U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: February 28, ~~2018~~2019

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

Commission file number: 000-27225

DigitalTown, Inc.

(Exact name of registrant as specified in its charter)

Minnesota		41-1427445
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2155 112th Avenue NE, Bellevue, Washington		98004
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number: (425) ~~295~~577-~~4564~~7766

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

Title of Each Class

Common Stock

Par Value $0.01 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ¨ Yes x No

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. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and disclosure will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K

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

Large Accelerated Filer	¨	Accelerated Filer	¨
Non-Accelerated Filer	¨	Smaller reporting company	x

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

The aggregate value of the Company’s common stock held by non-affiliates of the Company as of August 31, ~~2017~~2018 was $137,~~306~~941,~~880~~239, based on the closing sale price for the Company’s common stock on that date of $0.2312.

There were ~~125~~905,~~749~~305,~~320~~765 shares of the registrant’s common stock outstanding as of ~~May~~June 3110, ~~2018~~2019.

DOCUMENTS INCORPORATED BY REFERENCE

There are incorporated by reference in this report on Form 10-K certain previously filed exhibits identified in Part III, Item 13 hereof.

TABLE OF CONTENTS

PART I 3 ITEM 1. BUSINESS 3 ITEM 1A. RISK FACTORS 5 ITEM 2. PROPERTIES 7 ITEM 3. LEGAL PROCEEDINGS 7 ITEM 4. MINE SAFETY DISCLOSURES 7 PART II 8 ITEM 5. MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 8 ITEM 6. SELECTED FINANCIAL DATA 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 11 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA 12 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 13 ITEM 9A. CONTROLS AND PROCEDURES 13 ITEM 9B. OTHER INFORMATION 14 PART III 15 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 15 ITEM 11. EXECUTIVE COMPENSATION 17 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 18 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 19 ITEM 14. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES 21 PART IV 23 ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES 23 SIGNATURES 24

PART I		3
ITEM 1.	BUSINESS	3
ITEM 1A.	RISK FACTORS	4
ITEM 2.	PROPERTIES	7
ITEM 3.	LEGAL PROCEEDINGS	7
ITEM 4.	MINE SAFETY DISCLOSURES	7

PART II		8
ITEM 5.	MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	8
ITEM 6.	SELECTED FINANCIAL DATA	9
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	11
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA	12
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	13
ITEM 9A.	CONTROLS AND PROCEDURES	13
ITEM 9B.	OTHER INFORMATION	14

PART III		15
ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	15
ITEM 11.	EXECUTIVE COMPENSATION	16
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	17
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	18
ITEM 14.	INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES	21

PART IV		22
ITEM 15.	EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES	22
	SIGNATURES	23

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PART I

ITEM 1. BUSINESS

GENERAL

DigitalTown, Inc. (“The Company”, “We”, “Us”, “Our” and “DigitalTown”) provides turn-key hosted solutions to power a comprehensive platform for government entities, citizens and merchants. Our solutions improve the quality of life for residents and visitors through integrated technology for economic development, civic engagement, digital inclusion and smart tourism for cities around the world. The easy to use platform helps city officials and local merchants manage a feature-rich Smart City for web and mobile devices, and provides residents and visitors with access to Content, Community and Commerce.

The Company’s fiscal year end is the last day in February. Our current fiscal year ended on February 28, ~~2018~~2019, and we refer to as “fiscal ~~2018~~2019”. Last year, our fiscal year ended on February 28, ~~2017~~2018 and we refer this year as “fiscal ~~2017~~2018”.

Market Opportunity

We provide an integrated search, community, and commerce platform for both web and mobile devices. DigitalTown powers connected online communities that enable members of a community to find information and acquire the goods and services they need locally when possible. The DigitalTown platform is intended to improve how the local economy consumes and transacts. It does this by helping local community citizens interact with city government, as well as local merchants. Residents and visitors are able to use the DigitalTown powered search engine to access content, community and commerce from an easy search tool. If there are local vendors that can fulfill a product or service that relates to a search term, then those options are presented to the user. Local vendors can also become direct merchants on the platform, effectively allowing the local town to be its own hub for mass commerce.

The Strategic Importance of Local Online Economic Development

The DigitalTown platform elevates local communities to an advanced state of technical capability. To date, most cities have historically taken a hands-off approach towards the Internet. However, we believe city management will further consider the Internet as an integral part of their strategic plan for economic growth.

The continued expansion of big box retailers and steep growth of national eCommerce has created an increased number of challenges for locally owned small businesses. This requires a new approach to online economic development – one that equips local merchants with the means to compete locally and sell nationally. DigitalTown provides a cost-effective solution to help local businesses compete against entities with greater reach, scale and resources.

Why the DigitalTown solution makes sense now

The DigitalTown platform is a cost-effective solution for enabling a community to become a smart community, which we define as connected to shared content and local commerce. A key enabler for this capability is the continued growth of smartphones that are powered by common frameworks, such as Apple iOS and Android. The use of smartphones has enabled individuals to communicate and transact in real-time anywhere they choose using their smartphone, which serves as a proxy for identity, reputation, preferences and method of payment. In effect, the smartphone has become the Digital Wallet. We believe this opportunity is global and our approach, which emphasizes public-private partnerships, will enable accelerated adoption particularly in rural communities where trust of technology is lower, the need is potentially the greatest, and economic models are at the greatest risk.

How the DigitalTown SmartCity Platform is part of the new SmartWeb

A core component of the DigitalTown approach is to build branded web destinations that are intuitive to discover. Part of what makes this possible is the emergence of new domain extensions that are descriptive. For example, .CITY routes a visitor to a website about a city and .MENU routes a user to a website about restaurants in that city. Due to management’s long-standing relation with domain registry operators, the Company will seek to bring structure to the emerging landscape of domain extensions, while at the same time emphasizing distribution of a unified mobile application to work as a digital companion alongside the growing network of direct navigation brands.

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The DigitalTown Platform

The DigitalTown platform supports powerful online and mobile communities. We tap into locally relevant news and content in order to keep community members informed. We provide community tools to keep community members connected. We enable commerce and fulfillment in local communities thereby helping residents to buy locally while equipping merchants to sell locally, nationally and even globally.

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Content Search

The DigitalTown search engine serves as the core of the local experience. Whereas most residents may go once or twice per year to the official city site, the DigitalTown-powered search engine is designed for daily use as a preferred homepage for local residents and businesses. This will be accomplished through a combination of marketing and education to residents. In addition, we believe adoption can happen through building a strong level of trust with the residents, since our platform will be endorsed or supported by the local government whom the residents know. This compares to large national companies with limited to no connection to the local residents.

Community

Consumers are already familiar with social networking through applications like Facebook and Twitter. The integrated DigitalTown web service and mobile app make it easy to stay informed, as well as to connect and communicate with other members of a given community. Community members can message, join groups, shop online, and make payments.

Commerce

The DigitalTown platform provides merchants with a turn-key solution for online commerce. Once the approved merchant loads SKU’s and inventory available for sale, the merchants can begin selling without any setup fees or capital investment costs. Transaction processing services are provided by DigitalTown, thereby eliminating the need for each retailer to secure a merchant processing account. The community may also enable a private currency for use within the community.

Courier and Delivery Management

In a growing number of participating cities, an integrated courier and delivery application is included, enabling approved delivery service providers to be notified about items from merchants to be picked up and delivered to the customer, thereby enabling any approved merchant to also offer delivery services to the end-customer. Delivery time is chosen by the customer and can be hours to days.

Administration

The DigitalTown platform provides integrated administrative tools for managing Content, Community and Commerce, making it easy to administer. The administrative tools are designed to be the back end of the smart community. For example, administrators can create Frequently Asked Questions (FAQ) that are then presented through the site search. This FAQ article is then systematically provided as information when a user makes an inquiry that matches the keywords into the search box on the site.

Intellectual Property

Domain Name Portfolio. The Company is developing a proprietary platform for Smart City Management. As part of this platform rollout, the Company has secured approximately 13,000 of the .CITY domains that map to significant population centers. DigitalTown has methodically secured the .CITY domains through both acquisition from existing registrants, or via direct purchase from the operator of the .CITY registrar.

Software: The Company has developed a proprietary platform for enabling any city to become a Smart City, incorporating advanced features for economic development, community engagement and digital inclusion. In addition, the Company has completed acquisitions of 67 software companies: Cloud.Market, Software Masters, Inc, Rezserve Technologies Ltd, Appointment.com, Comencia Inc, ~~and~~ Congo Ltd. and CityInformation BV, each of which brought significant intellectual property and is in process of being fully integrated into the DigitalTown platform. The Company continues to invest in software with an emphasis on capital efficiency and return on investment.

~~EMPLOYEES~~Dispositions

AsIn oflate ~~February~~fiscal 282019, ~~2018,~~the ~~DigitalTown,~~Company ~~Inc.~~sold ~~has~~the 16balance ~~employees.~~of Inits ~~addition~~useful assets, ~~from~~including ~~time~~4 toof ~~time~~the weabove-mentioned ~~use~~previously ~~independent~~acquired ~~contractors,~~software ~~consultants~~companies ~~and~~that ~~advisors~~had tonot ~~execute~~been ~~our~~integrated ~~business~~into ~~plan~~the DigitalTown platform. The Company’s ~~employees~~is ~~are~~also ~~not~~no ~~represented~~longer byacquiring aor ~~union~~renewing its domain name portfolio.

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ITEM 1A. RISK FACTORS

We are subject to various risks that may materially affect 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 impacted. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.

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RISK FACTORS RELATED TO OUR BUSINESS

We have a history of operating losses and the report of our independent accountants issued in connection with the audit of our financial statements contained a qualification raising substantial doubt about our ability to continue as a going concern.

We incurred operating losses of $85,~~147~~788,~~305~~778 and $58,~~475~~057,~~577~~482 for in fiscal years ~~2018~~2019 and ~~2017~~2018 respectively, and had an accumulated deficit of $4856,~~885~~289,~~896~~322 at February 28, ~~2018~~2019. In addition, we have incurred net losses of $107,~~243~~403,~~396~~426 and $710,~~219~~243,~~626~~396 for the fiscal years ~~2018~~2019 and ~~2017~~2018, respectively. As a result of these conditions, the report of our independent accountants issued in connection with the audit of our financial statements as of and for the fiscal years ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018 contained a qualification raising substantial doubt about our ability to continue as a going concern. We can provide no assurance regarding when, if ever, we will become profitable. As a result, we may continue to generate losses for the foreseeable future and in the extreme case, discontinue operations.

We may not be able to collect on our stock subscriptions receivable or raise capital through the sale of our common stock as needed to fund our operations.

For fiscal years ~~2018~~2019 and ~~2017~~2018, the Company sold shares of its common stock which generated cash of $1,~~662~~070,~~732~~545 and $21,~~377~~662,~~950~~732, respectively.

We believe our current cash reserves, the amounts we expect to collect on our booked software licensing revenue, and proceeds from the sale of our common stock should be sufficient to enable us to operate for the next 12 months. In the event that we are unable to collect amounts due to us or raise capital through the sale of our common stock as needed, we would be forced to reduce operating expenses or cease operations altogether.

No assurances can be given that we will be successful in reaching or maintaining profitable operations. Our current monthly cash operating expenses going forward are approximately $~~325~~30,000 per month.

We may need to raise additional capital to finance operations.

Funding of our operations over the past 2 years has relied almost entirely on proceeds from the sale of our common stock and the issuance of promissory notes. We currently do not have any bank debt. We may need to raise additional capital to fund our anticipated operating expenses and execute our business plan. We cannot be assured that financing will be available or at favorable terms. Any sale of our common stock to raise capital will cause dilution to our existing stockholders, unless the existing holders participate in the capital raise. If we are unable to obtain adequate financing, we will need to reduce or cease business operations. Any of these events would be materially harmful to our business and may result in a lower stock price.

Our common stock may be affected by limited trading volume and may fluctuate significantly.

There has been a limited public market for our common stock and there can be no assurance that an active trading market for our common stock will develop. As a result, this could adversely affect our stockholders' ability to sell our common stock in short time periods, or possibly at all. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations that could adversely affect the market price of our common stock without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.

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Our common stock is traded on the OTC markets, which may make it more difficult for investors to resell their shares due to suitability requirements.

Our common stock is currently traded on the Over-The-Counter market “OTC” and quoted on the OTC Markets. Broker-dealers are challenged to trade in OTC stocks given that the market for such securities is often limited, the stocks are more volatile, and the risks to investors are greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of them. This could cause our stock price to decline. The Company is exploring the possibility of listing within a different level of OTC or transitioning to the NASDAQ exchange in an effort to help increase the liquidity of the Company’s stock.

Since our common stock is thinly traded it is more susceptible to extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.

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Since our common stock is thinly traded, its trading price is more likely to be volatile and could be subject to extreme fluctuations in response to various factors, many of which are beyond our control, including (but not necessarily limited to):

	·	the trading volume of our shares;
	·	new products or services introduced or announced by us or our competitors;
	·	actual or anticipated variations in quarterly operating results;
	·	general conditions or trends in our business industries;
	·	announcements by us of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;
	·	additions or departures of key personnel;
	·	sales of our common stock; and
	·	general stock market price and volume fluctuations of publicly-traded, and particularly microcap, companies.
	·	the number of securities analysts, market-makers and brokers following our common stock;

Investors may have difficulty reselling shares of our common stock, either at or above the price they paid for our stock, or even at fair market value. The stock markets often experience significant price and volume changes that are not related to the operating performance of individual companies, and because our common stock is thinly traded it is particularly susceptible to such changes. These broad market changes may cause the market price of our common stock to decline regardless of how well we perform as a company. In addition, there is a history of securities class action litigation following periods of volatility in the market price of a company’s securities. Although there is no such litigation currently pending or threatened against the Company, such activity against us could result in substantial legal fees, potential liabilities and the diversion of management’s attention and resources from our business. Moreover and as previously noted, our shares are currently quoted on the OTC Markets and are subject to the penny stock regulations. Price fluctuations in such shares are particularly volatile and subject to manipulation by market-makers, short-sellers and option traders.

We could fail to retain or attract key personnel.

Robert Monster has been our Chief Executive Officer since May 18, 2015. Our future success depends, in significant part, on the continued services of Mr. Monster. We cannot be assured that we would be able to find appropriate replacements for Mr. Monster or any other key personnel. Any loss or interruption of our key personnel's services could adversely affect our ability to execute our business plan. We do have an employment agreement with Mr. Monster through May 21, 2018, but we do not presently maintain an executive life insurance policy for him.

Minnesota law and our charter may inhibit a takeover of our company that stockholders may consider favorable.

Provisions of Minnesota law, such as its business combination statute, may have the effect of delaying, deferring or preventing a change in control of our Company. As a result, these provisions could limit the price some investors might be willing to pay in the future for shares of our common stock.

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Our officers and directors have the ability to exercise significant influence over matters submitted for stockholder approval and their interests may differ from other stockholders.

Our current directors in the aggregate have the ability to appoint new members to the Board of Directors. Accordingly, our directors and executive officers, whether acting alone or together, may have significant influence in determining the outcome of any corporate transaction or other matter submitted to our Board for approval, including issuing common and preferred stock, and appointing officers. This influence could have a material impact on mergers, acquisitions, consolidations, the sale of all or substantially all of our assets and the power to prevent or cause a change in control. The interests of these board members may differ from the interests of the other stockholders.

Our shares may be defined as penny stock, the rules imposed on the sale of the shares may affect your ability to resell any shares you may purchase, if at all.

Shares of our common stock may be defined as a penny stock under the Securities and Exchange Act of 1934 (“Exchange Act”) and rules of the Securities and Exchange Commission (“SEC”). The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000, individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker-dealer must make a suitability determination for each purchaser and receive the purchaser's written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the SEC. Consequently, the penny stock rules may affect the ability of broker-dealers to make a market in or trade our common stock and may also affect your ability to resell any shares you may purchase in the public markets.

Market for penny stock has suffered in recent years from patterns of fraud and abuse.

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Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:

	·	Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
	·	Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
	·	Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
	·	Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and,
	·	The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices creating consequential investor losses.

Our management team is aware of the abuses that have occurred historically in the penny stock market. Although we are not in a position to dictate the behavior of the market or of broker-dealers who participate in the market, we will strive within the confines of practical limitations to prevent the described abuses from being established with respect to our securities. The occurrence of these practices could increase the volatility of our share price.

Existing stockholders may experience significant dilution from the market sale or short sales of our common stock.

The perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock. Moreover, the perceived risk of dilution and the resulting pressure on our stock price could encourage investors to engage in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could further contribute to progressive price declines in our common stock.

ITEM 2. PROPERTIES

The Company does not currently own any property. As of February 28, ~~2018~~2019, wethe ~~had~~company ~~one~~did ~~operating~~not ~~lease~~have ~~for~~any office ~~space~~leases ~~located~~ in ~~Vancouver, British Columbia~~place.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may be a party to various claims, suits and complaints in the normal course of business. In the opinion of management, the resolutions of these matters are not expected to have a material adverse effect on the Company's business, financial position or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

DigitalTown, Inc.’s common stock is traded on the OTC Markets under the ticker symbol DGTW. The following table sets forth the quarterly high and low sales prices as reported during the last two fiscal years ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018.

Fiscal Year 2018	Low		High
Fiscal Year 2019	Low		High
First Quarter	$	0.38100	$	0.49200
Second Quarter		0.23070		0.48230
Third Quarter		0.19020		0.40108
Fourth Quarter		0.19004		0.36039

Fiscal Year 2017	Low		High
Fiscal Year 2018	Low		High
First Quarter	$	0.08380	$	0.56490
Second Quarter		0.20230		0.51480
Third Quarter		0.21190		0.52400
Fourth Quarter		0.21190		0.49360

These quotations represent inter dealer prices, without retail markup, markdown, or commission, and may not reflect actual transactions. As of ~~May~~June 316, ~~2018~~2019, there were approximately ~~345~~588 record holders of the Company's common stock.

DIVIDEND POLICY

The Company has never paid cash dividends on any of its securities. The Company currently intends to retain any earnings for use in its operations and does not anticipate paying cash dividends in the foreseeable future. Any future dividend policy will be determined by the Company's Board of Directors based upon the Company's earnings, if any, its capital needs and other relevant factors.

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial information for DigitalTown, Inc. as of February 28, ~~2018~~2019 and February 28, ~~2017~~2018 and for the years then ended, which have been derived from our audited consolidated financial statements.

	February 28,			February 28,
	2018			2017
Balance Sheet Data	2019			2018
Balance Sheet Data
Total Assets	$	59,822		$	184,314
Total Assets	$	184,314		$	693,637
Total Liabilities		2,991,936			2,299,665
Total Liabilities		2,299,665			1,048,359
Stockholders’ Deficit		(2,932,114	)		(2,115,351	)
Stockholders’ Deficit		(2,115,351	)		(354,722	)
Operating Statement Data
Revenues	$	~~327~~34,~~335~~473		$	~~165~~80,~~991~~940
Cost of revenues		1743,~~031,344~~464			~~473~~889,~~056~~454
Gross loss		(~~704~~708,~~009~~991	)		(~~307~~808,~~065~~514	)
Selling, general and administrative expenses		75,~~443~~079,~~296~~787			57,~~168~~248,~~512~~968
Loss from operations		(85,~~147~~788,~~305~~778	)		(58,~~475~~057,~~577~~482	)
Other income (expense), net		(21,~~096~~369,~~091~~673	)		(12,~~744~~096,~~049~~091	)
Net loss	$	(10,243,396	)	$	(7,219,626	)
Loss from discontinued operations		(244,975	)		(89,823	)
Net loss per common share-basic and diluted	$	(0.17	)	$	(0.16	)
Net loss	$	(7,403,426	)	$	(10,243,396	)
Weighted average shares outstanding - basic and diluted		61,786,169			44,840,743
Net loss per common share-basic and diluted	$	(0.06	)	$	(0.17	)
Weighted average shares outstanding - basic and diluted		121,297,460			61,786,169
Cash Flow Statement Data
Net cash used in operating activities	$	(32,~~162~~378,~~324~~094	)	$	(13,~~934~~162,~~540~~324	)
Net cash used in investing activities		~~(139~~905,~~169~~812	)		(40139,~~504~~169	)
Net cash provided by financing activities		21,~~817~~434,~~732~~758			2,~~377~~817,~~950~~732
Net change in cash		(~~480~~43,~~531~~441	)		~~404~~(480,~~774~~531	)
Cash and cash equivalents, beginning of period		~~539~~58,~~243~~712			~~134~~539,~~469~~243
Cash and cash equivalents, end of period	$	5815,~~712~~271		$	~~539~~58,~~243~~712

The data set forth above should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our Consolidated Financial Statements and related notes.

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ITEM 7. 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 years ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018, which should be read in conjunction with, and is qualified in its entirety by, the audited financial statements and notes thereto included elsewhere in this report.

RESULTS OF OPERATIONS

YEARS ENDED FEBRUARY 28, ~~2018~~2019 AND ~~February~~FEBRUARY 28, ~~2017~~2018

During fiscal ~~2018~~2019, the Company recorded revenues from continuing operations of $~~327~~34,~~335~~473 and cost of revenues of $1743,~~031,344~~464 for a gross loss of $~~(704~~708,~~009)~~991 compared to revenues from continuing operations of $~~165~~80,~~591~~940 and cost of revenues of $~~473~~889,~~056~~454 for a gross loss of $~~(307~~808,~~065)~~514 during fiscal ~~2017~~2018. For fiscal ~~2018~~2019, revenues mainly consisted of development fees related to our SmartCity platform ~~and activities from our Rezserve and Comencia subsidiaries~~. Cost of revenues consisted of amortization of prepaid annual domain name renewal fees of $~~675~~335,~~242~~629 and $82675,~~370~~242, and development expense of $~~354~~688,~~121~~804 and $~~390~~354,~~686~~121, for the two fiscal years, respectively.

The Company’s operating expenses are currently all related to selling, general and administrative activity. These expenses were $75,~~443~~079,~~296~~787 in fiscal ~~2018~~2019 compared to $57,~~168~~248,~~512~~968 in fiscal ~~2017~~2018, ana ~~increase~~decrease of $2,~~274~~169,~~784~~181. There was one significant driver of this ~~increase~~decrease and it was a non-recurring, non-cash expense from fiscal 2018. Our stock-based compensation expense was $32,~~524~~059,~~123~~677 for fiscal ~~2018~~2019 as compared to $23,~~455~~524,~~587~~123 for fiscal ~~2017~~2018, ana ~~increase~~decrease of $1,~~068~~464,~~536~~446. In addition, our ~~increase~~decrease in selling, general and administrative expenses was due to ana ~~increase~~decrease in domain name renewal fees of $~~592~~339,~~872~~613, and ana ~~increase~~decrease in ~~contractor~~travel, ~~expense~~conferences and trade shows expenses of $~~254~~255,~~200~~345.

The Company’s ~~overall net~~ loss ~~for~~from ~~the~~discontinued ~~current~~operations ~~year~~was ~~increased by~~ $3244,~~023,770~~975 toin ~~$10,243,396.~~fiscal ~~The~~2019 ~~increase~~compared ~~was mainly due~~ to ~~the~~$89,823 ~~increase~~ in ~~stock~~fiscal ~~compensation~~2018, ~~expense~~an ~~and the~~ increase inof ~~general and administrative items as detailed above~~$155,152.

The Company’s overall net loss for the current year decreased by $2,839,970 to $7,403,426. The decrease was mainly due to the decrease in stock compensation expense and the decrease in general and administrative items as detailed above.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s cash position at February 28, ~~2018~~2019 was $5815,~~712~~271, a decrease of $~~480~~43,~~531~~441 from $~~539~~58,~~243~~712 at February 28, ~~2017~~2018. During fiscal ~~2018~~2019, net cash used in operating activities was $32,~~162~~378,~~324~~094 compared to cash used of $13,~~934~~162,~~540~~324 for the fiscal ~~2017~~2018. When comparing the two periods, the ~~increase~~decrease in cash used in operating activities of $~~1,227,~~784,230 for fiscal ~~2018~~2019 is primarily due to ana ~~increase~~decrease of cash operating expenses.

Net cash provided (used) in investing activities was $~~139~~905,~~169~~812 and $40(139,~~504~~169) for fiscal years ~~2018~~2019 and ~~2017~~2018, respectively. In fiscal ~~2018~~2019, the Company ~~invested~~received incash ~~two~~from ~~acquisitions~~the todisposal ~~enhance~~of ~~its~~certain ~~Smart~~business ~~City~~assets, ~~platform~~and from the sale of cryptocurrencies.

Net cash provided by financing activities for fiscal ~~2018~~2019, was $21,~~817~~434,~~732~~758, which consisted primarily of proceeds from the issuance of common stock and borrowings from convertible ~~and promissory~~ notes. For fiscal ~~2017~~2018, the Company received net cash provided by financing activities of $2,~~377~~817,~~950~~732, which consisted primarily of proceeds from the issuance of common stock. and borrowings from convertible and promissory notes.

Monthly cash operating expenses for fiscal ~~2018~~2019, were approximately $~~300~~250,000 per month. Based on current projections, the Company’s monthly cash operating expenses going forward should be approximately $~~325~~25,000 per month~~, which includes the monthly cost for the renewal of the existing domain names of approximately $30,000~~.

We believe our current cash reserves, the amounts we expect from future proceeds from the issuance of our common stock and the sale of existing domain names should be sufficient to enable us to operate for the next 12 months. In the event that we are unable to operate profitably, raise additional capital through the sale of our common stock or sell existing domain names on acceptable terms, we would be forced to further reduce operating expenses or cease operations altogether.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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Critical Accounting Policies

Effective March 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the twelve months ended February 28, 2019 and 2018.

The discussion and analysis of DigitalTown, Inc.’s financial condition and results of operations are based on our audited 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:

Prepaid Domain Names

The annual domain name renewal fees are currently amortized over one year and the purchase of any new domain names are the only amounts capitalized. See Note 4 for further information.

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards. The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, directors, consultants and advisors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant.

The Company estimates the fair value of stock-based payment awards on the date of grant using the Black-Scholes option pricing model. This option pricing model involves a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company's common stock and interest rates. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest.

Recently Issued Accounting Pronouncements

Information regarding recently issued accounting pronouncements is included in Note 1 to the consolidated financial statements in “Item 8. Financial Statements and Supplemental Data” in this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The market risk inherent in the Company’s financial statements and in its financial position represents the potential loss arising from adverse changes in interest rates. This risk is low as the Company has very limited debt and has no third-party debt.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

	Page

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Financial Statements:
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Stockholders' Equity (Deficit)	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Digitaltown, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Digitaltown, Inc. (the Company) as of February 28, ~~2018~~2019 and ~~2017~~2018, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended February 28, ~~2018~~2019, and the related notes and schedules (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 28, ~~2018~~2019 and ~~2017~~2018, and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, ~~2018~~2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered losses from operations which raise substantial doubt about its ability to continue as a going concern. ~~Managements~~Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ M&K CPAS, PLLC

We have served as the Company’s auditor since 2012.

Houston, TX

June 12, 2019

F-1

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DigitalTown, Inc.

CONSOLIDATED BALANCE SHEETS

	February 28,			February 28,
	2018			2017
	2019			2018
ASSETS
Current assets:
Cash	$	5815,~~712~~271		$	~~539~~58,~~243~~712
Accounts receivable, net		1225,~~089~~343			2512,~~609~~089
Short term investment		~~10,000~~-			-10,000
Prepaid domain name renewal fees		~~77,977~~-			~~105~~77,~~775~~977
Prepaid insurance		~~3,103~~-			213,~~198~~103
Total current assets		~~161~~40,~~881~~614			~~691~~161,~~825~~881
Property and equipment, net		2219,~~433~~208			122,~~812~~433
Total assets	$	~~184~~59,~~314~~822		$	~~693~~184,~~637~~314
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	~~214~~551,~~700~~387		$	~~166~~214,~~847~~700
Accounts payable – related parties		~~458~~213,~~125~~566			10458,~~612~~125
Deferred revenue		~~170~~186,~~000~~305			~~190~~170,000
Domain marketing development obligation		~~145~~168,~~906~~174			-145,906
Interest payable		3446,~~783~~235			-34,783
Accrued expenses - related parties		~~552~~542,~~976~~066			~~280~~552,~~900~~976
Notes payable - related parties		~~105~~1,~~479~~025,200			-105,479
Notes payable - third parties, net		~~30,548~~-			-30,548
Convertible notes payable - related parties		~~468,493~~-			~~400~~468,~~000~~493
Convertible notes payable - third parties, net		~~118~~246,~~655~~175			-118,655
Total current liabilities		2,299,665			1,048,359
Liabilities held for sale		12,828			-
Total current liabilities		2,991,936			2,299,665
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 84,509,824 and 52,606,000 shares issued and outstanding at February 28, 2018 and February 28, 2017, respectively		845,098			526,060
Common stock, $0.01 par value, 2,000,000,000 shares authorized, 146,740,570 and 84,509,824 shares issued and outstanding at February 28, 2019 and February 28, 2018, respectively		1,467,406			845,098
Additional paid-in-capital		43,698,746			34,333,479
Preferred stock, $0.01 par value, 20,000,000 shares authorized, no shares issued and outstanding at February 28, 2019 and February 28, 2018, respectively		-			-
Stock payable		2,221,603			3,426,371
Additional paid-in-capital		51,411,971			43,698,746
Subscriptions receivable					-
Stock payable		478,650			2,221,603
Accumulated other comprehensive income		5,098			1,868
Subscriptions receivable
Accumulated deficit		(48,885,896	)		(38,642,500	)
Accumulated other comprehensive income		(819	)		5,098
Total stockholders’ equity (deficit)		(2,115,351	)		(354,722	)
Accumulated deficit		(56,289,322	)		(48,885,896	)
Total liabilities and stockholders’ equity (deficit)	$	184,314		$	693,637
Total stockholders’ equity (deficit)		(2,932,114	)		(2,115,351	)
Total liabilities and stockholders’ equity (deficit)	$	59,822		$	184,314

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

F-2

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DigitalTown, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended
	February 28, 2018			February 28, 2017
	February 28, 2019			February 28, 2018
Revenues	$	~~327~~34,~~335~~473		$	~~165~~80,~~991~~940
Cost of revenues		1743,~~031,344~~464			~~473~~889,~~056~~454
Gross loss		(~~704~~708,~~009~~991	)		(~~307~~808,~~065~~514	)
Operating expenses:
Selling, general and administrative expenses		75,~~443~~079,~~296~~787			57,~~168~~248,~~512~~968
Loss from operations		(85,~~147~~788,~~305~~778	)		(58,~~475~~057,~~577~~482	)
Other income (expense):
Impairment expense		~~(1,721,760~~-	)		(1,~~725~~721,~~009~~760	)
Interest expense		(~~374~~942,~~331~~891	)		(19374,~~040~~331	)
Total other income (expense)		(2,096,091	)		(1,744,049	)
Gain on disposal of asset, net		192,973			-
Loss before income taxes		(10,243,396	)		(7,219,626	)
Loss on settlement of debt		(48,037	)		-
Income tax provision		-			-
Cryptocurrency losses		(571,718	)		-
Net loss	$	(10,243,396	)	$	(7,219,626	)
Total other income (expense)		(1,369,673	)		(2,096,091	)
Net loss per common share – basic and diluted	$	(0.17	)	$	(0.16	)
Loss before income taxes		(7,158,451	)		(10,153,573	)
Weighted average common shares outstanding – basic and diluted		61,786,169			44,840,743
Income tax provision					-
Net loss from continuing operations, net of income taxes		(7,158,451	)		(10,153,573	)
Loss from discontinued operations		(244,975	)		(89,823	)
Net loss	$	(7,403,426	)	$	(10,243,396	)
Net loss per common share – basic and diluted	$	(0.06	)	$	(0.17	)
Weighted average common shares outstanding – basic and diluted		121,297,460			61,786,169

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

F-3

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DigitalTown, Inc.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

For the Years Ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018

																Accumulated
							Additional									Other
	Common Stock						Paid-In			Stock			Subscription			Comprehensive			Accumulated
	Shares			Amount			Capital			Payable			Receivable			Loss			Deficit			Total
Balance as of February 28, 2016		41,461,543		$	414,615		$	30,967,377		$	37,500		$	(12,150	)	$	-		$	(31,422,874	)	$	(15,532	)
Common stock issued for cash		6,999,707			69,997			1,502,453			800,500			5,000			-			-			2,377,950
Stock issued for compensation		775,000			7,750			571,618			1,857,121			7,150			-			-			2,443,639
Stock issued for acquisitions		3,000,000			30,000			1,110,000			731,250			-			-			-			1,871,250
Stock issued for domain names		369,750			3,698			151,043			-			-			-			-			154,740
Exercise of stock options		-			-			11,948			-			-			-			-			11,948
Imputed interest		-			-			19,040			-			-			-			-			19,040
Accumulated other comprehensive income		-			-			-			-			-			1,868			-			1,868
Net Loss		-			-			-			-			-			-			(7,219,626	)		(7,219,626	)
Balance as of February 28, 2017		52,606,000		$	526,060		$	34,333,479		$	3,426,371		$	-		$	1,868		$	(38,642,500	)	$	(354,722	)
Common stock issued for stock payable		8,039,382			80,394			2,478,667			(2,559,061	)		-			-			-			-
Common stock issued for cash		6,818,333			68,183			1,261,817			332,732			-			-			-			1,662,732
Stock issued for compensation		8,512,776			85,128			2,147,203			521,792			-			-			-			2,754,124
Stock issued for acquisitions		8,333,333			83,333			2,328,334			-			-			-			-			2,411,667
Conversion of debt		-			-			-			223,000			-			-			-			223,000
Exercise of stock options		200,000			2,000			18,000			-			-			-			-			20,000
Conversion of accrued expenses		-			-			164,743			276,769			-			-			-			441,512
Warrants issued with debt		-			-			450,000			-			-			-			-			450,000
BCF		-			-			450,246			-			-			-			-			450,246
Beneficial conversion feature		-			-			450,246			-			-			-			-			450,246
Imputed interest		-			-			66,257			-			-			-			-			66,257
Accumulated other comprehensive income		-			-			-			-			-			3,230			-			3,230
Net Loss		-			-			-			-			-			-			(10,243,396	)		(10,243,396	)
Balance as of February 28, 2018		84,509,824		$	845,098		$	43,698,746		$	2,221,603		$	-		$	5,098		$	(48,885,896	)	$	(2,115,351	)
Common stock issued for stock payable		9,783,548			97,835			1,730,365			(1,828,200	)		-			-			-			-
Common stock issued for cash		15,097,113			150,971			919,574			-			-			-			-			1,070,545
Common stock issued for cryptocurrency		11,385,590			113,856			1,545,144			-												1,659,000
Stock issued for conversion of third-party debt		8,933,740			89,337			82,208			-												171,545
Stock issued for conversion of accounts payable		252,500			2,525			16,675			42,500												61,700
Stock issued for conversion of related party debt		9,880,274			98,803			889,225			-												988,028
Stock issued for compensation		6,722,981			67,231			1,949,698			42,747			-			-			-			2,069,399
Stock issued for finder fee		100,000			1,000			(1,000	)		-												-
Stock issued for debt discount		90,000			900			7,110			-												8,010
Stock reclaimed for sale of domains		(15,000	)		(150	)		(2,850	)		-												(3,000	)
Contributed capital		-			-			20,000			-			-			-			-			20,000
Beneficial conversion feature		-			-			536,951			-			-			-			-			536,951
Imputed interest		-			-			20,125			-			-			-			-			20,125
Accumulated other comprehensive income		-			-			-			-			-			(5,917	)		-			(5,917	)
Net Loss		-			-			-			-			-			-			(7,403,426	)		(7,403,426	)
Balance as of February 28, 2019		146,740,570		$	1,467,406		$	51,411,971			478,650		$	-		$	(819	)	$	(56,289,322	)	$	(2,932,114	)

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

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DigitalTown, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	February 28, 2018			February 28, 2017
	February 28, 2019			February 28, 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,243,396	)	$	(7,219,626	)
Net loss from discontinued operations	$	(244,975	)	$	(89,823	)
Net loss from continuing operations		(7,158,451	)		(10,153,573	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Loss on conversion of debt and accrued expenses		~~329,526~~-			-329,526
Depreciation and amortization		708,~~929~~567			1470,~~805~~929
Bad debt expense		-			114,829
Debt discount amortization		879,734			276,257
Debt discount amortization		276,257			-
Loss on debt settlement		48,037			-
Loss on acquisition of Appointment.com		-			853,955
Loss on crypto dispositions		925,817			-
Impairment expense		~~1,721,760~~-			1,~~725~~721,~~009~~760
Imputed interest		6620,~~257~~125			1966,~~040~~257
Stock based compensation		32,~~524~~059,~~123~~677			23,~~455~~524,~~587~~123
Changes in operating assets and liabilities:
Accounts receivable		(13,~~520~~254	)		~~(102~~13,~~014~~520	)
Prepaid expenses		35,893			(104,186	)
Other current assets		10,000			-
Accounts payable		40,544			91,331
Prepaid expenses		78,080			35,893
Accounts payable – related parties		447,512			(131,835	)
Accounts payable		239,958			40,544
Accrued expenses - related parties		428,845			158,565
Accounts payable – related parties		520,641			447,512
Deferred revenue		(20,000	)		190,000
Accrued expenses		235,122			428,845
Domain marketing development obligation		145,906			-
Deferred revenue		-			(20,000	)
Net cash used in operating activities		(3,162,324	)		(1,934,540	)
Domain marketing development obligation		-			145,906
Net cash used in operating activities, continuing operations		(2,390,922	)		(3,162,324	)
Net cash provided by operating activities, discontinued operations		12,828			-
Net cash used in operating activities		(2,378,094	)		(3,162,324	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for office equipment		(265,~~158~~342	)		-(26,158	)
Cash paid for domain names		-			(69,500	)
Cash received from Comencia acquisition		-			11,989
Cash received from Comencia acquisition		11,989			-
Cash received from business dispositions		192,973			-
Cash received from Rezserve		-			34,256
Cash received from sale of cryptocurrency		718,181			-
Cash received from Appointment.com		-			2,240
Cash paid for Congo acquisition		-			(125,000	)
Cash paid for Congo acquisition		(125,000	)		-
Net cash used in investing activities		905,812			(139,169	)
Cash paid for Cloud.Market		-			(7,500	)
Net cash used in investing activities		(139,169	)		(40,504	)
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from convertible note		~~735~~570,~~000~~250			-735,000
Borrowings from promissory note		~~450,000~~-			-450,000
Payments on promissory note		(30206,~~000~~037	)		-(30,000	)
Proceeds from issuance of common stock		1,~~662~~070,~~732~~545			21,~~377~~662,~~950~~732
Net cash provided by financing activities		21,~~817~~434,~~732~~758			2,~~377~~817,~~950~~732
Foreign currency translation adjustment		3(5,~~230~~917	)		13,~~868~~230
Net change in cash and cash equivalents		(~~480~~43,~~531~~441	)		~~404~~(480,~~774~~531	)
Cash and cash equivalents, beginning of year		~~539~~58,~~243~~712			~~134~~539,~~469~~243
Cash and cash equivalents, end of year		5815,~~712~~271			~~539~~58,~~243~~712
Non-Cash Transactions:
Issuance of common stock for domain names		-			154,740
Issuance of common stock for stock payable		1,828,200			2,559,061
Issuance of common stock for stock payable		2,559,061			-
Stock issued for cryptocurrency		1,659,000			-
Beneficial conversion feature		450,246			-
Conversion of debt to common stock		1,159,572			210,000
Debt discount from warrants		450,000			-
Accounts payable and accrued expenses converted to stock - related party		915,200			-
Conversion of debt to common stock		210,000			-
Beneficial conversion feature		536,951			450,246
Conversion of accrued expenses to stock		121,986			-
Debt discount from warrants		-			450,000
Conversion of accrued expenses to stock		61,700			121,986
Debt in exchange for assets - related party		20,000			-
Cryptocurrency issued for AP settlement		15,080			-
Stock issued for debt discount		8,010			-
Stock retired for domains		3,000			-
Stock issued for finder’s fee		1,000			-

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

F-5

Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended February 28, ~~2018~~2019 and ~~2017~~2018

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

Nature of Business

The Company was founded in 1982 under the laws of the State of Minnesota as Command Small Computer Learning Center, Inc., a computer training company and operated under several different names in the computer hardware and training sector. In 2005, the Company began acquiring domain names. On March 1, 2007, the Company changed its name to DigitalTown, Inc. and began developing a business plan to develop a platform to monetize their domain names. DigitalTown currently provides turn-key hosted solutions to power a comprehensive platform for government entities, citizens and merchants. The easy to use platform helps city officials and local merchants manage a feature-rich Smart City for web and mobile devices and provides residents and visitors with access to Content, Community and Commerce. The Company’s headquarters are located in Bellevue, WA. The Company’s common stock is traded on the OTC Markets under the ticker symbol of DGTW.

The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

At February 28, ~~2018~~2019, the Company had an accumulated deficit of $4856,~~593~~289,~~820~~322. The Company anticipates that growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, ~~2019~~2020. In the event that the Company is unable to obtain additional capital in the future, the Company would reduce operating expenses or cease operations altogether.

Principles of Consolidation

The consolidated financial statements include the accounts of DigitalTown, Inc. and its wholly-owned subsidiaries and have been prepared by the Company in United States (U.S.) dollars and in accordance with accounting principles generally accepted in the United States, or GAAP. All material intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Certain prior period amounts in the consolidated statement of cash flows have been reclassified to conform to the current period presentation. Proceeds from related party notes payable received in the prior period have been reclassified from the prior period classification. These reclassifications had no impact on previously reported net income or accumulated deficit for any year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) 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.

Accounts Receivable

Accounts receivable arise from the software licensing of our Rezserve ~~subsidiary~~and Comencia subsidiaries. The Company evaluates collectability of accounts receivable based on a combination of factors including the age of the receivable or a specific customer’s inability to meet its financial conditions. In these circumstances, the Company records an allowance to reduce the receivable to an amount it deems collectible. The Company has recorded an allowance for doubtful accounts as of February 28, ~~2018~~2019 and February 28, ~~2017~~2018 of $5,~~456~~308 and $235,~~219~~456, respectively. ~~During fiscal 2017, the Company recorded $114,829 of bad debt expense due mostly to new customers from the Rezserve acquisition.~~

F-6 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets related to completed acquisitions. Goodwill has an indefinite life and is not amortized but instead tested for impairment annually, or more frequently if necessary.

F-6

Table of Contents

Intangible assets are recorded at fair value and are comprised of amounts assigned to acquisition-related items, such as trade names, customer lists, non-compete agreements and intellectual property/technology. Intangible assets are considered either definite or indefinite lived assets. Definite lived intangible assets are amortized on a straight-line basis over their useful lives. Certain intangible assets may have an indefinite life and are not amortized, but rather evaluated for impairment annually.

We evaluate any goodwill and intangible assets for an impairment on an annual basis each fiscal year end. We also evaluate goodwill and intangible assets for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the goodwill and intangible assets below the carrying amounts. At February 28, 2019, we did not have any goodwill or intangible assets. Based upon our review and analysis as of February 28, 2018, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired. Accordingly, we recognized an impairment expense of $1,721,760. Inin fiscal ~~2017, recognized an impairment expense of $1,725,009~~2018.

Revenue Recognition

There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the twelve months ended February 28, 2019.

~~Effective~~The ~~March 1, 2018, the~~ Company ~~adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company~~ recognizes revenue ~~from~~when the ~~commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the~~ following ~~steps:~~five ~~(1)~~criteria ~~identify~~have the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been ~~adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are~~ met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the twelve months ended February 28, 2018 and 2017.

~~The~~· ~~Company~~Identify ~~recognizes~~the ~~revenue~~contract ~~when~~with a customer · Identify the ~~following~~performance ~~four~~obligations ~~criteria~~in ~~have~~the ~~been~~contract ~~met:~~· Determine the transaction price · Allocate the transaction price to each performance obligation in the contract · Recognize revenue when each performance obligation is satisfied

· Persuasive evidence that a business relationship exists · Delivery has occurred · The price is fixed and determinable · Collectibility is reasonably assured

The Company primarily recognizes revenue from sale of software licenses and related development services. Software licensing and development revenue is recognized as invoiced and over the course of the applicable agreements. In the event projects have multiple project milestones, revenue is recognized as milestones are achieved and invoices are submitted for payment.

The Company may also be merchant of record for merchant transactions processed on the DigitalTown platform. When this happens, revenue is recognized on the date of the transaction. The Company has experience in merchant transaction fraud mitigation. To the extent chargebacks become material, the Company will implement a formal practice for allowance for doubtful accounts.

~~The~~Fair ~~Company~~Value ~~recognizes revenue from the sale~~ of ~~display~~Financial advertising appearing on specific pages of individual sites within DigitalTown’s network platform. Display advertising is sold by the Company directly to local merchants and placed by the Company on specific pages of individual sites targeted by the local merchant. The terms of these sales are either for a fixed monthly amount for a period ranging from three months to one year or variable based on a percentage of the per click or per-impression revenue generated by these ads.Instruments

F-7 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (ASC) 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under U.S. GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.

AsF-7 ofTable February 28, 2018, and February 28, 2017, the Company does not have any financial instruments that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of ~~the fair value hierarchy. The three levels are as follows:~~Contents

As of February 28, 2019, and February 28, 2018, the Company does not have any financial instruments that must be measured under the fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).

Level 3 - Unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing the asset or liability.

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs during fiscal ~~2018~~2019 or fiscal ~~2017~~2018.

Cash Equivalents

The Company considers all highly liquid investments with original maturity of three months or less when purchased to be cash equivalents. As of February 28, ~~2018~~2019, and February 28, ~~2017~~2018, the Company had no cash equivalents.

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. Accounts are insured by the Federal Deposit Insurance Company and currently have insurance coverage up to $250,000. At February 28, ~~2018,~~2019 ~~the~~and ~~Company had no uninsured cash balances. At~~ February 28, ~~2017~~2018, the Company had ~~one~~no ~~bank~~uninsured ~~deposit~~cash ~~account in excess of federally insured limits~~balances.

Prepaid Domain Names

The annual domain name renewal fees are currently capitalized in the period of renewal then amortized over one year. Only the purchase of new domain names are capitalized. See Note 4 for further information.

Property and Equipment

Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives, ranging from three to five years. The Company recorded $68,~~022~~567 and $26,~~782~~022 of depreciation expense for fiscal years ~~2018~~2019 and ~~2017~~2018, respectively. 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. See Note 3 for further information.

Income Taxes

Deferred tax assets (net of any valuation allowance) and liabilities resulting from temporary differences, net operating loss carryforwards and tax credit carryforwards are recorded using an asset-and-liability method. Deferred taxes relating to temporary differences and loss carryforwards are measured using the tax rate expected to be in effect when they are reversed or are realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be ultimately realized. The Company has recorded a full valuation allowance against the net deferred tax asset due to the uncertainty of realizing the related future benefits.

~~F-8~~The ~~Table~~Company accounts for income taxes pursuant to FASB guidance. This guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of ~~Contents~~tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at February 28, 2019 or February 28, 2018. In accordance with the FASB guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations. The Company has three open years of tax returns subject to examination.

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The Company accounts for income taxes pursuant to FASB guidance. This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company believes its income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves or related accruals for interest and penalties have been recorded at February 28, 2018 or February 28, 2017. In accordance with the FASB guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations. The Company has three open years of tax returns subject to examination.

Stock-Based Compensation, Including Options and Warrants

Use of equity for compensation is a material part of the Company’s near-term strategy. The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards. The Company measures and recognizes compensation expense for all stock-based payment awards made to employees, directors, consultants and advisors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant.

F-8

Table of Contents

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification 606 (“ASC 606”)). ASU No. 2014-09 provides guidance for revenue recognition. The ~~Company~~standard’s core principle is that a company will ~~adopt~~recognize ~~using~~revenue ~~the~~when ~~modified~~it ~~retrospective~~transfers ~~approach~~promised goods or services to ~~initially~~customers ~~apply~~in an amount that reflects the ~~update~~consideration ~~and~~to ~~recognize~~which the ~~remaining~~company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract ~~value~~and atestimating the ~~date~~amount of ~~application~~variable consideration to include in the transaction price attributable to each separate performance obligation. ~~The~~Subsequent ~~Company~~to ~~does~~the ~~not~~initial ~~expect~~standards, the ~~adoption~~FASB ofhas ~~ASU~~also ~~2014-09~~issued several ASUs to ~~have~~clarify ~~any~~specific ~~impact~~revenue onrecognition ~~its~~topics. ~~total~~This ~~cash~~guidance ~~flows~~is ~~from~~effective ~~operating,~~for ~~investing~~the orCompany ~~financing~~for ~~activities~~its fiscal year 2019.

The Company adopted using the modified retrospective approach to initially apply the update and recognize the remaining contract value at the date of application. The Company does not expect the adoption of ASU 2014-09 to have any impact on its total cash flows from operating, investing or financing activities.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which removes the second step of the two-step goodwill impairment test. Under ASU 2017-04, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment of goodwill impairment. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019; early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has not elected early adoption of this standard and is currently in the process of evaluating the impact of adopting ASU 2017-04 and cannot currently estimate the financial statement impact of adoption.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The amendments in this update provide guidance about which changes to the terms or conditions of a share-based award require an entity to apply modification accounting in Topic 718. The guidance will be effective for the Company for its fiscal year 2018, with early adoption permitted. The Company does not expect this ASU to materially impact the Company’s consolidated financial statements.

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements upon adoption.

F-9 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The Company believes there are no other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Note 2. Going Concern

The Company’s consolidated financial statements have been prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit, recurring losses, and negative cash flows from operations. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

At February 28, 2018 the Company had an accumulated deficit of $48,885,896. The Company anticipates growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equityF-~~based~~9 ~~securities,~~Table ~~and additional sales and/or leases~~ of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2019. In the event that the Company is unable to obtain additional capital in the future, the Company would further reduce expenses or cease operations altogether.Contents

At February 28, 2019 the Company had an accumulated deficit of $56,289,322. The Company anticipates growth from its operations, expected future proceeds from additional financing through the sale of its common stock or other equity-based securities, and additional sales and/or leases of existing domain names will be sufficient to meet its working capital and capital expenditure needs through at least February 28, 2020. In the event that the Company is unable to obtain additional capital in the future, the Company would further reduce expenses or cease operations altogether.

Note 3. Property and Equipment

Property and equipment are as follows:

	February 28,			February 28,
	2018			2017
	2019			2018
Office equipment and furniture	$	4347,~~088~~914		$	~~528~~43,~~034~~088
Less accumulated depreciation		(2028,~~655~~706	)		(~~526~~20,~~222~~655	)
Property and equipment, net	$	2219,~~433~~208		$	122,~~812~~433

Depreciation expense for fiscal years ~~2018~~2019 and ~~2017~~2018 was $68,~~022~~567 and $26,~~782~~022, respectively.

Note 4. Prepaid Domain Names

During the fiscal years ~~2018~~2019 and ~~2017~~2018, the Company incurred $~~214,304~~0 and $~~165~~214,~~573~~304, respectively, of annual domain name renewal fees, which range between $1.75 and $129~~.00~~ per domain name. These amounts were recorded as prepaid domain name renewal fees, and are then amortized over one year on a straight-line basis. During fiscal years ~~2018~~2019 and ~~2017~~2018, the Company recognized $~~136~~77,~~328~~977 and $82136,~~370~~328 of expense as cost of revenues related to this amortization. As of February 28, ~~2018~~2019 and February 28, ~~2017~~2018, the Company has $~~77,977~~0 and $~~105~~77,~~775~~977, respectively, of remaining prepaid domain name renewal fees recorded on the balance sheet. See Note 8 for information on Related Party activity within Prepaid Domain Names.

Note 5. Accrued Expenses and Deferred Revenue

Accrued Expenses

On December 5, 2016, Richard Pomije filed a lawsuit against the Company. Mr. Pomije asserts an employment agreement existed and a continuing obligation of the Company in the form of a monthly salary for a 1 year term from May 18, 2015 to May 17, 2016 was due in addition to a stock subscription receivable. Mr. Pomije claims the Company owes him $260,900, which had been fully accrued for by the Company at February 28, 2017.

On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. ~~The~~During ~~Company~~the isquarter inending ~~the~~May ~~process~~31, of2018, ~~filing~~$10,910 anwas ~~appeal~~paid to Mr. ~~See~~Richard ~~Note~~Pomije. 15As ~~for~~at ~~additional~~February ~~information~~28, ~~about~~2019, ~~transactions~~$542,066 ~~between~~has ~~the~~been accrued as payable to Mr. Pomije. The Company ~~and~~filed ~~its~~an ~~former~~appeal ~~officer~~on June 13, 2018. See Note 1514 for additional information about transactions between the Company and its former officer.

As of February 28, 2017, the accrued salary owed to Robert Monster, CEO was $20,000.

F-10 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Deferred Revenue

During fiscal ~~2017~~2019, the Company signed ~~three~~one customer ~~agreements~~agreement to ~~perform~~build ~~digital~~customized ~~support~~website and ~~construction~~app ~~services for three third party companies~~products. ~~Each~~The ~~customer~~pilot project agreement consists of milestones and completion metrics to ensure that the requested services have been performed satisfactorily and to the customers' full expectations. As the services requested by the customers have not yet been completed, ~~the~~a total of $186,305 and $170,000 ~~has~~have been recorded as deferred revenue as of February 28, 2019 and February 28, 2018, respectively.

Domain Marketing Development Obligation

During ~~fiscal~~fiscals 2019 and 2018, the Company signed top-level domain marketing development fund agreements with owners of 2 and 13 top level domains, respectively, whereby the Company markets and purchases domain names on behalf of the owners. The owner pays us an upfront deposit to be used to purchase a predefined number of domains based on a set schedule. As of February 28, ~~2018~~2019 and February 28, ~~2017~~2018, the Company has collected $~~930~~101,~~556~~600 and $0930,556 in cash related to these contracts. As some of the services requested by the owners have not yet been completed, a total of $~~145~~168,~~906~~174 and $0145,906 has been recorded as domain marketing development obligation as of February 28, ~~2018~~2019, and February 28, ~~2017~~2018, respectively.

Note 6. Stockholders’ Equity (Deficit)

The Company’s primary means of generating operating capital and completing acquisitions has been through the use of issuing common stock.

F-10

Table of Contents

Fiscal 2019 Stock Transactions

During fiscal 2019, the Company issued 36,266,251 shares of stock to various investors for stock payable of $1,828,200, cash of $1,070,545 and digital currencies of $1,659,000.

During fiscal 2019, the Company issued 6,716,932 shares to consultants and employees for services provided to the Company. During fiscal 2019, $1,104,832 was expensed related to these shares.

In the fourth quarter of fiscal 2019, the Company issued 252,500 shares for conversion of accounts payable of $19,200. The issuance had no gain or loss as the value of the shares equalled the accounts payable converted.

On May 9, 2018, the Company converted the $150,000 convertible note with Darvin Habben, Chairman, to 1,500,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or loss as the value of the shares issued equalled the debt converted.

On May 9, 2018, the Company converted the $100,000 promissory note with Derek Schumann, Director, to 1,000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or loss as the value of the shares issued equalled the debt converted.

On May 9, 2018, the Company converted the $100,000 promissory note with Greg Foss, Director, to 1,000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or loss as the value of the shares issued equalled the debt converted.

On May 9, 2018, the Company converted the $100,000 promissory note with Donovan, to 1,000,000 shares of its common stock, fully extinguishing this note. The issuance had no gain or loss as the value of the shares issued equalled the debt converted.

On May 9, 2018, the Company issued 100,000 shares to an employee as a finder’s fee. The shares were valued at $1,000 and was recorded to additional paid in capital due to its related party nature.

During the first quarter of fiscal 2019, the Company sold 2 domains valued at $3,000 to one of the Company’s shareholders in exchange for 15,000 shares, which were returned to treasury.

During May 2018, PowerUp Lending Group Ltd. converted $75,000 of the principal amount, plus $4,500 in accrued and unpaid interest, of the October 30, 2017 note into 1,277,498 shares of the Company’s common stock, fully extinguishing this note. There was no gain or loss due to the conversion being within the terms of the note.

During June and July 2018, PowerUp Lending Group Ltd. converted $58,000 of the principal amount, plus $3,480 in accrued and unpaid interest, of the November 30, 2017 note into 1,139,394 shares of the Company's common stock, fully extinguishing this note. There was no gain or loss due to the conversion within the terms of the note.

During January and February 2019, FirstFire Global Opportunities Fund LLC converted $30,565 of the principal amount of the July 10, 2018 note into 6,516,848 shares of the Company’s common stock, leaving a principal balance due of $153,185. There was no gain or loss due to the conversion being within the terms of the note.

On July 10, 2018, the Company issued 90,000 shares of its common stock, valued at $8,010 based on the closing market price on the date of the note agreement, to FirstFire Global Opportunities Fund LLC as consideration for improved terms and conditions on their July 10, 2018 convertible note. The Company recorded a beneficial conversion feature of $143,325 with this note. See Note 13 for more information related to the convertible note.

Fiscal 2018 Stock Transactions

During fiscal 2018, the Company issued 14,857,715 shares of stock to various investors for stock payable of $2,559,061 and cash of $1,662,732.

During fiscal 2018, a Director exercised one of his stock options for 200,000 shares of stock for cash of $20,000.

F-11

Table of Contents

During fiscal 2018, the Company issued 8,512,776 shares and recorded a stock payable of $521,792 to consultants and employees for services provided to the Company. During fiscal 2018, $1,763,168 was expensed related to these shares.

During fiscal 2018, various contractors and employees converted an aggregate of $124,996 of their expenses to stock payable of the Company’s common stock, based on a conversion rate of $0.10 per share. The stock value on the conversion date was $0.23, resulting in a loss on conversion of $316,526. At February 28, 2018, the stock payable for these conversions is $276,769.

On May 18, 2016, the Company granted 9,042,250 common shares to Robert Monster, CEO, in accordance with his employment agreement dated May 18, 2016, which vest monthly over the new employment agreement period which ends on May 18, 2018, a period of two years. The shares were valued based on the employment agreement date. During fiscal year 2018, $1,191,349 was expensed related to these shares. 6,799,361 shares were issued on February 8, 2018, and 2,130,500 shares were issued on May 31, 2018.

During fiscal 2018, the Company signed employment agreements with three members of senior management, all of which are still active. All employment agreements were for a period of approximately 6 to 24 months. Included in the employment agreements were common stock grants of 120,000 to 1,025,000 shares which vest over a period of 6 to 24 months. A total of 1,585,000 shares were granted for the three employment agreements. During fiscal 2018, $165,436 was expensed related to these agreements.

During fiscal 2018, the Company granted 8,512,776 shares of stock to various contractors and employees. The shares vest over a period of 6 to 24 months. The shares were valued based on the grant date. During fiscal 2018, $1,763,168 was expensed related to these shares.

F-11 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

On October 27, 2017, the Company closed on an asset purchase agreement for the acquisition of CityInformation. CityInformation, based in Amsterdam (Netherlands), develops and operates mobile apps for cities and towns worldwide. The Company granted 2,833,333 shares of its common stock to the existing owners of CityInformation. The closing price of the Company’s common stock on the acquisition date was $0.29 per share, therefore, the fair value of common stock issued was $821,667. The stock was issued in November 2017.

On December 7, 2017, the Company closed on an asset purchase agreement for the acquisition of Congo Ltd. (Congo). Congo, based in Houston, TX, owns and operates a web-based platform offering; a portal connecting attorneys to prospective clients through a marketplace setting; a software-as-a-service (SaaS) subscription, selling web features to attorneys for their use on their respective law firm websites, and; the creation of customized online directories. The Company granted 3,000,000 shares of its common stock to the existing owners of Congo. The closing price of the Company’s common stock on the acquisition date was $0.28 per share, therefore, the fair value of common stock issued was $840,000. The stock was issued in February 2018.

Fiscal 2017 Stock Transactions

During fiscal 2017, the Company issued 6,999,707 shares of stock to various investors and accrued $800,500 of stock payable for cash of $2,377,950.

Included in the above, are an aggregate of 435,000 shares which were sold to the Company’s chairman and a related party investor at terms below the market price and share prices available other investors at the time of the sales. As a result, the Company recorded additional stock compensation expense of $30,450 to additional paid in capital to account for the preferential common share pricing.

During fiscal 2017, the Company granted 1,600,812 shares of stock to various contractors and employees. The shares vest over a period of 6 to 24 months. The shares were valued based on grant date. During fiscal 2017, $503,710 was expensed related to these shares.

During fiscal 2017, the Company issued 775,000 shares and recorded a stock payable of $845,600 to directors and consultants for services provided to the Company. The value of the shares issued was $1,217,600 based on the fair market value of the common stock on the date of grant.

During fiscal 2017, the Company entered into agreements to purchase domain name rights with three individuals. In exchange for the domain name rights, the Company issued 369,750 common shares and paid $46,500 in cash. The total fair value of the shares was $154,740 based on the respective domain name purchase agreements date and the closing market price on that date.

On September 14, 2016, the Company closed on a Stock Purchase Agreement for 100% of Rezserve Technologies, Ltd. (Rezserve), a company based in Vancouver, British Columbia. Pursuant to the agreement, the Company purchased all of the issued and outstanding stock of Rezserve in consideration for an aggregate of $1,480,000, of which 3,000,000 shares of stock were paid at the closing and $400,000 was a secured convertible note payable to Rezserve’s founder Clint Skidmore. The stock had a value of $1,080,000 at the closing date. The terms of the note include interest at 0% per annum. Principal is due and payable within one year of September 13, 2016. The Company imputed interest expense of $19,040 related to the convertible note payable – related party as an increase in additional paid in capital during fiscal 2017. In addition, the Company recorded $1,868 of foreign currency translation loss during fiscal 2017 which was reflected as accumulated other comprehensive loss. See Note 13 for additional information on this acquisition.

On December 1, 2016, the Company acquired all of the assets of Appointment.com. The purchase price pursuant to an asset purchase agreement was 1,625,000 shares. The value of the stock of $731,250 is included as a stock payable as of February 28, 2017. See Note 13 for additional information on this acquisition.

F-12 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

During fiscal 2017, the Company signed employment agreements with four members of senior management, three of which are still active. All employment agreements were for a period of approximately 12 months, however in one case there is no end date but can be terminated by either party. Included in the employment agreements were common stock grants of 250,000 to 1,000,000 shares which vest over a period of 12 to 48 months. A total of 2,220,000 shares were granted for the four employment agreements. During fiscal 2017, $154,921 was expensed related to these agreements.

During fiscal 2017, the Company granted 495,000 shares of stock to four advisors and employees. The shares vest over a period of 24 months. The shares were valued based on the grant date. During fiscal year 2017, $44,508 was expensed related to these shares.

On March 5, 2016, the Company acquired all of the assembled workforce, patents, intellectual property, technology, trademarks, trade names, copyrights, mask works and registrations, computer software, trade secrets and non-compete agreements related to the Cloud.Market business, pursuant to an agreement among the Company and the owner of Cloud.Market. The purchase price paid included issuance of 750,000 shares of our common stock and $7,500 of cash. The stock had a value of $60,000 at the closing date and was transferred on that date from common stock held in escrow to additional paid-in capital for that amount. See Note 13 for more information.

Stock Warrants

The Company has regularly used warrants as a tool to attract and compensate advisors and directors of the board rather than to use cash. The Company feels this is an appropriate way to conserve cash and to incentivize its board of directors, advisors and consultants.

As of February 28, ~~2018~~2019, the Company had 96,~~044~~080,~~740~~000 warrants outstanding with an average exercise price of $0.1314. The warrants expire between one and ten years from the date of issuance and have a weighted average remaining exercise period as of February 28, ~~2018~~2019 of 67.1771 years.

During fiscal 2019, 2,964,740 warrants with an average exercise price of $0.10 expired.

During fiscal 2018, the Company issued an aggregate of 6,694,740 warrants to various investors, consultants and employees to purchase shares of the Company’s common stock at $0.10. All warrants vested immediately at the date of issuance. 4,000,000 warrants are exercisable through 2027. 30,000 warrants are exercisable through 2026. 2,964,740 warrants are exercisable through February 2019. The total estimated value using the Black-Scholes Model, based on a volatility rate between 153% and 263% and a call option value of $0.10 was $1,340,175.

AsF-12 ofTable ~~February 28, 2017, the Company had 4,660,000 warrants outstanding with an average exercise price~~ of ~~$0.14. The warrants expire between one and ten years from the date of issuance and have a weighted average remaining exercise period as of February 28, 2017 of 4.15 years.~~Contents

~~During~~As ~~fiscal~~of ~~2017~~February 28, 2018, the Company ~~issued~~had ~~an aggregate of 150~~9,~~000~~044,740 warrants tooutstanding 3with ~~consultants~~an toaverage ~~purchase~~exercise ~~shares~~price of ~~the Company’s common stock at prices which ranged from~~ $0.~~10 to $0~~13.~~30.~~ ~~All~~The warrants ~~vested~~expire ~~immediately~~between atone and ten years from the date of issuance and ~~are~~have ~~exercisable~~a ~~through~~weighted ~~2026.~~average ~~The~~remaining ~~total~~exercise ~~estimated~~period ~~value~~as ~~using~~of ~~the~~February ~~Black-Scholes Model~~28, ~~based~~2018 ~~on a volatility rate~~ of ~~180% and a call option value of $0~~6.~~0797,~~17 ~~was $11,948~~years.

F-13 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The Company utilized the following key assumptions in computing the fair value of the warrants using the Black-Scholes pricing model:

	July 20,	~~July 20,~~	July 27,		February 6,	~~July 27,~~	February 15,		February 16,	~~February 6,~~			~~February 15,~~			~~February 16,~~
	2017	~~2017~~	2017		2018	~~2017~~	2018		2018	~~2018~~			~~2018~~			~~2018~~
Weighted-average volatility	263%		263%	%	157%		~~263~~153%	%	158%		~~157~~	%		~~153~~	%		~~158~~	%
Expected dividends	None	~~None~~	None		None	~~None~~	None		None	~~None~~			~~None~~			~~None~~
Expected term (in years)	10.00		10.00		1.00		101.00		1.00		~~1.00~~			~~1.00~~			~~1.00~~
Weighted-average risk-free interest rate	1.17%		1.1716%	%	2.00%		1.1699%	%	2.00%		~~2.00~~	%		~~1.99~~	%		~~2.00~~	%
Weighted-average fair value of warrants granted	$0.20	$	$0.2027		$0.15	$	$0.2714		$0.17	$	~~0.15~~		$	~~0.14~~		$	~~0.17~~

The following table summarizes information about the Company’s stock warrant activity during the fiscal years ~~2018~~2019 and ~~2017~~2018:

	Number of Warrants
Outstanding - February 28, 2016		2,050,000
Granted		2,430,000
Canceled or expired		-
Outstanding - February 28, 2017		4,480,000
Granted		6,994,740
Canceled or expired		(2,430,000	)
Outstanding - February 28, 2018		9,044,740
Exercisable at February 28, 2018		9,044,740
Granted		-
Canceled or expired		(2,964,740	)
Outstanding - February 28, 2019		6,080,000
Exercisable at February 28, 2019		6,080,000

The following table summarizes information about stock warrants outstanding as of February 28, ~~2018~~2019:

Exercise Price		Number Outstanding			Weighted Average Remaining Life (years)			Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercisable Price
ExercisePrice	NumberOutstanding	Weighted Average Remaining Life (years)		Weighted AverageExercise Price	NumberExercisable		Weighted AverageExercisable Price
$0.10	4,430,000	8.24	~~7,394,740~~	$0.10	4,430,000	~~5.92~~	$0.10	$	~~0.10~~		~~7,394,740~~	$	~~0.10~~
$0.15	300,000	6.10	~~300,000~~	$0.15	300,000	~~7.10~~	$0.15	$	~~0.15~~		~~300,000~~	$	~~0.15~~
$0.25	850,000	6.19	~~850,000~~	$0.25	850,000	~~7.19~~	$0.25	$	~~0.25~~		~~850,000~~	$	~~0.25~~
$0.30	500,000	6.54	~~500,000~~	$0.30	500,000	~~7.54~~	$0.30	$	~~0.30~~		~~500,000~~	$	~~0.30~~
$0.10 - $0.30	6,080,000	7.71	~~9,044,740~~	$0.14	6,080,000	~~6.17~~	$0.14	$	~~0.13~~		~~9,044,740~~	$	~~0.13~~

The Company recorded stock-based compensation expense of $0 and $~~11,948~~0 for all outstanding stock warrants for fiscal years ~~2018~~2019 and ~~2017~~2018, respectively. This expense is included in stock-based compensation expense.

Note 7. Stock Options

The Company has one stock option plan called The 2006 Employee Stock and Option Plan (the “2006 Plan”), which has reserved 5,000,000 shares of our common stock for issuance. The types of awards that could be granted under the 2006 Plan include incentive and non-qualified options to purchase shares of common stock, stock appreciation rights, restricted shares, restricted share units, performance awards and other types of stock-based awards. All grants are determined and approved by the Board of Directors. Through February 28, ~~2018~~2019, the Company has only granted non-qualified stock options under the 2006 Plan. The stock options may be granted to officers and employees of the Company. Options granted under the 2006 Plan have exercise prices and vesting terms approved by the Board of Directors at the time of each grant. Vesting terms of the outstanding options range from immediate to four years from the date of grant. The exercise period of the options range from five to ten years from the date of grant.

F-1413 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The Company records its stock-based compensation arrangements calculating the fair value of share-based payments, including grants of employee stock options and employee stock purchase plan shares, to be recognized in the consolidated statements of operations based on their grant date fair values. The fair value of the Company’s stock options have been estimated using the Black-Scholes pricing model, which requires assumptions as to expected dividends, the options expected life, volatility and risk-free interest rate at the time of the grant. 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.

On October 1, 2018, the Company issued 2,468,750 stock options with a fair value of $188,740 to three contractors to purchase shares of the Company’s common stock at a price of $0.05. These options vest immediately and are exercisable for five years.

On November 21, 2018, the Company issued 3,500,000 stock options with a fair value of $120,421 to three contractors to purchase shares of the Company’s common stock at a price of $0.05. These options vest immediately and are exercisable for five years.

On June 1, 2018, the Company issued 3,555,212 stock options with a fair value of $436,131 to one employee to purchase shares of the Company’s common stock at a price of $0.10. 3,000,000 options vest immediately and are exercisable for five years. 555,212 options vest over 12 months, and are exercisable for five years. In the third quarter of fiscal 2019, the Company expensed an additional $19,621 related to the proportioned vesting of the 555,212 options. The Company terminated this employee’s contract on November 30, 2018, resulting in only 276,845 of the 555,212 options vesting. The balance of 278,367 options have been forfeited.

During fiscal 2018, the Company issued an aggregate of 1,035,159 stock options with a fair value of $151,627 to 1 officer, 6 employees and 2 contractors to purchase shares of the Company’s common stock at prices of $0.10. All options vested immediately and are exercisable for one year.

During fiscal 2018, 1,292,310 of previously issued stock options to 1 officer expired, and 200,000 stock options previously issued to another officer were exercised for $20,000 cash.

The Company utilized the following key assumptions in computing the fair value of the options using the Black-Scholes pricing model:

	February 16,		June 1	June 1	October 1	November 21
	2018		2018	2018	2018	2018
Weighted-average volatility	153%	~~153~~	223%	223%	208%	192%
Expected dividends	None		None	None	None	None
Expected term (in years)	1.00	~~1.00~~	2.50	3.00	3.00	3.00
Weighted-average risk-free interest rate	2.00%	~~2.00~~	2.61%	2.61%	2.96%	2.89%

The Company recorded stock-based compensation expense of $~~164~~764,~~742~~913 and $0164,742 for all outstanding options for fiscal years ~~2018~~2019 and ~~2017~~2018, respectively. This expense is included in stock-based compensation.

The following table summarizes information about the Company’s stock options as of February 28, ~~2018~~2019 and activity during the fiscal years ~~2018~~2019 and ~~2017~~2018:

	Number of Options			Weighted Average Exercise Price
	Number ofOptions			Weighted Average Exercise Price
Outstanding - February 28, 2016		6,542,310		$	0.17
Granted		150,000		$	0.10
Canceled or expired		-			-
Outstanding - February 28, 2017		6,692,310		$	0.16
Granted		1,035,159		$	0.10
Canceled or expired		(1,492,310	)	$	0.14
Outstanding - February 28, 2018		6,235,159		$	0.16
Exercisable at February 28, 2018		6,235,159		$	0.16
Granted		9,523,962		$	0.07
Canceled or expired		(1,035,159	)	$	0.10
Outstanding - February 28, 2019		14,723,962		$	0.10
Exercisable at February 28, 2019		14,723,962		$	0.10

~~The~~F-14 ~~following~~Table ~~table summarizes information about stock options outstanding as~~ of ~~February 28, 2018:~~Contents

Exercise Price	Number Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercisable Price
$0.10		4,885,159		5.87	$	0.10		4,885,159	$	0.10
$0.15		200,000		7.77	$	0.15		200,000	$	0.15
$0.30		700,000		7.42	$	0.30		700,000	$	0.30
$0.54		375,000		5.93	$	0.54		375,000	$	0.54
$1.00		75,000		3.62	$	1.00		75,000	$	1.00
$0.10 - $1.00		6,235,159		6.08	$	0.16		6,235,159	$	0.16

The following table summarizes information about stock options outstanding as of February 28, 2019:

F-15 Table of Contents

Exercise Price	Number Outstanding	Weighted Average Remaining Life (years)	Weighted Average Exercise Price	Number Exercisable	Weighted Average Exercisable Price
$0.05	5,968,750	4.67	$0.05	5,968,750	$0.05
$0.10	7,405,212	4.96	$0.10	7,405,212	$0.10
$0.15	200,000	6.77	$0.15	200,000	$0.15
$0.30	700,000	6.42	$0.30	700,000	$0.30
$0.54	375,000	4.93	$0.54	375,000	$0.54
$1.00	75,000	2.62	$1.00	75,000	$1.00
$0.10 - $1.00	14,723,962	4.93	0.10	14,723,962	$0.10

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Note 8. Related Party Transactions

Accounts Payable – Related Parties

As of February 28, ~~2018 and 2017~~2019, the Company owes $79,~~625~~661 ~~and~~to ~~$10,613,~~George ~~respectively,~~Nagy ~~due~~related to ~~advances~~operating ~~made~~expenses topaid anon ~~employee~~behalf ~~which~~of isthe ~~included~~Company ~~within~~and ~~accounts~~not ~~payable~~yet ~~– related parties~~repaid.

As of February 28, ~~2018 and 2017~~2019, the Company owes $~~450~~28,~~500~~000 ~~and $0, respectively,~~ to ~~Epik~~Sam ~~Holdings~~Ciacco ~~Inc.~~ related to ~~annual~~accounting-related ~~domain~~services ~~name~~provided ~~renewal~~in ~~fees~~fiscal ~~to satisfy Domain marketing development obligations~~2019.

As of February 28, 2019, the Company owes $57,000 to Jeffrey Mills related to consulting services provided during the period December 1, 2018 to February 28, 2019.

As of February 28, 2019, the Company owes $21,000 to Darvin Habben related to consulting services provided during the period December 1, 2018 to February 28, 2019.

As of February 28, 2019, the Company owes $9,905 to Darvin Habben related to operating expenses paid on behalf of the Company and not yet repaid.

As of February 28, 2019, the Company owes $18,000 to James Parsons related to consulting services provided during the period December 1, 2018 to February 28, 2019.

During the second quarter of 2019, Robert Monster deferred his salary payments to assist with cash conservation. As at February 28, 2019, $70,000 has been accrued as payable to Robert Monster.

As of February 28, 2019 and 2018, the Company owes $0 and $7,625, respectively, due to advances made to an employee which is included within accounts payable – related parties.

As of February 28, 2019 and February 28, 2018, the Company owes $0 and $450,500, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations. Epik Holdings Inc. is a company controller by Robert Monster, the Company’s former Chief Executive Officer. All amounts owing to Epik Holdings Inc. were converted to a promissory note. See Note 13 for more information.

Prepaid Domain Names

During the fiscal years ~~2018~~2019 and ~~2017~~2018, the Company incurred $~~214,304~~0 and $~~165~~214,~~573~~304, respectively, of annual domain name renewal fees. The amounts paid for the annual domain name renewal fees are paid directly to Epik Holdings Inc., a company which is controlled by Robert Monster, the Company’s former Chief Executive Officer. Epik, then uses those funds to directly to pay Verisign and ICANN companies for the annual domain renewal costs. The costs paid to Epik are at terms similar or better than what Epik charges its other clients.

Convertible Notes Payable – Related Party

On September 14, 2016, subject to a stock purchase agreement, the Company signed a secured convertible note of $400,000 with Clint Skidmore, founder of Rezserve Technology Ltd (“Rezserve”). The interest free note is due and payable within one year, at which time it can be converted into up to 1,000,000 shares of the Company’s common stock at a conversion price of $0.40 per share. The Company evaluated the note and determined that as the fixed exercise price exceeded the closing market price on the note issuance date, that no beneficial conversion feature was present.

OnF-15 ~~December~~Table ~~22, 2017, the Company formalized its agreement to extend and convert the original convertible note~~ of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $30,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, 2018, the Company owes $160,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $38,000 in fiscal 2018.Contents

On ~~June~~December 922, 2017, the Company ~~signed~~formalized aits agreement to extend and convert the original convertible note of $~~500~~400,000 ~~with~~for ~~Darvin~~Clint ~~Habben~~Skidmore to October 31, ~~Chairman.~~2018, ~~This~~original ~~note~~founder isof ~~due~~Rezserve ~~and~~Technologies ~~payable~~Ltd. ~~within~~The ~~one~~Company ~~year,~~has ~~bears~~repaid ~~interest~~$80,000 ofto 8%Clint Skidmore, and ~~can~~converted be$210,000 ~~converted~~of ~~into~~the upnote to 21,~~000~~100,000 shares of the Company’s common stock, atresulting in a ~~conversion~~loss ~~price~~on conversion of $013,000.25 ~~per~~At ~~share.~~February ~~The~~28, ~~Company~~2019, ~~recorded~~the aCompany ~~debt~~owes ~~discount equal to~~ $~~300~~110,000 ~~due~~ to ~~this~~Clint ~~conversion feature. The note had accrued interest of $28~~Skidmore,~~932~~ asbearing ofno ~~February 28, 2018~~interest. ~~The~~This ~~debt~~note ~~discount~~ had aimputed ~~balance~~interest atexpense ~~February 28, 2018~~ of $~~191~~11,~~507.~~500 ~~The~~and ~~Company recorded debt discount amortization expense of~~ $~~108~~38,~~493~~000 ~~during~~in ~~the~~fiscals ~~year~~2019 ~~ended~~and ~~February 28~~2018, ~~2018~~respectively.

On June 9, 2017, the Company signed a convertible note of $500,000 with Darvin Habben, Chairman. This note is due and payable within one year, bears interest of 8%, and can be converted into up to 2,000,000 shares of the Company’s common stock at a conversion price of $0.25 per share. The Company recorded a debt discount equal to $300,000 due to this conversion feature. The note had accrued interest of $28,932 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $191,507. The Company recorded debt discount amortization expense of $108,493 during the year ended February 28, 2018.

On May 9, 2018, the Company converted the $500,000 convertible note with Darvin Habben, Chairman, along with accrued and unpaid interest of $38,027, to 5,380,274 shares of its common stock at a conversion price of $0.10 per share, fully extinguishing this note. The company recorded debt discount amortization expense of $191,507 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception.

Promissory Notes Payable - Related Party

On July 20, 2017, the Company signed a promissory note of $100,000 with Derek Schumann, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Derek Schumann in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018.

On May 9, 2018, the Company converted the $100,000 promissory note with Derek Schumann, Director, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018.

On July 20, 2017, the Company signed a promissory note of $100,000 with Greg Foss, Director. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Greg Foss in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018.

~~F-16~~On ~~Table~~May 9, 2018, the Company converted the $100,000 promissory note with Greg Foss, Director, to 1,000,000 shares of ~~Contents~~its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018.

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

On July 27, 2017, the Company signed a promissory note of $150,000 with Darvin Habben, CEO. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Darvin Habben in connection with this note, with an exercise price of $0.10, and expiry date of July 27, 2027. The Company recorded a warrant discount equal to $150,000 due to this warrant feature. The note had imputed interest of $8,877 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $105,616. The Company recorded warrant discount amortization expense of $44,384 during the year ended February 28, 2018.

~~Appointment~~On May 9, 2018, the Company converted the $150,000 promissory note with Darvin Habben, Chairman, to 1,500,000 shares of its common stock at a conversion price of $0.~~com~~10 ~~Acquisition~~per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $105,616 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $2,875 during the quarter ended May 31, 2018.

OnF-16 ~~December~~Table 1, 2016, the Company acquired all assets related to Appointment.com, Inc. (“Appointment”), an online scheduling software system based in Seattle, Washington. This transaction is considered related party since the Company’s CEO, Rob Monster, owned a controlling interest in Appointment through a company owned 100% by Mr. Monster. The purchase price pursuant to an asset purchase agreement was 1,625,000 shares of common stock. This amount was paid with the issuance of 1,625,000 shares of our common stock, of which 536,364 shares were issued to Mr. Monster’s company. Due to the related party nature of the transaction, the Company did not record any goodwill related to the transaction and assets and liabilities acquired were recorded at cost. The difference between the cost of the assets received and the purchase price is recognized as compensation expense on the Company’s consolidated statement of operations. The agreement included customary representations, warranties, and covenants by us and Appointment. See Note 11 for additional information.Contents

On September 12, 2018, the Company issued a promissory note to Epik Holdings Inc. for $765,200 for conversion of accounts payable - related party. The note bears interest at 4%, and matures on September 12, 2019. The note had accrued interest of $11,069 and a principal balance of $765,200 as of February 28, 2019.

On November 15, 2018, the Company issued a promissory note to Robert Monster for $150,000 for conversion of outstanding severance owed. The note bears interest at 15%, and matures on November 15, 2019. The note had accrued interest of $6,473 and a principal balance of $150,000 as of February 28, 2019.

Sales of Common Stock

During fiscal 2019, the Company sold an aggregate of 5,050,000 shares to five of the Company’s board members totalling $545,000.

During fiscal 2018, the Company sold an aggregate of 2,100,000 shares to two of the Company’s board members at the market price of $250,000.

~~During~~Cryptocurrency ~~fiscal~~Sales ~~2017,~~- ~~the~~Related Company sold an aggregate of 435,000 shares which were sold to the Company’s chairman and a related party investor at terms below the market price and share prices available other investors at the time of the sales. As a result, the Company recorded additional stock compensation expense of $30,450 to additional paid in capital to account for the preferential common share pricing.Parties

On May 16, 2018, the Company sold 63,291.13924 RHOCs at $1.56 for $100,000 to Greg Foss, resulting in a loss on exchange of $1,282.

On May 18, 2018, the Company sold 63,291.13924 RHOCs at $1.58 for $100,000 to Darvin Habben, resulting in no gain or loss on exchange.

Employment Agreements

During fiscal ~~2018~~2019, the Company signed employment agreements with ~~three~~two ~~members~~member of senior management, ~~all~~neither of which are still active. All employment agreements were for a period of approximately 612 to 24 months. ~~See Note 6 for more information about these employment agreements.~~

During fiscal ~~2017~~2018, the Company signed employment agreements with ~~four~~three members of senior management, ~~three~~none of which are still active. All employment agreements were for a period of approximately ~~12 months, however in one case there is no end date but can be terminated by either party. See Note~~ 6 ~~for~~to ~~more~~24 ~~information about these employment agreements~~months.

Directors and Officers

In February 2019, all non-executive directors received a stock grant of 25,000,000 shares. This resulted in a stock-based compensation expense of $200,000 in fiscal 2019. The value of the price per share was determined based on the closing market price on the date of grant.

In the third quarter of fiscal 2019, three newly appointed Directors received a prorated stock grant based on 600,000 annualized shares. This resulted in a stock-based compensation expense of $68,379 in fiscal 2019.

On June 1, 2018, the Company issued 3,555,212 stock options with a fair value of $436,131 to one employee, whom was also a director, to purchase shares of the Company’s common stock at a price of $0.10. 3,000,000 options vest immediately and are exercisable for five years. 555,212 options vest over 12 months, and are exercisable for five years. The Company terminated this employee’s contract on November 30, 2018, resulting in only 276,845 of the 555,212 options vesting. The balance of 278,367 options have been forfeited.

In December 2017, all non-executive directors received a stock grant of 600,000 shares. Mr. Parsons and Mr. Mills received an additional 200,000 shares each, as recognition for completing tasks outside their director responsibilities. This resulted in a stock-based compensation expense of $956,800 in fiscal 2018.

In December 2016, all non-executive directors received a stock grant of 300,000 shares, except for Mr. Habben who received 350,000 as chairman and Mr. Parsons who received 140,000 shares and $40,000 in cash. As of the date of this report, all shares granted have been issued. This resulted in a stock-based compensation expense of $835,800 in fiscal 2017.

CEO Employment Agreement Share Issuance

The Company expensed $~~240~~160,000 in annual salary and $1476,~~026,710~~534 in stock-based compensation in the first nine months of fiscal ~~2018~~2019, and $240,000 in annual salary and $1,~~191~~026,~~349~~710 in stock-based compensation in fiscal ~~2017~~2018, related to the employment agreement with Robert Monster, the Company’s former CEO. Robert Monster’s employment with the Company was terminated on September 13, 2018, and his stock-based compensation will continue vesting until June 1, 2019. As of February 28, 2019, $221,392 of Robert Monster’s stock-based compensation remains unvested.

The Company expensed $80,000 in annual salary and $163,897 in stock option awards in fiscal 2019 related to the employment agreement with George Nagy, CEO. George Nagy’s tenure was from September 13, 2018 to December 20, 2018.

F-17

Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

On February 10, 2016, the Company issued 3,312,811 shares of common stock to Robert Monster, CEO, in accordance with his employment agreement dated May 18, 2015. The shares were valued based on the employment agreement date using the Black-Scholes model. See Note 6 for more information about this share issuance.

On May 22, 2016, the Company granted 9,042,250 common shares to Robert Monster, CEO, in accordance with his employment agreement dated May 22, 2016, which vest monthly over the new employment agreement period which ends on May 21, 2018, a period of two years. The shares were valued based on the employment agreement date. See Note 6 for more information about this share issuance.

CEO Accrued Salary Conversion

On February 16, 2018, Robert Monster, ~~CEO~~ converted $70,000 of his accrued salary into 700,000 shares of common stock and 700,000 stock options with an exercise price of $0.10 and a vesting period of 12 months. The shares and options were valued on the conversion date in the amounts of $161,000 and $92,507, respectively.

On February 10, 2016, Robert Monster, CEO converted $129,231 of his accrued salary into 1,292,310 shares of common stock and 1,292,310 stock options with an exercise price of $0.15 and a vesting period of 12 months. The shares and options were valued on the conversion date in the amounts of $109,846 and $19,385, respectively.

Accrued Expenses - Related Parties

The Company was founded in 1982 and managed by Richard Pomije since at least 1987. On May 17, 2015, Mr. Pomije resigned as CEO of the Company and on June 1, 2015, he resigned as the CFO and Chairman. At that time of his resignation, the Company and the Board of Directors were not aware of any continuing employment agreement. The Company released Mr. Pomije on September 11, 2015 concurrent with his closing of the Burnsville, MN office.

On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. ~~The~~During ~~Company~~the isquarter inending ~~the~~May ~~process~~31, of2018, ~~filing~~$10,910 was paid to Mr. Richard Pomije. As at February 28, 2019, $542,066 has been accrued as payable to Mr. Pomije. The Company filed an appeal on June 13, 2018. See Note 1514 for additional information about transactions between the Company and its former officer.

Note 9. Income Taxes

The Company accounts for income taxes under standards issued by the FASB. Under those standards, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not that such assets will not be realized through future operations.

No provision for federal income taxes has been recorded due to the net operating loss carry forwards totaling $1520,~~888~~331,~~098~~988 as of February 28, ~~2018~~2019 that will offset future taxable income. The available net operating loss carry forwards will expire in various years through ~~2038~~2039. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards.

The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at February 28, 2019 and February 28, 2018:

	2019			2018
Net tax loss carry-forwards	$	20,331,988		$	15,888,098
Statutory rate		21	%		21	%
Expected tax recovery		4,269,717			3,336,501
Change in valuation allowance		(4,269,717	)		(3,336,501	)
Income tax provision	$	-		$	-

Components of deferred tax asset:
Non capital tax loss carry forwards	$	4,269,717		$	3,336,501
Less: valuation allowance		(4,269,717	)		(3,336,501	)
Net deferred tax asset	$	-		$	-

F-18

Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

	2018			2017
Net tax loss carry-forwards	$	15,888,098		$	11,627,532
Statutory rate		21	%		34	%
Expected tax recovery		3,336,501			3,953,361
Change in valuation allowance		(3,336,501	)		(3,953,361	)
Income tax provision	$	-		$	-
Components of deferred tax asset:
Non capital tax loss carry forwards	$	3,336,501		$	3,953,361
Less: valuation allowance		(3,336,501	)		(3,953,361	)
Net deferred tax asset	$	-		$	-

Note 10. Commitments and Contingencies

Litigation

The Company, in the normal course of business, is a party to various ordinary course claims and legal proceedings. In the opinion of management, the ultimate resolution of these matters, individually and in the aggregate, will not have a material adverse effect on the Company's financial position or results of operations.

On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. ~~The~~During ~~Company~~the isquarter inending ~~the~~May ~~process~~31, of2018, ~~filing~~$10,910 was paid to Mr. Richard Pomije. As at February 28, 2019, $542,066 has been accrued as payable to Mr. Pomije. The Company filed an appeal on June 13, 2018. See Note 1514 for additional information about transactions between the Company and its former officer.

Lease Commitments

As of February 28, ~~2018~~2019, wethere ~~have~~are ~~one~~no ~~outstanding~~ operating ~~lease.~~leases ~~The lease is for 700 square feet of office space~~ in ~~Vancouver, British Columbia for our Rezserve subsidiary~~place. ~~The lease is month-to-month with either party able to terminate the lease with 30 days of notice. Gross rent is approximately $2,600 per month.~~

Note 11. ~~Common~~Earnings ~~Stock~~(Loss) ~~Subscriptions~~Per ~~Receivable~~Share

From time to time, the Company has had various stock subscription agreements outstanding all of which were due from a related party. As of February 28, 2016, the Company was owed $5,000 for stock issued and had accrued an additional $7,150 for stock which was payable during the 2017 fiscal year under the employment agreement with Robert Monster. The total amount of $12,150 was satisfied in full in fiscal 2017. No amounts are outstanding for fiscal 2018.

Note 12. Earnings (Loss) Per Share

The Company computes earnings per share using two different methods, basic and diluted, and presents per share data for all periods in which statements of operations are presented. Basic earnings per share are computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings per share are computed by dividing net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding.

Due to the recent net losses generated by the Company, there are no dilutive elements. Therefore, basic and diluted EPS are the same.

~~F-19~~The ~~Table~~following tables provide a reconciliation of ~~Contents~~the numerators and denominators used in calculating basic and diluted earnings (loss) per share for the fiscal years 2019 and 2018:

DigitalTown, Inc.

	Fiscal 2019			Fiscal 2018
Basic earnings (loss) per share calculation:
Net loss to common shareholders	$	(7,403,426	)	$	(10,243,396	)
Weighted average number of common shares outstanding		121,297,460			61,786,169
Basic net loss per share	$	(0.06	)	$	(0.17	)

Diluted earnings (loss) per share calculation:
Net loss to common shareholders	$	(7,403,426	)	$	(10,243,396	)
Weighted average number of common shares outstanding		121,297,460			61,786,169
Stock options (1)		-			-
Warrants (2)		-			-
Diluted weighted average common shares outstanding		121,297,460			61,786,169
Diluted net loss per share	$	(0.06	)	$	(0.17	)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)	At both February 28, 2019 and February 28, 2018, there were outstanding stock options equivalent to 14,723,962 and 6,235,159 common shares, respectively. The stock options are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share.

(2)	At February 28, 2019 and February 28, 2018, there were outstanding warrants equivalent to 6,080,000 and 9,044,740 common shares, respectively. The warrants are anti-dilutive at February 28, 2019 and February 28, 2018 and therefore, have been excluded from diluted earnings (loss) per share.

~~Years~~Note ~~Ended~~12. ~~February~~Acquisitions ~~28, 2018 and 2017~~

The following tables provide a reconciliation of the numerators and denominators used in calculating basic and diluted earnings (loss) per share for the fiscal years 2018 and 2017:

	Fiscal 2018			Fiscal 2017
Basic earnings (loss) per share calculation:
Net loss to common shareholders	$	(10,243,396	)	$	(7,219,626	)
Weighted average number of common shares outstanding		61,786,169			44,840,743
Basic net loss per share	$	(0.17	)	$	(0.16	)
Diluted earnings (loss) per share calculation:
Net loss to common shareholders	$	(10,243,396	)	$	(7,219,626	)
Weighted average number of common shares outstanding		61,786,169			44,840,743
Stock options (1)		-			-
Warrants (2)		-			-
Diluted weighted average common shares outstanding		61,786,169			44,840,743
Diluted net loss per share	$	(0.17	)	$	(0.16	)

	(1)	At both February 28, 2018 and February 28, 2017, there were outstanding stock options equivalent to 6,437,600 and 6,692,310 common shares, respectively. The stock options are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share.
	(2)	At February 28, 2018 and February 28, 2017, there were outstanding warrants equivalent to 7,080,000 and 8,510,000 common shares, respectively. The warrants are anti-dilutive at February 28, 2018 and February 28, 2017 and therefore, have been excluded from diluted earnings (loss) per share.

Note 13. Acquisitions

Congo Ltd. Acquisition

F-19

Table of Contents

This acquisition was accounted for using the replacement cost method, where the cost to replace or recreate the subject asset is estimated. The agreement included customary representations, warranties, and covenants by us and Congo.

According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows:

Developed Technology, Platform and code base			420,000
Developed Technology, New code base and databases			432,000
Assembled Workforce			35,000
Goodwill			78,000
Total intangibles and goodwill			965,000

Total assets acquired, net			965,000

F-20 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The purchase price consisted of the following:

Common stock			840,000
Cash consideration			75,000
Earnest money			50,000
Total purchase price			965,000

The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $926,252 related to this acquisition in fiscal 2018.

As the company is not using the assets in the same manner as the predecessor company, no proforma financials are presented.

CityInformation, B.V. Acquisition

According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows:

Developed Technology, App Portfolio			250,000
Developed Technology, App Handles			135,000
Assembled Workforce			40,000
Goodwill			396,667
Total intangibles and goodwill			821,667

Total assets acquired, net			821,667

F-20

Table of Contents

The purchase price consisted of the following:

Common stock			821,667
Total purchase price			821,667

The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $795,508 related to this acquisition in fiscal 2018.

As the company is not using the assets in the same manner as the predecessor company, no proforma financials are presented.

Comencia, Inc. Acquisition

On July 1, 2017, the Company closed on an agreement and plan of share exchange and acquired Comencia, a related party Company, which was partly owned by an officer of the Company. The Company granted 2,500,000 shares of its common stock to the existing owners of Comencia, Inc. The closing price of the Company’s common stock on the acquisition date was $0.30 per share, therefore, the fair value of common stock issued was $750,000. As part of the closing of this agreement, the Company made a cash payment and issued a note receivable from Comencia for $55,000. The terms of the note include payable on demand within 30 days of notice and a 3.0% annual interest rate. This note has not yet been repaid.

F-21 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of Comencia’s assets and ongoing operations were acquired. The agreement included customary representations, warranties, and covenants by us and Comencia.

According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:

Cash	11,989
Other assets	13,115
Total assets	25,104

Accrued expenses	(12,741	)
Long-term payables	(52,422	)
Total liabilities	(65,163	)

Customer Lists	33,000
Intellectual Property	48,800
Trademarks	7,000
Total intangibles	88,800

Total assets acquired, net	48,741
Additional consideration given as compensation expense	701,259
Total consideration	750,000

The purchase price consisted of the following:

Common stock			750,000
Total purchase price			750,000

This transaction was a non-arms length transaction, as one of Comencia’s owners was a Director of Digitaltown. As such, $750,000 was recorded as a stock-based compensation in fiscal 2018.

F-2221 Table of Contents

~~DigitalTown~~The unaudited supplemental pro forma results of operations of the combined entities had the date of the acquisition been March 1, ~~Inc.~~2017 are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Pro Forma:
	For Fiscal Year
	2018
Revenues	$	367,923

Cost of revenues		1,053,184

Gross profit (loss)		(685,261	)

Operating expenses:
Selling, general and administrative expenses		7,454,580

Loss from operations		(8,139,841	)

Other income (expense)		(2,096,091	)

Net loss	$	(10,235,932	)

Weighted average number of common shares
Outstanding – basic and fully diluted		61,786,169

Net loss per share – basic and fully diluted	$	(0.17	)

~~Years~~Note ~~Ended~~13. ~~February 28, 2018 and 2017~~Debt

The unaudited supplemental pro forma results of operations of the combined entities had the date of the acquisition been March 1, 2017 or March 1, 2016 are as follows:

	Combined Pro Forma:
	For Fiscal Years
	2018			2017
Revenues	$	367,923		$	251,713
Cost of revenues		1,053,184			562,216
Gross profit (loss)		(685,261	)		(310,503	)
Operating expenses:
Selling, general and administrative expenses		7,454,580			5,218,597
Loss from operations		(8,139,841	)		(5,529,100	)
Other income (expense)		(2,096,091	)		(1,744,049	)
Net loss	$	(10,235,932	)	$	(7,273,149	)
Weighted average number of common shares
Outstanding – basic and fully diluted		61,786,169			44,840,743
Net loss per share – basic and fully diluted	$	(0.17	)	$	(0.16	)

Appointment.com Acquisition

On December 1, 2016, the Company acquired all assets related to Appointment.com, Inc. (“Appointment”), an online scheduling software system based in Seattle, Washington. This transaction is considered related party since Epik Holdings Inc. is a controlling owner of Appointment and the Company’s CEO, Rob Monster, is the controlling owner of Epik Holdings Inc. The purchase price pursuant to an asset purchase agreement was 1,625,000 common shares. Due to the related party nature of the transaction, the Company did not record any goodwill related to the transaction. The sum of the cost basis of the liabilities assumed and the stock value of $731,500 is recognized as $853,955 expense on the Company’s consolidated statement of operations. The agreement included customary representations, warranties, and covenants by us and Appointment.

The allocation of the purchase price to assets based upon fair value determinations was as follows:

Cash	$	2,240
Related Party Payable		(42,380	)
Accrued Salary		(82,565	)
Total Net Liabilities Assumed	$	(122,705	)

The purchase price consisted of the following:

Total Net Liabilities Assumed	$	122,705
Common Stock		731,250
Total Compensation Expense and Purchase Price	$	853,955

The unaudited supplemental pro forma results of operations of the combined entities are not included in this disclosure as the acquisition of Appointment does not materially affect the Company's results from operations.

F-23 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Rezserve Technologies Ltd. Acquisition

On September 14, 2016, the Company entered into a Stock Purchase Agreement for 100% of Rezserve Technologies, Ltd. (Rezserve), a travel industry software company based in Vancouver, British Columbia. Pursuant to the terms of the agreement, the Company purchased all of the issued and outstanding stock of Rezserve in consideration for a total purchase price of $1,480,000. This price was paid with 3,000,000 shares of the Company’s common stock and a $400,000 secured convertible note payable to Rezserve’s founder Clint Skidmore. The terms of the note include interest at 0% per annum. Principal is due and payable within one year of September 13, 2016.

On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $30,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, 2018, the Company owes $160,000 to Clint Skidmore, bearing no interest. This note had imputed interest of $38,000 in fiscal 2018. See Note 14 for more information about the convertible note payable – related party.

This acquisition was accounted for as a business combination under the purchase method of accounting, given that substantially all of Rezserve’s assets and ongoing operations were acquired. The purchase resulted in $1,445,292 of impairment expense. This was due to the use of common stock by the Company to pay for the acquisition and the corresponding the value of the stock was in excess of the fair value of the assets received. The agreement included customary representations, warranties, and covenants by us and the Rezserve owner.

According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:

Assets, net	$	34,708
Customer Lists		77,295
Intellectual Property		30,842
Trademarks		19,475
Goodwill		1,317,680
Total Assets Acquired	$	1,480,000

The purchase price consisted of the following:

Convertible note payable – related party	$	400,000
Common Stock		1,080,000
Total Purchase Price	$	1,480,000

The Company reviewed the fair value of the total assets of the acquisition and concluded the fair value of the goodwill and intangible assets which were acquired was less than the fair value of the common stock which was used to pay for the business. Accordingly, the Company recorded an impairment expense of $1,445,292 related to this acquisition in fiscal 2017.

F-24 Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The unaudited supplemental pro forma results of operations of the combined entities had the dates of the acquisitions been March 1, 2016 is as follows:

	Combined Pro Forma:
	For Fiscal Years
	2017
Revenues	$	333,879
Cost of revenues		475,308
Gross profit (loss)		(141,429	)
Operating expenses:
Selling, general and administrative expenses		5,323,560
Loss from operations		(5,464,989	)
Other income (expense)		(1,744,049	)
Net loss	$	(7,209,038	)
Weighted average number of common shares
Outstanding – basic and fully diluted		44,840,743
Net loss per share – basic and fully diluted	$	(0.16	)

Cloud.Market Acquisition

On March 5, 2016, the Company acquired all of the assembled workforce, patents, intellectual property, technology, trademarks, trade names, copyrights, mask works and registrations, computer software, trade secrets and non-compete agreements related to the Cloud.Market business, pursuant to an agreement among the Company and the owner of Cloud.Market. The purchase price paid included issuance of 750,000 shares of our common stock and $7,500 of cash. The agreement included customary representations, warranties, and covenants by us and the Cloud.Market owner.

The allocation of the purchase price to assets based upon fair value determinations was as follows:

Non-compete agreements	$	700
Customer Lists		66,800
Total Assets Acquired	$	67,500

The purchase price consisted of the following:

Cash	$	7,500
Common Stock		60,000
Total Purchase Price	$	67,500

The unaudited supplemental pro forma results of operations of the combined entities are not included in this disclosure as the acquisition of Cloud.Market does not materially affect the Company's results from operations.

Note 14. Debt

Convertible Note Payable - Related Party

Clint Skidmore - Note

~~F-25~~On ~~Table~~December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of ~~Contents~~$400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $80,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, 2019, the Company owes $110,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $11,500 and $38,000 in fiscals 2019 and 2018, respectively.

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares.

~~The~~Darvin ~~Company~~Habben ~~evaluated~~- the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the fixed conversion price and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares.Note

On May 9, 2018, the Company converted the $500,000 convertible note with Darvin Habben, Chairman, along with accrued and unpaid interest of $38,028, to 5,380,274 shares of its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $191,507 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception.

F-22

Table of Contents

Promissory Note Payable - Related Party

Derek Schumann - Note

Greg Foss - Note

On ~~July~~May 279, ~~2017~~2018, the Company ~~signed~~converted athe ~~promissory note of~~ $~~150~~100,000 ~~with~~promissory ~~Darvin Habben, CEO. This interest free~~ note iswith ~~due~~Greg ~~and~~Foss, ~~payable~~Director, ~~within~~to ~~one year and bears no interest. The Company issued~~ 1,000,000 ~~warrants~~shares toof ~~Darvin~~its ~~Habben~~common instock ~~connection~~at ~~with~~a ~~this~~conversion ~~note, with an exercise~~ price of $0.10 per share, ~~and~~fully ~~expiry~~extinguishing ~~date~~this ofnote. ~~July~~There ~~27,~~was ~~2027.~~no ~~The~~gain ~~Company~~or ~~recorded~~loss aon ~~warrant~~this ~~discount~~conversion ~~equal~~as tothe ~~$150,000~~conversion ~~due~~price toand ~~this~~market ~~warrant~~price ~~feature~~were equal. The ~~note~~company ~~had~~recorded ~~imputed~~debt ~~interest~~discount amortization expense of $869,~~877~~452 asduring ofthe ~~February~~quarter 28ended May 31, 2018., ~~The~~related ~~warrant~~to ~~discount~~this ~~had~~debt’s aconversion ~~balance~~recorded at ~~February 28, 2018 of $105,616~~inception. The ~~Company~~note ~~recorded~~had ~~warrant~~imputed ~~discount~~interest ~~amortization expense~~ of $441,~~384~~917 during the ~~year~~quarter ended ~~February~~May 2831, 2018.

Darvin Habben - Note

On July 27, 2017, the Company signed a promissory note of $150,000 with Darvin Habben, Chairman. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Darvin Habben in connection with this note, with an exercise price of $0.10, and expiry date of July 27, 2027. The Company recorded a warrant discount equal to $150,000 due to this warrant feature. The note had imputed interest of $8,877 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $105,616. The Company recorded warrant discount amortization expense of $44,384 during the year ended February 28, 2018.

On May 9, 2018, the Company converted the $150,000 promissory note with Darvin Habben, Chairman, to 1,500,000 shares of its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $105,616 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $2,875 during the quarter ended May 31, 2018.

Epik Holdings - Note

Robert Monster - Note

F-23

Table of Contents

Convertible Note Payable - Third Party

~~On October 30, 2017, the Company issued a convertible note to~~ PowerUp Lending ~~Group~~- ~~Ltd.~~Note for $75,000 of cash consideration. The note bears interest at 12%, matures on October 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $47,951 due to this conversion feature. The note had accrued interest of $2,885 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $32,055. The Company recorded debt discount amortization expense of $15,896 during the year ended February 28, 2018. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009.1

On October 30, 2017, the Company issued a convertible note to PowerUp Lending Group Ltd. for $75,000 of cash consideration. The note bears interest at 12%, matures on October 30, 2018, and is convertible days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion, with a fixed price floor of $0.00009. The Company recorded a debt discount equal to $47,951 due to this conversion feature.

~~F-26~~On ~~Table~~May 3, 2018, PowerUp Lending Group Ltd. converted $12,000 of ~~Contents~~the principal amount of the October 30, 2017 note into 170,940 shares of the Company’s common stock, leaving a principal balance due of $63,000.

~~DigitalTown~~On May 7, ~~Inc~~2018, PowerUp Lending Group Ltd. converted $13,000 of the principal amount of the October 30, 2017 note into 213,115 shares of the Company’s common stock, leaving a principal balance due of $50,000.

~~NOTES~~On TOMay ~~CONSOLIDATED~~10, ~~FINANCIAL~~2018, ~~STATEMENTS~~PowerUp Lending Group Ltd. converted $15,000 of the principal amount of the October 30, 2017 note into 245,902 shares of the Company’s common stock, leaving a principal balance due of $35,000.

~~Years~~On ~~Ended~~May ~~February 28~~15, 2018, ~~and~~PowerUp Lending Group Ltd. converted $20,000 of the principal amount of the October 30, 2017 note into 327,869 shares of the Company’s common stock, leaving a principal balance due of $15,000.

On ~~November~~May 3016, ~~2017~~2018, ~~the Company issued a convertible note to~~ PowerUp Lending Group Ltd. ~~for~~converted $5815,000 of ~~cash~~the ~~consideration.~~principal ~~The note bears interest at 12%~~amount, ~~matures~~plus on November 30, 2018, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $384,~~164~~500 ~~due~~in ~~to this conversion feature. The note had~~ accrued ~~interest~~and ofunpaid $1interest,~~716~~ as of ~~February 28, 2018. The debt discount had a balance at February 28, 2018 of $28,754. The Company recorded debt discount amortization expense of $9,410 during~~ the ~~year~~October ~~ended February 28~~30, ~~2018.~~2017 ~~The Company evaluated the convertible~~ note ~~and~~into ~~determined~~319,672 ~~that the~~ shares ~~issuable~~of ~~pursuant to~~ the ~~conversion~~Company’s ~~option~~common ~~were determinate due to the conversion price floor and~~stock, asfully ~~such,~~extinguishing ~~does~~this ~~not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0~~note.~~00009.~~

~~On January 18, 2018, the Company issued a convertible note to PowerUp Lending Group Ltd. for $53,000 of cash consideration.~~ The note bears interest at 12%, matures on January 18, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount ~~equal~~amortization toexpenses of $3332,~~164~~055 ~~due~~related to this ~~conversion feature. The~~ note ~~had accrued interest of $714 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $30,079. The Company recorded debt discount amortization expense of $3,806~~ during the ~~year~~first ~~ended~~quarter ~~February~~of ~~28,~~fiscal ~~2018~~2019. The Company evaluated the convertible note and determined that the shares issuable pursuant to the conversion option were determinate due to the conversion price floor and, as such, does not constitute a derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009.

OnPowerUp ~~January~~Lending ~~30,~~- ~~2018,~~Note the Company issued a convertible note to Crown Bridge Partners, LLC. for $55,000 of cash consideration. The note bears interest at 10%, matures on January 30, 2019, and is convertible after 180 days into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion. The Company recorded a debt discount equal to $33,246 due to this conversion feature. The Company also recorded a $3,000 debt discount due to issuance fees. The note had accrued interest of $437 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $33,366. The Company recorded debt discount amortization expense of $2~~,880 during the year ended February 28, 2018.~~

On November 30, 2017, the Company issued a convertible note to PowerUp Lending Group Ltd. for $58,000 of cash consideration. The note bears interest at 12%, matures on November 30, 2018, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion, with a fixed price floor of $0.00009. The Company recorded a debt discount equal to $28,754 due to this conversion feature. The note had accrued interest of $3,456 as of May 31, 2018. The debt discount had a balance at May 31, 2018 of $19,213. The Company recorded debt discount amortization expense of $9,541 during the quarter ended May 31, 2018.

On June 14, 2018, PowerUp Lending Group Ltd. converted $20,000 of the principal amount of the November 30, 2017 note into 309,119 shares of the Company’s common stock, leaving a principal balance due of $38,000.

On June 20, 2018, PowerUp Lending Group Ltd. converted $15,000 of the principal amount of the November 30, 2017 note into 196,592 shares of the Company’s common stock, leaving a principal balance due of $23,000.

On June 29, 2018, PowerUp Lending Group Ltd. converted $15,000 of the principal amount of the November 30, 2017 note into 257,290 shares of the Company’s common stock, leaving a principal balance due of $8,000.

On July 20, 2018, PowerUp Lending Group Ltd. converted $8,000 of the principal amount, plus $3,480 in accrued and unpaid interest, of the November 30, 2017 note into 376,393 shares of the Company’s common stock, fully extinguishing this note.

During the second quarter of fiscal 2019, the Company recorded debt discount amortization expenses of $19,213, representing the debt discount balance, due to the extinguishment of this note.

PowerUp Lending - Note 3

On January 18, 2018, the Company issued a convertible note to PowerUp Lending Group Ltd. for $53,000 of cash consideration. The note bears interest at 12%, matures on January 18, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion, with a fixed price floor of $0.00009. The Company recorded a debt discount equal to $33,164 due to this conversion feature. The note had accrued interest of $2,304 as of May 31, 2018. The debt discount had a balance at May 31, 2018 of $21,608. The Company recorded debt discount amortization expense of $8,471 during the quarter ended May 31, 2018.

On July 11, 2018, the Company paid $78,323 to PowerUp Lending Group Ltd., representing $53,000 for the principal of the January 18, 2018 note, $3,099 in accrued and unpaid interest, and $22,224 in losses on settlement of debt. The Company recorded debt discount amortization expense of $21,608, representing the debt discount balance, due to the extinguishment of this note.

PowerUp Lending - Note 4

On September 17, 2018, the Company issued a convertible note to PowerUp Lending Group Ltd. for $85,000 of cash consideration. The note bears interest at 12%, matures on September 17, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion, with a fixed price floor of $0.00009. The Company recorded a debt discount equal to $85,000 due to this conversion feature. The note had accrued interest of $4,583 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $46,808. The Company recorded debt discount amortization expense of $38,192 during fiscal 2019.

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PowerUp Lending - Note 5

On October 23, 2018, the Company issued a convertible note to PowerUp Lending Group Ltd. for $53,000 of cash consideration. The note bears interest at 12%, matures on October 23, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 10 trading days prior to conversion, with a fixed price floor of $0.00009. The Company recorded a debt discount equal to $49,926 due to this conversion feature. The note had accrued interest of $2,230 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $32,417. The Company recorded debt discount amortization expense of $17,508 during fiscal 2019.

PowerUp Lending - Note 6

On January 22, 2019, the Company issued a convertible note to PowerUp Lending Group Ltd. for $12,500 of cash consideration. The note bears interest at 12%, matures on January 22, 2020, and is convertible after 180 days into common stock at 50% of the lowest closing market prices of the previous 20 trading days prior to conversion, with a fixed price floor of $0.00009. The Company recorded a debt discount equal to $12,500 due to this conversion feature. The note had accrued interest of $152 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $11,233. The Company recorded debt discount amortization expense of $1,267 during the quarter ended February 28, 2019.

Crown Bridge - Note 1

On January 30, 2018, the Company issued a convertible note to Crown Bridge Partners, LLC. for $55,000 of cash consideration. The note bears interest at 10%, matures on January 30, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion, with a fixed floor price of $0.0001. The Company recorded a debt discount equal to $33,246 due to this conversion feature. The Company also recorded a $3,000 debt discount due to issuance fees. The note had accrued interest of $1,812 as of May 31, 2018. The debt discount had a balance at May 31, 2018 of $24,305. The Company recorded debt discount amortization expense of $9,062 during the quarter ended May 31, 2018.

On July 25, 2018, the Company paid $83,312 to Crown Bridge Partners, LLC., representing $55,000 for the principal of the January 30, 2018 note, $2,499 in accrued and unpaid interest, and $25,813 in losses on settlement of debt. The Company recorded debt discount amortization expense of $24,305, representing the debt discount balance, due to the extinguishment of this note.

Crown Bridge - Note 2

On September 27, 2018, the Company issued a convertible note to Crown Bridge Partners, LLC. for $55,000 of cash consideration. The note bears interest at 10%, matures on September 29, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion, with a fixed floor price of $0.0001. The Company recorded a debt discount equal to $52,000 due to this conversion feature. The Company also recorded a $3,000 debt discount due to issuance fees. The note had accrued interest of $2,321 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $31,795. The Company recorded debt discount amortization expense of $23,205 during fiscal 2019.

FirstFire Global Opportunities - Note 1

On July 10, 2018, the Company issued a convertible note and 90,000 shares of its common stock to FirstFire Global Opportunities Fund LLC for $183,750 of cash consideration. The note bears interest at 10%, matures on July 10, 2019, and is convertible into common stock at the lower of $0.20 per share or 75% of the lowest closing market prices of the previous 10 trading days prior to conversion. The Company recorded a debt discount equal to $143,325 due to a ratchet triggering event also on July 10, 2018, which lowered the conversion price to $0.05 per share. The Company recorded a $8,750 debt discount representing the original issue discount. The Company also recorded a $8,010 debt discount due to the 90,000 shares issued. On January 23, 2019, the convertible note was amended to increase the principal by $5,000 for $5,000 of cash consideration. The Company recorded a further debt discount of $5,000 related to the conversion feature of the January 23, 2019 amendment. The note had accrued interest of $12,049 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $59,702. The Company recorded debt discount amortization expense of $105,383 during fiscal 2019.

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On January 11, 2019, FirstFire Global Opportunities Fund LLC converted $10,000 of the principal amount of the July 10, 2018 note into 1,086,065 shares of the Company’s common stock, leaving a principal balance due of $173,750.

On February 7, 2019, FirstFire Global Opportunities Fund LLC converted $10,000 of the principal amount of the July 10, 2018 note into 1,930,783 shares of the Company’s common stock, leaving a principal balance due of $163,750.

On February 21, 2019, FirstFire Global Opportunities Fund LLC converted $10,565 of the principal amount of the July 10, 2018 note into 3,500,000 shares of the Company’s common stock, leaving a principal balance due of $153,185.

EMA Financial - Note 1

On October 22, 2018, the Company issued a convertible note to EMA Financial, LLC for $53,000 of cash consideration. The note bears interest at 10%, matures on October 22, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 15 trading days prior to conversion, with a fixed floor price of $0.0001. The Company recorded a debt discount equal to $53,000 due to this conversion feature. The note had accrued interest of $1,873 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $34,268. The Company recorded debt discount amortization expense of $18,732 during fiscal 2019.

JSJ Investments - Note 1

On October 22, 2018, the Company issued a convertible note to JSJ Investments Inc. for $59,500 of cash consideration. The note bears interest at 12%, matures on October 22, 2019, and is convertible into common stock at 61% of the lowest 3 closing market prices of the previous 20 trading days prior to conversion, with a fixed floor price of $0.0001. The Company recorded a debt discount equal to $57,000 due to this conversion feature. The Company also recorded a $2,500 debt discount due to issuance fees. The note had accrued interest of $2,523 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $38,471. The Company recorded debt discount amortization expense of $21,029 during fiscal 2019.

Auctus Fund - Note 1

On November 14, 2018, the Company issued a convertible note to Auctus Fund, LLC for $85,000 of cash consideration. The note bears interest at 12%, matures on November 14, 2019, and is convertible into common stock at 61% of the lowest trading price of the previous 25 trading days prior to conversion, with a fixed floor price of $0.0001. The Company recorded a debt discount equal to $77,750 due to this conversion feature. The Company also recorded a $7,250 debt discount due to issuance fees. The note had accrued interest of $2,962 as of February 28, 2019. The debt discount had a balance at February 28, 2019 of $60,315. The Company recorded debt discount amortization expense of $24,685 during fiscal 2019..

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Promissory Note Payable - Third Party

On July 20, 2017, the Company signed a promissory note of $100,000 with Donovan Olson. This interest free note is due and payable within one year and bears no interest. The Company issued 1,000,000 warrants to Donovan Olson in connection with this note, with an exercise price of $0.10, and expiry date of July 20, 2027. The Company recorded a warrant discount equal to $100,000 due to this warrant feature. The note had imputed interest of $6,110 as of February 28, 2018. The warrant discount had a balance at February 28, 2018 of $69,452. The Company recorded warrant discount amortization expense of $30,548 during the year ended February 28, 2018.

~~Note~~On ~~15.~~May ~~Transactions~~9, 2018, the Company converted the $100,000 promissory note with ~~Former~~Donovan ~~Officer~~Olson, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018.

Note 14. Transactions with Former Officers

On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. ~~The~~During ~~Company~~the isquarter inending ~~the~~May ~~process~~31, of2018, ~~filing~~$10,910 was paid to Mr. Richard Pomije. As at February 28, 2019, $542,066 has been accrued as payable to Mr. Pomije. The Company filed an appeal on June 13, 2018.

~~F-27~~During ~~Table~~the second quarter of ~~Contents~~2019, Robert Monster deferred his salary payments to assist with cash conservation. As at February 28, 2019, $70,000 has been accrued as payable to Robert Monster.

~~DigitalTown~~On November 15, ~~Inc~~2018, the Company issued a promissory note to Robert Monster for $150,000 for conversion of outstanding severance owed. The note bears interest at 15%, and matures on November 15, 2019. The note had accrued interest of $6,473 and a principal balance of $150,000 as of February 28, 2019.

~~NOTES~~Note TO15. ~~CONSOLIDATED~~Intangible ~~FINANCIAL~~Assets ~~STATEMENTS~~and Goodwill

Years Ended February 28, 2018 and 2017

Note 16. Intangible Assets and Goodwill

Goodwill

The carrying value of goodwill at February 28, ~~2018~~2019 and February 28, ~~2017~~2018 was $0. During fiscal ~~2018~~2019 and fiscal ~~2017~~2018, the Company made ~~three~~two acquisitions which resulted in $~~549,667~~0 and $1549,~~317,680~~667 of goodwill being recorded, and subsequently impaired, respectively. See Note 1312 for more information about acquisitions.

Intangible assets

The carrying value of intangible assets at February 28, ~~2018~~2019 and February 28, ~~2017~~2018 was $0. During fiscal 2018, the Company acquired $1,237,000 of intangible assets, including $432,000 of code base and databases, $420,000 of platform and code base, $250,000 of app portfolios, and $135,000 of app handles. During fiscal 2018, the Company recorded $64,907 of amortization expense related to intangible assets.

During fiscal 2017, the Company entered into agreements to purchase domain name rights with five individuals. In exchange for the domain name rights, the Company issued 369,750 common shares and paid $69,500 in cash. The total fair value of the shares was $154,740 based on the respective domain name purchase agreements date and the closing market price on that date.

Impairments

We evaluate our goodwill and intangible assets for an impairment on an annual basis each fiscal year end. At February 28, 2019, we did not have any goodwill or intangible assets. Based upon our review and analysis, we deemed all of the goodwill and intangible assets acquired in fiscal 2018 as fully impaired as of February 28, 2018. Accordingly, we recognized an impairment expense of $1,721,760 in fiscal 2018. ~~In fiscal 2017, we recognized an impairment of $1,725,009.~~ This reflects the full amount of goodwill and the unamortized balance of the intangible assets ~~each year~~.

~~Note~~F-27 ~~17.~~Table ~~Subsequent~~of ~~Events~~ Contents

OnNote ~~April 18, 2018, Mr~~16. ~~Richard~~Digital Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2017, $260,900 had been accrued. As at February 28, 2018, the accrual has increased by $292,076 to $552,976. The Company is in the process of filing an appeal.Currencies

OnThe ~~April 25, 2018, the~~ Company ~~received~~has aentered ~~$1,000,000~~into ~~investment~~stock ~~commitment from Triton Funds LP to~~ purchase ~~registered~~agreements ~~DGTW~~with ~~shares.~~investors, ~~The~~and ~~Company~~ has ~~filed~~accepted andigital ~~S-1~~currencies ~~with~~as ~~the~~a ~~SEC.~~form ~~Once~~of ~~approved,~~payment ~~Triton~~from ~~will~~these ~~purchase~~investors, upin toexchange 5%for shares of the Company’s ~~fully~~common ~~diluted shares~~stock.

On May 15, 2018, the Company ~~received~~issued ~~a $2~~11,~~400~~385,~~000~~590 ~~investment~~shares ~~from Pithia, Inc. in exchange for 10%~~ of ~~the~~stock ~~Company’s~~to ~~fully~~Catena ~~diluted~~Fund ~~shares.~~One, ~~Pithia~~LP ~~invested~~for $1,~~200~~050,000 onRHOC ~~May~~(RChain ~~15,~~Coins). ~~2018~~The inmarket ~~the~~price ~~form~~ of RHOC ~~cryptocurrency.~~on ~~The~~May ~~remaining $1~~15,~~200,000~~ ~~will~~2018 bewas ~~received~~$1.58 90per ~~days from the agreement date~~RHOC, ~~again~~resulting in ~~the~~a ~~form~~value of ~~RHOC cryptocurrency~~$1, ~~as long as the Company meets certain conditions. The Company issued 11~~659,~~385,590 shares of its common stock to Pithia, Inc~~000. ~~on May 31, 2018.~~

On May 1716, 2018, ~~Digitaltown amended~~ the ~~employment~~Company ~~agreement~~sold ~~of Michael Cartwright~~63,291.13924 ~~its~~RHOCs ~~Chief~~at ~~Technology Officer, to extend his employment term by two years to June~~ $1~~, 2020~~.56 ~~This~~for ~~included a base salary increase~~$100, ~~additional stock award~~000, ~~and~~resulting in a ~~cryptocurrency~~loss ~~coin award conditional~~ on ~~achieving~~exchange ~~specific development and product launch milestones. A copy~~ of ~~his amended employment agreement is attached as Exhibit 10.~~$1,282.

On May 18, 2018, the Company sold 63,291.13924 RHOCs at $1.58 for $100,000, resulting in no gain or loss on exchange.

On June 1, 2018, the Company transferred 200,000 RHOCs at $1.58, with a value of $316,000, as a bonus to an employee as a condition of his employment agreement. There was no gain or loss on exchange related to this transaction.

On June 13, 2018, the Company paid a vendor invoice with a face value of $6,452 with 5,377 RHOCs, resulting in a loss on exchange of $2,043.

On June 18, 2018, the Company paid a vendor invoice with a face value of $5,000 with 4,167 RHOCs, resulting in a loss on exchange of $1,583.

During the second quarter of fiscal 2019, the Company sold the balance of RHOC for cash consideration of $518,181, resulting in a loss on exchange of $570,435.

In August 2018, the Company received 172,413 RHOC (RChain Coins) from Catena Fund One, LP, which were immediately liquidated for cash consideration of $59,237. The Company will issue 1,184,738 shares in exchange for this cash consideration in the subsequent quarter.

Our primary market risk exposure with regard to digital currencies is the volatility in trading prices from day to day, which would only impact the gain/loss recognized at time of exchange on such instruments. As of February 28, 2019, the Company did not hold any digital currencies.

Note 17. Discontinued Operations

Appointment.com Disposal

On October 9, 2018, the Appointment.com division was sold to an arms length third party for $150,000 in cash consideration, less closing costs of $17,028, resulting in a net gain on disposal of asset of $132,972 in fiscal 2019.

There are no assets and no liabilities held for sale on February 28, 2019.

The following table summarizes the income (loss) from discontinued operations for Appointment.com:

	Fiscal 2019		Fiscal 2018

Revenues	$	51,627	$	101,457
Cost of revenues		21,992		33,448
Gross profit (loss)		29,635		68,009

Operating expenses:
Selling, general and administrative expenses		5,250		9,000

Income from operations		24,385		59,009

Income tax provision		-		-
Net income	$	24,385	$	59,009

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~~DigitalTown, Inc~~got.law Disposal

~~NOTES~~On TODecember ~~CONSOLIDATED~~11, ~~FINANCIAL~~2018, ~~STATEMENTS~~the got.law division was sold to related party for $1 in cash consideration and $20,000 in forgiveness of debt, resulting in a gain on disposal of asset of $20,001 in fiscal 2019. This gain was recorded to additional paid in capital as it represented contributed capital due to its related party nature.

~~Years~~There ~~Ended~~are no assets and no liabilities held for sale on February 28, ~~2018 and 2017~~2019.

InThe ~~May~~following ~~2018,~~table summarizes the ~~Company~~income (loss) from discontinued operations for got.law:

- issued 8,644,838 shares of its common stock for stock payable of $1,274,376, - issued 16,940,804 shares for cash of $1,786,950, - converted the October 30, 2017 note from PowerUp Lending Group Ltd, with an original value of $75,000, to 1,277,498 shares of its common stock, - converted the $500,000 convertible note from Darvin Habben, plus accrued interest of $38,027, to 5,380,274 shares of its common stock, - converted the $150,000 promissory note from Darvin Habben to 1,500,000 shares of its common stock, - converted the $100,000 promissory note from Greg Foss to 1,000,000 shares of its common stock, - converted the $100,000 promissory note from Derek Schumann to 1,000,000 shares of its common stock, - converted the $100,000 promissory note from Donovan Olson to 1,000,000 shares of its common stock, - returned 15,000 shares of its common stock into treasury, at a value of $3,000, in exchange for sale of two .city domains, and - issued 4,511,082 shares of its common stock to various employees and contractors, with a value of $1,126,347.

	Fiscal 2019			Fiscal 2018

Revenues	$	397			-
Cost of revenues		(96,065	)		-
Gross profit (loss)		(96,065	)		-

Operating expenses:
Selling, general and administrative expenses		75,698		$	53,585

Loss from operations		(171,366	)		(53,585	)

Income tax provision		-			-
Net loss	$	(171,366	)	$	(53,585	)

~~There~~Rezserve ~~were no additional significant subsequent events through June 13, 2018, the date the financial statements were issued.~~Disposal

On February 26, 2019, the Company sold the assets of it’s fully owned subsidiary, Rezserve Technologies Ltd., to an arms length third party for $30,000 in cash consideration, resulting in a gain on disposal of asset of $30,000 in fiscal 2019.

There are no assets held for sale, and there are $4,188 in liabilities held for sale on February 28, 2019. Liabilities consisted of cash collected from customers on behalf of the acquiring party.

The following table summarizes the income (loss) from discontinued operations for Rezserve:

	Fiscal 2019		Fiscal 2018

Revenues	$	104,340	$	91,371
Cost of revenues		32,806		57,056
Gross profit (loss)		71,534		34,315

Operating expenses:
Selling, general and administrative expenses		69,142		61,282

Income (loss) from operations		2,392		(26,967	)

Income tax provision		-		-
Net income (loss)	$	2,392	$	(26,967	)

Comencia Disposal

On February 26, 2019, the Company sold the assets of it’s fully owned subsidiary, Comencia Inc., to an arms length third party for $30,000 in cash consideration, resulting in a gain on disposal of asset of $30,000 in fiscal 2019.

There are no assets held for sale, and there are $8,640 in liabilities held for sale on February 28, 2019. Liabilities consisted of cash collected from customers on behalf of the acquiring party.

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The following table summarizes the income (loss) from discontinued operations for Comencia:

	Fiscal 2019			Fiscal 2018

Revenues	$	63,593		$	53,567
Cost of revenues		135,099			51,386
Gross profit (loss)		(71,506	)		2,181

Operating expenses:
Selling, general and administrative expenses		28,880			70,461

Loss from operations		(100,386	)		(68,280	)

Income tax provision		-			-
Net loss	$	(100,386	)	$	(68,280	)

Note 18. Subsequent Events

On April 30, 2019, Sam Ciacco was appointed as CEO and Chairman, and member of the Board of Directors.

On April 30, 2019, Kevin Wilson was appointed as CFO and Treasurer, and member of the Board of Directors.

On May 1, 2019, Darv Habben resigned as Chairman and member of the Board of Directors.

On May 1, 2019, Jeff Mills resigned as Secretary and member of the Board of Directors.

Note Conversions

FirstFire Global Opportunities - Note 1

On March 6, 2019, FirstFire Global Opportunities Fund LLC converted $10,431 of the principal amount of the July 10, 2018 note into 4,700,000 shares of the Company’s common stock, leaving a principal balance due of $142,754.

On March 18, 2019, FirstFire Global Opportunities Fund LLC converted $10,230 of the principal amount of the July 10, 2018 note into 5,000,000 shares of the Company’s common stock, leaving a principal balance due of $132,524.

On March 25, 2019, FirstFire Global Opportunities Fund LLC converted $11,328 of the principal amount of the July 10, 2018 note into 6,000,000 shares of the Company’s common stock, leaving a principal balance due of $121,196.

On March 29, 2019, FirstFire Global Opportunities Fund LLC converted $11,938 of the principal amount of the July 10, 2018 note into 8,000,000 shares of the Company’s common stock, leaving a principal balance due of $109,258.

On April 8, 2019, FirstFire Global Opportunities Fund LLC converted $6,600 of the principal amount of the July 10, 2018 note into 6,000,000 shares of the Company’s common stock, leaving a principal balance due of $102,658.

On May 9, 2019, FirstFire Global Opportunities Fund LLC converted $6,204 of the principal amount of the July 10, 2018 note into 9,500,000 shares of the Company’s common stock, leaving a principal balance due of $96,084.

On May 14, 2019, FirstFire Global Opportunities Fund LLC converted $7,313 of the principal amount of the July 10, 2018 note into 10,900,000 shares of the Company’s common stock, leaving a principal balance due of $88,770.

On May 16, 2019, FirstFire Global Opportunities Fund LLC converted $6,812 of the principal amount of the July 10, 2018 note into 12,400,000 shares of the Company’s common stock, leaving a principal balance due of $81,958.

On May 20, 2019, FirstFire Global Opportunities Fund LLC converted $4,920 of the principal amount of the July 10, 2018 note into 14,100,000 shares of the Company’s common stock, leaving a principal balance due of $77,038.

On May 21, 2019, FirstFire Global Opportunities Fund LLC converted $9,276 of the principal amount of the July 10, 2018 note into 24,300,000 shares of the Company’s common stock, leaving a principal balance due of $67,762.

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On May 23, 2019, FirstFire Global Opportunities Fund LLC converted $12,478 of the principal amount of the July 10, 2018 note into 31,200,000 shares of the Company’s common stock, leaving a principal balance due of $55,284.

On May 24, 2019, FirstFire Global Opportunities Fund LLC converted $11,353 of the principal amount of the July 10, 2018 note into 34,300,000 shares of the Company’s common stock, leaving a principal balance due of $43,931.

On May 28, 2019, FirstFire Global Opportunities Fund LLC converted $7,584 of the principal amount of the July 10, 2018 note into 36,000,000 shares of the Company’s common stock, leaving a principal balance due of $36,347.

Auctus Fund - Note 1

On May 17, 2019, Auctus Fund, LLC converted $2,334 of the principal amount and $5,086 of accrued and unpaid interest of the November 14, 2018 note into 21,998,800 shares of the Company’s common stock, leaving a principal balance due of $82,666.

On May 28, 2019, Auctus Fund, LLC converted $7,440 of the principal amount and $299 of accrued and unpaid interest of the November 14, 2018 note into 34,328,200 shares of the Company’s common stock, leaving a principal balance due of $75,227.

On June 6, 2019, Auctus Fund, LLC converted $6,162 of the principal amount and $223 of accrued and unpaid interest of the November 14, 2018 note into 43,027,563 shares of the Company’s common stock, leaving a principal balance due of $69,065.

Crown Bridge - Note 2

On April 4, 2019, Crown Bridge Partners, LLC converted $9,022 of the principal amount of the September 27, 2018 note into 9,200,000 shares of the Company’s common stock, leaving a principal balance due of $45,978.

On April 12, 2019, Crown Bridge Partners, LLC converted $10,111 of the principal amount of the September 27, 2018 note into 11,790,000 shares of the Company’s common stock, leaving a principal balance due of $35,867.

On April 23, 2019, Crown Bridge Partners, LLC converted $10,956 of the principal amount of the September 27, 2018 note into 12,380,000 shares of the Company’s common stock, leaving a principal balance due of $25,411.

On May 3, 2019, Crown Bridge Partners, LLC converted $7,852 of the principal amount of the September 27, 2018 note into 13,580,000 shares of the Company’s common stock, leaving a principal balance due of $17,930.

On May 9, 2019, Crown Bridge Partners, LLC converted $6,745 of the principal amount of the September 27, 2018 note into 17,250,000 shares of the Company’s common stock, leaving a principal balance due of $11,185.

On May 16, 2019, Crown Bridge Partners, LLC converted $8,509 of the principal amount of the September 27, 2018 note into 21,450,000 shares of the Company’s common stock, leaving a principal balance due of $3,177.

On May 21, 2019, Crown Bridge Partners, LLC converted $3,1766 of the principal amount and $3,407 of accrued and unpaid interest of the September 27, 2018 note into 25,300,000 shares of the Company’s common stock, leaving a principal balance due of $0, not including default penalties and interest.

On May 22, 2019, Crown Bridge Partners, LLC converted $7,550 of the principal default amount of the September 27, 2018 note into 30,000,000 shares of the Company’s common stock, leaving a principal default balance due of $24,793.

On May 28, 2019, Crown Bridge Partners, LLC converted $7,108 of the principal default amount of the September 27, 2018 note into 34,320,000 shares of the Company’s common stock, leaving a principal default balance due of $17,685.

JSJ Investments - Note 1

On May 6, 2019, JSJ Investments Inc. converted $8,137 of the principal amount of the October 22, 2018 note into 15,067,787 shares of the Company’s common stock, leaving a principal balance due of $51,363.

On May 16, 2019, JSJ Investments Inc. converted $8,741 of the principal amount of the October 22, 2018 note into 20,087,963 shares of the Company’s common stock, leaving a principal balance due of $42,622.

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On May 21, 2019, JSJ Investments Inc. converted $7,637 of the principal amount of the October 22, 2018 note into 24,245,023 shares of the Company’s common stock, leaving a principal balance due of $34,985.

On May 28, 2019, JSJ Investments Inc. converted $6,736 of the principal amount of the October 22, 2018 note into 35,389,771 shares of the Company’s common stock, leaving a principal balance due of $28,249.

EMA Financial - Note 1

On May 3, 2019, EMA Financial LLC converted $5,105 of the principal amount of the October 25, 2018 note into 13,000,000 shares of the Company’s common stock, leaving a principal balance due of $73,968, including additional $25,000 default amounts.

On May 9, 2019, EMA Financial LLC converted $8,832 of the principal amount of the October 25, 2018 note into 16,000,000 shares of the Company’s common stock, leaving a principal balance due of $65,994.

On May 14, 2019, EMA Financial LLC converted $9,259 of the principal amount of the October 25, 2018 note into 20,000,000 shares of the Company’s common stock, leaving a principal balance due of $56,734.

On May 21, 2019, EMA Financial LLC converted $6,223 of the principal amount of the October 25, 2018 note into 22,000,000 shares of the Company’s common stock, leaving a principal balance due of $50,511.

Power Up Lending - Note 4

On March 21, 2019, Power Up Lending Group Ltd. converted $18,130 of the principal amount of the September 17, 2018 note into 7,554,167 shares of the Company’s common stock, leaving a principal balance due of $66,870.

On March 25, 2019, Power Up Lending Group Ltd. converted $13,600 of the principal amount of the September 17, 2018 note into 7,555,556 shares of the Company’s common stock, leaving a principal balance due of $53,270.

On March 27, 2019, Power Up Lending Group Ltd. converted $13,595 of the principal amount of the September 17, 2018 note into 7,552,778 shares of the Company’s common stock, leaving a principal balance due of $39,675.

On March 29, 2019, Power Up Lending Group Ltd. converted $16,620 of the principal amount of the September 17, 2018 note into 9,233,333 shares of the Company’s common stock, leaving a principal balance due of $23,055.

On April 1, 2019, Power Up Lending Group Ltd. converted $14,770 of the principal amount of the September 17, 2018 note into 9,231,250 shares of the Company’s common stock, leaving a principal balance due of $8,285.

On April 4, 2019, Power Up Lending Group Ltd. converted $8,285 of the principal amount, plus $5,100 in accrued and unpaid interest, of the September 17, 2018 note into 9,560,714 shares of the Company’s common stock, fully extinguishing this note.

PowerUp Lending - Note 5

On April 26, 2019, Power Up Lending Group Ltd. converted $12,900 of the principal amount of the October 23, 2018 note into 11,727,273 shares of the Company’s common stock, leaving a principal balance due of $40,100.

On April 30, 2019, Power Up Lending Group Ltd. converted $11,500 of the principal amount of the October 23, 2018 note into 11,734,694 shares of the Company’s common stock, leaving a principal balance due of $28,600.

On May 2, 2019, Power Up Lending Group Ltd. converted $10,000 of the principal amount of the October 23, 2018 note into 11,764,706 shares of the Company’s common stock, leaving a principal balance due of $18,600.

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On May 3, 2019, Power Up Lending Group Ltd. converted $8,600 of the principal amount of the October 23, 2018 note into 11,780,822 shares of the Company’s common stock, leaving a principal balance due of $10,000.

On May 6, 2019, Power Up Lending Group Ltd. converted $8,600 of the principal amount of the October 23, 2018 note into 11,780,822 shares of the Company’s common stock, leaving a principal balance due of $1,400.

On May 8, 2019, Power Up Lending Group Ltd. converted $1,400 of the principal amount, plus $3,180 in accrued and unpaid interest, of the October 23, 2018 note into 6,273,973 shares of the Company’s common stock, fully extinguishing this note.

Debt Conversion

On March 1, 2019, the Company converted the $110,000 balance of Clint Skidmore’s December 22, 2017 convertible note to stock payable, and 2,200,000 $0.05 five-year warrants.

In May 2019, the company converted $350,987 of accounts payable and accrued payables to stock payable.

Note Issuances

On May 9, 2019, the Company issued a convertible note to PowerUp Lending Group Ltd. for $45,000 of cash consideration. The note bears interest at 12%, matures on May 9, 2020, and is convertible after 180 days into common stock at 55% of the lowest closing market prices of the previous 20 trading days prior to conversion.

Legal Proceedings

On April 1, 2019, the Court of Appeals issued its Unpublished Opinion in favor of the Company with respect to its appeal filed against Mr. Richard Pomije’s judgement on June 13, 2018. Negotiations are underway to settle this lawsuit prior to trial, which is scheduled for January 2020.

Preferred Shares

In June 2019, the Company has authorized a Preferred Share class of super-voting shares to facilitate an increase of the Authorized Common Stock limit. The additional availability of shares will allow the Company to continue meeting its obligations and secure its ability to fund minimum operating requirements.

There were no additional significant subsequent events through June 12, 2019, the date the financial statements were issued.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness, as of February 28, ~~2018~~2019, of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”). The purpose of this evaluation was to determine whether as of the evaluation date our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in our filings with the Securities and Exchange Commission (“SEC”), under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation, our management has concluded, as discussed below, that material weaknesses existed in our internal control over financial reporting as of February 28, ~~2018~~2019 and as a result, our ~~disclosures~~disclosure controls and procedures were not effective. Notwithstanding the material weaknesses that existed as of February 28, ~~2018~~2019, our chief executive officer and chief financial officer has concluded that the financial statements included in this Annual Report on Form 10-K present fairly, in all material aspects, the financial position, results of operations and cash flows of the Company in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a15-(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that:

(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are made only in accordance with authorizations of management and directors of the Company; and

(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision of our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—2013 Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, management concluded that the Company did not maintain effective internal controls over financial reporting as of February 28, 2018. Management identified the following material weaknesses:

	1.	Management did not maintain effective internal controls relating to the quarter end closing and financial reporting process in adequately preparing account reconciliations pertaining to stock option activity;
	2.	The Company has insufficient internal personnel resources and technical accounting and reporting expertise within the Company’s financial closing and reporting functions; and

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	3.	The Company did not maintain effective internal controls to assure proper segregation of duties as the same employee was responsible for initiating and recording of transactions, thereby creating a segregation of duties weakness; and
	4.	Due to the Company not having formal Control procedures related to the approval of related party transactions.

Under the supervision of our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—2013 Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment and those criteria, management concluded that the Company did not maintain effective internal controls over financial reporting as of February 28, 2019. Management identified the following material weaknesses:

	1.	Management did not maintain effective internal controls relating to the quarter end closing and financial reporting process in adequately preparing account reconciliations pertaining to stock option activity;
	2.	The Company has insufficient internal personnel resources and technical accounting and reporting expertise within the Company’s financial closing and reporting functions; and
	3.	The Company did not maintain effective internal controls to assure proper segregation of duties as the same employee was responsible for initiating and recording of transactions, thereby creating a segregation of duties weakness; and
	4.	Due to the Company not having formal Control procedures related to the approval of related party transactions.

This annual filing does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to an amendment to the Sarbanes-Oxley Act which exempts Smaller Issuers from the requirements of Section 404(b).

Changes in Internal Controls over Financial Reporting

During the fiscal year ended February 28, ~~2018~~2019, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Remediation

The Company is in the process of remediation of the identified disclosure and financial reporting control weakness, which is primarily related to retaining additional accounting personnel to assist with the financial reporting process. Due to our small size, limited operations and limited cash flow generation, we do not anticipate adding the requisite additional professional staff over the next 12 months to fully eliminate this weakness. However, we are providing best efforts to ensure the financial reporting is accurate and proper controls and procedures are followed by our limited staff.

In response to the material weaknesses in our internal controls noted above, we have formalized the following corrective procedures to remediate them;

Material weakness #1, #2, #3 and #4;

Apply a more rigorous review of the quarterly close processes by the CEO/CFO to ensure that the performance of the control is evidenced through appropriate documentation which is consistently maintained;

Additional controls for material weakness #1;

	·	Reconciliation of internal stock option register with new options expensed on a quarterly basis;
	·	Review of new stock option agreements with Chairman on a quarterly basis;
	·	All new stock option grants will be documented in the board minutes including grantee, date of grant and number of options granted.

Inherent Limitation on the Effectiveness of Internal Controls

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is certain information concerning each of the directors and executive officers of DigitalTown, Inc.

Name	Age	Position
Mike Cartwright	45	Chief Technology Officer and Director
Sam Ciacco	42	Chief Executive Officer and Chairman
Kenwei Chong	50	Director
Kevin Wilson	61	Chief Financial Officer and Director
Greg Foss	54	Director
Darvin R. Habben	68	Chairman
Lawrence Lerner	53	Director
Jeffrey L. Mills	56	Director
Robert W. Monster	50	Chief Executive Officer and Director
James B. Parsons	65	Director
Derek R. Schumann	53	Director

~~MICHAEL~~SAM ~~CARTWRIGHT~~CIACCO. Mr. ~~Cartwright~~Sam Ciacco was appointed as a member of the Board of Directors, as its Chairman, and as Chief Executive Officer on ~~October~~April 330, ~~2017~~2019. Mr. ~~Cartwright~~Ciacco ~~has~~is ~~over~~a 20respected ~~years~~industry ofprofessional ITwith ~~experience~~a ~~with~~proven ~~organizations~~track record of ~~all~~implementing ~~sizes~~structure and ~~across~~discipline, aworking ~~range~~in ofCanada, ~~industries~~the ~~including~~United ~~travel~~States and the Middle East, ~~consultancy~~with ~~and~~a ~~manufacturing~~focus on improving organizational culture. ~~Prior~~Sam tois ~~joining~~known ~~Digital~~for ~~Town,~~his ~~Mr.~~ability ~~Cartwright~~to ~~was~~forensically aaudit ~~co-founder~~financial and ~~CEO~~operational processes of ~~Comencia~~companies ~~Inc~~and improve profitability and shareholder value., aFrom ~~Private~~September ~~Label~~2017 ~~Travel~~to ~~Platform~~December 2018, aMr. ~~Technology~~Ciacco served the Company in various roles including Vice President atof ~~Expedia,~~Finance. ~~CTO~~In ofevaluating ~~Pirean,~~Mr. aCiacco’s UKspecific ~~based~~experience, ~~identity~~qualifications, attributes and ~~access~~skills ~~management~~in ~~company,~~connection ~~and~~with ahis ~~Technology~~appointment ~~Director~~to atthe ~~Nestle~~Board, ~~Switzerland.~~the Company considered Mr. ~~Cartwright~~Ciacco’s ~~holds~~industry aexperience ~~BSc(Hons)~~and inintimate ~~Computer~~knowledge ~~Science~~of ~~from~~ the ~~University of Teeside~~Company.

~~KENWEI~~KEVIN ~~CHONG~~WILSON. Mr. ~~Chong~~Wilson was ~~elected~~appointed as a ~~director~~member inof ~~December~~the ~~2016.~~Board ~~Mr.~~of ~~Chong’s~~Directors, ~~early career was in foreign exchange~~ and ~~global~~as ~~fixed~~Chief ~~income~~Financial ~~analysis~~Officer and ~~funds~~Secretary ~~management~~of ~~for~~the ~~various~~Company ~~firms~~on inApril ~~New~~30, ~~York City and San Francisco; and later as product development manager for foreign exchange and fixed income risk management at Bloomberg~~2019. ~~In 2001~~ Mr. ~~Chong~~Wilson ~~left the capital markets profession to pursue entrepreneurial interests and~~ has ~~been~~almost anfour ~~active~~decades ~~owner~~of ~~and~~finance ~~investor~~leadership ~~in self-storage, physical~~ and ~~electronic~~entrepreneurial ~~records~~experiences ~~management~~from ~~and~~a ~~storage,~~wide ~~restaurant~~variety ~~and~~of ~~hospitality,~~organizations. ~~food~~Under ~~manufacturing~~Mr. ~~and~~Wilson’s ~~wholesale distribution~~leadership, ~~physical~~he ~~and~~has ~~virtual~~assisted ~~real~~growth ~~estate~~companies ~~investment~~in ~~and~~various ~~top level domain ventures~~sectors. Mr. ~~Chong~~Wilson ~~received~~is ~~his~~a BAStanford ~~in Finance from Boston~~ University ~~and~~undergraduate ~~his~~with ~~Chartered~~an ~~Financial~~MBA ~~Analyst designation~~ from ~~the Association of Investment Management and Research~~UCLA.

GREG FOSS. Mr. Foss was appointed a member of the Board of Directors on November 15, 2017. Mr. Foss is a Director, 3iQ Corp. 3iQ is an investment manager that promotes emerging strategies and managers focusing on disruptive technologies. The company has an interest in Bitcoin and blockchain mandates. Mr. Foss is a Director, Britnell Ventures, Inc. Britnell invests in e-commerce startups. To date, it has funded three ventures: booksforbusiness.com, healthwick.ca, and charge-more.com. Mr. Foss is a Director, Ye Olde Orchard Pub Group, which is currently a partner in seven Montreal area pubs. From 2013-2015, Mr. Foss was a Senior Portfolio Manager – Credit Strategies for Fiera Quantum. Fiera Quantum is the Alternative Investment Strategies arm of Fiera Capital, a Canadian based investment manager with over C$88 billion in AUM. Fiera Quantum purchased the assets of the Diversified Alpha Fund and the Canadian Restructured ABCP Funds from GMPIM.

DARVIN R. HABBEN. Mr. Habben has been a director since May 11, 2015 and Chairman since June 1, 2015. Mr. Habben is currently the Founder, Chairman and Chief Executive Officer of Crossroads Trailer Sales and Service, Inc., a trucking company based in Albert Lea, MN. Mr. Habben is also owner and CEO of Agilis, a national donations processing and fulfillment company serving non-profit companies.

LAWRENCE LERNER. Mr. Lerner was appointed to the board on May 16, 2018. Mr. Lerner is the Managing Member of Catena Fund One, LP, which recently entered into an agreement for the purchase of common stock in Digitaltown. Mr. Lerner has worked in the cryptocurrency space since the late 1990’s. Today, he is the CEO of Pithia, a blockchain corporation with $170M in assets. Additionally, Mr. Lerner is associated with LERNER Consulting & LLBC, LLC (Lawrence Lerner Business Consulting), Ameritas Technologies and Genpact.

JEFFREY L. MILLS. Mr. Mills has served as a director since 2003. Mr. Mills worked for Xerox Corporation for 27 years in various management and operational roles and is currently consulting in the digital marketplace. Additionally, Mr. Mills has held a variety of leadership roles across various private equity companies, including President and Director level positions. He also currently serves as a director for one private company. Mr. Mills is a graduate of the University of Northern Iowa.

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ROBERT W. MONSTER. On May 11, 2015, Mr. Monster was appointed to the Board and appointed as CEO effective May 18, 2015. Mr. Monster is Founder, Chairman and CEO of Epik LLC and Managing Director of Monster Venture Partners LLC. Mr. Monster was the Founder of GMI (Global Market Insite, Inc.). Prior to founding GMI, Mr. Monster was a global product development manager with Procter & Gamble. Mr. Monster has both a BS and an MBA from Cornell University.

JAMES B. PARSONS. On May 22, 2015, Mr. Parsons was appointed to the Board. Mr. Parsons is Managing Partner of Parsons/Burnett/Bjordahl/Hume, LLP, a law firm with offices in Bellevue and Spokane, Washington. He has been in practice for 38 years, emphasizing securities, both public and private, and general corporate law. Mr. Parsons is a member of the Washington State Bar Association, the Securities Law Committee of the Business Law Section, and is past Chair of the Northwest Securities Law Institute. He served as past President and member of the Board of Eastside Legal Assistance Program, serving the legal needs of low income citizens. He is a graduate of the University of Puget Sound and Lewis and Clark Law School, where he served on the Moot Court Board.

DEREK R. SCHUMANN. Mr. Schumann was appointed to the Board in December 2016 and is currently the Managing Partner of Go Toys Inc., Morris Trust and Kaplunk Development Group. All are investment holding companies focused primarily on investments in companies which create value through practical applications of disruptive new technology. Mr. Schumann is a resident of Vancouver, B.C. He received his B.A in Economics and Political Science from Bishop's University.

Directors are elected at the annual meeting of the stockholders and serve until their successors are elected and qualified. Officers are elected by the Board of Directors and serve at the discretion of the Board of Directors or until their earlier resignation or removal.

Committees of the Board of Directors

DigitalTown has chartered 5 standing committees, comprised of the 62 Board members. Each committee has a formal charter and a non-executive Chair. Through committee work, the Board is actively involved in stewardship of the Company both during Board meetings and between Board meetings as the Company seeks to exercise its fiduciary duty for all stakeholders while building an industry-leading enterprise. All committees are currently chaired by Mr. Wilson, with Mr. Ciacco as the second member, until such time additional Board members are added.

Audit Committee

~~Currently, Messrs. Habben (Chair) and Mills are the members of the Audit Committee.~~ The Audit Committee is responsible for assisting the Board of Directors with respect to its oversight of corporate accounting, reporting practices of the Company and the quality and integrity of the financial reports of the Company. The Board has named Mr. Habben as the Audit Committee Financial Expert as defined by Item 401(h)(2) of Regulation S-K under the Securities Act of 1933. The Company acknowledges that the designation of Mr. ~~Habben~~Wilson as the Audit Committee Financial Expert does not impose on him any duties, obligations or liability that are greater than the duties, obligations and liability imposed on him as a member of the Audit Committee and the Board of Directors in the absence of such designation or identification.

Compensation Committee

~~Currently, Messrs. Chong (Chair) and Mills are the members of the Compensation Committee.~~ The Compensation Committee shall provide assistance to the directors of the Company in fulfilling their responsibility to the shareholders relating to executive Compensation matters.

Finance Committee

~~Currently, Messrs. Chong (Chair), Mills and Foss are the members of the Finance Committee.~~ The Finance Committee shall provide assistance to the directors of the Company in fulfilling their responsibility to the shareholders relating to corporate finance matters, treasury, investor relations, capital structure, mergers & acquisitions and tax strategies.

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Governance Committee

~~Currently, Messrs. Habben (Chair) and Parsons are the members of the Governance Committee.~~ The Governance Committee shall provide assistance to the directors of the Company in fulfilling their responsibility to the shareholders relating to corporate Governance matters, nominations to the Board of Directors and related committees and compliance with regulatory and company requirements.

Strategic Planning Committee

~~Currently, Messrs. Monster and Schumann (Chair) are the members of the Strategic Planning Committee.~~ The Strategic Planning Committee shall provide assistance to the directors of the Company in fulfilling their responsibility to the shareholders relating to executive Strategic Planning matters.

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ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid for services rendered during the fiscal years ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018 to the Principal Executive Officer/Chief Executive Officer and the Principal Financial Officer/Chief Financial Officer.

Summary Compensation Table

Name and Principal Position	Fiscal year	Salary		Bonus		Stock Option Awards (1)		Other Annual Compensation (2)		Total Compensation
Robert Monster CEO	2018	$	240,000	$	-	$	-	$	1,026,710	$	1,266,710
Robert Monster, CEO	2019	$	160,000		-		-	$	476,534	$	636,534
(Principal Executive Officer), & Director	~~2017~~2018	$	240,000	$	-	$	-	$	1,~~191~~026,~~349~~710	$	1,~~431~~266,~~349~~710
Darvin R. Habben Chairman & Director	2018	$	-	$	-	$	-	$	144,000	$	144,000
George Nagy, CEO	2019	$	80,000		-	$	163,897		-	$	243,897
	2017	$	-	$	-	$	-	$	267,000	$	267,000
(Principal Executive Officer), & Director
Darvin R. Habben	2019	$	21,000		-		-	$	100,000	$	121,000
Chairman & Director	2018		-		-		-	$	144,000	$	144,000

(1)	The amounts shown are the aggregate grant date fair values of these awards computed in accordance with FASB guidance now codified as ASC Topic 718, “Stock Compensation” (formerly under FASB Statement No. 123(R)). The assumptions and methodologies used to calculate these amounts are discussed in Note 7 in the Notes to Financial Statements contained elsewhere in this Annual Report.
(2)	Other Compensation for Mr. Monster and Mr. Habben related to common stock grants during the year. See Note 6 in the Notes to Financial Statements contained elsewhere in this Annual Report.

OPTIONS GRANTED IN THE LAST FISCAL YEAR

The following table sets forth information regarding options granted to the named executive officers and directors during fiscal ~~2018~~2019.

Grants of Plan-Based Awards

Name ~~Grant~~GrantDate ~~Date~~ Number of shares - Underlying options granted ~~Exercise Price~~ ExercisePrice($/Share) ~~Grant~~GrantDateFairValue ~~Date~~ExpirationDate ~~Fair Value Expiration Date~~None

None

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OUTSTANDING OPTIONS AT FISCAL YEAR-END

The following table provides information relating to the value of shares of common stock subject to options held by the named executive officers and directors as of February 28, ~~2018~~2019.

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Outstanding Equity Awards at Fiscal Year-End

Name	Number of Unexercised Options Exercisable		Number of Unexercised Options Unexercisable		Option Exercise Price ($/share)		Option Expiration Date
Jeffrey L. Mills		75,000		-	$	1.00	10/10/21
Jeffrey L. Mills		300,000		-	$	0.54	2/3/24
Jeffrey L. Mills		300,000		-	$	0.10	11/13/24
Jeffrey L. Mills		300,000		-	$	0.10	12/1/24
Jeffrey L. Mills		200,000		-	$	0.10	5/5/25
Jeffrey L. Mills		200,000		-	$	0.10	6/3/25
Jeffrey L. Mills		200,000		-	$	0.10	12/4/25
James B. Parsons		200,000		-	$	0.10	12/4/25
Sam Ciacco		500,000		-	$	0.05	10/1/23
Robert Monster		200,000		-	$	0.10	12/4/25
Sam Ciacco		750,000		-	$	0.05	11/21/23
Robert Monster		400,000		-	$	0.10	6/3/25
Robert Monster		700,000		-	$	0.10	2/16/18

OPTIONS EXERCISED BY THE EXECUTIVE OFFICERS AND DIRECTORS IN THE LAST FISCAL YEAR

None

DIRECTORS' COMPENSATION

In ~~December~~February ~~2017~~2019, all non-executive directors ~~received~~were aeach ~~stock~~granted ~~grant of 600~~25,000 ~~shares. Mr. Parsons and Mr. Mills received an additional 200~~,000 shares ~~each, as recognition~~ for ~~completing~~the ~~tasks~~2019 ~~outside~~calendar ~~their director responsibilities~~year.

In December ~~2016~~2017, all non-executive directors received a stock grant of ~~300~~600,000 shares, ~~except~~ for ~~Mr.~~the ~~Habben~~2018 ~~who~~calendar ~~received~~year. ~~350,000~~Mr. asParsons ~~chairman~~ and Mr. ~~Parsons~~Mills ~~who~~ received ~~140~~an additional 200,000 shares ~~and $40~~each,~~000~~ inas ~~cash.~~recognition Asfor ofcompleting ~~the~~tasks ~~date~~outside oftheir ~~this~~director ~~report, all shares granted have been issued~~responsibilities.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information regarding our common stock, on an as converted basis, beneficially owned as of February 28, ~~2018~~2019 for (i) each stockholder we know to be the beneficial owner of 5% or more of our outstanding common stock; (ii) all directors and executive officers; and (iii) all directors and executive officers as a group. The securities "beneficially owned" by a person are determined in accordance with the definition of "beneficial ownership" set forth in the regulations of the SEC and, accordingly, may include securities owned by or for, among others, the spouse, children or certain other relatives of such person as well as other securities as to which the person has or shares voting or investment power or has the right to acquire within 60 days, per rule 13d-3(d)(1) under the Securities and Exchange Act of 1934. As of ~~May~~February 3128, ~~2018~~2019, we had ~~125~~146,~~749~~740,~~320~~570 issued and outstanding shares of common stock.

Name of Beneficial Owner	Number of shares		Percentage of Outstanding Shares
Directors and Officers:
Robert Monster		14,247,839		11.33	%
Darvin R. Habben		17,114,274		11.7	%
Darvin R. Habben		13,614,274		10.83	%
Derek Schumann		2,950,000		2.0	%
Kenwei Chong		1,900,000		1.51	%
Jeff Mills		2,039,950		1.4	%
Jeff L. Mills		2,039,950		1.62	%
Kenwei Chong		1,900,000		1.3	%
Greg Foss		4,050,000		3.22	%
All directors and executive officers as a group		24,004,224		16.4	%
Derek Schumann		2,950,000		2.35	%
James B. Parsons		1,590,000		1.26	%
Michael Cartwright		763,095		0.61	%
All directors and executive officers as a group		41,155,158		32.73	%
5% Stockholders:
Richard A. Pomije		15,407,740		12.25	%
Catena One Fund, LP		16,277,489		11.1	%
Catena One Fund, LP		11,385,590		9.05	%
Robert Monster		15,004,003		10.2	%
Richard A. Pomije		13,430,757		9.2	%

1817 Table of Contents

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder require the Company's officers, directors, and holders of 10% or more of its outstanding common stock to file certain reports with the Securities and Exchange Commission (the "Commission"). To the Company's best knowledge, based solely on information provided by the reporting individuals, one of the reports required to be filed by these individuals has not been filed as of the date of this report.

Accounts Payable – Related Parties

As of February 28, 2019, the Company owes $57,000 to Jeffrey Mills related to consulting services provided during the period December 1, 2018 to February 28, 2019.

As of February 28, 2019, the Company owes $21,000 to Darvin Habben related to consulting services provided during the period December 1, 2018 to February 28, 2019.

As of February 28, 2019, the Company owes $9,905 to Darvin Habben related to operating expenses paid on behalf of the Company and not yet repaid.

As of February 28, 2019, the Company owes $18,000 to James Parsons related to consulting services provided during the period December 1, 2018 to February 28, 2019.

During the second quarter of 2019, Robert Monster deferred his salary payments to assist with cash conservation. As at February 28, 2019, $70,000 has been accrued as payable to Robert Monster.

As of February 28, 2019 and 2018, the Company owes $0 and $7,625, respectively, due to advances made to an employee which is included within accounts payable – related parties.

As of February 28, 2019 and February 28, 2018, the Company owes $0 and $450,500, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations. Epik Holdings Inc. is a company controller by Robert Monster, the Company’s former CEO. All amounts owing to Epik Holdings Inc. were converted to a promissory note. See Note 13 for more information.

Prepaid Domain Names

During the fiscal years ~~2018~~2019 and ~~2017~~2018, the Company incurred $~~214,304~~0 and $~~165~~214,~~573~~304, respectively, of annual domain name renewal fees. The amounts paid for the annual domain name renewal fees are paid directly to Epik Holdings Inc., a company which is controlled by Robert Monster, the Company’s ~~Chief~~former ~~Executive Officer~~CEO. Epik, then uses those funds to directly to pay Verisign and ICANN companies for the annual domain renewal costs. The costs paid to Epik are at terms similar or better than what Epik charges its other clients.

Convertible Notes Payable – Related Party

On December 22, 2017, the Company formalized its agreement to extend and convert the original convertible note of $400,000 for Clint Skidmore to October 31, 2018, original founder of Rezserve Technologies Ltd. The Company has repaid $3080,000 to Clint Skidmore, and converted $210,000 of the note to 1,100,000 shares of the Company’s common stock, resulting in a loss on conversion of $13,000. At February 28, ~~2018~~2019, the Company owes $~~160~~110,000 to Clint Skidmore, bearing no interest. This note had imputed interest expense of $11,500 and $38,000 in ~~fiscal~~fiscals 2019 and 2018, respectively.

On18 ~~June~~Table ~~9, 2017, the Company signed a convertible note~~ of $500,000 with Darvin Habben, Chairman. This note is due and payable within one year, bears interest of 8%, and can be converted into up to 2,000,000 shares of the Company’s common stock at a conversion price of $0.25 per share. The Company recorded a debt discount equal to $300,000 due to this conversion feature. The note had accrued interest of $28,932 as of February 28, 2018. The debt discount had a balance at February 28, 2018 of $191,507. The Company recorded debt discount amortization expense of $108,493 during the year ended February 28, 2018. Contents

Promissory Notes Payable - Related Party

19On ~~Table~~May 9, 2018, the Company converted the $100,000 promissory note with Derek Schumann, Director, to 1,000,000 shares of ~~Contents~~its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018.

On May 9, 2018, the Company converted the $100,000 promissory note with Greg Foss, Director, to 1,000,000 shares of its common stock at a conversion price of $0.10 per share, fully extinguishing this note. There was no gain or loss on this conversion as the conversion price and market price were equal. The company recorded debt discount amortization expense of $69,452 during the quarter ended May 31, 2018, related to this debt’s conversion recorded at inception. The note had imputed interest of $1,917 during the quarter ended May 31, 2018.

On ~~December~~September 112, ~~2016~~2018, the Company ~~acquired~~issued ~~all~~a ~~assets~~promissory ~~related~~note to ~~Appointment.com,~~Epik Holdings Inc. ~~(“Appointment”),~~for ~~an online scheduling software system based in Seattle~~$765,200 ~~Washington.~~for ~~This~~conversion ~~transaction~~of isaccounts ~~considered~~payable - related party ~~since the Company’s CEO, Rob Monster, owned a controlling interest in Appointment through a company owned 100% by Mr~~. ~~Monster.~~ The ~~purchase~~note ~~price~~bears ~~pursuant~~interest toat ~~an asset purchase agreement was 1~~4%,~~625,000~~ ~~shares~~and ofmatures ~~common~~on ~~stock.~~September ~~This amount was paid with the issuance of 1~~12,~~625,000~~ ~~shares of our common stock, of which 536,364 shares were issued to Mr~~2019. ~~Monster’s~~The ~~company.~~note ~~Due~~had toaccrued ~~the~~interest ~~related party nature~~ of ~~the transaction~~$11,069 ~~the Company did not record any goodwill related to the transaction~~ and ~~assets~~a ~~and~~principal ~~liabilities~~balance ~~acquired were recorded at cost. The difference between the cost~~ of ~~the~~$765,200 ~~assets received and the purchase price is recognized~~ as ~~compensation expense on the Company’s consolidated statement~~ of ~~operations.~~February ~~The agreement included customary representations~~28, ~~warranties, and covenants by us and Appointment~~2019. ~~See Note 11 for additional information.~~

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Sales of Common Stock

During fiscal 2019, the Company sold an aggregate of 5,050,000 shares to five of the Company’s board members totalling $545,000.

During fiscal 2018, the Company sold an aggregate of 2,100,000 shares to two of the Company’s board members at the market price of $250,000.

During fiscal 2017, the Company sold an aggregate of 435,000 shares which were sold to the Company’s chairman and a related party investor at terms below the market price and share prices available other investors at the time of the sales. As a result, the Company recorded additional stock compensation expense of $30,450 to additional paid in capital to account for the preferential common share pricing.

Employment Agreements

20 Table of Contents

Directors and Officers

CEO Employment Agreement Share Issuance

The Company expensed $~~240~~160,000 in annual salary and $1476,~~026,710~~534 in stock-based compensation in fiscal ~~2018~~2019, and $240,000 in annual salary and $1,~~191~~026,~~349~~710 in stock-based compensation in fiscal ~~2017~~2018, related to the employment agreement with Robert Monster, the Company’s former CEO. Robert Monster’s employment with the Company was terminated on September 13, 2018, and his stock-based compensation will continue vesting until June 1, 2019. As of February 28, 2019, $221,392 of Robert Monster’s stock-based compensation remains unvested.

OnThe ~~February~~Company ~~10,~~expensed ~~2016~~$80,000 ~~the~~in ~~Company~~annual ~~issued~~salary 3and $163,~~312,811~~897 ~~shares~~in ~~of common~~ stock tooption ~~Robert~~awards ~~Monster,~~in ~~CEO,~~fiscal in2019 ~~accordance~~related ~~with~~to ~~his~~the employment agreement ~~dated~~with ~~May~~George 18Nagy, ~~2015~~CEO. ~~The~~George ~~shares~~Nagy’s ~~were~~tenure ~~valued~~was ~~based~~from onSeptember ~~the~~13, ~~employment~~2018 ~~agreement~~to ~~date~~December ~~using~~20, ~~the Black-Scholes model~~2018. ~~See Note 6 for more information about this share issuance.~~

CEO Accrued Salary Conversion

OnAccrued ~~February~~Expenses ~~10,~~- ~~2016,~~Related Robert Monster, CEO converted $129,231 of his accrued salary into 1,292,310 shares of common stock and 1,292,310 stock options with an exercise price of $0.15 and a vesting period of 12 months. The shares and options were valued on the conversion date in the amounts of $109,846 and $19,385, respectively. Parties

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On April 18, 2018, Mr. Richard Pomije was granted a judgement for the lawsuit he filed against the Company on December 5, 2016. Mr. Pomije was awarded $256,488 as damages, and $296,488 as attorney’s fees and costs, for a total award of $552,976. As at February 28, 2018, $552,976 has been accrued as payable to Mr. Pomije. During the quarter ending May 31, 2018, $10,910 was paid to Mr. Richard Pomije. As at February 28, 2019, $542,066 has been accrued as payable to Mr. Pomije. The Company filed an appeal on June 13, 2018. See Note 14 for additional information about transactions between the Company and its former officer.

ITEM 14. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES

M&K CPAS, PLLC ("M&K") served as the Company’s independent registered public accounting firm during the fiscal years ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018. The aggregate fees billed by M&K for professional services rendered for the audit of our annual consolidated financial statements included in our annual reports on Form 10-K and for the reviews of the consolidated financial statements included in our quarterly reports on Form 10-Q for the fiscal years ~~2018~~2019 and ~~2017~~2018 were $5349,500 and $4753,~~900~~500, respectively. There were no aggregate fees billed by M&K for other audit related services or tax services for the fiscal years ~~2018~~2019 or ~~2017~~2018.

Audit Committee Policies and Procedures:

The primary responsibility of the Audit Committee is to oversee the Company’s financial reporting process on behalf of the Board and report the results of their activities to the Board. Management is responsible for preparing the Company’s financial statements, and the independent auditors are responsible for auditing those financial statements. The Committee in carrying out its responsibilities and believes its policies and procedures should remain flexible in order to best react to changing conditions and circumstances.

The following shall be the principal recurring processes of the Audit Committee in carrying out its oversight responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate.

The Committee shall have a clear understanding with management and the independent auditors that the independent auditors are ultimately accountable to the board and the Audit Committee, as representatives of the Company’s stockholders. The Committee shall have the ultimate authority for and responsibility to evaluate and annually recommend the selection, retention, and, where appropriate, the replacement of the independent auditors. The Committee shall review and approve the performance by the independent auditors of any non-audit-related service if the fees for such service are projected to exceed 15% of the most recently completed fiscal year’s combined audit fees and audit-related service fees. The Committee shall review and discuss with the auditors their independence from management and the Company and the matters included in the written disclosures required by professional independence standards applicable to the independent auditors. Annually, the Committee shall review and assess whether the independent auditor’s performance of non-audit services is compatible with the auditor’s independence. In addition, the Audit Committee shall review any candidate for the senior accounting and/or financial executive position prior to his or her appointment by the Company.

21 Table of Contents

The Committee shall review and discuss with the independent auditors and with the head of the Company’s finance department the overall scope and plans for the audits. Also, the Committee shall discuss with management and the independent auditors the adequacy and effectiveness of the accounting and financial controls, including the Company’s system to monitor and manage business risk, and legal and ethical compliance programs. Further, the Committee shall meet separately with the independent auditors, without management present, to discuss the results of their respective audit procedures.

The Committee shall review and discuss the results of the quarterly review and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards. The chair of the Committee may represent the entire Committee for the purpose of this review.

The Committee shall review and discuss with management and the independent auditors the financial statements to be included in the Company’s annual report on Form 10-K, including their judgment about the quality, not just the acceptability, of accounting principles, the reasonableness of significant judgments, the basis and appropriateness of any change in significant accounting policies and the clarity of the disclosures in the financial statements. Also, the Committee shall review and discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards.

The Committee shall review and discuss with management and the independent auditors any material financial or non-financial arrangements of the Company which do not appear in the financial statements of the Company and any transactions or courses of dealing with parties related to the Company which transactions are significant in size or involve terms or other aspects that differ from those that would likely be negotiated with independent parties, in each case where such arrangements or transactions are relevant to an understanding of the Company’s financial statements.

2221 Table of Contents

PART IV

ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

	(a)	Consolidated Financial Statements
		Audited Consolidated Financial Statements for the year ended February 28, 2018 and February 28, 2017
	(b)	Exhibits.

(a)

Consolidated Financial Statements

	3.1	Articles of Incorporation, as amended (1)
	3.2	Bylaws (1)
	10.1	Amended Employment Agreement - Michael Cartwright
	22.1	List of wholly-owned subsidiaries
	31	Certifications of Chief Executive Officer and Chief Financial Officer under Rule 13a-14(a)/15d-14(a)
	32	Certifications under Section 1350
	101.INS(2)	XBRL Instance
	101.SCH(2)	XBRL Taxonomy Extension Schema
	101.CAL(2)	XBRL Taxonomy Extension Calculation
	101.DEF(2)	XBRL Taxonomy Extension Definition
	101.LAB(2)	XBRL Taxonomy Extension Labels
	101.PRE	XBRL Taxonomy Extension Presentation

Audited Consolidated Financial Statements for the year ended February 28, 2019 and February 28, 2018

~~______________~~(b) Exhibits.

(1)	Incorporated by reference to exhibit filed as a part of Registration Statement on Form 10-SB (Commission File No. 000-27225).
	3.1	Articles of Incorporation - March 23, 1982
(2)	XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
	3.2	Bylaws (1)
	3.3	Certificate of Consent to Use Corporate Name - Command Small Computer Learning Center Inc. - September 15, 1982
	3.4	Election to Become Governed by Chapter 302A - July 13, 1983
	3.5	Articles of Amendment - Name Change to Command Electronics Inc. - April 2, 1987
	3.6	Articles of Amendment - January 29, 1997
	3.7	Articles of Amendment - Name Change to CyberStar Computer Corporation - April 2, 1997
	3.8	Articles of Amendment - January 7, 1998
	3.9	Articles of Amendment - June 30, 1998
	3.10	Articles of Amendment - Name Change to eNetpc, Inc - August 8, 2000
	3.11	Articles of Amendment - January 14, 2004
	3.12	Articles of Amendment - Name Change to BDC Capital, Inc - November 30, 2004
	3.13	Certificate of Designation - Series A Preferred Stock - December 17, 2004
	3.14	Articles of Amendment - April 14, 2005
	3.15	Articles of Amendment - July 8, 2005
	3.16	Articles of Amendment - August 9, 2005
	3.17	Articles of Amendment - Name Change to DigitalTown, Inc - March 1, 2007
	22.1	List of wholly-owned subsidiaries
	31	Certifications of Chief Executive Officer and Chief Financial Officer under Rule 13a-14(a)/15d-14(a)
	32	Certifications under Section 1350
	101.INS(2)	XBRL Instance
	101.SCH(2)	XBRL Taxonomy Extension Schema
	101.CAL(2)	XBRL Taxonomy Extension Calculation
	101.DEF(2)	XBRL Taxonomy Extension Definition
	101.LAB(2)	XBRL Taxonomy Extension Labels
	101.PRE	XBRL Taxonomy Extension Presentation

~~23 Table of Contents~~_______________

(1)	Incorporated by reference to exhibit filed as a part of Registration Statement on Form 10-SB (Commission File No. 000-27225).
(2)	XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DigitalTown, Inc.	~~DigitalTown, Inc.~~
Dated: June 13, 2018		By: /s/ Robert W. Monster
Dated: June 13, 2019	By:	/s/ Sam Ciacco
		Robert Monster
		Sam Ciacco
		Chief Executive Officer and Director
		Chief Executive Officer and Chairman
		(Principal Executive Officer and Principal Financial Officer)
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Dated: June 13, 2018		By: /s/ Robert W. Monster
Dated: June 13, 2019	By:	/s/ Sam Ciacco
		Robert W. Monster
		Sam Ciacco
		Chief Executive Officer and Director
		Chief Executive Officer and Chairman
		(Principal Executive Officer and Principal Financial Officer)
		(Principal Executive Officer)
Dated: June 13, 2018		By: /s/ Darvin R. Haben
Dated: June 13, 2019	By:	/s/ Kevin Wilson
		Darvin R. Habben
		Kevin WilsonChief Financial Officer
		Chairman
		(Principal Financial Officer)
Dated: June 13, 2018		By: /s/ Kenwei Chong
		Kenwei Chong, Director
Dated: June 13, 2018		By: /s/ Jeffrey L. Mills
		Jeffrey L. Mills, Director
Dated: June 13, 2018		By: /s/ James B. Parsons
		James B. Parsons, Director
Dated: June 13, 2018		By: /s/ Derek R. Schumann
		Derek R. Schumann, Director
Dated: June 13, 2018		By: /s/ Greg Foss
		Greg Foss, Director
Dated: June 13, 2018		By: /s/ Michael Cartwright
		Michael Cartwright, Director
Dated: June 13, 2018		By: /s/ Lawrence Lerner
		Lawrence Lerner, Director

2423

Filing Compare · DigitalTown, Inc.