U.S.
      SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549





AMENDMENT
      NO.1


FORM
      10-Q/A





(Mark
      One)





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





For
      the
      quarterly period ended: May 31, 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 25,723,750 shares of the registrant’s common stock outstanding as of July
      12, 2007.














PURPOSE
      OF AMENDMENT NO. 1








This
      Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q for the quarter
      ended May 31, 2007, which amends the Company’s Form 10-Q originally filed on
      July 13, 2007, is being filed to record stock options originally granted on
      May
      31, 2007 that were not previously recorded.  The stock options granted
      were for 150,000 shares of common stock with an exercise price of $2.25 per
      share and a total fair value of $307,658.  The financial statements
      and MD & A have been adjusted to reflect this amendment.













































ii








TABLE
      OF
      CONTENTS





PART
                IItem
                1.
            Financial
                Statements
            1-12Item
                2.
            Management’s
                Discussion and Analysis and Plan of Operation
            13-16Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            17Item4.
            Controls
                and Procedures
            17PART
                IIItem
                1.
            Legal
                Proceedings
            17Item
                1A
            Risk
                Factors
            17Item
                2.
            Unregistered
                sales of Equity Securities and Use of Proceeds
            18Item
                3.
            Defaults
                Upon Senior Securities
            18Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            18Item
                5.
            Other
                Information
            18Item
                6.
            Exhibits
            18
















iii





PART
      I





ITEM
      1.  FINANCIAL STATEMENTS





PageFinancial
                Statements:Balance
                Sheets
            1Statements
                of Operations
            2Statements
                of Cash Flows
            3Notes
                to Financial Statements
            4-12




















































DigitalTown,
      Inc.


(formerly
      BDC Capital, Inc.)


CONSOLIDATED
      BALANCE SHEETS




ASSETSMay
                31,
              2007
            
            
            February
                28,
              2007(unaudited)
            
            
            (audited)Current
                assets:Cash
            
            $
            15,390
            
            
            $
            8,933Other
                receivable
            
            
            28
            
            
            
            999Total
                current assets
            
            
            15,418
            
            
            
            9,932Property
                and equipment, net
            
            
            5,154
            
            
            
            1,579Intangible
                assets – domain names
            
            
            656,727
            
            
            
            441,558Total
                assets
            
            $
            677,299
            
            
            $
            453,069LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            392,406
            
            
            $
            137,144Advances
                from stockholders
            
            
            5,704
            
            
            
            16,354Accrued
                expenses:Accrued
                payroll
            
            
            20,152
            
            
            
            32,169Accrued
                interest
            
            
            10,876
            
            
            
            9,476Deferred
                officer compensation
            
            
            30,807
            
            
            
            18,865Notes
                payable - stockholder
            
            
            70,000
            
            
            
            70,000Total
                current liabilities
            
            
            529,945
            
            
            
            284,008Commitments
                and contingenciesStockholders’
                equity:Common
                stock, $.01 par value, 2,000,000,000 shares authorized, 25,723,750
                and
                25,701,500 shares issued and outstanding at May 31, 2007
                and  February 28, 2007, respectively
            
            
            257,233
            
            
            
            257,010Additional
                paid-in-capital
            
            
            14,887,133
            
            
            
            14,521,673Subscription
                receivable
            
            
            (2,795,501
            )
            
            
            (2,947,470
            )Accumulated
                deficit
            
            
            (12,201,511
            )
            
            
            (11,662,152
            )Total
                stockholders’ equity
            
            
            147,354
            
            
            
            169,061Total
                liabilities and stockholders’ equity
            
            $
            677,299
            
            
            $
            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





Three
                Months
              Ended
              May
                31, 2007(unaudited)Operating
                expenses:Selling,
                general and administrative expenses
            
            $
            540,933Loss
                from operations
            
            
            (540,933
            )Other
                income (expense)Interest
                expense
            
            
            (1,400
            )Other
                income
            
            
            2,974Total
                other income (expense)
            
            
            1,574Net
                loss
            
            $
            (539,359
            )Loss
                per common share – basic and diluted
            
            $
            (0.02
            )Weighted
                average common shares outstanding – basic and diluted
            
            
            25,711,658







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





2





DigitalTown,
        Inc.
 (formerly
        BDC Capital, Inc.)
 
 CONSOLIDATED
        STATEMENT OF CASH FLOWS
 
 Three
                  months
                ended
                May
                  31, 2007(unaudited)CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (539,359
              )Adjustments
                  to reconcile net loss to net cash flows used in operating
                  activities:Depreciation
              
              
              381Stock
                  based compensation expense
              
              
              315,620Non
                  cash stock payment
              
              
              50,063Changes
                  in operating assets and liabilities:Other
                  receivables
              
              
              971Prepaid
                  expenses
              
              
              -Accounts
                  payable
              
              
              59,022Accrued
                  expenses:Accrued payroll
              
              
              (12,017
              )Accrued interest
              
              
              1,400Deferred
                  officer compensation
              
              
              11,942Net cash used in operating activities
              
              
              (111,977
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchases
                  of fixed assets
              
              
              (3,956
              )Purchases
                  and  renewal of  intangible assets – domain
                  names
              
              
              (18,929
              )Net cash used in investing activities
              
              
              (22,885
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Advances
                  to officer/stockholder
              
              
              (10,650
              )Payments
                  received on stockholder subscription receivables net of $20,000
                  in
                  transaction costs for the subscription offering initiated in fiscal
                  2006
              
              
              151,969Net cash provided by financing activities
              
              
              141,319Net
                  change in cash and cash equivalents
              
              
              6,457Cash
                  and cash equivalents, beginning of period
              
              
              8,933Cash
                  and cash equivalents, end of period
              
              $
              15,390SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION:Cash
                  payments for interest
              
              $
              -Non-cash
                  investing and financing activities:Intangible
                  assets-domain name renewals incurred with accounts payable
              
              $
              196,240







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





DigitalTown,
      Inc. (formerly known as 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 changed its name to
      CyberStar Computer Corporation. In 2000, the Company changed its name to eNetpc,
      Inc. In November 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’s Board of Directors 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 planned to focus on current
      opportunities available to this attractive business model in the somewhat
      uncertain economic times.





On
      August
      31, 2006, the Company filed with the SEC to withdraw their “business development
      company” status. The Company has changed its business plan to become a
      multiple-site online social-networking community portal through the
      internet.  As part of that plan, the Company changed its name to
      DigitalTown, Inc. effective March 1, 2007.  The Company is currently
      developing the DigitalTown portal.  This portal, when complete, will
      include features such as email, alumni communication and reunion tools, chat,
      a
      wide range of high school activities such as music, drama and athletics,
      personal profiles, photo, video and music sharing and timely community
      news.  The Company is currently developing a revenue model associated
      with the use of the DigitalTown portal.





The
      company has sustained losses and negative cash flows from operations and expects
      these conditions to continue into the foreseeable future.  At May 31,
      2007, the company had an accumulated deficit of
      $12,201,511.  Subsequent to May 31, 2007, the company has received
      cash proceeds totaling approximately $255,000 from its stock subscription
      receivable.  The company anticipates existing cash, proceeds received
      to-date as well as expected future proceeds from its stock subscription
      receivable 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 May 31,
      2008.





Principles
      of
      Consolidation





As
      a
      result of the Company’s Business Development Company withdrawal, the Company now
      files consolidated financial statements that include its controlled
      Subsidiaries. All material intercompany accounts and transactions have been
      eliminated in consolidation.








4





The
      election to withdraw the Company’s election as a Business Development Company
      under the 1940 Act has resulted in a significant change in the Company's
      required method of accounting.  Business Development Company financial
      statement presentation and accounting utilizes the fair value method of
      accounting used by investment companies, which allows Business Development
      Company’s to recognize income and value their investments at market value as
      opposed to historical cost.





In
      addition, majority-owned subsidiaries are not consolidated and instead,
      investments in those subsidiaries are reflected on the balance sheet as an
      investment in and advances to affiliates, at fair value.  As an
      operating company, the required financial statement presentation and accounting
      for securities held by the Company utilize either fair value or historical
      cost
      methods of accounting, depending on the classification of the investment and
      the
      Company's intent with respect to the period of time it intends to hold the
      investment, and the Company and its subsidiaries are reflected for financial
      accounting purposes as a consolidated entity.  The change in
      accounting due to the conversion to an operating company from a Business
      Development Company is considered a change in accounting principle.





Management
      has retroactively applied this change in accounting principle in accordance
      with
      Statement of Financial Accounting Standards No. 154, “Accounting for Changes and
      Error Corrections” for the Company’s balance sheet as of February 28,
      2006.  As a business development company, the Company’s investment in
      BDC Partners, Inc. was not previously audited prior to February 28,
      2006.  Management has determined that it is impractible and not cost
      effective to retroactively apply this change in accounting to the previously
      reported  interim financial statements of BDC Capital, Inc. for the
      three months ended May 31, 2006, per SFAS 154 par. 11.  Therefore, the
      statements of operations and cash flows for the three months ended May 31,
      2006
      will not be comparative.  However, these prior period financial
      statements are included in Note 9 as originally filed for informational
      purposes.





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.





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.











5





Intangible
      Assets – Domain
      Names





The
      Company is still in the development stage of its web site portal and
      accordingly, all costs, including license renewals, associated with domain
      names
      expected to be utilized in its website portal have been
      capitalized.  Since the Company is still in the development stage of
      its web site 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.




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 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.




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.











6





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 months ended
      May
      31, 2007, 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, convertible debt and convertible preferred
      stock.  Incremental shares attributable to the assumed exercise of
      stock options and conversion of debt and preferred stock for the three months
      ended May 31, 2007 and May 31, 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.





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 $0 at May 31, 2007 and February 28,
      2007.  The Company has not experienced any losses in such
      accounts.








Note
      2. Property and Equipment





Property
      and equipment are as follows:





May
                31,
              2007
            
            
            February
                28,
              2007Office
                equipment and furniture
            
            $
            477,176
            
            
            $
            473,220Less
                accumulated depreciation
            
            
            (457,384
            )
            
            
            (457,003
            )Less
                impairment of equipment
            
            
            (14,638
            )
            
            
            (14,638
            )$
            5,154
            
            
            $
            1,579





Depreciation
      expense for the three months ended May 31, 2007 was $ 381.











7





Note
      3. Notes Payable – Stockholder





As
      of May
      31, 2007, the Company had interest bearing advances from a stockholder in the
      amount of $70,000.  The unsecured notes are due at various dates from
      June 21, 2007 to August 1, 2007 with an interest rate of 8%.  Accrued
      interest at May 31, 2007 and February 28, 2007 totaled $10,876 and $9,476,
      respectively.





Note
      4. Stockholders Equity





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.





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.





Note
      5. Stock Options





The
      Company has one stock option plan called The 2006 Employee Stock and Option
      Plan. As of May 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 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 pricing model, which assumes
      no expected dividends and estimates the option expected life, volatility and
      risk-free interest rate at the time of grant.





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). 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 months ended May
      31,
      2007, reflect the impact of SFAS 123(R). The Company granted 150,000 and no
      options, respectively for the three month periods ended May 31, 2007 and
      2006.  For the three months ended May 31, 2007, the Company recorded
      related compensation expense of $315,620. 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 May 31, 2007
      basic loss per common share by $0.01. There remains $208,990 of total
      unrecognized compensation expense, which is expected to be recognized over
      future periods.








8





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 over
      the
      requisite service periods in the Company’s consolidated statements of
      operations. The Company uses the Black-Sholes-Merton (“Black Sholes”)
      option-pricing model as a method for determining the estimated fair market
      value
      for employee stock awards. Compensation expense for employee stock awards is
      recognized on a straight-line basis over the vesting period of the award. 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
      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
            
            
            
            4.50
            
            
            
            -Granted
            
            
            150,000
            
            
            $
            2.250
            
            
            
            2.00
            
            
            
            -Canceled
                or expired
            
            
            (270,000
            )
            
            
            (1.725
            )
            
            
            -
            
            
            
            -Exercised
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -Options
                outstanding - May 31,
                2007
            
            
            3,005,000
            
            
            $
            1.751
            
            
            
            4.14
            
            
            $
            1,048,745Exercisable
                at May 31,
                2007
            
            
            2,880,000
            
            
            $
            1.751
            
            
            
            4.14
            
            
            $
            1,005,120





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





Note
      6. Related Party Transactions





The
      Company entered into a 5 year lease with a director of the Company for
      approximately 1,000 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 $2,650. The Company previously
      sub-leased from a director of the Company the same space at a monthly rent
      of
      $750 renewable monthly.  The Company incurred rent expense to the
      director for the three months ended May 31, 2007 totaling $7,950.  The
      Company currently owes $14,575 to the director for rent payments due through
      May
      31, 2007.  This amount is included in accounts payable.





Future
      payments for fiscal years ending:




2008
            
            $
            31,8002009
            
            
            31,8002010
            
            
            31,8002011
            
            
            31,8002012
            
            
            25,175$
            152,375











9





Note
      7. 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
      8. 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.





As
      of May
      31, 2007 and February 28, 2007, the company has outstanding subscription
      receivables of $2,795,501 and $2,947,470 respectively.  For the three
      months ended May 31, 2007, the company collected $151,969 of outstanding
      subscription receivables.  No interest has been charged on these
      subscription agreements.  The Company has collected approximately
      $255,000 of additional outstanding subscription receivables subsequent to May
      31, 2007.





Note
      9.  Prior Period Financial Statement Presentation





For
      informational purposes, the following financial statements prepared using the
      accounting principles for a “business development company”, have been
      provided:





·
            Statement
                of Operations for the three months ended May 31, 2006


·
            Statement
                of Cash Flows for the three months ended May 31, 2006





















































10





DigitalTown,
      Inc.


(formerly
      BDC Capital, Inc.)


STATEMENT
      OF OPERATIONS


(unaudited)





As
                a Business Development
              CompanyThree
                months
              ended
              May
                31,2006Investment
                income
            
            $
            2Operating
                Expenses:Professional
                fees
            
            
            26,775Administrative
                expenses
            
            
            47,019Rent
            
            
            1,125Other
            
            
            2,333Interest
                expense
            
            
            1,400Total
                Operating expenses
            
            
            78,652Net
                investment loss
            
            
            (78,650
            )Net
                change in unrealized appreciation on investment
            
            
            -Net
                decrease in net assets resulting from operation
            
            $
            (78,650
            )Loss
                per common share – basic and diluted
            
            $
            (0.01
            )Weighted
                average shares outstanding – basic and diluted as restated for the 1 for
                75 reverse stock split on October 4, 2006
            
            
            5,700,962















11




DigitalTown,
      Inc.


(formerly
        BDC Capital, Inc.)
 
 STATEMENT
        OF CASH FLOWS
 (Unaudited)
 
 As
                  a Business
                Development
                CompanyThree
                  months
                ended
                May
                  31,2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  decrease in net assets resulting from operations as aBusiness
                  development company
              
              $
              (78,650
              )Adjustments
                  to reconcile net assets resulting from operations and net loss
                  to net cash
                  used by operating activities:Prepaid
                  expenses
              
              
              759Accounts
                  payable
              
              
              12,448Accrued
                  liabilities
              
              
              1,400Investment
                  in BDC Partners, Inc.
              
              
              (217,000
              )Net
                  cash used in operating and investing activities
              
              
              (281,043
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Net
                  advance from stockholder
              
              
              5,202Payments
                  received on stockholder subscription receivable net
                  of
                  $20,000 in transaction costs
              
              
              381,063Net
                  cash provided by financing activities
              
              
              386,265Net
                  change in cash and cash equivalents for the period
              
              
              105,222Cash
                  and cash equivalents at beginning of period
              
              
              15,346Cash
                  and cash equivalents at end of period
              
              $
              120,568








12





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 months ended May 31, 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 May 31, 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.





Withdrawal
      as a Business Development Company





The
      reader of this management discussion, the related financial statements and
      notes
      thereto, and other recent Company filings should understand that the portfolio
      company (BDC Partners), a company in which the Company invests, and the
      Company’s method of accounting upon its withdrawal of its election to be treated
      as a business development company (“BDC”) under the investment Company Act of
      1940 (“1940 Act”), have materially changed the Company’s financial
      reporting.





REASONS
      FOR CEASING TO BE A BUSINESS DEVELOPMENT COMPANY




We
      determined that many of the regulatory, financial reporting and other
      requirements imposed by the 1940 Act were too restrictive and prevented the
      Company from operating in the manner in which it desired. Among these
      restrictions are the following:





·
            BDCs
                are subject to restrictions in the 1940 Act on the type and amount
                of
                securities, other than common stock, that they can issue. We believe
                that
                the Company would be better served by greater flexibility in our
                capital
                structure.




·
            The
                closely regulated nature of BDCs causes them to be subject to greater
                legal and accounting expenses.





The
      Company’s Board of Directors agreed with our assessment and determined that it
      was no longer feasible for the Company to operate as a BDC. The appropriate
      course of action was to withdraw the Company’s election to be regulated as a BDC
      by filing a Form N-54C with the SEC. Following the withdrawal of the election,
      the Company continues to be a reporting company under the Exchange Act, but
      is
      managed so that it will not be subject to the provisions of the 1940
      Act.




EFFECT
      ON
      FINANCIAL STATEMENTS AND TAX STATUS





The
      election to withdraw the Company’s election as a Business Development Company
      under the 1940 Act has resulted in a significant change in the Company's
      required method of accounting.  Business Development Company financial
      statement presentation and accounting utilizes the fair value method of
      accounting used by investment companies, which allows Business Development
      Company’s to recognize income and value their investments at market value as
      opposed to historical cost.








13





In
      addition, majority-owned subsidiaries are not consolidated and instead,
      investments in those subsidiaries are reflected on the balance sheet as an
      investment in and advances to affiliates, at fair value.  As an
      operating company, the required financial statement presentation and accounting
      for securities held by the Company utilize either fair value or historical
      cost
      methods of accounting, depending on the classification of the investment and
      the
      Company's intent with respect to the period of time it intends to hold the
      investment, and the Company and its subsidiaries are reflected for financial
      accounting purposes as a consolidated entity.  The change in
      accounting due to the conversion to an operating company from a Business
      Development Company is considered a change in accounting principle.




We
      do not
      believe that the withdrawal of the Company’s election to be treated as a BDC
      will have any impact on its federal income tax status, since we never elected
      to
      be treated as a regulated investment company under Subchapter M of the Internal
      Revenue Code. (Electing treatment as a regulated investment company under
      Subchapter M generally allows a qualified investment company to avoid paying
      corporate level federal income tax on income it distributes to its
      shareholders.) Instead, we have always been subject to corporate level federal
      income tax on our income (without regard to any distributions we make to our
      shareholders) as a “regular” corporation under Subchapter C of the
      Code.




CHANGE
      IN
      ACCOUNTING PRINCIPLE




Management
      has retroactively applied this change in accounting principle in accordance
      with
      Statement of Financial Accounting Standards No. 154, “Accounting for Changes and
      Error Corrections” for the Company’s balance sheet as of February 28,
      2006.  The net effect, as of February 28, 2006, of the Company’s
      election to withdrawl its business development company status pursuant to the
      Investment Company Act of 1940 was ($797,056) net loss.  As a business
      development company, the Company’s investment in BDC Partners was not previously
      audited prior to February 28, 2006.  Management has determined that it
      is impractical and not cost effective to retroactively apply this change in
      accounting to the financial statements of BDC Partners prior to February 28,
      2006, or to the three interim quarterly financial statements ended May 31,
      2006,
      August 31, 2006 and November 30, 2006, respectively, as allowed per FAS 154
      par.
      11.  Therefore, the statements of operations and cash flows for the
      three months ended May 31, 2006 will not be comparative.  However,
      these prior period financial statements are included in Note 9 to the Company’s
      financial statements, as originally filed for informational
      purposes.





Company
      Overview





The
      Company legally dissolved BDC Partners, Inc., a wholly owned subsidiary of
      DigitalTown, Inc.  and all remaining assets were transferred to and
      liabilities assumed by DigitalTown, Inc.  Additionally, the Company
      formed Tiger Media, a new wholly owned subsidiary of DigitalTown, Inc. for
      the
      sole purpose of registering all future renewals and purchases of domain
      names.  For the three months ended May 31, 2007, there was limited
      activity in this subsidiary.





























14





RESULTS
      OF OPERATIONS





THREE
      MONTHS ENDED MAY 31, 2007





For
      the three months ended May 31,
      2007, the Company incurred a net operating loss of $540,933.  The
      Company incurred $33,500 of administrative fees for the management of the
      Company and total salary and payroll expense of $59,729 of which $11,942 was
      deferred salary expense and stock option expense of $315,620.  The
      Company also incurred $41,507 of professional fees which included $20,000 paid
      for April and May retainer fees as part of an agreement signed with Stifel
      Nicolaus to act as the Company’s financial advisor and exclusive financing
      agent.  The Company also made a non-cash stock payment of
      $50,063.  The company’s overall net loss for the three months ended
      May 31, 2007 was $539,359.











LIQUIDITY
      AND CAPITAL RESOURCES





The
      Company’s cash position at May 31, 2007 was $15,390, an increase of $6,457 from
      $8,933 at February 28, 2007.  During the three months ended May 31,
      2007, net cash used in operating activities was $111,977 which was primarily
      due
      to losses from operations, offset by increases in accounts payable, a non cash
      stock payment and deferred officer compensation.  Net cash used in
      investing activities was $22,885 of which $18,929 was used for the renewal
      of
      existing and the purchase of additional domain names and $3,956 was used for
      fixed asset purchases.  The Company entered into an installment
      agreement 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 three months ended May 31, 2007, the Company made
      cash payments of $17,840 on the installment agreement. The balance of $196,240
      will be paid in 11 monthly payments of $17,840 for the period of June 2007
      to
      March 2008 and is included in accounts payable on the balance sheet. Net cash
      provided by financing activities was $141,319 which consisted primarily of
      payments received on stockholder subscription receivables of $151,969 less
      $10,650 of advances paid to officer/stockholder.





Our
      current monthly operating expenses
      are approximately $60,000 per month. We believe our current cash
      reservesand amounts we expect to collect on our outstanding stock subscription
      receivable should be sufficient to enable us to operate for the next 12
      months.  The
      Company signed an agreement with Stifel Nicolaus on April 1, 2007 to act as
      the
      Company’s financial advisor and exclusive financing agent for a 12 month
      period.  The payment terms of the agreement include a monthly fee of
      $10,000 per month (the “Monthly Fee”),  a contingent placement fee
      (the “Placement Fee”) equal to 7.0% (700 basis points) of the amount of the
      equity committed as part of the proposed Financing, plus 5.5% (550 basis points)
      of the subordinated debt committed as part of the proposed Financing, plus
      2.0%
      (200 basis points) of the senior debt committed as part of the proposed
      Financing, provided that the Placement Fee will not be less than
      $700,000.  In addition, warrants to purchase a number of shares of the
      same security of the Company as is issued in the Financing (or a security with
      substantially identical terms) such that the aggregate fair market value, as
      determined in the Financing, of the securities purchasable under the warrants
      equals 50% of the Placement Fee (the “Warrants”).  The Warrants shall
      be earned as of, and shall be issued to Stifel Nicolaus or its designated
      affiliates on, the date of the first closing of the Financing and shall be
      exercisable at a price of 100% of the price per share as established in the
      Financing.  We anticipate that any additional financing would be
      through the sale of our common stock or other equity-based
      securities.














15





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. 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, 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





The
      Company is still in the development stage of its web site portal and
      accordingly, all costs, including license renewals, associated with domain
      names
      expected to be utilized in its web site portal have been
      capitalized.  Since the Company is still in the development stage of
      its web site 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.





Impairment
      of Long-Lived Assets





Long-lived
      assets, such as property and equipment, and intangibles are reviewed for
      impairment whenever events or 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 a 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 by 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. BDC Capital, Inc. undertakes
      no
      obligation to update any such statements to reflect actual events.








16





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 May
      31, 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 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.





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.





17





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





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





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 May 31, 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.





ITEM
      6.
 EXHIBITS AND REPORTS ON FORM 8-K


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





18




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.)/s/  Richard
                A.
                PomijeRichard
                A. Pomije, CEO and
                CFO













































19