U.S.
      SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





Form
      10-Q





(Mark
      One)





|
                X
                |
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      quarterly period ended: November 30, 2007





|__|
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934








Commission
      file number: 000-27225





DigitalTown,
      Inc.


(formerly
      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)Registrant's
                telephone number: (952)
                890-2362





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





Title
      of Each
      Class


Common
      Stock


Par
      Value
      $0.01 per share











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














Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer.  See definitions of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.   (check one):





Large
                Accelerated Filer [  ]
            Accelerated
                Filer [  ]
            Non-Accelerated
                Filer [X]





There
      were 27,062,000 shares of the registrant’s common stock outstanding as of
      January 7, 2008.







































ii








TABLE
      OF
      CONTENTS





PART
                IItem
                1.
            Financial
                Statements
            1-11Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            12-14Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            15Item
                4.
            Controls
                and Procedures
            15PART
                IIItem
                1.
            Legal
                Proceedings
            16Item
                1A
            Risk
                Factors
            16Item
                2.
            Unregistered
                sales of Equity Securities and Use of Proceeds
            16Item
                3.
            Defaults
                Upon Senior Securities
            16Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            16Item
                5.
            Other
                Information
            16Item
                6.
            Exhibits
            17

















iii




PART
      I





ITEM
      1.  FINANCIAL STATEMENTS





PageFinancial
                Statements:Consolidated
                Balance Sheets
            1Consolidated
                Statements of Operations
            2Consolidated
                Statements of Cash Flows
            3Notes
                to Financial Statements
            4-11


























DigitalTown,
      Inc.


(formerly
      BDC Capital, Inc.)


CONSOLIDATED
      BALANCE
      SHEETS





ASSETSNovember
                30,
              2007
            
            
            February
                28,
              2007(unaudited)
            
            
            (audited)Current
                assets:Cash
            
            $
            153,456
            
            
            $
            8,933Other
                receivable
            
            
            28
            
            
            
            999Total
                current assets
            
            
            153,484
            
            
            
            9,932Property
                and equipment, net
            
            
            4,340
            
            
            
            1,579Intangible
                assets – domain names/website development
            
            
            730,756
            
            
            
            441,558Total
                assets
            
            $
            888,580
            
            
            $
            453,069LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            266,274
            
            
            $
            137,144Advances
                from stockholders
            
            
            0
            
            
            
            16,354Accrued
                expenses:Accrued
                payroll
            
            
            18,731
            
            
            
            32,169Accrued
                interest
            
            
            11,156
            
            
            
            9,476Deferred
                officer compensation
            
            
            0
            
            
            
            18,865Notes
                payable – stockholder
            
            
            0
            
            
            
            70,000Total
                current liabilities
            
            
            296,161
            
            
            
            284,008Commitments
                and contingenciesStockholders’
                equity:Common
                stock, $.01 par value, 2,000,000,000 shares authorized, 27,037,000
                and
                25,701,500 shares issued and outstanding at November 30, 2007
                and  February 28, 2007, respectively
            
            
            270,365
            
            
            
            257,010Additional
                paid-in-capital
            
            
            19,486,546
            
            
            
            14,521,673Subscription
                receivable
            
            
            (5,130,220
            )
            
            
            (2,947,470
            )Accumulated
                deficit
            
            
            (14,034,272
            )
            
            
            (11,662,152
            )Total
                stockholders’ equity
            
            
            592,419
            
            
            
            169,061Total
                liabilities and stockholders’ equity
            
            $
            888,580
            
            
            $
            453,069








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







1





DigitalTown,
      Inc


(formerly
      BDC Capital, Inc.)





CONSOLIDATED
      STATEMENTS OF OPERATIONS






For
                the Three Months Ended
            
            
            For
                the Nine Months EndedNovember
                30,
            
            
            November
                30,2007
            
            
            2006
            
            
            2007
            
            
            2006(unaudited)
            
            
            (unaudited)
            
            
            (unaudited)
            
            
            (unaudited)Operating
                expenses:Selling,
                general and administrative expenses
            
            $
            598,182
            
            
            $
            5,348,597
            
            
            $
            2,375,648
            
            
            $
            5,563,900Loss
                from operations
            
            
            (598,182
            )
            
            
            (5,348,597
            )
            
            
            (2,375,648
            )
            
            
            (5,563,900
            )Other
                income (expense)Interest
                expense
            
            
            0
            
            
            
            (1,400
            )
            
            
            (1,680
            )
            
            
            (4,200
            )Other
                income
            
            
            1,014
            
            
            
            398
            
            
            
            5,208
            
            
            
            1,253Total
                other income (expense)
            
            
            1,014
            
            
            
            (1,002
            )
            
            
            3,528
            
            
            
            (2,947
            )Net
                loss
            
            $
            (597,168
            )
            
            $
            (5,349,599
            )
            
            $
            (2,372,120
            )
            
            $
            (5,566,847
            )Loss
                per common share – basic and diluted
            
            $
            (0.02
            )
            
            $
            (0.31
            )
            
            $
            (0.09
            )
            
            $
            (0.59
            )Weighted
                average common shares outstanding – basic and diluted
            
            
            26,546,335
            
            
            
            17,129,533
            
            
            
            25,992,965
            
            
            
            9,500,517



















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





2







DigitalTown,
      Inc.


(formerly
      BDC Capital, Inc.)





CONSOLIDATED
      STATEMENT OF CASH FLOWS





Nine
                months ended
              November
                30, 2007
            
            
            Nine
                months ended
              November
                30, 2006(unaudited)
            
            
            (unaudited)CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (2,372,120
            )
            
            $
            (5,566,847
            )Adjustments
                to reconcile net loss to net cash flows used in operating
                activities:Depreciation
            
            
            1,195
            
            
            
            889Stock
                based compensation expense
            
            
            1,645,040
            
            
            
            5,149,484Non
                cash stock payments for services
            
            
            50,063
            
            
            
            -Changes
                in operating assets and liabilities:Other
                receivables
            
            
            971
            
            
            
            -Prepaid
                expenses
            
            
            -
            
            
            
            2,019Accounts
                payable
            
            
            90,895
            
            
            
            26,379Accrued
                expenses:Accrued
                payroll
            
            
            (13,438
            )
            
            
            4,136Accrued
                interest
            
            
            1,680
            
            
            
            4,200Deferred
                officer compensation
            
            
            (18,865
            )
            
            
            33,000Net
                cash used in operating activities
            
            
            (614,579
            )
            
            
            (346,740
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Purchases
                of fixed assets
            
            
            (3,956
            )
            
            
            -Purchase
                of intangible asset-website development
            
            
            (72,540
            )
            
            
            -Purchases
                and  renewal of  intangible assets – domain
                names
            
            
            (145,298
            )
            
            
            (220,666
            )Net
                cash used in investing activities
            
            
            (221,794
            )
            
            
            (220,666
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Advances
                from officer/stockholder
            
            
            (16,354
            )
            
            
            15,556Note
                payable-shareholder
            
            
            (70,000
            )
            
            
            -Payments
                received on stockholder subscription receivables
            
            
            1,067,250
            
            
            
            545,280Net
                cash provided by financing activities
            
            
            980,896
            
            
            
            560,836Net
                change in cash and cash equivalents
            
            
            144,523
            
            
            
            (6,570
            )Cash
                and cash equivalents, beginning of period
            
            
            8,933
            
            
            
            17,765Cash
                and cash equivalents, end of period
            
            $
            153,456
            
            
            $
            11,195SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION:Non-cash
                flow information:Intangible
                assets-domain name renewals incurred with accounts payable
            
            $
            71,360
            
            
            $
            -Common
                stock issued in lieu of rent payments owed a director of the Company
                included in Accounts Payable
            
            $
            (33,125
            )
            
            $
            -






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





3





DigitalTown,
      Inc.


(formerly
      BDC Capital, Inc.)








NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS


(unaudited)








Note
      1. Nature of Business and
      Summary of Significant Accounting Policies:





Nature
      of
      Business





The
      Company currently is developing the DigitalTown social-networking portal which
      will connect approximately 27,000 local online spirit sites formed around a
      town
      and its high school.  The Company owns the domains associated with all
      of these communities.  This portal, when complete, will include
      easy-to-use and free features such as email, alumni communication and reunion
      tools, calendar and organizing tools for boosters,  personal profiles,
      photo, video and music sharing and timely community news.  The Company
      currently is developing a service-and-product revenue model associated with
      the
      use of the DigitalTown portal.





The
      Company is working with website development and hosting companies and proven
      application service providers to create beta sites for its DigitalTown portal.
      These viral sites will offer a rich menu of free features, from reunion planning
      and booster organizing tools, notification systems, and applications to create
      information about school and community activities which will attract and connect
      alumni, boosters, students and administrators and deepen their
      relationships.





The
      Company has sustained losses and negative cash flows from operations and expects
      these conditions to continue into the foreseeable future.  At November
      30, 2007, the Company had an accumulated deficit of
      $14,034,272.  Subsequent to November 30, 2007, the Company has
      received cash proceeds totaling approximately $50,000 from its stock
      subscription receivable.  The Company anticipates that existing cash,
      stock subscription proceeds received to date, expected future proceeds from
      its
      stock subscription receivables and any additional financing needed through
      the
      sale of its common stock or other equity-based securities will be sufficient
      to
      meet its working capital and capital expenditures needs through at least
      November 30, 2008.  In the event that we are unable to obtain
      additional capital in the future, we would be forced to reduce operating
      expenses and/or cease operations altogether.





Principles
      of
      Consolidation





The
      Company files consolidated financial statements that include its controlled
      Subsidiaries. All material intercompany accounts and transactions have been
      eliminated in consolidation.




Use
      of
      Estimates





The
      preparation of 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.  Actual results could differ from those
      estimates.








4





Fair
      Value of Financial
      Instruments





The
      Company’s financial instruments consist of cash, other receivables, accounts
      payable, accrued expenses and notes payable.  Pursuant to SFAS No. 107
“Disclosures About Fair Value of Financial Instruments,” the Company is required
      to estimate the fair value of all financial instruments at the balance sheet
      date.  The Company considers the carrying value of its financial
      instruments in the financial statements to approximate fair value.





Revenue
      Recognition





The
      Company does not currently generate revenue from its operations.





Cash
      and Cash
      Equivalents





The
      Company considers all highly liquid investments with original maturity of three
      months or less when purchased to be cash equivalents.





Intangible
      Assets – Domain
      Names/WebSite Development Costs





The
      Company is still in the development stage of its website portal, and
      accordingly, all costs including license renewals, associated with domain names
      expected to be utilized in its website portal and website development costs
      have
      been capitalized.  Since the Company is still in the development stage
      of its website portal and the ownership of these domain names can be renewed
      at
      a nominal fee prior to their expiration date, the useful life of the domain
      names are deemed to be indefinite and no amortization will be
      recorded.  Additionally, since the Company is still in the development
      stage of its website portal, no amortization has been recorded for the website
      development costs.





Property
      and
      Equipment





Property
      and equipment are stated at cost and depreciated on a straight-line basis over
      their estimated useful lives, ranging from two to five years. Leasehold
      improvements are amortized over the shorter of the useful life or the term
      of
      the related lease. Repairs and maintenance costs are expensed as incurred;
      major
      renewals and improvements are capitalized.  As items of property or
      equipment are sold or retired, the related cost and accumulated depreciation
      are
      removed from the accounts and any gain or loss is included in operating
      income.





Impairment
      of Long-Lived
      Assets





Long-lived
      assets, such as property and equipment and intangible assets – domain
      names/website development costs are reviewed for impairment whenever changes
      in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable.  Recoverability of assets to be held and used is measured
      by comparison of the carrying amount of an asset to estimated undiscounted
      future cash flows expected to be generated by the asset. If the carrying amount
      of an asset exceeds its estimated future cash flows, an impairment charge is
      recognized in the amount by which the carrying amount of the asset exceeds
      the
      fair value of the asset.





Income
      Taxes





Deferred
      taxes are provided on a liability method whereby deferred tax assets are
      recognized for deductible temporary differences and operating losses 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.





5





Stock-Based
      Compensation





Effective
      March 1, 2006, the Company adopted Financial Accounting Standards Board (“FASB”)
      Statement No. 123(R), “Share-Based Payment,” applying the modified prospective
      method.  This standard requires the fair value of share-based
      payments, including grants of employee stock options and employee stock purchase
      plan shares, to be recognized in the income statement based on their grant
      date
      fair values unless a fair value is not reasonably estimable.  Prior to
      the Company’s adoption of SFAS No. 123(R), the Company followed the intrinsic
      value method prescribed in Accounting Principles Board (“APB”) Opinion No. 25,
“Accounting for Stock Issued to Employees”, and its related interpretations, as
      permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123,
“Accounting for Stock-Based Compensation.”  The fair value of the
      Company’s stock options issued prior to and after the adoption of SFAS No.
      123(R) has been estimated using a Black-Scholes pricing model, which assumes
      no
      expected dividends and estimates the option expected life, volatility and
      risk-free interest rate at the time of the grant.





Comprehensive
      Income
      (Loss)





Comprehensive
      income (loss) includes net income (loss) and items defined as other
      comprehensive income (loss). Items defined as other comprehensive income (loss)
      include such items as foreign currency translation adjustments and unrealized
      gains (losses) on certain marketable securities. For the three and nine months
      ended November 30, 2007 and 2006, the Company had no items defined as other
      comprehensive income (loss).





Net
      Loss Per Common
      Share





Basic
      loss per share is computed using the weighted average number of shares
      outstanding for the period. 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 convertible debt. Incremental shares attributable to
      the
      assumed exercise of stock options and conversion of debt for the three and
      nine
      months ended November 30, 2007 and November 30, 2006 were excluded from the
      computation of diluted loss per share as their effect would be
      anti-dilutive.





Recently
      Issued Accounting
      Pronouncements





In
      September 2006, the Financial Accounting Standards Board (FASB) issued Statement
      of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS No.
      157"). This standard clarifies the principle that fair value should be based
      on
      the assumptions that market participants would use when pricing an asset or
      liability. Additionally, it establishes a fair value hierarchy that prioritizes
      the information used to develop those assumptions. This standard is effective
      for financial statements issued for fiscal years beginning after November 15,
      2007. We are currently evaluating the impact of this statement. We believe
      the
      adoption of SFAS No. 157 will not have a material impact on our consolidated
      financial position or results of operations.























6





Cash
      Deposits in Excess of
      Federally Insured Limits





The
      Company maintains its cash in bank deposit accounts which, at times, may exceed
      federally insured limits. The balances are insured by the Federal Deposit
      Insurance Company up to $100,000.  Account balances in excess of
      federally insured limits were $30,061 at November 30, 2007 and  $0 at
      February 28, 2007.  The Company has not experienced any losses in such
      accounts.








Note
      2. Property and Equipment





Property
      and equipment are as follows:




November
                30,
              2007
            
            
            February
                28,
              2007Office
                equipment and furniture
            
            $
            477,176
            
            
            $
            473,220Less
                accumulated depreciation
            
            
            (458,198
            )
            
            
            (457,003
            )Less
                impairment of equipment
            
            
            (14,638
            )
            
            
            (14,638
            )$
            4,340
            
            
            $
            1,579





Depreciation
      expense for the three and nine months ended November 30, 2007 was $407 and
      $1,195, respectively.





Note
      3. Intangible Assets





Intangible
      assets are as follows:





November
                30,
              2007
            
            
            February
                28,
              2007Domain
                names
            
            $
            658,216
            
            
            $
            441,558Website
                development
            
            
            72,540
            
            
            
            -Less
                accumulated amortization
            
            
            -
            
            
            
            -$
            730,756
            
            
            $
            441,558





Since
      the
      Company is still in the development stage of its website portal and the useful
      life of the domain names are deemed to be indefinite, no amortization has been
      recorded.





Note
      4. Notes Payable – Stockholder





On
      June
      18, 2007, the Company paid all interest bearing advances from a stockholder
      in
      the amount of $70,000.  The unsecured notes were due at various dates
      from June 21, 2007 to August 1, 2007 with an interest rate of
      8%.  Outstanding accrued interest owed on these advances was not paid
      on June 18, 2007 and remains a debt of the Company.  Accrued interest
      at November 30, 2007 and February 28, 2007 totaled $11,156 and $9,476,
      respectively.

















7





Note
      5. Stockholders Equity




During
        the period from May 2007 to September 2007, holders of previously subscribed
        shares sold a portion of their shares to other subscription holders of the
        Company in order to pay the Company the balance due on their subscription
        agreements.  As of November 30, 2007, a total of 827,092 shares had
        been sold and transferred to the new purchaser and the proceeds of $1,842,108
        was due to the original subscription holder. The underlying original
        subscription receivable due the Company for these transferred shares totaled
        $620,319.  As of November 30, 2007, the entire $620,319 has been paid
        to the Company and has reduced their stock subscription
        receivable.  Additionally, due to these shares being re-sold at prices
        in excess of the original face amount of the shares purchased, a portion
        of the
        proceeds is due back to the Company.  Per the 2005 stock subscription
        agreements, the seller of the subscribed shares is entitled to up to 200%
        of the
        face amount of each share sold and the Company is entitled to 50% of any
        additional proceeds of the stock in excess of that 200%.  Therefore,
        the Company is owed $300,735 for their share of the additional proceeds for
        sales that occurred through November 30, 2007.  As of January 14,
        2008, no payments have been received and the Company has not recorded the
        $300,735 in the stock subscription receivable at November 30,
        2007.  The Company will record those future cash receipts to
        Additional Paid in Capital when received.





On
      October 5, 2007, the Company issued 13,250 restricted common shares at a price
      of $2.50 per share, valued at $33,125, to a director of the Company, for payment
      of outstanding rent charges included in accounts payable for the period of
      December 16, 2006 through December 31, 2007.





On
      October 5, 2007, the Company issued 1,300,000 restricted common shares at a
      price of $2.50 per share, valued at $3,250,000 in exchange for stock
      subscription agreements (see further details in note 9).





On
      April
      20, 2007, the Company issued 22,250 restricted common shares, valued at $50,063,
      to a Minneapolis area high school for their assistance in initially developing
      the portal revenue model.





On
      October 4, 2006, the Company initiated a reverse stock split of 75 to
      1.  Accordingly, all per share amounts reported in the financial
      statements for all periods have been retroactively restated to reflect the
      reverse stock split.








Note
      6. Stock Options





The
      Company has one stock option plan called The 2006 Employee Stock and Option
      Plan. As of August 31, 2007, an aggregate of 5,000,000 shares of common stock
      may be granted under these plans determined by the Board of Directors. The
      stock
      options may be granted to directors, officers, employees, consultants and
      advisors of the Company.  Options granted under this plan are
      non-qualified stock options and have exercise prices and vesting terms
      established by the Board of Directors at the time of each
      grant.  Vesting terms of outstanding options range from immediate to
      two years of employment anniversary.  All options expire either two or
      five years from the date of grant.





Effective
      March 1, 2006, the Company adopted Financial Accounting Standards Board (“FASB”)
      Statement No. 123(R), “Share-Based Payment,” which requires the fair value
      of share-based payments, including grants of employee stock options and employee
      stock purchase plan shares, to be recognized in the income statement based
      on
      their grant date fair values unless a fair value is not reasonably estimable.
      Prior to the Company’s adoption of SFAS No. 123(R), the Company followed
      the intrinsic value method prescribed in Accounting Principles Board (“APB”)
      Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related
      interpretations, as permitted by Statement of Financial Accounting Standards
      (“SFAS”) No. 123, “Accounting for Stock-Based Compensation.” The fair value
      of the Company’s stock options issued prior to and after the adoption of SFAS
      No. 123(R) has been estimated using a Black-Scholes Merton option pricing model,
      which assumes no expected dividends and estimates the option expected life,
      volatility and risk-free interest rate at the time of grant.








8





The
      Company elected to adopt the modified prospective transition method, under
      which
      prior periods have not been restated to reflect, and do not include, the impact
      of SFAS No. 123(R).  SFAS 123 (R) requires companies to estimate
      the fair value of share-based payment awards on the date of grant using an
      option-pricing model. The value of the portion of the award that is ultimately
      expected to vest is recognized as expense on a straight-line basis over the
      requisite vesting periods in the Company’s consolidated statements of
      operations. The adoption of SFAS 123 (R) also requires certain changes to the
      accounting for income taxes and the method used in determining diluted shares,
      as well as additional disclosure related to the cash flow effects resulting
      from
      share-based compensation. The relevant interpretive guidance of Staff Accounting
      Bulletin 107 was applied in connection with its implementation and adoption
      of
      SFAS 123 (R).  The valuation provisions of SFAS No. 123(R) apply
      to new grants and to grants that were outstanding as of the effective date
      and
      are subsequently modified. The Company had no remaining estimated compensation
      for grants that were outstanding as of the effective date that would need to
      be
      recognized over the remaining service period using the compensation cost
      estimated for the SFAS No. 123 pro forma disclosures.





The
      Company’s consolidated financial statements as of and for the three and nine
      months ended November 30, 2007, reflect the impact of SFAS
      123(R).  For the three months ended November 30, 2007, the Company
      granted 130,000 stock options with an average per option fair value of $2.27
      and
      recorded related compensation expense of $336,314.  For the nine
      months ended November 30, 2007, the Company has recorded $1,645,040 in stock
      compensation expense.  This expense is included in selling, general
      and administrative expense. There was no tax benefit from recording this
      non-cash expense due to the Company having a full valuation allowance against
      its deferred tax assets. The compensation expense impacted the nine months
      ended
      November 30, 2007 basic loss per common share by $0.06. There remains $73,955
      of
      total unrecognized compensation expense, which is expected to be recognized
      over
      future periods through November 30, 2008.





The
      following table summarizes information about the Company’s stock
      options:








Number
                of Options
            
            
            Weighted
                Average Exercise Price
            
            
            Weighted
                Average Remaining Contract Life
            
            
            Aggregate
                Intrinsic Value (1)Options
                outstanding February 28, 2007
            
            
            3,125,000
            
            
            $
            1.725
            
            
            
            3.75
            
            
            
            -Granted
            
            
            572,000
            
            
            $
            2.912
            
            
            
            4.50
            
            
            
            -Canceled
                or expired
            
            
            (270,000
            )
            
            $
            (1.725
            )
            
            
            3.75
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Options
                outstanding - November 30, 2007
            
            
            3,427,000
            
            
            $
            1.944
            
            
            
            4.00
            
            
            $
            3,961,530Exercisable
                at November 30,
                2007
            
            
            3,303,872
            
            
            $
            1.923
            
            
            
            4.00
            
            
            $
            3,889,038





(1)
      The
      intrinsic value of an option is the amount by which the fair value of the
      underlying stock exceeds its exercise price.








9





Note
      7. Related Party Transactions





The
      Company entered into a 5 year lease with a director of the Company for
      approximately 2,650 square feet of space used for offices and operations
      equipment storage at 11974 Portland Avenue, Burnsville,
      Minnesota.  The lease commenced on December 16, 2006 at a monthly rent
      of $2,650 for the 5 year term of the lease and contains an option to renew
      for
      an additional term of 1 year at a monthly rent of $3,650. The Company previously
      sub-leased from a director of the Company the 1,000 square feet of space at
      the
      same location at a monthly rent of $750 renewable monthly.  The
      Company incurred rent expense to the director for the three and nine months
      ended November 30, 2007 totaling $7,950 and $23,850, respectively.  On
      October 5, 2007, the Company issued 13,250 restricted common shares, valued
      at
      $33,125, to the director for rent payments due for the period of December 16,
      2006 through December 31, 2007.





Future
      payments for fiscal years ending:





2008-remaining
            
            $
            7,9502009
            
            
            31,8002010
            
            
            31,8002011
            
            
            31,8002012
            
            
            25,175$
            128,525








Note
      8. Commitments and Contingencies





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
      9. Common Stock Subscriptions Receivable





During
      fiscal year ended February 28, 2006, the Company received subscriptions for
      4,811,709 restricted common shares at $0.75 per share.  Significant
      terms of the subscription agreement are as follows:


·
            Payment
                is due in full in 60 months


·
            At
                24 months, the Company can demand at its option, monthly 1/36 payments
                on
                the subscription agreement.


·
            The
                Company has the option to charge simple annual interest of up to
                4%.


·
            The
                Company will provide downside protection of up to 30% of the stock
                price
                upon conversion.





On
      October 5, 2007, the Company received subscriptions for 1,300,000 restricted
      common shares at $2.50 per share.  Significant terms of the
      subscription agreement are as follows:


·
            The
                price per share of $2.50 was based on the closing price on October
                4,
                2007.


·
            At
                24 months, 1/36 payments are due monthly.


·
            The
                Company, at its option, may call up to 1/12 of the gross receivable
                per
                month if the preceding 30 day average trading price is at or above
                $7.00 a
                share with minimum trading volume of 5,000 shares per day.


·
            If
                the purchaser sells these common shares, the purchaser shall be entitled
                to an amount equal to 200% of the original purchase price of each
                share
                and the Company shall be entitled to 50% of any additional net sales
                proceeds of the stock.





10





As
      of
      November 30, 2007 and February 28, 2007, the Company has outstanding
      subscription receivables of $5,130,220 and $2,947,470
      respectively.  For the three months ended November 30, 2007, the
      Company collected $499,250 of outstanding subscription
      receivables.  No interest has been charged on these subscription
      agreements.  The Company has collected approximately $45,000 of
      additional outstanding subscription receivables subsequent to November 30,
      2007.





The
      following table summarizes information about the stock subscription
      receivable:








Receivable
                balance at February 28, 2007
            
            $
            2,947,470Cash
                collected from March 1, 2007 to November 30, 2007
            
            
            (1,067,250
            )New
                subscriptions received October 5, 2007
            
            
            3,250,000Receivable
                balance at November 30, 2007
            
            $
            5,130,2202006
                subscriptions
            
            $
            1,880,220October
                5, 2007 subscriptions
            
            
            3,250,000$
            5,130,220



















































































11




ITEM
      2.
 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





The
      following is a discussion of the financial condition and results of operations
      of the Company for the three and nine months ended November 30, 2007, 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.





CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION





This
      Form
      10-Q for the quarter ended November 30, 2007, contains forward-looking
      statements within the meaning of Section 27A of Section 21E of the Securities
      Exchange Act of 1934, as amended (“Exchange Act”).  Forward-looking
      statements may be identified by the use of forward-looking terminology, such
      as
“may,” “shall,” “could,” “expect,” “estimate,” “anticipate,” “predict,”
“probable,” “should,” “continue,” or similar terms, variations of those terms or
      the negative of those terms.  The forward-looking statements specified
      in the following information have been compiled by our management and are
      considered by management to be reasonable.  Our future operating
      results, however, are impossible to predict and no representation, guaranty,
      or
      warranty is to be inferred from those forward-looking statements.





Company
      Overview





The
      Company currently is developing the DigitalTown social-networking portal which
      will connect approximately 27,000 local online spirit sites formed around a
      town
      and its high school.  The Company owns the domains associated with all
      of these communities.  This portal, when complete, will include
      easy-to-use and free features such as email, alumni communication and reunion
      tools, calendar and organizing tools for boosters,  personal profiles,
      photo, video and music sharing and timely community news.  The Company
      currently is developing a service-and-product revenue model associated with
      the
      use of the DigitalTown portal.





The
      Company is working with website development and hosting companies and proven
      application service providers to create beta sites for its DigitalTown portal.
      These viral sites will offer a rich menu of free features, from reunion planning
      and booster organizing tools, notification systems,  and applications
      to create information about school and community activities which will attract
      and connect alumni, boosters, students and administrators and deepen their
      relationships.





The
      Company has applied for membership with the American Stock
      Exchange.





RESULTS
      OF OPERATIONS





THREE
      MONTHS ENDED NOVEMBER 30, 2007 and 2006





Selling,
      general and administrative expenses for the current three months decreased
      by
      $4,750,415 to $598,182 and this was primarily due to a $4,813,170 reduction
      of
      stock option expense.  Excluding stock compensation expense for the
      two comparable quarters, selling, general, and administrative expenses were
      $261,868 for the three months ended November 30, 2007 compared to $199,113
      for
      the three months ended November 30, 2006.  The increase in selling,
      general, and administrative expenses of $62,755 for the two comparable quarters
      was primarily due to increases in investor relations expense and filing fees
      related to the Company’s application for membership with the American Stock
      Exchange.  The Company’s overall net loss for the current three months
      decreased by $4,752,431 to $597,168.











12




NINE
      MONTHS ENDED NOVEMBER 30, 2007 and 2006


Selling,
        general and administrative expenses for the current nine months decreased
        by
        $3,188,252 to $2,375,648 and this was primarily due to a $3,504,444 reduction
        of
        stock option expense.  Excluding stock compensation expense for the
        two comparable periods, selling, general, and administrative  expenses
        were $730,608 for the nine months ended November 30, 2007 compared to $414,416
        for the nine months ended November 30, 2006.  The increase in selling,
        general, and administrative expenses of $316,192 for the two comparable periods
        was primarily due to increases in investor relations expense, filing fees
        related to the Company’s application for membership with the American Stock
        Exchange, payroll expense and professional fees.  The Company’s
        overall net loss for the current nine months decreased by $3,194,727 to
        $2,372,120.







LIQUIDITY
      AND CAPITAL RESOURCES





NINE
      MONTHS ENDED NOVEMBER 30, 2007





The
      Company’s cash position at November 30, 2007 was $153,456, an increase of
      $144,523 from $8,933 at February 28, 2007.  During the nine months
      ended November 30, 2007, net cash used in operating activities was $614,579
      which was primarily due to losses from operations, offset by non cash stock
      payments and stock based compensation expense along with an increase in accounts
      payable.  Net cash used in investing activities for the nine months
      ended November 30, 2007 was $221,794 of which $145,298 was used for the renewal
      of existing and the purchase of additional domain names, $72,540 for website
      development costs and $3,956 was used for fixed asset
      purchases.  Tiger Media, a wholly owned subsidiary of DigitalTown,
      Inc., entered into an installment agreement in May 2007 with an online services
      vendor for the renewal of existing domain names and assistance in purchasing
      additional domain names.  The total amount of the non-interest bearing
      installment agreement was $214,080.  For the nine months ended
      November 30, 2007, DigitalTown, Inc. made cash payments of $142,720 on the
      installment agreement. The remaining balance of $71,360 will be paid in 4
      monthly payments of $17,840 for the period of December 2007 to April 2008 and
      is
      included in accounts payable on the consolidated balance sheet and non-cash
      investing and financing activities on the consolidated statement of cash flows.
      Net cash provided by financing activities for the nine months ended November
      30,
      2007 was $980,896 which consisted of payments received on stockholder
      subscription receivables of $1,067,250 less the payoff of a $70,000 shareholder
      note payable and $16,354 of advances to officer/stockholder.





Our
      current monthly operating expenses
      for the three months ended November 30, 2007, adjusted for non cash stock based
      compensation of $336,314, was approximately $87,000 per month. We believe our current cash
      reservesand amounts we expect to collect on our outstanding stock subscription
      receivables should be sufficient to enable us to operate for the next 12
      months. We anticipate that
      any additional financing would be through the sale of our common stock or other
      equity-based securities.  In the event that we are unable to obtain
      additional capital in the future, we would be forced to reduce operating
      expenses and/or cease operations altogether.





Critical
      Accounting Policies





The
      discussion and analysis of
      DigitalTown, Inc.’s financial condition and results of operations are based on
      our financial statements, which have been prepared in accordance with accounting
      principles generally accepted in the U.S. The preparation of these financial
      statements requires management to make estimates and judgments that affect
      the
      reported amounts of assets, liabilities and expenses and related disclosure
      of
      contingent assets and liabilities. Management reviews its estimates on an
      ongoing basis.





13








Management
      bases its estimates on historical experience and on various other assumptions
      that it believes to be reasonable under the circumstances, the results of which
      form the basis for making judgments about the carrying values of assets and
      liabilities. Actual results may differ from these estimates under different
      assumptions or conditions. While DigitalTown Inc.’s significant accounting
      policies are described in more detail in Note 1 to its financial statements
      and
      year-end 10-K filed for February 28, 2007, management believes the following
      accounting policies to be critical to the judgments and estimates used in the
      preparation of its financial statements:





Intangible
      Assets- Domain Names/Website Development Costs





The
      Company is still in the development stage of its website portal, and
      accordingly, all costs, including license renewals, associated with domain
      names
      expected to be utilized in its website portal and website development costs
      have
      been capitalized.  Since the Company is still in the development stage
      of its website portal and the ownership of these domain names can be renewed
      at
      a nominal fee prior to their expiration date, the useful life of the domain
      names are deemed to be indefinite and no amortization will be
      recorded.  Additionally, since the Company is still in the development
      stage of its website portal, no amortization has been recorded for the website
      development costs.





Impairment
      of Long-Lived Assets





Long-lived
      assets, such as property and equipment and intangible assets – domain
      names/website development costs are reviewed for impairment whenever changes
      in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable.  Recoverability of assets to be held and used is measured
      by comparison of the carrying amount of an asset to estimated undiscounted
      future cash flows expected to be generated by the asset. If the carrying amount
      of an asset exceeds its estimated future cash flows, an impairment charge is
      recognized in the amount by which the carrying amount of the asset exceeds
      the
      fair value of the asset.








Recently
      issued accounting pronouncements:





In
      September 2006, the Financial Accounting Standards Board (FASB) issued Statement
      of Financial Accounting Standards No. 157, Fair Value Measurements ("SFAS No.
      157"). This standard clarifies the principle that fair value should be based
      on
      the assumptions that market participants would use when pricing an asset or
      liability. Additionally, it establishes a fair value hierarchy that prioritizes
      the information used to develop those assumptions. This standard is effective
      for financial statements issued for fiscal years beginning after November 15,
      2007. We are currently evaluating the impact of this statement. We believe
      the
      adoption of SFAS No. 157 will not have a material impact on our consolidated
      financial position or results of operations.








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. DigitalTown, Inc. undertakes
      no
      obligation to update any such statements to reflect actual events.

















14





ITEM
      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK.





We
      are
      exposed to market risk for the effect of interest rate
      changes.  Information relating to quantitative and qualitative
      disclosure about market risk is set forth below and in Management’s Discussion
      and Analysis of Financial Condition and Results of Operations – Liquidity and
      Capital Resources.





As
      of
      November 30, 2007, the Company did not have any off-balance sheet investments
      or
      hedging investments.








ITEM
      4.
      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 (as defined in Rule 13a-15(e) under the Securities Exchange
      Act
      of 1934 (“the Exchange Act”))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 and in taking into account the
      limited number of employees noted in the following paragraph, 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.





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.

























15




PART
      II





ITEM
                1.
            LEGAL
                PROCEEDINGS





DigitalTown,
      Inc. is, from time to time, a party to litigation arising in the normal course
      of its business.  The Company believes that none of these actions will
      have a material adverse effect on its financial condition or results of
      operations.





ITEM
      1A.        RISK FACTORS




We
      are
      subject to various risks that may materially harm our business, financial
      condition and results of operations.  You should carefully consider
      the risks and uncertainties described below and the other information in this
      filing before deciding to purchase our common stock.  If any of these
      risks or uncertainties actually occurs, our business, financial condition or
      operating results could be materially harmed.  In that case, the
      trading price of our common stock could decline and you could lose all or part
      of your investment.





ITEM
                2.
            UNREGISTERED
                SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





On
      October 5, 2007, the Company issued 13,250 restricted common shares at a price
      of $2.50 per share, valued at $33,125, to a director of the Company, for payment
      of outstanding rent charges for the period of December 16, 2006 through December
      31, 2007.





On
      October 5, 2007, the Company issued 1,300,000 restricted common shares at a
      price of $2.50 per share, valued at $3,250,000 in exchange for stock
      subscription agreements.





ITEM
                3.
            DEFAULTS
                UPON SENIOR SECURITIES





None.




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





None.





ITEM
                5.
            OTHER
                INFORMATION





(a)
            All
                information required to be disclosed on a report on Form 8-K during
                the
                period ended November 30, 2007 has previously been reported.


(b)
            There
                have been no material changes to the procedures by which security
                holders
                may recommend nominees to the registrant’s board of directors.


























16








ITEM
                6.
            EXHIBITS
                AND REPORTS ON FORM 8-K




3.1
            
            Articles
                of Incorporation, as amended (1)
            Previously
                Filed3.2
            
            Bylaws
                (1)
            Previously
                Filed31.1
            
            Certification
                of Chief Executive Officer under Rule 13a-14(a)/15d-14(a)
            Included31.2
            
            Certification
                of Chief Financial Officer under Rule 13a-14(a)/15d-14(a)
            Included32.1
            
            Certification
                of Chief Executive Officer under Section 1350
            Included32.2
            
            Certification
                of Chief Financial Officer under Section 1350
            Included





(1)
      Incorporated by reference to exhibit filed as a part of Registration Statement
      on Form 10-SB (Commission File No. 000-27225).





































17




SIGNATURES





In
      accordance with the requirements of the Exchange Act, the registrant caused
      this
      report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





DigitalTown,
                INC.(formerly
                BDC Capitl,
                Inc.)Dated:
                January 14, 2008/s/  Richard
                A. PomijeRichard
                A. Pomije, CEO/s/  Paul
                R.
                GramstadPaul
                R. Gramstad, CFO











































18