dgtw_10k.htm

CONSOLIDATED BALANCE SHEETS

	February 28,			February 28,
	2018			2017
ASSETS
Current assets:
Cash	$	58,712		$	539,243
Accounts receivable, net		12,089			25,609
Short term investment		10,000			-
Prepaid domain name renewal fees		77,977			105,775
Prepaid insurance		3,103			21,198
Total current assets		161,881			691,825
Property and equipment, net		22,433			1,812
Total assets	$	184,314		$	693,637

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	214,700		$	166,847
Accounts payable – related parties		458,125			10,612
Deferred revenue		170,000			190,000
Domain marketing development obligation		145,906			-
Interest payable		34,783			-
Accrued expenses - related parties		552,976			280,900
Notes payable - related parties		105,479			-
Notes payable - third parties, net		30,548			-
Convertible notes payable - related parties		468,493			400,000
Convertible notes payable - third parties, net		118,655			-
Total current liabilities		2,299,665			1,048,359

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
Additional paid-in-capital		43,698,746			34,333,479
Stock payable		2,221,603			3,426,371
Subscriptions receivable					-
Accumulated other comprehensive income		5,098			1,868
Accumulated deficit		(48,885,896	)		(38,642,500	)
Total stockholders’ equity (deficit)		(2,115,351	)		(354,722	)
Total liabilities and stockholders’ equity (deficit)	$	184,314		$	693,637

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

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CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended
	February 28, 2018			February 28, 2017
Revenues	$	327,335		$	165,991
Cost of revenues		1,031,344			473,056
Gross loss		(704,009	)		(307,065	)

Operating expenses:
Selling, general and administrative expenses		7,443,296			5,168,512

Loss from operations		(8,147,305	)		(5,475,577	)

Other income (expense):
Impairment expense		(1,721,760	)		(1,725,009	)
Interest expense		(374,331	)		(19,040	)
Total other income (expense)		(2,096,091	)		(1,744,049	)

Loss before income taxes		(10,243,396	)		(7,219,626	)
Income tax provision		-			-
Net loss	$	(10,243,396	)	$	(7,219,626	)

Net loss per common share – basic and diluted	$	(0.17	)	$	(0.16	)

Weighted average common shares outstanding – basic and diluted		61,786,169			44,840,743

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

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

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

													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
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	)

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

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	February 28, 2018			February 28, 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(10,243,396	)	$	(7,219,626	)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Loss on conversion of debt and accrued expenses		329,526			-
Depreciation and amortization		70,929			14,805
Bad debt expense		-			114,829
Debt discount amortization		276,257			-
Loss on acquisition of Appointment.com		-			853,955
Impairment expense		1,721,760			1,725,009
Imputed interest		66,257			19,040
Stock based compensation		3,524,123			2,455,587
Changes in operating assets and liabilities:
Accounts receivable		13,520			(102,014	)
Prepaid expenses		35,893			(104,186	)
Accounts payable		40,544			91,331
Accounts payable – related parties		447,512			(131,835	)
Accrued expenses - related parties		428,845			158,565
Deferred revenue		(20,000	)		190,000
Domain marketing development obligation		145,906			-
Net cash used in operating activities		(3,162,324	)		(1,934,540	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for office equipment		(26,158	)		-
Cash paid for domain names		-			(69,500	)
Cash received from Comencia acquisition		11,989			-
Cash received from Rezserve		-			34,256
Cash received from Appointment.com		-			2,240
Cash paid for Congo acquisition		(125,000	)		-
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		735,000			-
Borrowings from promissory note		450,000			-
Payments on promissory note		(30,000	)		-
Proceeds from issuance of common stock		1,662,732			2,377,950
Net cash provided by financing activities		2,817,732			2,377,950

Foreign currency translation adjustment		3,230			1,868
Net change in cash and cash equivalents		(480,531	)		404,774
Cash and cash equivalents, beginning of year		539,243			134,469
Cash and cash equivalents, end of year		58,712			539,243

Non-Cash Transactions:
Issuance of common stock for domain names		-			154,740
Issuance of common stock for stock payable		2,559,061			-
Beneficial conversion feature		450,246			-
Debt discount from warrants		450,000			-
Conversion of debt to common stock		210,000			-
Conversion of accrued expenses to stock		121,986			-

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

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

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, the Company had an accumulated deficit of $48,593,820. 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. 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. 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 and February 28, 2017 of $5,456 and $23,219, respectively. During fiscal 2017, the Company recorded $114,829 of bad debt expense due mostly to new customers from the Rezserve acquisition.

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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.

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. Based upon our review and analysis, 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. In fiscal 2017, recognized an impairment expense of $1,725,009.

Revenue Recognition

The Company recognizes revenue when the following four criteria have been met:

· 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 Company recognizes revenue from the sale of display 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.

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Fair Value of Financial Instruments

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.

As of 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:

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 or fiscal 2017.

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, and February 28, 2017, 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, the Company had no uninsured cash balances. At February 28, 2017, the Company had one bank deposit account in excess of federally insured limits.

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 $6,022 and $2,782 of depreciation expense for fiscal years 2018 and 2017, 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.

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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.

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 standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the 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 and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019.

The Company will adopt 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.

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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 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. 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
Office equipment and furniture	$	43,088		$	528,034
Less accumulated depreciation		(20,655	)		(526,222	)
Property and equipment, net	$	22,433		$	1,812

Depreciation expense for fiscal years 2018 and 2017 was $6,022 and $2,782, respectively.

Note 4. Prepaid Domain Names

During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, 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 and 2017, the Company recognized $136,328 and $82,370 of expense as cost of revenues related to this amortization. As of February 28, 2018 and February 28, 2017, the Company has $77,977 and $105,775, 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 Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer. See Note 15 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.

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Deferred Revenue

During fiscal 2017, the Company signed three customer agreements to perform digital support and construction services for three third party companies. Each customer 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 total of $170,000 has been recorded as deferred revenue as of February 28, 2018.

Domain Marketing Development Obligation

During fiscal 2018, the Company signed top-level domain marketing development fund agreements with owners of 13 top level domains 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 and February 28, 2017, the Company has collected $930,556 and $0 in cash related to these contracts. As some of the services requested by the owners have not yet been completed, a total of $145,906 and $0 has been recorded as domain marketing development obligation as of February 28, 2018, and February 28, 2017, 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.

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.

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.

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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.

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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, the Company had 9,044,740 warrants outstanding with an average exercise price of $0.13. 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 of 6.17 years.

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.

As of 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.

During fiscal 2017, the Company issued an aggregate of 150,000 warrants to 3 consultants to purchase shares of the Company’s common stock at prices which ranged from $0.10 to $0.30. All warrants vested immediately at the date of issuance and are exercisable through 2026. The total estimated value using the Black-Scholes Model, based on a volatility rate of 180% and a call option value of $0.0797, was $11,948.

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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 27,			February 6,			February 15,			February 16,
	2017			2017			2018			2018			2018
Weighted-average volatility		263	%		263	%		157	%		153	%		158	%
Expected dividends	None			None			None			None			None
Expected term (in years)		10.00			10.00			1.00			1.00			1.00
Weighted-average risk-free interest rate		1.17	%		1.16	%		2.00	%		1.99	%		2.00	%
Weighted-average fair value of warrants granted	$	0.20		$	0.27		$	0.15		$	0.14		$	0.17

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

	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

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

Exercise Price	Number Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercisable Price
$0.10		7,394,740		5.92	$	0.10		7,394,740	$	0.10
$0.15		300,000		7.10	$	0.15		300,000	$	0.15
$0.25		850,000		7.19	$	0.25		850,000	$	0.25
$0.30		500,000		7.54	$	0.30		500,000	$	0.30
$0.10 - $0.30		9,044,740		6.17	$	0.13		9,044,740	$	0.13

The Company recorded stock-based compensation expense of $0 and $11,948 for all outstanding stock warrants for fiscal years 2018 and 2017, 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, 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.

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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.

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,
	2018
Weighted-average volatility		153	%
Expected dividends	None
Expected term (in years)		1.00
Weighted-average risk-free interest rate		2.00	%

The Company recorded stock-based compensation expense of $164,742 and $0 for all outstanding options for fiscal years 2018 and 2017, 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 and activity during the fiscal years 2018 and 2017:

	Number of Options			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

The following table summarizes information about stock options outstanding as of February 28, 2018:

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

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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, the Company owes $7,625 and $10,613, respectively, due to advances made to an employee which is included within accounts payable – related parties.

As of February 28, 2018 and 2017, the Company owes $450,500 and $0, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations.

Prepaid Domain Names

During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, 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 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.

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 expense of $38,000 in fiscal 2018.

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.

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 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.

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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.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 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.

Sales of Common Stock

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

Directors and Officers

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 $240,000 in annual salary and $1,026,710 in stock-based compensation in fiscal 2018, and $240,000 in annual salary and $1,191,349 in stock-based compensation in fiscal 2017, related to the employment agreement with Robert Monster, CEO.

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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.

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 $15,888,098 as of February 28, 2018 that will offset future taxable income. The available net operating loss carry forwards will expire in various years through 2038. 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.

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Table of Contents

DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

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, 2018 and February 28, 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.

Lease Commitments

As of February 28, 2018, we have one outstanding operating lease. The lease is for 700 square feet of office space in Vancouver, British Columbia for our Rezserve subsidiary. 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 Stock Subscriptions Receivable

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.

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 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

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

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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

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.

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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.

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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 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.

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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.

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.

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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

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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.

Promissory Note Payable - Related Party

Convertible Note Payable - Third Party

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 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.

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

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 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 $38,164 due to this conversion feature. The note had accrued interest of $1,716 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 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.

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 to $33,164 due 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 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.

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 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.

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 15. Transactions with Former Officer

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

Note 16. Intangible Assets and Goodwill

Goodwill

The carrying value of goodwill at February 28, 2018 and February 28, 2017 was $0. During fiscal 2018 and fiscal 2017, the Company made three acquisitions which resulted in $549,667 and $1,317,680 of goodwill being recorded, and subsequently impaired, respectively. See Note 13 for more information about acquisitions.

Intangible assets

The carrying value of intangible assets at February 28, 2018 and February 28, 2017 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. 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 17. Subsequent Events

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, 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.

On April 25, 2018, the Company received a $1,000,000 investment commitment from Triton Funds LP to purchase registered DGTW shares. The Company has filed an S-1 with the SEC. Once approved, Triton will purchase up to 5% of the Company’s fully diluted shares.

On May 15, 2018, the Company received a $2,400,000 investment from Pithia, Inc. in exchange for 10% of the Company’s fully diluted shares. Pithia invested $1,200,000 on May 15, 2018 in the form of RHOC cryptocurrency. The remaining $1,200,000 will be received 90 days from the agreement date, again in the form of RHOC cryptocurrency, as long as the Company meets certain conditions. The Company issued 11,385,590 shares of its common stock to Pithia, Inc. on May 31, 2018.

On May 17, 2018, Digitaltown amended the employment agreement of Michael Cartwright, its Chief Technology Officer, to extend his employment term by two years to June 1, 2020. This included a base salary increase, additional stock award, and a cryptocurrency coin award conditional on achieving specific development and product launch milestones. A copy of his amended employment agreement is attached as Exhibit 10.1.

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DigitalTown, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended February 28, 2018 and 2017

In May 2018, the Company:

- 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.

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

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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, 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 and as a result, our disclosures controls and procedures were not effective. Notwithstanding the material weaknesses that existed as of February 28, 2018, 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.

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, 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
Kenwei Chong	50	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 CARTWRIGHT. Mr. Cartwright was appointed a member of the Board of Directors on October 3, 2017. Mr. Cartwright has over 20 years of IT experience with organizations of all sizes and across a range of industries including travel, consultancy and manufacturing. Prior to joining Digital Town, Mr. Cartwright was a co-founder and CEO of Comencia Inc., a Private Label Travel Platform, a Technology Vice President at Expedia, CTO of Pirean, a UK based identity and access management company, and a Technology Director at Nestle, Switzerland. Mr. Cartwright holds a BSc(Hons) in Computer Science from the University of Teeside.

KENWEI CHONG. Mr. Chong was elected as a director in December 2016. Mr. Chong’s early career was in foreign exchange and global fixed income analysis and funds management for various firms in New York City and San Francisco; and later as product development manager for foreign exchange and fixed income risk management at Bloomberg. In 2001 Mr. Chong left the capital markets profession to pursue entrepreneurial interests and has been an active owner and investor in self-storage, physical and electronic records management and storage, restaurant and hospitality, food manufacturing and wholesale distribution, physical and virtual real estate investment and top level domain ventures. Mr. Chong received his BA in Finance from Boston University and his Chartered Financial Analyst designation from the Association of Investment Management and Research.

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 6 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.

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 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.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation paid for services rendered during the fiscal years ended February 28, 2018 and February 28, 2017 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
(Principal Executive Officer), & Director	2017	$	240,000	$	-	$	-	$	1,191,349	$	1,431,349

Darvin R. Habben Chairman & Director	2018	$	-	$	-	$	-	$	144,000	$	144,000
	2017	$	-	$	-	$	-	$	267,000	$	267,000

	(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.

Grants of Plan-Based Awards

Name

Grant

Date

Number of shares - Underlying options granted

Exercise

Price

($/Share)

Grant

Date

Fair

Value

Expiration

Date

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.

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
Robert Monster		200,000		-	$	0.10	12/4/25
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

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 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 31, 2018, we had 125,749,320 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		13,614,274		10.83	%
Kenwei Chong		1,900,000		1.51	%
Jeff L. Mills		2,039,950		1.62	%
Greg Foss		4,050,000		3.22	%
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		11,385,590		9.05	%

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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.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Accounts Payable – Related Parties

As of February 28, 2018 and 2017, the Company owes $7,625 and $10,613, respectively, due to advances made to an employee which is included within accounts payable – related parties.

As of February 28, 2018 and 2017, the Company owes $450,500 and $0, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations.

Prepaid Domain Names

Convertible Notes Payable – Related Party

Promissory Notes Payable - Related Party

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Appointment.com Acquisition

Sales of Common Stock

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.

Employment Agreements

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Directors and Officers

CEO Employment Agreement Share Issuance

CEO Accrued Salary Conversion

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 and February 28, 2017. 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 and 2017 were $53,500 and $47,900, respectively. There were no aggregate fees billed by M&K for other audit related services or tax services for the fiscal years 2018 or 2017.

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.

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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.

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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.

	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

______________

(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.

Dated: June 13, 2018		By: /s/ Robert W. Monster
		Robert Monster
		Chief Executive Officer and Director
		(Principal Executive Officer and Principal Financial 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
		Robert W. Monster
		Chief Executive Officer and Director
		(Principal Executive Officer and Principal Financial Officer)

Dated: June 13, 2018		By: */s/ Darvin R. Haben*
		Darvin R. Habben
		Chairman

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

EX-10.1 2 dgtw_ex101.htm AMENDED EMPLOYMENT AGREEMENT dgtw_ex101.htm

EXHIBIT 10.1

AMENDED EMPLOYMENT AGREEMENT

This AMENDED EMPLOYMENT AGREEMENT is dated as of May 17, 2017, (“Agreement”) amends and replaces in its entirety the Employment Agreement between dated June 30, 2017, by and between DigitalTown, Inc., a Minnesota corporation (the “Company”) and Michael Cartwright (the “Executive”).

WHEREAS, the Company wishes to continue to employ the Executive as its Chief Technology Officer.

WHEREAS, the Company and the Executive both wish to enter into an amended employment agreement which sets forth terms and conditions of employment.

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive, intending to be legally bound, hereby agree as follows:

1. Employment Capacity; Term.

(a) The Company agrees to employ the Executive, and the Executive agrees to serve the Company, during the Term of Employment (as hereinafter defined), as Chief Technology Officer of the Company, with such duties consistent with such capacity as may, in good faith, be assigned to the Executive by the Board of Directors of the Company (the “Board”). The Executive shall perform all services to be rendered hereunder faithfully, devote the Executive’s full business time and attention to the duties assigned to the Executive hereunder and use the Executive’s best efforts to promote the business interests of the Company. The Executive certifies he can legally work in the United States of America.

(b) Employment of the Executive pursuant to the terms of this Agreement begin on June 1, 2018 (the “Effective Date”), and continue until the close of business on June 1, 2020 (the “Fixed Term”), and thereafter from day to day until terminated by the Company or the Executive (the “At-Will Term”), subject to the terms and conditions hereinafter set forth. As used herein, the “Term of Employment” shall mean the full term of the Executive’s employment hereunder, including both the Fixed Term and the At-Will Term.

2. Compensation. The Company agrees to compensate the Executive for the services rendered by the Executive during the Executive’s employment as follows:

(a) Base Salary. The Company shall pay the Executive an annual base salary (the “Base Salary”) of two hundred thousand dollars ($200,000) during the Fixed Term, payable in accordance with the standard payroll practices of the Company. The Executive’s Base Salary shall be reviewed on or about the commence-ment of the At-Will Term and annually thereafter, at which times it shall be subject to increase or decrease at the discretion of the Board. Employee shall be guaranteed a salary equal to four (4) months.

(b) Stock Award. Executive shall be entitled to an option to purchase 3,555,212 shares of common stock of the Company at a fixed price of $.10 per share. 555,212 options are not subject to the claw-back provisions of Section 3(f)(ii) below. 3,000,000 options are subject to the claw-back provisions of Section 3(f)(ii) below. The option is for five years from the date of vesting. Vesting of the 3,000,000 options occurs immediately. Vesting of the 555,212 options will occur at an equal rate over a period of twelve (12) months from the date of this Agreement.

(c) Cryptocurrency Coin Award. Upon the receipt of 1,050,000 RHOC cryptocurrency coins, Executive shall be entitled to a payment of 200,000 RHOC coins. Upon the completion of development and launch of the RChain wallet prior to March 31, 2019, Executive shall be entitled to a bonus of $25,000 in RHOC cryptocurrency coins at the then market rate for RHOC.

(d) The Executive shall be permitted to participate in all employee medical and insurance benefit plans applicable to senior executives and officers of the Company, and such other plans as may be made available or applicable to the Executive, consistent with the policies of the Company and subject any applicable waiting period. Medical and insurance benefits will include coverage for Executive’s spouse and dependent children. The Executive shall also be permitted to participate in any retirement or deferred compensation plan the Company may offer from time to time, subject to the Company’s or such plan’s eligibility requirements.

(e) The Executive shall be entitled to the benefits of the holiday and sick day policies of the Company as from time to time in effect and applicable to senior executives of the Company.

(f) The Executive shall be entitled to twenty (20) paid vacation days per year. No vacation earned during any year may be carried forward to a subsequent year; if not used during the year in which earned, it will be forfeited.

(g) The Company shall reimburse the Executive, consistent with the Company’s expense reimbursement policies and procedures and subject to receipt of appropriate documentation, for all reasonable and necessary out-of-pocket travel, business entertainment and other business expenses incurred or expended by the Executive incident to the performance of the Executive’s duties hereunder.

3. Termination.

(a) For Cause. The Company may terminate the Executive’s employment at any time for Cause (as defined below); provided, however, with respect to subsections 3(a)(i) and (vi), before terminating the Executive for Cause, the Company shall be required first to give the Executive written notice of any alleged violation of said provision and a period of fifteen (15) days after receipt of such notice to cure such violation. For the purposes of this Agreement, “Cause” shall mean the occurrence of one or more of the following: (i) habitual drunkenness or any substance abuse which adversely affects the Executive’s performance of the Executive’s job responsibilities, (ii) commission of a felony, (iii) dishonesty materially relating to the Executive’s employment, (iv) personal misconduct by the Executive which would cause the Company to violate any state or federal law relating to sexual harassment, sex or other prohibited discrimination, or any intentional violation of any written policy of the Company or any successor entity adopted in respect to any such law, (v) conduct in the performance of the Executive’s employment which the Executive knows or should reasonably be expected to know (either as a result of a prior warning by the Company, custom within the industry or the flagrant nature of the conduct) violates applicable law or causes the Company to violate applicable law in any material respect, (vi) failure to follow the lawful instructions of the Board, provided compliance with such instructions was within the scope of the Executive’s duties, (vii) internal misconduct by the Executive which would cause the Company to violate any state or federal laws with regard to securities filings, including but not limited to filings required by the U.S. Securities and Exchange Commission, or (viii) knowing and intentional violation of any confidentiality, non-competition, non-solicitation or non-association provision at any time applicable to the Executive.

(b) Upon Death or Disability. The Executive’s employment shall automatically terminate upon the death of the Executive and may be terminated by the Company upon the Disability of the Executive. For purposes of this Section 3, the Executive shall be deemed Disabled (and termination of the Executive’s employment shall be deemed to be due to such “Disability”) if an independent medical doctor (selected by the Company’s applicable health or disability insurer) certifies that the Executive has, for a cumulative period of more than one hundred twenty (120) days during any 365-day period, been disabled in a manner which seriously interferes with the Executive’s ability to perform the essential functions of Executive’s job even with a reasonable accommodation to the extent required by law. Any refusal by the Executive to submit to a medical examination for the purpose of certifying Disability shall be deemed conclusively to constitute evidence of the Executive’s Disability.

(c) For Convenience of the Company. Notwithstanding any other provisions of this Agreement, the Company shall have the right to terminate the Executive’s employment at the “Company’s Convenience” (i.e., for reasons other than Cause, death or Disability) at any time.

(d) Resignation; Good Reason. Notwithstanding any other provisions of this Agreement, the Executive shall have the right to resign at any time during the Fixed Term or At Will Term, upon thirty (30) days’ written notice to the Company.

(e) Change of Control. If a Change of Control (as defined below) occurs on or before the first anniversary of the Effective Date and the Executive incurs a separation from service (a “Separation from Service”) as defined in Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”) and the Treasury regulations and other authoritative guidance issued thereunder (“Section 409A”) within six months thereafter, the Executive shall be entitled to receive three (3) months of Base Salary, paid monthly, beginning on the first day of the month occurring at least ten days after the Separation from Service, plus all Stock Awards due during the Fixed Term and not issued shall immediately become payable to the Executive. “Change of Control” means the occurrence of any of the following events:

i) the sale or disposition, in one or a series of related transactions, of more than 75% of the equity interests in the Company; or

ii) the sale or disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company; or

iii) a merger of the Company with or into another person, in which the voting shareholders of the Company immediately prior to such merger cease to hold at least 50% of the voting shares of the Company (or the surviving corporation or ultimate parent) immediately following such merger.

Anything in the foregoing to the contrary notwithstanding, a transaction shall not constitute a Change of Control (i) if its sole purpose is to change the legal jurisdiction of incorporation of the Company or to create a holding company that will be owned, directly or indirectly, in substantially the same proportions by the persons who held securities of the Company, directly or indirectly, immediately before such transaction or (ii) if any person who directly or indirectly owned more than 50% of the total voting power of the voting securities of the Company immediately before such transaction continues to own directly or indirectly more than 50% of the total voting power of the voting securities of the entity that continues to operate the business of the Company.

(f) Effect of Termination.

(i) Termination for Cause; Resignation. In the event the Executive’s employment with the Company is terminated by the Company for Cause or as a result of the Executive’s resignation, and except as to the four (4) month’s salary guaranteed in Section 2(a) above, the Company shall have no further liability to Executive hereunder, whether for salary, stock, benefits, incentive compensation or otherwise. The Executive may elect to continue, at the Executive’s own expense, medical insurance coverage to the extent mandated under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”).

(ii) Return of Shares. In the event the Executive‘s employment is terminated by his resignation (and the resignation is prior to a Change of Control as defined in Section 3(e) above, and the Executive has exercised any of the 3,000,000 option referenced in Section 2(b) above, the Executive shall sell back to the Company the number of shares exercised at the lower of the option price or the then current market price, The number of shares to be sold back to the Company shall be the percentage of the number of months of the Fixed Term remaining over the Fixed Term times the percentage of options exercised. The Executive shall be entitled to retain that percentage of shares equaling the number of months of the Fixed Term served over the Fixed Term. For instance and by way of example, if the Executive resigns after twelve (12) months and has exercised 2,000,000 options, the Executive must sell back to the Company 500,000 shares at the price set forth herein. Any vested and unexercised options shall be terminated and forfeited, except for that number of options equaling the percentage of the number of months of the Fixed Term the Executive served over the Fixed Term.

(iii) Death or Disability. In the event the Executive’s employment with the Company terminates as a result of the death of the Executive, the estate of the Executive shall be entitled to receive the Executive’s salary and benefits described in Sections 2, and expenses properly incurred, through the date of termination, as well as applicable accrued health, disability or death benefits, if any, offered by the Company at the time consistent with the policies of the Company, provided that Executive meets the eligibility requirements of such benefits.

(iv) Company’s Convenience. In the event the Executive incurs a Separation from Service at the Company’s Convenience, the Executive shall be entitled to continue to receive the compensation as set forth in Section 2(a) above for the Fixed Term.

4. Confidentiality.

(a) The Executive recognizes and acknowledges that certain information possessed by the Company or its Affiliates constitutes valuable, special, and unique proprietary information and trade secrets. Accordingly, the Executive agrees that he shall not, during the Term of Employment and for a period of three (3) years thereafter, divulge, use, furnish, disclose or make available to any person, whether or not a competitor of the Company, any confidential or proprietary information concerning the assets, business, or affairs of the Company, of any of its Affiliates, or of its suppliers, customers, licensees or licensors (collectively, “Confidential Information”), including but not limited to information regarding trade secrets and information (whether or not constituting trade secrets) concerning business plans, marketing plans, strategies, forecasts, financial data, budgets, projections, agreements, inventions, improvements, research or development, know-how, or any other confidential information which gives the Company or its Affiliates an opportunity to claim a competitive advantage or has economic value. The foregoing shall not be applicable to any information which is required to be disclosed by law, including Regulation FD as promulgated by the Securities and Exchange Commission, subpoena or by order of any governmental or judicial authority, provided that the Executive provides prompt notice to the Company of such disclosure request and assists the Company in preventing such disclosure.

(b) Upon the expiration or earlier termination of the Executive's employment, for any reason, whether terminated voluntarily or involuntarily by the Company or the Executive, or at any time the Company may request, the Executive shall (i) surrender to the Company all documents and data of any kind (including data in machine-readable form) or any reproductions (in whole or in part) of any items relating to the Confidential Information and shall not make or retain any copy or extract of any of the foregoing, and (ii) will confirm in writing that to the Executive’s knowledge, after inquiry, no Confidential Information exists on any computers, computer storage devices or other electronic media that were at any time within the Executive’s control (other than those which remain at, or have been returned to, the Company).

5. Non-Competition, Non-Solicitation and Non-Association.

(a) In consideration of this Agreement and all the recitals and provisions contained herein, and in view of the Executive’s participation in and access to the unique and valuable information of the current and proposed business activities of the Company and its Affiliates in all aspects, the Executive covenants and agrees that, during the Term of Employment and thereafter during the Restrictive Period (as defined below), the Executive shall not, directly or indirectly:

i) except in the ordinary-course performance of the Executive’s duties as an employee of the Company, induce or attempt to induce or encourage others to induce or attempt to induce, any person who is an employee of, independent contractor, consultant to or agent of the Company or any Affiliate of the Company as of the date of termination of Executive’s employment, to (A) terminate such person’s employment with such employer (in the case of an employee) or cease providing its services to the Company or its Affiliates (in the case of a consultant, independent contractor or sales or other commercial representative), provided that nothing herein shall prevent general solicitations through advertising or similar means which are not specifically directed at employees of, consultants to, or agents of the Company or its Affiliates; or (B) engage in any of the activities hereby prohibited with respect to the Executive under subparagraphs (ii) and (iii) below;

ii) divert, solicit or attempt to divert, or assist or encourage any person in diverting, soliciting or attempting to divert, (A) any customer of the Company to or for any competitor of the Company, or (B) any supplier of the Company (whether or not to or for any competitor of the Company).

iii) As used in this Section 5, “Restrictive Period”, (A) as it pertains to Sections 5(a)(i), means twenty-four (24) months from the end of the Term of Employment, and (B) as it pertains to Sections 5(a)(ii) and 5(a)(iii), means (i) following a termination for Cause or a resignation other than for Good Reason, eighteen (18) months from the date of termination of employment, or (ii) following a termination as a result of the Disability of the Executive, or by the Company at the Company’s Convenience, twelve (12) months from the date of termination of employment.

6. Rights in Company Property; Inventions.

(a) The Executive hereby recognizes the Company’s proprietary rights in the tangible and intangible property of the Company and its Affiliates and acknowledges that notwithstanding the relationship of employment, the Executive has not obtained or acquired and will not hereafter obtain or acquire through such employment any personal property rights in any of the property of the Company and its Affiliates, including but not limited to, any writing, communications, manuals, documents, instruments, contracts, agreements, files, literature, data, technical information, know-how, secrets, formulas, products, methods, procedures, processes, devices, apparatuses, trademarks, trade names, trade styles, service marks, logos, copyrights, works of authorship, patents, or other matters which are the property of the Company and its Affiliates.

(b) The Executive agrees that any and all discoveries, inventions, works of authorship, improvements and innovations (including all data and records pertaining thereto), whether or not patentable, or copyrightable, or reduced to writing (collectively, “Inventions”), which during the Executive’s employment by the Company, the Executive conceived or made, or conceives or makes, either alone or in conjunction with others, which are related to the business of the Company and its Affiliates, are and shall be the sole and exclusive property of the Company and its Affiliates, except for those inventions and discoveries conceived by the Executive prior to commencement of the Executive’s employment by the Company which are disclosed on Schedule A of this Agreement. The Executive shall promptly disclose all Inventions to the Company conceived during the period of the Executive’s employment. At the request of the Company and at any time during or after the Executive’s employment with the Company, the Executive shall execute any assignments or other documents the Company and its Affiliates may deem necessary to protect or perfect its rights in the Inventions, and shall assist the Company, at the Company’s expense, in obtaining, defending and enforcing the Company’s and its Affiliates’ rights therein. The Executive hereby appoints the Company as the Executive’s attorney-in-fact to execute on the Executive’s behalf any assignments or other documents deemed necessary by the Company to protect or perfect its rights to any Inventions.

7. Conflicts; Enforcement; Modification.

(a) The Executive represents and warrants that his employment with the Company, and the performance of his duties on behalf of the Company, will not conflict with or cause a breach of any agreement or obligation between the Executive and any existing or prior employer or third party, including any non-competition, non-solicitation or other similar agreements. The Executive will not use any trade secrets from the Executive’s prior work experience in violation of restrictive agreements the Executive may have entered into.

(b) The Executive further acknowledges and agrees that any breach or threatened breach by the Executive of any provision of Section 4, 5 or 6 due to the Executive’s unique services provided to the Company as further detailed above will result in irreparable injury to the Company (or its Affiliates), that monetary damages will be an inadequate remedy for such breach and that, accordingly, in addition to any other remedy that the Company may have, the Company shall be entitled to injunctive relief in the event of any breach hereof without posting bond or other security. In the event the Company brings an action to obtain such relief, the prevailing party in such action shall be entitled to recover its attorney’s fees and other expenses incurred in said action, and the court in which said action is brought shall award such expenses to the prevailing party as part of the costs of such action.

(c) It is expressly agreed that if any restrictions set forth in Section 4, 5 or 6 are found by any Court having jurisdiction to be unreasonable because they are too broad in any respect, then and in each such case, the remaining restrictions herein contained shall nevertheless remain effective, and this Agreement, or any portion thereof, shall be considered to be amended so as to be considered reasonable and enforceable by such Court, and the Court shall specifically have the right to restrict the business, geographical or temporal scope of such restrictions to any portion of the business or geographic areas or time period described above to the extent the Court deems such restriction to be necessary to cause the covenants to be enforceable, and in such event, the covenants shall be enforced to the extent so permitted.

8. Indemnification of Executive. To the fullest extent authorized or permitted by law, the Company shall indemnify the Executive when made, or threatened to be made, a party to any action or proceeding, whether civil, at law, in equity, criminal, administrative, investigative or otherwise, including any action by or in the right of the Company, by reason of the fact that the Executive, on or after the Effective Date, is or was a director, officer or employee of, or a consultant to, the Company, from and against all judgments, fines, penalties, amounts paid in settlement (provided the Company shall have consented to such settlement, which consent shall not be unreasonably withheld or delayed by it) and reasonable expenses, including attorneys’ fees and costs of investigation, incurred by the Executive with respect to any such threatened or actual action or proceeding, and any appeal therein, provided only that (x) acts of the Executive which were material to the cause of action so adjudicated or otherwise disposed of were (A) committed in good faith and (B) were committed in a manner the Executive reasonably believed to be in or not opposed to the best interests of the Company, and (y) with respect to any criminal action or proceeding, the Executive had no reasonable cause to believe his or her conduct was unlawful. Notwithstanding the foregoing, the Executive is not entitled to indemnification pursuant to this Section 8 with respect to any action or proceeding (or part thereof) initiated by the Executive unless the Company has joined in or consented to the initiation of such action or proceeding (or part thereof). The rights of the Executive to indemnification under this Section 8 with respect to matters occurring or arising during the term of the Executive’s employment hereunder shall survive the expiration or earlier termination of such employment.

9. Parachute Payment Limitation. Notwithstanding anything to the contrary contained herein, if payment of all or any portion of any severance payments to the Executive pursuant to Section 3(f) of this Agreement (the “Severance Payments”) would under Section 280G of the Code render any payments or other benefits to the Executive in the nature of compensation subject to the excise tax imposed by Section 4999 of the Code or nondeductible under Section 280G of the Code, then the Severance Payments shall be reduced to an amount such that the Severance Payments and any other amount or amounts otherwise payable in connection with the Change of Control by the Company or by any person whose relationship to the Company is such as to require attribution of stock ownership between the parties under Section 318(a) of the Code upon the occurrence of the Change of Control and which are includible in the computation of “parachute payments” under Section 280G of the Code, does not exceed 2.99 times the “base amount” as defined in Section 280G of the Code, provided that the foregoing reduction shall not take place if, prior to the Change of Control, the Severance Payments shall have been approved, in a vote satisfying the requirements of Section 280G(b)(5) of the Code, by persons who own, immediately before the Change of Control, more than 75% of the voting power of all outstanding capital stock of the Company.

10. General.

(a) Notices. All notices and other communications hereunder shall be in writing or by written telecommunication, and shall be deemed to have been duly given if delivered personally or if mailed by certified or registered mail, or if sent by confirmed written telecommunication, to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this Section 9(a):

If to the Company:

DigitalTown, Inc.

PO Box 742

Bellevue WA 98009

Attention: Board of Directors

with a copy to:

James B. Parsons

Parsons/Burnett/Bjordahl/Hume, LLP

2155 112^TH Ave NE

Bellevue, WA 98004

jparsons@pblaw.biz

If to the Executive:

Michael Cartwright

7605 E. Mercer Way

Mercer Island, WA 98040

mike@digitaltown.com

(b) Computation of Months. For purposes of this Agreement, any period measured in months following a specified date shall commence on the specified date and end at the close of business on the day of the month immediately prior to the specified date in the month falling the specified number of months thereafter; (i) Successors and Assigns. This Agreement shall be binding upon the Executive and inure to the benefit of the Company and its successors and assigns, including without limitation any corporation to which substantially all of the assets or the business of the Company are sold or transferee; (ii) Severability. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired; (ii) Waivers. No delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege; (iv) Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A facsimile or electronic signature shall be deemed an original for all purposes; (v) Governing Law. This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of Washington; (vi) Arbitration. Any controversy arising out of or relating to this Agreement or Executive’s employment with the Company, whether arising under common or statutory law, and including the arbitrability of any such controversy, will be resolved exclusively by a single neutral arbitrator selected jointly by Executive and the Company, in Seattle, Washington, or such other location as may be mutually agreed upon, in accordance with the Employment Arbitration Rules of the American Arbitration Association as then in effect. The Company will be responsible for the fees and expenses of the arbitrator. Executive and the Company will be responsible for their own attorney’s fees and any other costs occasioned by the arbitration; provided that the arbitrator may award attorneys’ fees and costs to a party when so empowered by law. The arbitrators shall have the authority, in addition to their authority under the Employment Arbitration Rules, to award equitable relief, including injunctive relief. The decision of the arbitrator shall be final and binding upon the parties and all persons claiming under and through them. Judgment on any arbitration award may be entered in any court having jurisdiction. Executive and the Company will have all rights, remedies, and defenses available to them in that arbitration that they would have in a civil action for the issues in controversy. Notwithstanding anything in this Agreement to the contrary, either party may seek preliminary injunctive relief in a court of competent jurisdiction; (vii) Entire Agreement; Termination of Original Employment Agreement. This Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes any prior employment, severance, confidentiality or invention assignment agreement between the parties hereto; provided however, that the Company reserves and shall retain all rights and remedies it may have against the Executive with respect to any breach of any prior confidentiality and invention assignment agreements. Additionally, except as set forth herein, the Executive represents and acknowledges that no other agreement, promise or understanding, express or implied, including any guarantee of future compensation or continued employment, has been made by any person to induce the Executive to enter into this Agreement.

IN WITNESS WHEREOF, the parties have duly executed this Agreement, to be effective as of the Effective Date.

DIGITALTOWN, INC.

By: /s/ Robert W. Monster

Name:
Robert W Monster

Title:
Chief Executive Officer

Date:
May 17, 2018

EXECUTIVE

/s/ Michael Cartwright

Date:

May 17. 2018

EX-22.1 3 dgtw_ex221.htm LIST OF WHOLLY-OWNED SUBSIDIARIES doc1.htm

EXHIBIT 22.1

DigitalTown Subsidiaries

Rezserve Technologies Ltd

Appointment.com, Inc.

Comencia Inc.

EX-31 4 dgtw_ex31.htm CERTIFICATION doc2.htm

EXHIBIT 31

CERTIFICATION PURSUANT

TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert W. Monster, certify that:

1. I have reviewed this annual report of DigitalTown, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which the report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, 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;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: June 13, 2018

/s/ Robert W. Monster

Robert W. Monster

Chief Executive Officer

Principal Executive Officer

Principal Financial Officer

EX-32 5 dgtw_ex32.htm CERTIFICATION doc3.htm

EXHIBIT 32

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Annual Report of DigitalTown, Inc. (the “Company”), on Form 10-K for the period ended February 28, 2018 as filed with the Securities and Exchange Commission (the “Report”), the undersigned hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to my knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 13, 2018

/s/ Robert W. Monster

Robert W. Monster

Chief Executive Officer

Principal Executive Officer

Principal Financial Officer

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Property and equipment are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="text-align: center">February 28,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 28,</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Office equipment and furniture</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">43,088</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">528,034</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Less accumulated depreciation</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(20,655</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(526,222</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Property and equipment, net</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">22,433</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">1,812</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center">Fiscal 2018</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Fiscal 2017</td> <td style="text-align: justify"> </td></tr> <tr> <td style="vertical-align: top; text-align: justify">Basic earnings (loss) per share calculation:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net loss to common shareholders</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">(10,243,396</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">)</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">(7,219,626</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares outstanding</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Basic net loss per share</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(0.17</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(0.16</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Diluted earnings (loss) per share calculation:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net loss to common shareholders</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(10,243,396</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(7,219,626</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares outstanding</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Stock options (1)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Warrants (2)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Diluted weighted average common shares outstanding</td> <td style="vertical-align: bottom; 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7500

46500

1.00

1480000

1625000

1191349

165436

1763168

503710

812912

154921

44508

0.14 0.13 0.10 0.10 0.10 0.10 0.0797 0.10

11948

1340175

164742

6542310

6692310

6235159

1492310

0.17

0.16

0.10

0.14

0.16

P5Y P10Y P1Y

7625

10613

400000

210000

400000

0.40

0.10

0.25

0.40

1.00

1625000

8510000

6692310

536364

7080000

6437600

600000

300000

140000

350000

9042250

0.21

0.34

3336501

3953361

-3336501

-3953361

15888098 11627532

-3336501

-3953361

3336501 3953361

2038

1 P30D 13306880

41461543

52606000

84509824

-2115351

-354722

414615

526060

30967377

34333479

37500

3426371

-12150

1868

-31422874

-38642500

845098

43698746

2221603

5098

-48885896

-15532

6999707

6818333

1662732

2377950

69997

1502453

800500

5000

68183

1261817

332732

80394 2478667 -2559061 775000 8512776 775000 2754124 2443639 7750 571618 1857121 7150 85128 2147203 521792

3000000

8333333

2411667

1871250

30000

1110000

731250

83333

2328334

731250

369750 369750 154740 3698 151043 154740

3230

1868

3230

66257 19040 19040 66257 The Company utilized the following key assumptions in computing the fair value of the warrants using the Black-Scholes pricing model:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="text-align: center">July 20,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">July 27,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 6,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 15,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 16,</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2017</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2017</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted-average volatility</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">263</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">263</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">157</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">153</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">158</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Expected dividends</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Expected term (in years)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">10.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">10.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted-average risk-free interest rate</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.17</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.16</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2.00</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.99</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2.00</td> <td style="vertical-align: bottom; text-align: justify">%</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted-average fair value of warrants granted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.20</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.27</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.15</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.14</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.17</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

The following table summarizes information about stock warrants outstanding as of February 28, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1pt solid; text-align: center">Exercise Price</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid">Number Outstanding</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Remaining Life (years)</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Weighted Average Exercise Price</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Number Exercisable</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Exercisable Price</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%; text-align: center">$0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td id="ffcell" style="width: 12%; text-align: right">7,394,740</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">5.92</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">7,394,740</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center">$0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">300,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.10</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">300,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center">$0.25</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">850,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.19</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.25</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">850,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.25</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="border-bottom: black 1pt solid; text-align: center">$0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">500,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">7.54</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">500,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">0.30</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; border-bottom: black 1pt solid; text-align: center">$0.10 - $0.30</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">9,044,740</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6.17</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.13</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">9,044,740</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.13</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

The Company utilized the following key assumptions in computing the fair value of the options using the Black-Scholes pricing model:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="text-align: center">February 16,</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted-average volatility</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">153</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Expected dividends</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Expected term (in years)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted-average risk-free interest rate</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2.00</td> <td style="vertical-align: bottom; text-align: justify">%</td></tr> </table>

The following table summarizes information about the Company’s stock options as of February 28, 2018 and activity during the fiscal years 2018 and 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center">Number of Options</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2016</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">6,542,310</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">0.17</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Granted </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">150,000</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.10</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Canceled or expired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2017</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">6,692,310</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Granted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1,035,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.10</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Canceled or expired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(1,492,310</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.14</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2018</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Exercisable at February 28, 2018</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

The following table summarizes information about stock options outstanding as of February 28, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1pt solid; text-align: center">Exercise Price</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center">Number Outstanding</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Remaining Life (years)</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Weighted Average Exercise Price</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Number Exercisable</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Exercisable Price</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%; text-align: center">$0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td id="ffcell" style="width: 12%; text-align: right">4,885,159</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">5.87</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">4,885,159</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center">$0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">200,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.77</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">200,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center">$0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">700,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.42</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">700,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.30</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center">$0.54</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">375,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">5.93</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.54</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">375,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.54</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 1pt solid; text-align: center">$1.00</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">75,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">3.62</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">1.00</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">75,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">1.00</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; border-bottom: black 1pt solid; text-align: center">$0.10 - $1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6.08</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net tax loss carry-forwards</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">15,888,098</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">11,627,532</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Statutory rate </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">21</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">34</td> <td style="vertical-align: bottom; text-align: justify">%</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Expected tax recovery</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">3,336,501</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">3,953,361</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Change in valuation allowance</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,336,501</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,953,361</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Income tax provision</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Components of deferred tax asset:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Non capital tax loss carry forwards </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">3,336,501</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">3,953,361</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Less: valuation allowance </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,336,501</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,953,361</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net deferred tax asset </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

0.00

0.030

184314

693637

-2115351

-354722

-48885896

-38642500

5098

1868

2221603

3426371

43698746

34333479

2299665

1048359

118655 30548

105479

552976

280900

34783

145906 0 145906

170000

190000

458125

10612

214700

166847

184314

693637

25104

22433

1812

161881

691825

3103

21198

77977

105775

10000

12089

25609

84509824

52606000

-10243396

-7219626

-8147305

-5475577

-704009

-307065

8039382

223000

200000

441512 164743 276769 450000 450000 450246 450246 121986 210000 450000 69452 69452 105616

450246

300000

100000

150000

2559061

154740

-480531

404774

3230

1868

2817732

2377950

1662732

2377950

-450000

-735000

-139169

-40504

7500 -2240 -34256 11989

-3162324

-1934540

145906

-20000

190000

428845

158565

447512

-131835

40544

91331

35893

-104186

13520

-102014

3524123

2455587

750000

1721760

1725009

853955

276257

30548

44384

108493

30548

108493

114829

70929

14805

329526 125000

69500

5456

23219

250000

P3Y

P5Y

6022

2782

43088

528034

20655

526222

6022

2782

136328

82370

77977 105775 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 930556 0 296488

552976

256488

552976

2430000

30000 -30000 124996

0.23

316526 276769 0.30 0.29 0.28 750000 821667 840000 1217600

30450

P1Y P10Y P10Y P1Y 4000000 30000 2964740

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, the Company had an accumulated deficit of $48,593,820. 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. 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. 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 and February 28, 2017 of $5,456 and $23,219, respectively. During fiscal 2017, the Company recorded $114,829 of bad debt expense due mostly to new customers from the Rezserve acquisition.   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.   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. Based upon our review and analysis, 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. In fiscal 2017, recognized an impairment expense of $1,725,009.   Revenue Recognition   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, 2018 and 2017.   The Company recognizes revenue when the following four criteria have been met:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr> <td style="width: 4%; text-align: justify"> </td> <td style="vertical-align: top; width: 4%; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">Persuasive evidence that a business relationship exists</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">Delivery has occurred</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">The price is fixed and determinable</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">Collectibility is reasonably assured</td></tr> </table>   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 Company recognizes revenue from the sale of display 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.   Fair Value of Financial Instruments   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.   As of 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:   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 or fiscal 2017.   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, and February 28, 2017, 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, the Company had no uninsured cash balances. At February 28, 2017, the Company had one bank deposit account in excess of federally insured limits.   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 $6,022 and $2,782 of depreciation expense for fiscal years 2018 and 2017, 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.   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.   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   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 standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the 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 and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019.   The Company will adopt 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. 65279;  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.   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.

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 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. 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.

During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, 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 and 2017, the Company recognized $136,328 and $82,370 of expense as cost of revenues related to this amortization. As of February 28, 2018 and February 28, 2017, the Company has $77,977 and $105,775, 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.

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 Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer. See Note 15 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.   Deferred Revenue   During fiscal 2017, the Company signed three customer agreements to perform digital support and construction services for three third party companies. Each customer 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 total of $170,000 has been recorded as deferred revenue as of February 28, 2018.   Domain Marketing Development Obligation   During fiscal 2018, the Company signed top-level domain marketing development fund agreements with owners of 13 top level domains 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 and February 28, 2017, the Company has collected $930,556 and $0 in cash related to these contracts. As some of the services requested by the owners have not yet been completed, a total of $145,906 and $0 has been recorded as domain marketing development obligation as of February 28, 2018, and February 28, 2017, respectively.

The Company’s primary means of generating operating capital and completing acquisitions has been through the use of issuing common stock.   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.   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.   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.   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.   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 2017, $812,912 was expensed related to these shares.   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, the Company had 9,044,740 warrants outstanding with an average exercise price of $0.13. 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 of 6.17 years.   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.   As of 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.   During fiscal 2017, the Company issued an aggregate of 150,000 warrants to 3 consultants to purchase shares of the Company’s common stock at prices which ranged from $0.10 to $0.30. All warrants vested immediately at the date of issuance and are exercisable through 2026. The total estimated value using the Black-Scholes Model, based on a volatility rate of 180% and a call option value of $0.0797, was $11,948.   The Company utilized the following key assumptions in computing the fair value of the warrants using the Black-Scholes pricing model:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="text-align: center">July 20,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">July 27,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 6,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 15,</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">February 16,</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2017</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2017</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted-average volatility</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">263</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">263</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">157</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">153</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">158</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Expected dividends</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Expected term (in years)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">10.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">10.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted-average risk-free interest rate</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.17</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.16</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2.00</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.99</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2.00</td> <td style="vertical-align: bottom; text-align: justify">%</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted-average fair value of warrants granted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.20</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.27</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.15</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.14</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.17</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The following table summarizes information about the Company’s stock warrant activity during the fiscal years 2018 and 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Number of Warrants</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2016</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">2,050,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Granted </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2,430,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Canceled or expired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2017</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">4,480,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Granted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">6,994,740</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Canceled or expired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(2,430,000</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2018</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">9,044,740</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Exercisable at February 28, 2018</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">9,044,740</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The following table summarizes information about stock warrants outstanding as of February 28, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1pt solid; text-align: center">Exercise Price</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Number Outstanding</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Remaining Life (years)</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Weighted Average Exercise Price</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Number Exercisable</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Exercisable Price</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%; text-align: center">$0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">7,394,740</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">5.92</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">7,394,740</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center">$0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">300,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.10</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">300,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center">$0.25</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">850,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.19</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.25</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">850,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.25</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="border-bottom: black 1pt solid; text-align: center">$0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">500,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">7.54</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">500,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">0.30</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; border-bottom: black 1pt solid; text-align: center">$0.10 - $0.30</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">9,044,740</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6.17</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.13</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">9,044,740</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.13</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The Company recorded stock-based compensation expense of $0 and $11,948 for all outstanding stock warrants for fiscal years 2018 and 2017, respectively. This expense is included in stock-based compensation expense.

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, 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.   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.   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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="text-align: center">February 16,</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2018</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted-average volatility</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">153</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">%</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Expected dividends</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" style="text-align: right">None</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Expected term (in years)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted-average risk-free interest rate</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">2.00</td> <td style="vertical-align: bottom; text-align: justify">%</td></tr> </table>   The Company recorded stock-based compensation expense of $164,742 and $0 for all outstanding options for fiscal years 2018 and 2017, respectively. This expense is included in stock-based compensation.   The following table summarizes information about the Company’s stock options as of February 28, 2018 and activity during the fiscal years 2018 and 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Number of Options</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Exercise Price</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2016</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">6,542,310</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">0.17</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Granted </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">150,000</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.10</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Canceled or expired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2017</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">6,692,310</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Granted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">1,035,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">0.10</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Canceled or expired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(1,492,310</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.14</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Outstanding - February 28, 2018</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Exercisable at February 28, 2018</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The following table summarizes information about stock options outstanding as of February 28, 2018:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1pt solid; text-align: center">Exercise Price</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Number Outstanding</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Remaining Life (years)</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid">Weighted Average Exercise Price</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Number Exercisable</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Weighted Average Exercisable Price</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 24%; text-align: center">$0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">4,885,159</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">5.87</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 12%; text-align: right">4,885,159</td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify"> </td> <td style="width: 1%; text-align: justify">$</td> <td style="width: 12%; text-align: right">0.10</td> <td style="width: 1%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center">$0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">200,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.77</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">200,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.15</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: center">$0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">700,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">7.42</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.30</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">700,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.30</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center">$0.54</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">375,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">5.93</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.54</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: right">375,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="text-align: justify">$</td> <td style="text-align: right">0.54</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="border-bottom: black 1pt solid; text-align: center">$1.00</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">75,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">3.62</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">1.00</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: right">75,000</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td style="border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; text-align: right">1.00</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; border-bottom: black 1pt solid; text-align: center">$0.10 - $1.00</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6.08</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">6,235,159</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">0.16</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

Accounts Payable – Related Parties   As of February 28, 2018 and 2017, the Company owes $7,625 and $10,613, respectively, due to advances made to an employee which is included within accounts payable – related parties.   As of February 28, 2018 and 2017, the Company owes $450,500 and $0, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations.   Prepaid Domain Names   During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, 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 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.   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 expense of $38,000 in fiscal 2018.   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.   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 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.   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.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 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.   Sales of Common Stock   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   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. See Note 6 for more information about these employment agreements.   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. See Note 6 for more information about these employment agreements.   Directors and Officers   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 $240,000 in annual salary and $1,026,710 in stock-based compensation in fiscal 2018, and $240,000 in annual salary and $1,191,349 in stock-based compensation in fiscal 2017, related to the employment agreement with Robert Monster, CEO.   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 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 as of 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 Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer.

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 $15,888,098 as of February 28, 2018 that will offset future taxable income. The available net operating loss carry forwards will expire in various years through 2038. Future tax benefits which may arise as a result of these losses have not been recognized in these consolidated financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the future tax loss carry forwards.   The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows at February 28, 2018 and February 28, 2017:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net tax loss carry-forwards</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">15,888,098</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">11,627,532</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Statutory rate </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">21</td> <td style="vertical-align: bottom; text-align: justify">%</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">34</td> <td style="vertical-align: bottom; text-align: justify">%</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Expected tax recovery</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">3,336,501</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">3,953,361</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Change in valuation allowance</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,336,501</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,953,361</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Income tax provision</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Components of deferred tax asset:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Non capital tax loss carry forwards </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">3,336,501</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">3,953,361</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Less: valuation allowance </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,336,501</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(3,953,361</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net deferred tax asset </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

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 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 as of 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 Company is in the process of filing an appeal. See Note 15 for additional information about transactions between the Company and its former officer.   Lease Commitments As of February 28, 2018, we have one outstanding operating lease. The lease is for 700 square feet of office space in Vancouver, British Columbia for our Rezserve subsidiary. 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.

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.

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.   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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" id="hdcell" style="border-bottom: black 1pt solid; text-align: center">Fiscal 2018</td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">Fiscal 2017</td> <td style="text-align: justify"> </td></tr> <tr> <td style="vertical-align: top; text-align: justify">Basic earnings (loss) per share calculation:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" id="ffcell" style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td colspan="2" style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net loss to common shareholders</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">(10,243,396</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">)</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">(7,219,626</td> <td style="vertical-align: bottom; width: 1%; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares outstanding</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Basic net loss per share</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(0.17</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(0.16</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Diluted earnings (loss) per share calculation:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net loss to common shareholders</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(10,243,396</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(7,219,626</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares outstanding</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Stock options (1)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Warrants (2)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">-</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Diluted weighted average common shares outstanding</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Diluted net loss per share</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(0.17</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify">$</td> <td style="vertical-align: bottom; text-align: right">(0.16</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr> <td style="width: 4%; text-align: justify"> </td> <td style="vertical-align: top; width: 4%">(1)</td> <td style="vertical-align: top; text-align: justify">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.</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top"> </td> <td style="vertical-align: top; text-align: justify"> </td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top">(2)</td> <td style="vertical-align: top; text-align: justify">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.</td></tr> </table>

Congo Ltd. Acquisition   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.   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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Developed Technology, Platform and code base</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">420,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Developed Technology, New code base and databases</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">432,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Assembled Workforce</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">35,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Goodwill</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">78,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total intangibles and goodwill</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">965,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total assets acquired, net</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">965,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>     The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Common stock</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">840,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Cash consideration</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">75,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Earnest money</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">50,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total purchase price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">965,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   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   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.   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 CityInformation.   According to the replacement cost method of accounting, the Company recognized the identifiable assets acquired as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Developed Technology, App Portfolio</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">250,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Developed Technology, App Handles</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">135,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Assembled Workforce</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">40,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Goodwill</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">396,667</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total intangibles and goodwill</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">821,667</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total assets acquired, net</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">821,667</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Common stock</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; width: 9%; text-align: right">821,667</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total purchase price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">821,667</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   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.   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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cash</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 9%; text-align: right">11,989</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Other assets</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">13,115</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total assets</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">25,104</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Accrued expenses</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(12,741</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Long-term payables</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(52,422</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total liabilities</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(65,163</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Customer Lists</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">33,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Intellectual Property</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">48,800</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Trademarks</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">7,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total intangibles</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">88,800</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Total assets acquired, net</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">48,741</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Additional consideration given as compensation expense</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">701,259</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total consideration</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">750,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Common stock</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; width: 9%; text-align: right">750,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total purchase price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">750,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   This transaction was a non-arms length transaction, as one of Comencia’s owners was a Director of Digitaltown. As such, $750,000 was recorded as a stock-based compensation in fiscal 2018.   The unaudited supplemental pro forma results of operations of the combined entities had the date of the acquisition been March 1, 2017 or March 1, 2016 are as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="6" id="hdcell" style="text-align: center">Combined Pro Forma:</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">For Fiscal Years</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Revenues</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">367,923</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">251,713</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cost of revenues</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">1,053,184</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">562,216</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Gross profit (loss)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(685,261</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(310,503</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Operating expenses:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Selling, general and administrative expenses</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">7,454,580</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">5,218,597</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Loss from operations</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(8,139,841</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(5,529,100</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Other income (expense)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(2,096,091</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(1,744,049</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net loss</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(10,235,932</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(7,273,149</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Outstanding – basic and fully diluted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net loss per share – basic and fully diluted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(0.17</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(0.16</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> </table>   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 $853,955 expense on the Company’s consolidated statement of operations. The agreement included customary representations, warranties, and covenants by us and Appointment.   The allocation of the purchase price to assets based upon fair value determinations was as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cash</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">2,240</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Related Party Payable</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(42,380</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Accrued Salary</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(82,565</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Net Liabilities Assumed</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(122,705</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> </table>   The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Total Net Liabilities Assumed</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">122,705</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Common Stock</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">731,250</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Compensation Expense and Purchase Price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">853,955</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   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.   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 $1,445,292 of impairment expense. This was due to the use of common stock by the Company to pay for the acquisition and the corresponding the value of the stock was in excess of the fair value of the assets received. The agreement included customary representations, warranties, and covenants by us and the Rezserve owner.   According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Assets, net</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">34,708</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Customer Lists</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">77,295</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Intellectual Property</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">30,842</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Trademarks</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">19,475</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Goodwill</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">1,317,680</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Assets Acquired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">1,480,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Convertible note payable – related party</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">400,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Common Stock</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">1,080,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Purchase Price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">1,480,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   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 $1,445,292 related to this acquisition in fiscal 2017.   The unaudited supplemental pro forma results of operations of the combined entities had the dates of the acquisitions been March 1, 2016 is as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="text-align: center">Combined Pro Forma:</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2">For Fiscal Years</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom-style: solid; border-bottom-width: 1pt; text-align: center">2017</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Revenues</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">333,879</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cost of revenues</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">475,308</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Gross profit (loss)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(141,429</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Operating expenses:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Selling, general and administrative expenses</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">5,323,560</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Loss from operations</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(5,464,989</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Other income (expense)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(1,744,049</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net loss</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(7,209,038</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Outstanding – basic and fully diluted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net loss per share – basic and fully diluted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(0.16</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> </table>   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 $7,500 of cash. The agreement included customary representations, warranties, and covenants by us and the Cloud.Market owner.   The allocation of the purchase price to assets based upon fair value determinations was as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Non-compete agreements</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">700</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Customer Lists</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">66,800</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Assets Acquired</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">67,500</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cash</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">7,500</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Common Stock</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">60,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Purchase Price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">67,500</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>   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 $67,500 related to this acquisition in fiscal 2017.   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.

Convertible Note 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.   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 expense of $38,000 in fiscal 2018.   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.   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.   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.   Promissory Note 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 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.   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.   Convertible Note Payable - Third Party   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 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.   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 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 $38,164 due to this conversion feature. The note had accrued interest of $1,716 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 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.   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 to $33,164 due 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 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.   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 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.   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.   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.

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 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 as of 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 Company is in the process of filing an appeal.

Goodwill   The carrying value of goodwill at February 28, 2018 and February 28, 2017 was $0. During fiscal 2018 and fiscal 2017, the Company made three acquisitions which resulted in $549,667 and $1,317,680 of goodwill being recorded, and subsequently impaired, respectively. See Note 13 for more information about acquisitions.   Intangible assets   The carrying value of intangible assets at February 28, 2018 and February 28, 2017 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. 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.

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, 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.   On April 25, 2018, the Company received a $1,000,000 investment commitment from Triton Funds LP to purchase registered DGTW shares. The Company has filed an S-1 with the SEC. Once approved, Triton will purchase up to 5% of the Company’s fully diluted shares.   On May 15, 2018, the Company received a $2,400,000 investment from Pithia, Inc. in exchange for 10% of the Company’s fully diluted shares. Pithia invested $1,200,000 on May 15, 2018 in the form of RHOC cryptocurrency. The remaining $1,200,000 will be received 90 days from the agreement date, again in the form of RHOC cryptocurrency, as long as the Company meets certain conditions. The Company issued 11,385,590 shares of its common stock to Pithia, Inc. on May 31, 2018.   On May 17, 2018, Digitaltown amended the employment agreement of Michael Cartwright, its Chief Technology Officer, to extend his employment term by two years to June 1, 2020. This included a base salary increase, additional stock award, and a cryptocurrency coin award conditional on achieving specific development and product launch milestones. A copy of his amended employment agreement is attached as Exhibit 10.1.

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, the Company had an accumulated deficit of $48,593,820. 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. 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.

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.

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.

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 arise from the software licensing of our Rezserve subsidiary. 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 and February 28, 2017 of $5,456 and $23,219, respectively. During fiscal 2017, the Company recorded $114,829 of bad debt expense due mostly to new customers from the Rezserve acquisition.

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.   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. Based upon our review and analysis, 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. In fiscal 2017, recognized an impairment expense of $1,725,009.

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, 2018 and 2017.   The Company recognizes revenue when the following four criteria have been met:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr> <td style="width: 4%; text-align: justify"> </td> <td style="vertical-align: top; width: 4%; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">Persuasive evidence that a business relationship exists</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">Delivery has occurred</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">The price is fixed and determinable</td></tr> <tr> <td style="text-align: justify"> </td> <td style="vertical-align: top; text-align: justify">·</td> <td style="vertical-align: top; text-align: justify">Collectibility is reasonably assured</td></tr> </table>   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 Company recognizes revenue from the sale of display 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.

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.   As of 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:   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 or fiscal 2017.

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, and February 28, 2017, the Company had no cash equivalents.

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, the Company had no uninsured cash balances. At February 28, 2017, the Company had one bank deposit account in excess of federally insured limits.

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 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 $6,022 and $2,782 of depreciation expense for fiscal years 2018 and 2017, 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.

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.   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.

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.   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.

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 standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the 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 and estimating the amount of variable consideration to include in the transaction price attributable to each separate performance obligation. Subsequent to the initial standards, the FASB has also issued several ASUs to clarify specific revenue recognition topics. This guidance will be effective for the Company for its fiscal year 2019.   The Company will adopt 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.   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.

The allocation of the purchase price to assets based upon fair value determinations was as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cash</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">2,240</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Related Party Payable</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(42,380</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Accrued Salary</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(82,565</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Net Liabilities Assumed</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify">$</td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">(122,705</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> </table>

The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Total Net Liabilities Assumed</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">122,705</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Common Stock</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">731,250</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total Compensation Expense and Purchase Price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">853,955</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table> According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cash</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">11,989</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Other assets</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">13,115</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total assets</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">25,104</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Accrued expenses</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(12,741</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Long-term payables</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(52,422</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total liabilities</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(65,163</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Customer Lists</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">33,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Intellectual Property</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">48,800</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Trademarks</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">7,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total intangibles</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">88,800</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Total assets acquired, net</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">48,741</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Additional consideration given as compensation expense</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">701,259</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total consideration</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom: black 1pt solid; text-align: justify"> </td> <td style="border-bottom: black 1pt solid; vertical-align: bottom; text-align: right">750,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table> The purchase price consisted of the following:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Common stock</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td id="ffcell" style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; width: 9%; text-align: right">750,000</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Total purchase price</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">750,000</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> </table>

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:   <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; font-size-adjust: none; font-stretch: normal"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="6" id="hdcell" style="text-align: center">Combined Pro Forma:</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="6" style="border-bottom: black 1pt solid; text-align: center">For Fiscal Years</td> <td style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2018</td> <td style="text-align: justify"> </td> <td style="text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center">2017</td> <td style="text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Revenues</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td id="ffcell" style="vertical-align: bottom; width: 9%; text-align: right">367,923</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td> <td style="vertical-align: bottom; width: 1%; text-align: justify">$</td> <td style="vertical-align: bottom; width: 9%; text-align: right">251,713</td> <td style="vertical-align: bottom; width: 1%; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Cost of revenues</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">1,053,184</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">562,216</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Gross profit (loss)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(685,261</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(310,503</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Operating expenses:</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Selling, general and administrative expenses</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">7,454,580</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">5,218,597</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Loss from operations</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(8,139,841</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right">(5,529,100</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Other income (expense)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(2,096,091</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(1,744,049</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Net loss</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(10,235,932</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(7,273,149</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> <tr style="background-color: #CCEEFF"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">Weighted average number of common shares</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; padding-left: 11.25pt; text-align: justify">Outstanding – basic and fully diluted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">61,786,169</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">44,840,743</td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: white"> <td style="text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; text-align: right"> </td> <td style="vertical-align: bottom; text-align: justify"> </td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify">Net loss per share – basic and fully diluted</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(0.17</td> <td style="vertical-align: bottom; text-align: justify">)</td> <td style="vertical-align: bottom; text-align: justify"> </td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: justify">$</td> <td style="vertical-align: bottom; border-bottom-style: solid; border-bottom-width: 1pt; text-align: right">(0.16</td> <td style="vertical-align: bottom; text-align: justify">)</td></tr> </table>

151627 20000 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 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. to extend his employment term by two years to June 1, 2020.

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369750 154740 1000000 Once approved, Triton will purchase up to 5% of the Companys fully diluted shares.

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The remaining $1,200,000 will be received 90 days from the agreement date, again in the form of RHOC cryptocurrency, as long as the Company meets certain conditions.

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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. derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. 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. derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. matures 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. derivative liability as the Company has sufficient authorized shares and a conversion floor of $0.00009. 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. 3000 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. 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.

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Acquisition [Member] Cityinformation B V [Member] Rezserve Technologies Ltd [Member] Combined Pro Forma [Member] Assets Net [Member] Finite-Lived Intangible Assets by Major Class [Axis] Customer Lists [Member] Intellectual Property [Member] Trademarks [Member] Goodwill [Member] Short-term Debt, Type [Axis] Purchase price [Member] Securities or Other Assets Sold under Agreements to Repurchase [Axis] July 1, 2017 [Member] December 7, 2017 [Member] Donovan Olson [Member] Convertible Debt [Member] Crown Bridge Partners [Member] Lender Name [Axis] January 30, 2018 [Member] Powerup [Member] January 18, 2018 [Member] November 30, 2017 [Member] Promissory Notes [Member] Clint Skidmore [Member] Stock Purchase Agreement [Member] Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Is Entity a Well-known Seasoned Issuer? Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current assets: Cash Accounts receivable, net Short term investment Prepaid domain name renewal fees Prepaid insurance Total current assets Property and equipment, net Total assets LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable Accounts payable - related parties Deferred revenue Domain marketing development obligation Interest payable Accrued expenses - related parties Notes payable - related parties Notes payable - third parties, net Convertible note payable - related party Convertible notes payable - third parties, net Total current liabilities Commitments and contingencies Stockholders' equity (deficit): Common stock, $0.01 par value, 2,000,000,000 shares authorized, 84,509,824 and 52,606,000 shares issued and outstanding at February 28, 2018 and February 28, 2017, respectively Additional paid-in-capital Stock payable Subscriptions receivable Accumulated other comprehensive income Accumulated deficit Total stockholders' equity (deficit) Total liabilities and stockholders' equity (deficit) Common stock, par value Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Consolidated Statements Of Operations Revenues Cost of revenues Gross loss Operating expenses: Selling, general and administrative expenses Loss from operations Other income (expense) Impairment expense Interest expense Total other income (expense) Loss before income taxes Income tax provision EX-101.PRE 11 dgtw-20180228_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE GRAPHIC 12 dgtw_10kimg1.jpg begin 644 dgtw_10kimg1.jpg M_]C_X 02D9)1@ ! 0$ 8 !@ #_VP!# @&!@<&!0@'!P<)"0@*#!0-# L+ M#!D2$P\4'1H?'AT:'!P@)"XG("(L(QP<*#7J#A(6&AXB)BI*3E)66EYB9FJ*CI*6FIZBIJK*SM+6VM[BYNL+#Q,7& MQ\C)RM+3U-76U]C9VN'BX^3EYN?HZ>KQ\O/T]?;W^/GZ_\0 'P$ P$! 0$! 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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Feb. 28, 2018	May 31, 2018	Aug. 31, 2017
Document And Entity Information
Entity Registrant Name	DigitalTown, Inc.
Entity Central Index Key	0001065598
Document Type	10-K
Document Period End Date	Feb. 28, 2018
Amendment Flag	false
Current Fiscal Year End Date	--02-28
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 13,306,880
Entity Common Stock, Shares Outstanding		125,749,320
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2018

XML 14 R2.htm IDEA: XBRL DOCUMENT

CONSOLIDATED BALANCE SHEETS - USD ($)	Feb. 28, 2018	Feb. 28, 2017
Current assets:
Cash	$ 58,712	$ 539,243
Accounts receivable, net	12,089	25,609
Short term investment	10,000
Prepaid domain name renewal fees	77,977	105,775
Prepaid insurance	3,103	21,198
Total current assets	161,881	691,825
Property and equipment, net	22,433	1,812
Total assets	184,314	693,637
Current liabilities:
Accounts payable	214,700	166,847
Accounts payable - related parties	458,125	10,612
Deferred revenue	170,000	190,000
Domain marketing development obligation	145,906
Interest payable	34,783
Accrued expenses - related parties	552,976	280,900
Notes payable - related parties	105,479
Notes payable - third parties, net	30,548
Convertible note payable - related party	468,493	400,000
Convertible notes payable - third parties, net	118,655
Total current liabilities	2,299,665	1,048,359
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
Additional paid-in-capital	43,698,746	34,333,479
Stock payable	2,221,603	3,426,371
Subscriptions receivable
Accumulated other comprehensive income	5,098	1,868
Accumulated deficit	(48,885,896)	(38,642,500)
Total stockholders' equity (deficit)	(2,115,351)	(354,722)
Total liabilities and stockholders' equity (deficit)	$ 184,314	$ 693,637

XML 15 R3.htm IDEA: XBRL DOCUMENT

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Feb. 28, 2018	Feb. 28, 2017
Stockholders' equity (deficit):
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	2,000,000,000	2,000,000,000
Common stock, shares issued	84,509,824	52,606,000
Common stock, shares outstanding	84,509,824	52,606,000

XML 16 R4.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	Feb. 28, 2018	Feb. 28, 2017
Consolidated Statements Of Operations
Revenues	$ 327,335	$ 165,991
Cost of revenues	1,031,344	473,056
Gross loss	(704,009)	(307,065)
Operating expenses:
Selling, general and administrative expenses	7,443,296	5,168,512
Loss from operations	(8,147,305)	(5,475,577)
Other income (expense)
Impairment expense	(1,721,760)	(1,725,009)
Interest expense	(374,331)	(19,040)
Total other income (expense)	(2,096,091)	(1,744,049)
Loss before income taxes	(10,243,396)	(7,219,626)
Income tax provision
Net loss	$ (10,243,396)	$ (7,219,626)
Net loss per common share basic and diluted	$ (0.17)	$ (0.16)
Weighted average common shares outstanding basic and diluted	61,786,169	44,840,743

XML 17 R5.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($)	Common Stock	Additional Paid-In Capital	Stock Payable	Subscription Receivable	Accumulated Other Comprehensive Loss	Accumulated Deficit	Total
Beginning balance, Shares at Feb. 29, 2016	41,461,543
Beginning balance, Amount at Feb. 29, 2016	$ 414,615	$ 30,967,377	$ 37,500	$ (12,150)		$ (31,422,874)	$ (15,532)
Common stock issued for cash, Shares	6,999,707
Common stock issued for cash, Amount	$ 69,997	1,502,453	800,500	5,000			2,377,950
Stock issued for compensation, Shares	775,000
Stock issued for compensation, Amount	$ 7,750	571,618	1,857,121	7,150			2,443,639
Stock issued for acquisitions, Shares	3,000,000
Stock issued for acquisitions, Amount	$ 30,000	1,110,000	731,250				1,871,250
Stock issued for domain names, Shares	369,750
Stock issued for domain names, Amount	$ 3,698	151,043					154,740
Exercise of stock options, Amount		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)
Ending balance, Shares at Feb. 28, 2017	52,606,000
Ending balance, Amount at Feb. 28, 2017	$ 526,060	34,333,479	3,426,371		1,868	(38,642,500)	(354,722)
Common stock issued for cash, Shares	6,818,333
Common stock issued for cash, Amount	$ 68,183	1,261,817	332,732				1,662,732
Common stock issued for stock payable, Shares	8,039,382
Common stock issued for stock payable, Amount	$ 80,394	2,478,667	(2,559,061)
Stock issued for compensation, Shares	8,512,776
Stock issued for compensation, Amount	$ 85,128	2,147,203	521,792				2,754,124
Stock issued for acquisitions, Shares	8,333,333
Stock issued for acquisitions, Amount	$ 83,333	2,328,334					2,411,667
Conversion of debt			223,000				223,000
Exercise of stock options, Shares	200,000
Exercise of stock options, Amount	$ 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
Imputed interest		66,257					66,257
Accumulated other comprehensive income					3,230		3,230
Net Loss						(10,243,396)	(10,243,396)
Ending balance, Shares at Feb. 28, 2018	84,509,824
Ending balance, Amount at Feb. 28, 2018	$ 845,098	$ 43,698,746	$ 2,221,603		$ 5,098	$ (48,885,896)	$ (2,115,351)

XML 18 R6.htm IDEA: XBRL DOCUMENT

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	Feb. 28, 2018	Feb. 28, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (10,243,396)	$ (7,219,626)
Adjustments to reconcile net loss to net cash flows used in operating activities:
Loss on conversion of debt and accrued expenses	329,526
Depreciation and amortization	70,929	14,805
Bad debt expense		114,829
Debt discount amortization	276,257
Loss on acquisition of Appointment.com		853,955
Impairment expense	1,721,760	1,725,009
Imputed interest	66,257	19,040
Stock based compensation	3,524,123	2,455,587
Changes in operating assets and liabilities:
Accounts receivable	13,520	(102,014)
Prepaid expenses	35,893	(104,186)
Accounts payable	40,544	91,331
Accounts payable - related parties	447,512	(131,835)
Accrued expenses - related parties	428,845	158,565
Deferred revenue	(20,000)	190,000
Domain marketing development obligation	145,906
Net cash used in operating activities	(3,162,324)	(1,934,540)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for office equipment	(26,158)
Cash paid for domain names		(69,500)
Cash received from Comencia acquisition	11,989
Cash received from Reserve		34,256
Cash received from Appointment.com		2,240
Cash paid for Congo acquisition	(125,000)
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	735,000
Borrowings from promissory note	450,000
Payments on promissory note	(30,000)
Proceeds from issuance of common stock	1,662,732	2,377,950
Net cash provided by financing activities	2,817,732	2,377,950
Foreign currency translation adjustment	3,230	1,868
Net change in cash and cash equivalents	(480,531)	404,774
Cash and cash equivalents, beginning of year	539,243	134,469
Cash and cash equivalents, end of year	58,712	539,243
Non-Cash Transactions:
Issuance of common stock for domain names		154,740
Issuance of common stock for stock payable	2,559,061
Beneficial conversion feature	450,246
Debt discount from warrants	450,000
Conversion of debt to common stock	210,000
Conversion of accrued expenses to stock	$ 121,986

XML 19 R7.htm IDEA: XBRL DOCUMENT

Nature of Operations and Significant Accounting Policies

12 Months Ended

Feb. 28, 2018

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

Nature of Business

Principles of Consolidation

Reclassifications

Use of Estimates

Accounts Receivable

Goodwill and Intangible Assets

Revenue Recognition

The Company recognizes revenue when the following four criteria have been met:

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

Fair Value of Financial Instruments

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 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 or fiscal 2017.

Cash Equivalents

Cash Deposits in Excess of Federally Insured Limits

Prepaid Domain Names

Property and Equipment

Income Taxes

Stock-Based Compensation, Including Options and Warrants

Recently Issued Accounting Pronouncements

65279;

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.

XML 20 R8.htm IDEA: XBRL DOCUMENT

Going Concern

12 Months Ended

Feb. 28, 2018

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.

XML 21 R9.htm IDEA: XBRL DOCUMENT

Property and Equipment	12 Months Ended
Property and Equipment	Feb. 28, 2018
Notes to Financial Statements
Note 3. 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 $6,022 and $2,782 of depreciation expense for fiscal years 2018 and 2017, 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.

XML 22 R10.htm IDEA: XBRL DOCUMENT

Prepaid Domain Names	12 Months Ended
Prepaid Domain Names	Feb. 28, 2018
Notes to Financial Statements
Note 4. Prepaid Domain Names	During the fiscal years 2018 and 2017, the Company incurred $214,304 and $165,573, 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 and 2017, the Company recognized $136,328 and $82,370 of expense as cost of revenues related to this amortization. As of February 28, 2018 and February 28, 2017, the Company has $77,977 and $105,775, 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.

XML 23 R11.htm IDEA: XBRL DOCUMENT

Accrued Expenses and Deferred Revenue

12 Months Ended

Feb. 28, 2018

Note 5. Accrued Expenses and Deferred Revenue

Accrued Expenses

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

Deferred Revenue

Domain Marketing Development Obligation

XML 24 R12.htm IDEA: XBRL DOCUMENT

Stockholders' Equity (Deficit)

12 Months Ended

Feb. 28, 2018

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.

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.

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.

Stock Warrants

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

	July 20,			July 27,			February 6,			February 15,			February 16,
	2017			2017			2018			2018			2018
Weighted-average volatility		263	%		263	%		157	%		153	%		158	%
Expected dividends	None			None			None			None			None
Expected term (in years)		10.00			10.00			1.00			1.00			1.00
Weighted-average risk-free interest rate		1.17	%		1.16	%		2.00	%		1.99	%		2.00	%
Weighted-average fair value of warrants granted	$	0.20		$	0.27		$	0.15		$	0.14		$	0.17

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

	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

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

Exercise Price	Number Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercisable Price
$0.10		7,394,740		5.92	$	0.10		7,394,740	$	0.10
$0.15		300,000		7.10	$	0.15		300,000	$	0.15
$0.25		850,000		7.19	$	0.25		850,000	$	0.25
$0.30		500,000		7.54	$	0.30		500,000	$	0.30
$0.10 - $0.30		9,044,740		6.17	$	0.13		9,044,740	$	0.13

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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Stock Options

12 Months Ended

Feb. 28, 2018

Note 7. Stock Options

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,
	2018
Weighted-average volatility		153	%
Expected dividends	None
Expected term (in years)		1.00
Weighted-average risk-free interest rate		2.00	%

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

	Number of Options			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

The following table summarizes information about stock options outstanding as of February 28, 2018:

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

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Related Party Transactions

12 Months Ended

Feb. 28, 2018

Note 8. Related Party Transactions

Accounts Payable – Related Parties

As of February 28, 2018 and 2017, the Company owes $7,625 and $10,613, respectively, due to advances made to an employee which is included within accounts payable – related parties.

As of February 28, 2018 and 2017, the Company owes $450,500 and $0, respectively, to Epik Holdings Inc. related to annual domain name renewal fees to satisfy Domain marketing development obligations.

Prepaid Domain Names

Convertible Notes Payable – Related Party

Promissory Notes Payable - Related Party

Appointment.com Acquisition

Sales of Common Stock

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.

Employment Agreements

Directors and Officers

CEO Employment Agreement Share Issuance

CEO Accrued Salary Conversion

Accrued Expenses - Related Parties

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Income Taxes

12 Months Ended

Feb. 28, 2018

Note 9. Income Taxes

	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	$	-		$	-

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Commitments and Contingencies

12 Months Ended

Feb. 28, 2018

Note 10. Commitments and Contingencies

Litigation

Lease Commitments

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Common Stock Subscriptions Receivable	12 Months Ended
Common Stock Subscriptions Receivable	Feb. 28, 2018
Notes to Financial Statements
Note 11. Common Stock Subscriptions Receivable	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.

Tabular disclosure of an entity's stock, including par or stated value per share, number and dollar amount of share subscriptions, shares authorized, shares issued, shares outstanding, number and dollar amount of shares held in an employee trust, dividend per share, total dividends, share conversion features, par value plus additional paid in capital, the value of treasury stock and other information necessary to a fair presentation, and EPS information. Stock by class includes common, convertible, and preferred stocks which are not redeemable or redeemable solely at the option of the issuer. Includes preferred stock with redemption features that are solely within the control of the issuer and mandatorily redeemable stock if redemption is required to occur only upon liquidation or termination of the reporting entity. If more than one issue is outstanding, state the title of each issue and the corresponding dollar amount; dollar amount of any shares subscribed but unissued and the deduction of subscriptions receivable there from; number of shares authorized, issued, and outstanding.

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Earnings (Loss) Per Share

12 Months Ended

Feb. 28, 2018

Note 12. Earnings (Loss) Per Share

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

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.

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Acquisitions

12 Months Ended

Feb. 28, 2018

Note 13. Acquisitions

Congo Ltd. Acquisition

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

The purchase price consisted of the following:

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

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

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

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.

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

Rezserve Technologies Ltd. Acquisition

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.

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

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Debt

12 Months Ended

Feb. 28, 2018

Note 14. Debt

Convertible Note Payable - Related Party

Promissory Note Payable - Related Party

Convertible Note Payable - Third Party

Promissory Note Payable - Third Party

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Transactions with Former Officer

12 Months Ended

Feb. 28, 2018

Note 15. Transactions with Former Officer

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Intangible Assets and Goodwill

12 Months Ended

Feb. 28, 2018

Note 16. Intangible Assets and Goodwill

Goodwill

Intangible assets

Impairments

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

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Subsequent Events

12 Months Ended

Feb. 28, 2018

Note 17. Subsequent Events

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, 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.

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Nature of Operations and Significant Accounting Policies (Policies)

12 Months Ended

Feb. 28, 2018

Nature Of Operations And Significant Accounting Policies Policies

Nature of Business

Principles of Consolidation

Reclassifications

Use of Estimates

Accounts Receivable

Goodwill and Intangible Assets

Revenue Recognition

The Company recognizes revenue when the following four criteria have been met:

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

Fair Value of Financial Instruments

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 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 or fiscal 2017.

Cash Equivalents

Cash Deposits in Excess of Federally Insured Limits

Prepaid Domain Names

Property and Equipment

Income Taxes

Stock-Based Compensation, Including Options and Warrants

Recently Issued Accounting Pronouncements

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.

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Property and Equipment (Tables)

12 Months Ended

Feb. 28, 2018

Property And Equipment Tables

Schedule of Equipment

Property and equipment are as follows:

	February 28,			February 28,
	2018			2017
Office equipment and furniture	$	43,088		$	528,034
Less accumulated depreciation		(20,655	)		(526,222	)
Property and equipment, net	$	22,433		$	1,812

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Stockholders' Equity (Tables)

12 Months Ended

Feb. 28, 2018

Stockholders Equity Tables

Schedule of computing the fair value of the warrants using the Black-Scholes pricing model

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

	July 20,			July 27,			February 6,			February 15,			February 16,
	2017			2017			2018			2018			2018
Weighted-average volatility		263	%		263	%		157	%		153	%		158	%
Expected dividends	None			None			None			None			None
Expected term (in years)		10.00			10.00			1.00			1.00			1.00
Weighted-average risk-free interest rate		1.17	%		1.16	%		2.00	%		1.99	%		2.00	%
Weighted-average fair value of warrants granted	$	0.20		$	0.27		$	0.15		$	0.14		$	0.17

Summary of stock warrant activity

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

	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

Summary of stock warrants outstanding

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

Exercise Price	Number Outstanding		Weighted Average Remaining Life (years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercisable Price
$0.10		7,394,740		5.92	$	0.10		7,394,740	$	0.10
$0.15		300,000		7.10	$	0.15		300,000	$	0.15
$0.25		850,000		7.19	$	0.25		850,000	$	0.25
$0.30		500,000		7.54	$	0.30		500,000	$	0.30
$0.10 - $0.30		9,044,740		6.17	$	0.13		9,044,740	$	0.13