costs on convertible debentures
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              584,322
              
              
              -
              
              
              -
              
              
              584,322Stock
                  dividend
              
              
              3,939,000
              
              
              39,390
              
              
              -
              
              
              -
              
              
              (39,390
              )
              
              -
              
              
              -
              
              
              -Net
                  increase in net assets - 3 months ended 2/28/05
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              390,244
              
              
              390,244Balance
                  February 28,2005
              
              
              3,939,000
              
              $
              39,390
              
              
              6,980,117
              
              $
              69,801
              
              $
              4,762,773
              
              $
              -
              
              $
              (4,063,928
              )
              $
              808,036
 
 
 The
        accompanying notes are an integral part of these financial
        statements.
 
  20
  
 **BDC
        Capital, Inc.**
 **(formerly
        eNetpc, Inc.)**
 
 **STATEMENTS
        OF CASH FLOWS**
 
 **As
                  a Business Development Company**
              
              **Prior
                  to becoming a Business Development Company****Three
                  months ended February 28,****2005**
              
              **Nine
                  months ended November 30,****2004**
              
              **2004****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss from operations
              
              
              -
              
              $
              (171,706
              )
              $
              (84,483
              )Net
                  increase in net assets resulting from operations as a business
                  development
                  company
              
              $
              390,244
              
              
              -Adjustments
                  to reconcile net assets resulting from operations and net loss
                  to net cash
                  used by operating activities:Depreciation
                  and amortization
              
              
              -
              
              
              -
              
              
              55,000Amortization
                  of original issue discount
              
              
              132,757
              
              
              16,284
              
              
              -Compensation
                  expense related to warrants
              
              
              -
              
              
              -
              
              
              6,410Interest
                  added to due to stockholder
              
              
              -
              
              
              -
              
              
              13,567**Net
                  change in unrealized appreciation on investments**
              
              
              (607,597
              )
              
              -
              
              
              -Assets
                  transferred to BDC Partners, Inc.
              
              
              (16,223
              )
              
              -
              
              
              -Accounts
                  receivable
              
              
              -
              
              
              19,099
              
              
              98,829Deposit
                  on inventory
              
              
              
              
              
              (960
              )
              
              -Accounts
                  payable
              
              
              (3,848
              )
              
              24,266
              
              
              (77,301
              )Accrued
                  liabilities
              
              
              6,413
              
              
              (856
              )
              
              (1,056
              )Investment
                  in BDC Partners, Inc.
              
              
              (50,000
              )
              
              -
              
              
              -Due
                  to BDC Partners, Inc.
              
              
              2,100
              
              
              -
              
              
              -Net
                  cash provide by (used in) operating activities
              
              
              (146,154
              )
              
              (113,873
              )
              
              10,966**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Net
                  payments on note payable - bank
              
              
              -
              
              
              -
              
              
              (35,000
              )Net
                  proceeds (payments) from due to stockholder
              
              
              -
              
              
              48,023
              
              
              16,977Payments
                  received on stockholder subscription receivable
              
              
              -
              
              
              22,500
              
              
              15,499Proceeds
                  from issuance of convertible debentures
              
              
              390,000
              
              
              50,000
              
              
              -Net
                  cash provided by (used in) financing activities
              
              
              390,000
              
              
              120,523
              
              
              (2,524
              )**Net
                  change in cash and cash equivalents for the
                  period**
              
              
              243,846
              
              
              6,650
              
              
              8,442**Cash
                  and cash equivalents at beginning of period**
              
              
              16,333
              
              
              9,683
              
              
              1,241**Cash
                  and cash equivalents at end of period**
              
              $
              260,179
              
              $
              16,333
              
              $
              9,683**SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION**:Cash
                  payments for interest
              
              
              -
              
              $
              100
              
              $
              3,409**SUPPLEMENTAL
                  SCHEDULE OF NONCASH INVESTING****AND
                  FINANCING ACTIVITIES:**Issuance
                  of common stock for stock subscription
              
              
              -
              
              
              -
              
              $
              37,500Write
                  down of stock subscription
              
              
              -
              
              
              -
              
              $
              14,666Issuance
                  of preferred stock dividend
              
              $
              39,390
              
              
              -
              
              
              -Debt
                  to equity conversion
              
              $
              31,321
              
              
              -
              
              $
              185,067
 
 The
        accompanying notes are an integral part of these financial
        statements.
 
  21
  
 **BDC
        Capital, Inc.**
 **(formerly
        eNetpc, Inc.)**
 
 **SCHEDULE
        OF INVESTMENTS**
 **February
        28, 2005**
 
 
 **Portfolio
                  Company**
              **Principal
                  business**
              **Investments**
              **Cost**
              **Fair
                  Value**BDC
                  Partners, Inc.
              Technology
              Equity
              $67,403
              $675,000
 
 
 BDC
        Partners, Inc is a private company founded in 2004 and is located in
        Minneapolis, MN. It is a wholly own subsidiary of BDC Capital, Inc. that
        has a
        unique, multidisciplinary technology process paired with an intellectual
        property revenue-focused business model.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  22
  
 **BDC
          Capital, Inc.**
 **(formerly
          eNetpc, Inc.)**
 **NOTES
        TO FINANCIAL STATEMENTS**
 **Years
        Ended February 28, 2005 and February 29, 2004**
 
 
 **Note
        1. Nature of Business and Summary of Significant Accounting
        Policies** :
 
 **Nature
        of business** ***:***
 
 BDC
        Capital, Inc. (“The Company”) was formed as a Minnesota corporation on April 7,
        1982. It was incorporated under the name Command Small Computer Learning
        Center,
        Inc., a computer training company. In 1987, the Company changed its name
        to
        Command Electronics, Inc. In February 1995, the Company acquired CyberStar
        Computer Systems, a manufacturer and marketer of microcomputers and servers,
        and
        in 1997 it changed its name to CyberStar Computer Corporation. In 2000, the
        Company changed its name to eNetpc, Inc. In November of 2004 the Company
        changed
        its name to BDC Capital, Inc. BDC Capital, Inc. has engaged in the sale of
        computer components, development of software and resell of major computer
        brands. The names "BDC Capital, Inc." "we", "our" and "us" used in this report
        refer to BDC Capital, Inc.
  On
        December 10, 2004, the Company
        elected to be regulated as a business development company (BDC) as outlined
        in
        the Investment Company Act of 1940 by filing a Form NT-54A. As a BDC, The
        Company plans to focus on current opportunities available to this attractive
        business model in these somewhat uncertain economic times.
  ***Investment
        Strategy:***
 
 BDC
        Capital, Inc. intends to build an investment portfolio consisting of revenue
        generating assets and emerging companies well positioned for future growth.
        A
        business development company is a unique kind of investment company that
        primarily focuses on investing in or lending to small private companies and
        making managerial assistance available to them. A business development company
        may use capital provided by public stockholders and from other sources to
        invest
        in growing small businesses.
 
 A
        business development company provides stockholders the ability to retain
        the
        liquidity of a publicly traded stock while sharing in the possible benefits
        of
        investing in privately owned small-and medium-sized companies.
  As
        a BDC,
        the
        Company is required to have at least 70% of its assets in portfolio companies.
 
 **A
        summary of the Company's significant accounting policies
        follows:**
 
 ***Conversion
        to Business Development Company***
 
 The
        results of operations for 2005 are divided into two periods. The nine-month
        period, representing the period March 1, 2004 through November 30, 2004,
        reflects the Company's results prior to operating as a business development
        company under the Investment Company Act of 1940, as amended. The three-month
        period ended February 28, 2005, reflects the Company's results as a business
        development company under the Investment Company Act of 1940, as amended.
        Accounting principles used in the preparation of the financial statements
        beginning December 1, 2004 are different than those of prior periods and,
        therefore, the financial position and results of operations of these periods
        are
        not directly comparable. The primary differences in accounting principles
        relate
        to the carrying value of investments and
        consolidations.
 
 Changes
        in unrealized gains (losses) on the change in value of portfolio investments
        for
        business development companies are recognized each period. Prior to becoming
        a
        business development company, unrealized gains (losses) on the change in
        value
        of investments were recorded as accumulated comprehensive income in the
        statement of stockholders equity. Gains (losses) on investment would only
        be
        recognized when realized or when an investment was permanently
        impaired.
 
  23
  
 As
        a
        business development company, consolidation of portfolio companies is not
        required in which the Company has a controlling interest. In contrast, prior
        to
        operating as a business development corporation, entities in which the Company
        had controlling interest would have been required to be
        consolidated.
 
 The
        Company has determined that there is no cumulative effect adjustment for
        the
        three-month period ended February 28, 2005 in order to reflect the effects
        of
        conversion to a business development company.
 
 ***Cash
        and cash equivalents:***
 
 The
        Company considers all highly liquid debt instruments purchased with
        a maturity
        of three months or less to be cash equivalents. Cash on deposit in excess
        of
        FDIC and similar insurance coverage is subject to the usual banking risks
        of
        funds in excess of those limits.
  ***Valuation
        of Investments*** ***:***
 
 Value,
        as
        defined in Section 2(a)(41) of 1940 Act, is (i) the market price for those
        securities for which a market quotation is readily available and (ii) for
        all
        other securities and assets, fair value is as determined in good faith by
        the
        board of directors. Since there is typically no readily available market
        value
        for the Company’s privately held investments, the Company values substantially
        all of its investments at fair value as determined in good faith by the board
        of
        directors pursuant to a valuation policy and a consistent valuation process.
        At
        February 28, 2005, approximately 72% of the Company’s total assets represented
        investments of which approximately 100% are valued at fair value. Because
        of the
        inherent uncertainty of determining the fair value of investments that do
        not
        have a readily available market value, the fair value of the Company’s
        investments determined in good faith by the board of directors may differ
        significantly from the values that would have been used had a ready market
        existed for the investments, and the differences could be material.
  There
        is
        no single standard for determining fair value in good faith. As a result,
        determining fair value requires that judgment be applied to the specific
        facts
        and circumstances of each portfolio investment. The Company must determine
        the
        fair value of each individual investment on a quarterly basis. The Company
        records unrealized depreciation on investments when it believes that an
        investment has decreased in value, including where collection of a loan or
        realization of an equity security is doubtful. Conversely, the Company record
        unrealized appreciation if it believes that the underlying portfolio company
        has
        appreciated in value and, therefore, the Company’s investment has also
        appreciated in value, where appropriate.
  As
        a
        business development company, the Company invests primarily in illiquid
        securities including debt and equity securities of private companies. the
        Company’s investments are generally subject to some restrictions on resale and
        generally have no established trading market. Because of the type of investments
        that the Company makes and the nature of its business, the Company’s valuation
        process requires an analysis of various factors. the Company’s fair value
        methodology includes the examination of, among other things, the underlying
        portfolio company performance, financial condition and market changing events
        that impact valuation.
 
 With
        respect to private debt and equity securities, each investment is valued
        using
        industry valuation benchmarks, and, where appropriate, the value is assigned
        a
        discount reflecting the illiquid nature of the investment and/or the Company’s
        minority, non-control position. When an external event such as a purchase
        transaction, public offering, or subsequent equity sale occurs, the pricing
        indicated by the external event will be used to corroborate the Company’s
        private debt or equity valuation.
 
 
 ***Investments
        in equity securities:***
 
 Under
        business development company accounting, all equity investments are carried
        at
        fair value with any adjustments recorded in the statement of operations,
        combined with adjustments in the fair value of investments in loans, as
        investment gains (losses)—unrealized.
 
  24
  
 In
        accordance with Article 6 of Regulation S-X under the Securities Act of 1933
        and
        Securities Exchange Act of 1934, the Company does not consolidate portfolio
        company investments, including those in which it has a controlling
        interest.
 
 
 ***Income
        taxes:***
 
 Deferred
        taxes are provided on a liability method whereby deferred tax assets are
        recognized for deductible temporary differences and operating loss and tax
        credit carryforwards and deferred tax liabilities are recognized for taxable
        temporary differences. Temporary differences are the differences between the reported amounts of
        assets
        and liabilities and their tax basis. Deferred tax assets are reduced by a
        valuation allowance when, in the opinion of management, it is more likely
        than
        not that some portion or all of the deferred tax assets will not be realized.
        Deferred tax assets and liabilities are adjusted for the effects of changes
        in
        tax laws and rates on the date of the enactment.
  ***Stock-based
        employee compensation:***
 
 The
        Company follows Accounting Principles Board Opinion No. 25, Accounting for
        Stock
        Issued to Employees ("APB 25") and related interpretations in accounting
        for its
        stock options. Under APB 25, when the exercise price of stock options equals
        the
        market price of the underlying stock on the date of grant, no compensation
        expense is recognized. The Company has elected to follow the disclosure only
        provisions of Statement of Financial Accounting Standards No. 123, Accounting
        for Stock-Based Compensation ("Statement 123"). Accordingly, the pro forma
        disclosures of what net loss would have been had the provisions of Statement
        123
        been applied to the Company's stock options is as follows:
 
 For
                  the three months ended February 28,2005
              
              For
                  the nine months ended November 30, 2004
              
              The
                  year ended February 29, 2004Net
                  loss as reported
              
              $
              390,244
              
              $
              (171,706
              )
              $
              (84,483
              )Pro
                  forma fair value compensation
              
              
              -
              
              
              -
              
              
              (324,984
              )Pro
                  forma net loss
              
              $
              390,244
              
              $
              (171,706
              )
              
              (409,469
              )Basic
                  income (loss) per share as reported
              
              $
              .07
              
              $
              (.04
              )
              $
              (.05
              )Dilutive
                  income (loss) per share as reported
              
              $
              .01
              
              $
              (.04
              )
              $
              (.05
              )Basic
                  pro forma income (loss) per share
              
              $
              .07
              
              $
              (.04
              )
              
              (.24
              )Dilutive
                  pro forma income (loss) per share
              
              $
              .01
              
              $
              (.04
              )
              
              (.24
              )
 
 
 Pro
        forma
        information regarding net loss is required by Statement 123, and has been
        determined as if the Company had accounted for its employee stock options
        under
        the fair value method of Statement 123. The fair value for these options
        was
        estimated at the date of grant using the Black-Scholes option pricing model
        with
        the following weighted average assumptions: dividend yield of 0%, volatility
        range of 376%, risk-free interest rates of 3.0% and a weighted average expected
        life of the option of five years in 2004. There were no options issued for
        the
        three months ended February 28, 2005 and for the nine months ended November
        30,
        2004.
 
 ***Shipping
        and handling costs - Prior to becoming a business development
        company::***
 
 Shipping
        and handling costs charged to customers have been included in net sales.
        Shipping and handling costs incurred by the Company have been included in
        cost
        of sales.
 
 ***Advertising:***
 
 The
        Company expenses advertising costs as they are incurred. Advertising costs
        were
        $1,420 for the year ended February 29, 2004. The Company did not incur any
        advertising expense for the three months ended February 28, 2005 and the
        nine
        months ended November 30, 2004.
 
  25
  
 ***Revenue
        recognition - Prior to becoming a business development
        company:***
 
 The
        Company recognizes sales when the products are shipped. Revenue from services
        is
        recognized when the service is provided. The Company ensures that the
        transaction complies with the seven conditions and the six considerations
        contained in Accounting and Auditing Enforcement Release No. 108 of the
        Securities and Exchange Commission.
 
 ***Net
        loss per share:***
 
 Basic
        loss per share is computed using the weighted average number of shares
        outstanding for the period, including preferred stock (see note 7). Diluted
        loss
        per share is computed using the weighted average number of shares outstanding
        per share adjusted for the incremental shares attributed to outstanding stock
        options under the Company's stock option plans and stock purchase warrants
        and
        convertible debt. Incremental shares attributable to the assumed exercise
        of
        stock options and stock purchase warrants for the three months ended February
        28, 2005, the nine months ended November 30, 2004 and the year ended February
        29, 2004 were excluded from the computation of diluted earnings per share
        as
        their effect would be anti-dilutive. The diluted loss per share computation
        does
        include the adjusted incremental shares for the convertible debentures for
        the
        three months ended February 28, 2005.
 
 ***Credit
        risk and allowance for doubtful accounts*** :
 
 The
        Company reviews customers' credit history before extending credit and
        establishes an allowance for doubtful accounts based upon factors surrounding
        the credit risk of specific customers, historical trends and other information.
        Invoices are due 30 days after presentation. Accounts receivable over 30
        days
        are considered past due. The Company does not accrue interest on past due
        accounts receivable. The Company writes off accounts receivable when they
        are
        deemed uncollectible. There is no allowance for doubtful accounts at February
        29, 2004.
 
 ***Carrying
        value of financial instruments:***
 
 The
        carrying value of the Company's financial instruments approximates fair value
        at
        February 28, 2005 and February 29, 2004.
 
 ***Recently
        issued accounting pronouncements:***
 
 In
        December 2004, the FASB issued SFAS No. 123(R) “Share-Based Payment”.
        SFAS 123(R) requires the recognition of compensation cost relating
        to
        share-based payment transactions in financial statements. That cost will
        be
        measured based on the fair value of the equity or liability instruments issued
        as of the grant date, based on the estimated number of awards that are expected
        to vest. SFAS 123(R) covers a wide range of share-based compensation
        arrangements including share options, restricted share plans, performance-based
        awards, share appreciation rights, and employee share purchase plans.
        Statement 123(R) replaces FASB Statement No. 123, “Accounting for
        Stock-Based compensation,” and supersedes APB Opinion No. 25, “Accounting
        for Stock Issued to Employees”. Statement 123(R) is effective for us
        beginning March 1, 2006. We are in the process of evaluating the impact of
        SFAS 123(R) on our financial position and results of
        operations.
 
 ***Estimates
        and assumptions:***
 
 The
        preparation of the financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and revenues and expenses during the reporting period.
        Significant estimates include the lives of patent rights and equipment and
        the
        valuation of stock issued. Actual results could differ from these
        estimates.
 
  26
  
 ***Reclassifications***
 
 Certain
        accounts in the prior quarter financial statements have been reclassified
        for
        comparative purposes to conform with the presentation in the current financial
        statements. These reclassifications had no effect on net loss or stockholders'
        equity.
 
 
 **Note
        2. Property and Equipment:**
 
 
 **2005**
              
              **2004**Office
                  equipment and furniture
              
              $
              469,666
              
              $
              469,666Leasehold
                  improvements
              
              
              -
              
              
              37,270Production
                  equipment
              
              
              -
              
              
              61,515469,666
              
              
              568,451Less
                  accumulated depreciation
              
              
              455,028
              
              
              553,813Less
                  impairment of equipment
              
              
              14,638
              
              
              14,638$
              -
              
              $
              -
 
 Depreciation
        expense was $0 for the three months ended February 28, 2005, the nine months
        ended November 30, 2004 and $55,000 for the year ended February 29,
        2004.
 
 **Note
        3. Note Payable**
 
 During
        2003, the Company entered into a $35,000 note with a bank to serve as a
        short-term loan to pay current obligations. The note was paid in full during
        2004.
 
 **Note
        4. Due to Stockholder:**
  At
          February 28, 2003, the Company had a note payable to a stockholder. The
          note had
          an outstanding balance of $150,000 at February 28, 2003, and was converted
          to
          common stock during the year ended February 29, 2004 at $0.075 per share.
          Interest expense on the note for the year ended February 29, 2004 was
          $13,567.
 
 The
          Company had advances from one shareholder of $16,977 at February 28, 2004.
 **Note
        5. Convertible debentures:**
  The
        Company issued convertible debentures totaling $519,322 as of February 28,
        2005,
        bearing interest at 8.0% payable at maturity and are convertible at the
        Company’s current stock offering price which has been $.01 since December 1,
        2004.  The debentures mature at various dates from April 1, 2005 through
        February 28, 2007. These debentures plus any accrued interest are convertible
        as
        of the date of issuance at the option of the Company or the debt holder.
        These
        debentures are subordinated to any bank financing.  The
        application of the provisions of EITF 98-5, “Accounting for Convertible
        Securities with Beneficial Conversion Features or Contingently Adjustable
        Conversion Ratios,” and EITF 00-27, “Application of Issue 98-5 to Certain
        Convertible Instruments” resulted in the calculation of an embedded beneficial
        conversion feature which is required to be treated as an additional discount
        to
        the debt. The value of the beneficial conversion feature was $519,322. $132,757
        and $15,659 of the beneficial conversion feature was amortized into interest
        expense for the three months ended February 28, 2005 and the nine months
        ended
        November 30, 2004, respectively.
  
 Future
        maturities of these convertible debentures are as follows for the years ending
        February 28:
 
 2006
              
              $
              310,0002007
              
              
              209,322Total
              
              $
              519,322
 
  27
  
 The
        Company has also issued long-term convertible preferred debentures with a
        majority stockholder totaling $65,000, net of original issue discount of
        $58,085
        as of February 28, 2005, bearing interest at 8.0% payable at maturity. The
        debenture matures in February, 2007. This debenture plus any accrued interest
        is
        convertible as of the date of issuance at the option of the Company or the
        debt
        holder. These debentures are subordinated to any bank financing.. The
        application of the provisions of EITF 98-5, “Accounting for Convertible
        Securities with Beneficial Conversion Features or Contingently Adjustable
        Conversion Ratios,” and EITF 00-27, “Application of Issue 98-5 to Certain
        Convertible Instruments” resulted in the calculation of an embedded beneficial
        conversion feature which is required to be treated as an additional discount
        to
        the debt. The value of the beneficial conversion feature was $65,000. $6,915
        of
        the beneficial conversion feature was amortized into interest expense for
        the
        three months ended February 28, 2005
 
 The
        convertible debentures are issued with binding term sheets that require the
        following terms upon the sale of the converted stock by the
        purchaser:
 
 A)
              Purchaser
                  shall first be entitled to an amount equal to 200% of the face
                  amount of
                  each debenture attributable to the sale of common stock acquired
                  from the
                  conversion of the associated debt.
  B)
              After
                  the Purchaser receives the amount in A above, the Company shall
                  be
                  entitled to 50% of any additional Net Sales Proceeds of the stock.
                  Net
                  Sales Proceeds shall mean the gross proceeds received from the
                  sale of the
                  stock, less reasonable brokerage
                  commissions.
  C)
              Final
                  adjusted Net Sales Proceeds are to be wired to the Company within
                  7 days
                  from the date of the final settlement of the sale of stock from
                  the
                  conversion of all of the outstanding
                  debentures.
  As
        of
        February 28, 2005, the Company entered into binding term sheets also provide
        for
        convertible debt financing similar to the terms above totaling $16.5 million.
        The Company, at its option may draw up to $50,000 weekly against the total
        investor commitment over a 24 month period beginning February 28, 2005, subject
        to certain restrictions.
 
 **Note
        6. Income Taxes:**
 
 At
        February 29, 2005, the Company had net operating loss carryforwards of
        approximately $4,500,000. The net operating loss carryforwards are available
        to
        offset future taxable income through 2025 and may be subject to the limitations
        under Section 382 of the Internal Revenue Code if significant changes in
        the
        equity ownership of the Company have occurred. If not used, net operating
        loss
        carryforwards begin to expire in the following amounts each year:
 
 2005
              
              $
              26,0002007
              
              
              5,0002011
              
              
              39,0002012
              
              
              97,0002018
              
              
              41,0002019
              
              
              900,000Thereafter
              
              
              3,392,000Total
              
              $
              4,500,000
 
 
 The
        Company has recorded a full valuation allowance against its net deferred
        tax
        asset due to the uncertainty of realizing the related net benefits as
        follows:
 
 **2005**
              
              **2004**Deferred
                  tax assets:Net
                  operating loss carryforwards
              
              $
              1,650,000
              
              $
              1,650,000Valuation
                  allowance
              
              
              (1,443,000
              )
              
              (1,650,000
              )Net
                  deferred tax assets
              
              
              207,000
              
              
              -Deferred
                  tax liabilities:Unrealized
                  appreciation on investments
              
              
              (207,000
              )
              
              -Net
                  deferred tax assets
              
              $
              -
              
              $
              -
 
  28
  
 The
        change in valuation allowance was $0 and $40,000 for the years ended February
        28, 2005 and February 29, 2004, respectively. Reconciliation between the
        federal
        statutory rate and the effective tax rate for the years ended February 28,
        2005
        and February 29, 2004 is as follows:
 
 **2005**
              
              **2004**Federal
                  statutory tax rate
              
              
              34.0
              %
              
              34.0
              %State
                  taxes, net of federal benefit
              
              
              4.0
              %
              
              4.0
              %Change
                  in valuation allowance
              
              
              (38.0
              )%
              
              (38.0
              )%Effective
                  tax rate
              
              
              0.0
              %
              
              0.0
              %
 
 
 **Note
        7. Stockholders' Equity (Deficit):**
 
 ***Preferred
        Stock***
 
 On
        February 4, 2005, the Corporation's board of directors designated 10,000,000
        shares of preferred stock as Series A Preferred Stock to be issued out of
        the
        20,000,000 authorized.
 
 The
        Series A Preferred Stock ("Series A Preferred") is non-interest bearing,
        does
        not have voting rights and is not entitled to receive dividend. Each share
        of
        Series A Preferred issued can be converted into common stock on a 1:1 basis
        after a twelve month period. Should a liquidation event occur, the Series
        A
        Preferred automatically converts into common stock based on the foregoing
        formula. Further, the Series A Preferred is not affected by forward or reverse
        splits on the Corporation's common stock or other adjustments to the
        Corporation's capital structure. Finally, Series A Preferred is entitled
        to
        elect a majority of the Corporation's board of directors at all times, provided
        that a majority of the board of directors is, at all times,
        independent.
 
 The
        Corporation has currently 3,939,000 Series A Preferred issued and outstanding
        as
        of February 28, 2005.
 
 ***Stock
        Dividend***
 
 On
        February 4, 2005 the board of directors of BDC Capital, Inc. ("Corporation")
        authorized the issuance of 3,939,000 shares of Class A Preferred Stock in
        a
        stock dividend to each shareholder of record as of November 30, 2004. For
        each
        share of common stock held as of the Record Date, the Company shall issue
        one
        share of Preferred Series A stock. The Corporation relied on exemptions provided
        by Section 4(2) of the Securities Act of 1933, as amended.
 
 ***Stock
        options:***
 
 The
        Company has a stock option plan that includes both incentive and non-statutory
        stock options granted to directors, officers, employees and consultants of
        the
        Company. The maximum number of shares of Common Stock reserved for issuance
        is
        1,000,000 shares under the 1996 Stock Option Plan. Option activity is summarized
        as follows:
 
 **Shares
                  available for****grant**
              
              **Options****Outstanding**
              
              **Non-Plan****Options**
              
              **Options****Outstanding**
              
              **Weighted
                  Average Exercise Price Per****Share**Balance
                  at February 28, 2003
              
              
              705,000
              
              
              295,000
              
              
              -
              
              
              295,000
              
              $
              6.80Options
                  granted
              
              
              (980,000
              )
              
              980,000
              
              
              40,000
              
              
              1,020,000
              
              
              1.00Options
                  cancelled
              
              
              275,000
              
              
              (275,000
              )
              
              -
              
              
              (275,000
              )
              
              6.90Balance
                  at February 29, 2004
              
              
              -
              
              
              1,000,000
              
              
              40,000
              
              
              1,040,000
              
              
              1.08Options
                  granted
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -Options
                  cancelled
              
              
              -
              
              
              (577,800
              )
              
              (40,000
              )
              
              (617,800
              )
              
              5.69Balance
                  at February 28, 2005
              
              
              -
              
              
              422,200
              
              
              -
              
              
              422,200
              
              $
              1.04
 
  29
  Pursuant
        to SFAS No. 123, the Company recorded an expense of $6,410 during the year
        ended
        February 29, 2004 related to options issued to a non-employee. The expense
        was
        determined using the Black Scholes pricing model.
  **Note
        8. Related Party Transactions**
 
 As
        a
        business development company, the Company has issued convertible debentures
        totaling $204,322, reduced by original issue discount of $166,104 as of February
        28, 2005, bearing interest at 8.0% payable at maturity to various family
        members
        of the majority stockholder.
 
 The
        Company issued a convertible debenture its majority stockholder totaling
        $65,000, reduced by original issue discount of $58,085 as of February 28,
        2005.
        This debenture was converted in 6,061,000 shares of series A preferred stock
        in
        May 2005. See Note 5 for further details.
 
 During
        the year ended February 29, 2004, the Company had sales of approximately
        $26,000
        to Second Swing, a related party through common ownership. The Company had
        accounts receivable of approximately $15,000 from the related party at February
        29, 2004.
 
 The
        Company sub-leases from a director of the Company approximately 1,000 square
        feet of space used for offices and operations equipment storage at 11974
        Portland Avenue, Burnsville, Minnesota at a monthly rent of $750 renewable
        monthly.
 
 **Note
        9. Commitments and Contingencies:**
 
 During
        the year ended February 29, 2004 the Company leased two vehicles under operating
        leases. The vehicle leases expired during 2004. Lease expense for the year
        ended
        February 29, 2004 was $17,988.
 
 The
        Company is exposed to asserted and unasserted claims encountered in the normal
        course of business. In the opinion of management, the resolution of these
        matters will not have a material adverse effect on the Company's financial
        position or results of operations.
 
 **Note
        10. Major Customers** ***- Prior to becoming a business development company:***
 
 The
        Company had one and three customers which represented 73% and 44% of total
        sales
        for the nine months ended February 28, 2005 and the year ended February 29,
        2004, respectively. Accounts receivable from these customers was $0 and $15,930
        at February 28, 2005 and February 29, 2004, respectively.
 
 **Note
        11. Financial Highlights** ***-
        as a business development company:***
 
 Following
        is a schedule of financial highlights for the three months ended February
        28,
        2005:
 
  30
  
 Per
                    Share Data:Net
                    asset value, at conversion to a BDC
                
                $
                (0.05
                )
                
                (a
                )Income
                    from investment operations:Net
                    Investment loss
                
                
                (0.05
                )
                
                (b
                )Net
                    realized gains on investments
                
                
                -
                
                
                (b
                )Net
                    unrealized appreciation on investments
                
                
                0.13
                
                
                (b
                )Net
                    increase in net assets resulting from operations
                
                
                0.08Dividends
                
                
                -Issuance
                    of shares
                
                
                0.01Dilutive
                    effect of share insurances
                
                
                (0.07
                )Increase
                    in stockholders' equity (deficit) from OID on convertible
                    debentures
                
                
                0.15
                
                
                (b
                )Increase
                    in stockholder's equity relating to equity issuances
                
                
                0.09Net
                    asset value, end of period
                
                $
                0.12Per
                    share market value at end of period
                
                $
                0.02Total
                    Return
                
                
                -400
                %
                
                (c
                )Shares
                    outstanding at end of period
                
                
                6,980,117Ratio/Supplemental
                    Data:Net
                    assets end of period
                
                $
                808,036Ratio
                    of operating expenses to average net assets (annualized)
                
                
                285
                %Ratio
                    of net investment loss to average assets (annualized)
                
                
                285
                %
  (a)
                Based
                    on total shares outstanding at date of conversion to BDC (December
                    1,
                    2004)(b)
                Based
                    on average shares outstanding at date of conversion to BDC (December
                    1,
                    2004) through February 28, 2005(c)
                Total
                    return for the period is not annualized
 
 
 **Note
        12. Subsequent Events:**
 
 In
        April,
        the majority stockholder converted his $65,000 convertible preferred debenture
        into 6,061,000 shares of preferred stock.
 
 During
        the period March 1, 2005 to May 31, 2005, convertible debenture holders
        converted $107,425 of the outstanding convertible debentures into 10,722,465
        shares of common stock.
 
 During
        the 3 months ended May 31, 2005, BDC Capital, Inc. invested an additional
        $278,000 in BDC Partners, Inc.
   31