UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)
         [ X ]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 1997.

         [   ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ________________to_______________

                         Commission file number: 0-27704

                           DIGITAL DATA NETWORKS, INC.
                 (Name of small business issuer in its charter)


Washington                                                 91-1426372
(State or other jurisdiction of                            (IRS Employer
incorporation or organization)                             Identification No.)

3102 Maple Avenue, Suite 230
Dallas, Texas                                              75201
(Address of principal executive offices)                   (Zip Code)

                                 (214) 969-7200
              (Registrant's telephone number, including area code)


Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]

As of March 31, 1997, 2,334,496 shares of Common Stock and 1,840,000 Common
Stock Purchase Warrants were outstanding.


                                       1

<PAGE>



                                      INDEX

                                                                          Page

       PART I.       FINANCIAL INFORMATION

            1.       Financial Statements                                    3

            2.       Management's Discussion and Analysis of 
                     Financial Condition and Results of Operations           8

      PART II.       OTHER INFORMATION

       Item 1.       Legal Proceedings                                      10

       Item 2.       Changes in Securities                                 (a)

       Item 3.       Defaults Upon Senior Securities                       (a)

       Item 4.       Submission of Matters to a Vote of Security Holders   (a)

       Item 5.       Other Information                                      10

       Item 6.       Exhibits and Reports on Form 8-K                       10

                     Exhibit 3.2                                            12















----------------------------------------------------------------------------

(a) These  items  are  inapplicable  or  have a  negative  response  and  have
therefore been omitted.


                                       2

<PAGE>



                           DIGITAL DATA NETWORKS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                  (Dollars in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>

                                                                          December 31,         March 31,
                                                                              1996                1997
                                                                         ------------          ---------
CURRENT ASSETS
<S>                                                                        <C>                  <C>     
   Cash and cash equivalents                                               $   2,865            $  1,421
   Notes receivable                                                              325               1,350
   Accounts receivable                                                            83                  93
   Prepaid expenses and other current assets                                     169                 165
                                                                           ---------            --------
         Total Current Assets                                                  3,442               3,029

Equipment, net of accumulated depreciation
   of $1,356 and $1,428                                                          386                 371

Intangible Assets, net of accumulated
   amortization of $263 and $298                                                 362                 327

Other Assets                                                                      87                  80
                                                                           ---------            --------

TOTAL ASSETS                                                               $   4,277            $  3,807
                                                                           =========            ========




CURRENT LIABILITIES
   Accounts payable and accrued liabilities                                $     290            $    305
   Accrued payroll and related                                                    99                  90
   Notes payable and accrued interest                                             71                  72
   Current portion of long-term debt                                             501                 362
   Current portion of expanded license commitment                                 78                   -
   Unearned income                                                                97                  64
                                                                           ---------            --------
         Total Current Liabilities                                             1,136                 893
                                                                           ---------            --------

LONG-TERM OBLIGATIONS
   Long-term debt and accrued interest                                            34                  29
                                                                           ---------            --------
         Total Long-Term Obligations                                              34                  29
                                                                           ---------            --------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Preferred Stock, no par value, 1 million shares
     authorized, none issued                                                       -                   -
   Common Stock, no par value, 10 million shares authorized,
     2,297,473 and 2,334,496 shares issued and outstanding                    13,099              13,260
   Accumulated Deficit                                                        (9,992)            (10,375)
                                                                           ---------            --------
         Total Stockholders' Equity                                            3,107               2,885
                                                                           ---------            --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $   4,277            $  3,807
                                                                           =========            ========
</TABLE>





                 See accompanying notes to financial statements

                                       3

<PAGE>


                           DIGITAL DATA NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                  (Dollars in Thousands, Except Per Share Data)



<TABLE>
<CAPTION>

                                                                                    Three Months
                                                                                   Ended March 31,
                                                                            ---------------------------
                                                                                 1996           1997
                                                                            -----------      ----------


<S>                                                                         <C>              <C>    
   REVENUES                                                                 $       101      $   218
                                                                            -----------      ----------

   EXPENSES:
     Direct operating costs                                                          86          160
     Salaries and related                                                           278          217
     Marketing, general and administrative                                           82          189
     Financing, legal and other consulting                                           50           67
                                                                            ------------     ----------

       Total Expenses                                                               496          633
                                                                            ------------     ----------

   Loss Before Other Income (Expense)                                              (395)        (415)
                                                                            ------------     ----------

   OTHER INCOME (EXPENSE):
     Interest expense                                                               (26)          (7)
     Interest income                                                                 22           39
                                                                            ------------     ----------

       Total Other Income (Expense)                                                  (4)          32
                                                                            ------------     ----------

   NET LOSS                                                                 $      (399)     $  (383)
                                                                            ============     ==========


   NET LOSS PER SHARE                                                       $      (.29)     $  (.16)
                                                                            ============     ==========
</TABLE>





                 See accompanying notes to financial statements

                                       4

<PAGE>


                           DIGITAL DATA NETWORKS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                                                       Three Months
                                                                                      Ended March 31,
                                                                                 --------------------------
                                                                                    1996            1997
                                                                                 ----------     -----------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                             <C>            <C>       
Net Loss                                                                        $   (399)      $    (383)
    Adjustments to reconcile net loss to net cash
     used by operating activities:
       Depreciation and amortization                                                  83             115
       Decrease in accrued interest                                                  (69)             (6)
       Increase (decrease) in accounts payable                                       (50)              7
       Other                                                                          69             (39)
                                                                                -----------    ------------
Net Cash Used by Operating Activities                                               (366)           (306)
                                                                                -----------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Increase in notes receivable                                                     (50)         (1,025)
    Purchases of equipment                                                            (3)            (58)
                                                                                -----------    ------------

Net Cash Used by Investing Activities                                                (53)         (1,083)
                                                                                -----------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from issuance of common stock                                         5,857               -
    Proceeds from issuance of notes payable                                           30               -
    Repayment of expanded software license commitment                               (225)              -
    Repayment of notes payable                                                    (1,012)            (55)
                                                                                -----------    ------------

Net Cash Provided (Used) by Financing Activities                                   4,650             (55)
                                                                                -----------    ------------

Net Increase (Decrease) in Cash and Cash Equivalents                               4,231          (1,444)

CASH AND CASH EQUIVALENTS
    Beginning of Period                                                               12           2,865
                                                                                -----------    ------------

    End of Period                                                               $  4,243       $   1,421
                                                                                ===========    ============



SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
    Exchange of debt for equity                                                 $      -       $     161
</TABLE>




                 See accompanying notes to financial statements

                                       5

<PAGE>


                           DIGITAL DATA NETWORKS, INC.
                          NOTES TO FINANCIAL STATEMENTS



Note 1  Description of Business

Digital Data Networks,  Inc. (the "Company")  provides  wireless  communications
systems to the transit  industry  and  high-end  Internet  services for business
clients.   The  Company's   Transit  Network   Division   markets  the  wireless
communications products and the Company's subsidiaries,  Pro.Net Communications,
Inc.   and   Cyber   America   Corporation   ("Cyber   America"),   market   the
Internet-related services.

The consolidated  financial  statements presented herein include all adjustments
which  are,  in the  opinion of  management,  necessary  to  present  fairly the
operating  results for the interim periods  reported.  The financial  statements
should be read in conjunction with the audited,  annual  consolidated  financial
statements  for the year ended  December  31,  1996,  included in the  Company's
Annual Report on Form 10-KSB.

Certain reclassifications have been made to prior period financial statements in
order to conform to current period classifications.

Note 2  Initial Public Offering and Supplemental Loss Per Share

In February 1996,  the Company  closed its initial public  offering and received
net  cash  proceeds  of   approximately   $5.9  million,   after  deduction  for
underwriters  commissions  and certain other offering  related  costs,  from the
issuance of  1,322,500  shares of its common  stock and  1,840,000 of its common
stock purchase warrants.

The Company's  proforma  supplemental  loss per share for the three months ended
March 31, 1996  approximates  $(.23)  presented on a basis as if the 1996 public
offering and related debt  repayment  with a portion of the proceeds  therefrom,
had occurred at the beginning of 1996.

Note 3  Debt Exchange

During the three months ended March 31, 1997, certain of the Company's creditors
exchanged   approximately   $161,000  of  the  Company's  debt  obligations  for
approximately 37,000 shares of the Company's common stock.

Note 4  Business Acquisitions and Proforma Information

During 1996, the Company  acquired  certain  Internet  related  businesses.  The
following unaudited pro forma financial information is presented on the basis as
if such business  combinations  had occurred at the  beginning of 1996.  The pro
forma  information  is  based  on  historical   operating  results  and  is  not
necessarily indicative of results of operations that would have occurred, nor is
it  necessarily  indicative  of future  results of  operations  of the  combined
companies (in thousands, except per share data):

                                     Three Months Ended March 31, 1996
                                     ---------------------------------
       Revenues                             $       260
                                            ===========

       Net loss                             $      (543)
                                            ===========

       Net loss per share                   $      (.35)
                                            ============

The  above  pro  forma  financial  information  does not  include  non-recurring
expenses of approximately  $183,000  recorded in 1996 immediately  subsequent to
recording the Cyber America business  combination relating to the estimated fair
value of intangible  assets  acquired  associated  with products in  development
which have not been determined to have yet attained technological feasibility.




                                       6

<PAGE>


                          DIGITAL DATA NETWORKS, INC.
                         NOTES TO FINANCIAL STATEMENTS


Note 5  Commitments and Contingencies

The Company is subject to various legal proceedings and claims that arise in the
ordinary course of business, including the litigation described in the following
sentence.  The former  stockholder of a business acquired by the Company in 1996
has  initiated a lawsuit in the Supreme  Court of British  Columbia  against the
Company  claiming,  among  other  things,  damages for breach of contract in the
amount of approximately  $550,000 Canadian  (approximately  $400,000 U.S.), plus
punitive  damages which are  unquantified.  The Company  denies these claims and
intends to  vigorously  defend this lawsuit and,  further,  in this regard,  the
Company has  counterclaimed  against the  plaintiffs  for,  among other  things,
damages  for  misrepresentations  and  breach of  contract.  Company  management
currently  believes that resolving  these various legal  proceedings  and claims
will not have a material  adverse  impact on the Company's  financial  position,
results of operations or cash flows.

Note 6  Income Taxes

As a result of losses for each of the interim  periods,  there was no  provision
for income taxes recorded.

Note 7  Potential Business Acquisition

On February 4, 1997, the Company  signed a Letter of Intent to acquire  Advanced
Communication  and  Information   Services  ("ACIS"),   a  provider  of  digital
communication and information services to business and government organizations.
The acquisition is subject to, among other conditions,  shareholder  approval by
both  companies.  The  purchase  transaction  is  anticipated  to be  valued  at
approximately  $20 million  comprised  of a  combination  of cash and stock.  In
accordance with terms of the Letter of Intent, at March 31, 1997 the Company had
advanced  ACIS $1 million  pursuant to secured,  10%  promissory  notes due June
1997.  In  accordance  with terms of the Letter of Intent,  upon approval of the
proposed  acquisition,  the Company has agreed to advance up to an additional $1
million.

Note 8  Effect of Recently Issued Accounting Standards

Recently  issued  accounting  standards  having  relevant  applicability  to the
Company consist primarily of Statement of Financial Accounting Standards No. 128
("SFAS 128"), which establishes  standards for computing and presenting earnings
per share ("EPS") and has the effect of simplifying  the standards for computing
earnings per share and makes them comparable to international EPS standards.  It
replaces presentation of primary EPS with a presentation of basic EPS. Basic EPS
excludes  dilution for the effect of common stock equivalents such as options or
warrants.  SFAS 128 is effective  for  financial  statements  issued for periods
ending after  December  15, 1997  (earlier  application  is not  permitted)  and
requires restatement of all prior period EPS data presented.  It is not expected
that adoption of SFAS 128 will have a  significant,  if any,  effect on reported
EPS data.






                                       7

<PAGE>


                      Management's Discussion and Analysis
                of Financial Condition and Results of Operations

         Results of Operations

         Revenues increased $117,000,  or 115%, from $101,000 to $218,000 during
the three  months  ended March 31,  1997,  as compared to the prior year period.
This increase is the result of contributions from Pro.Net  Communications,  Inc.
in the amount of $62,000  and from Cyber  America  Corporation  in the amount of
$27,000,  both of which were acquired in the second  quarter of 1996, as well as
an increase of $28,000 from the Company's Transit Network Division.

         Total  expenses  increased  from $496,000 to $633,000  during the three
months ended March 31, 1997 as compared to the prior year  period.  The increase
was due to approximately  $180,000 of operating and other costs incurred in 1997
by businesses  acquired late in the second  quarter of 1996,  and  approximately
$20,000  of  amortization  of  intangible  assets  recorded  for  such  business
acquisition.  The  increase  was offset by a decrease  in  salaries  and related
expenses of approximately  $60,000 due to the absence of IPO-related bonuses and
fewer employees in the Company's Transit Network Division.

         Interest  income,  derived from the  investment of the public  offering
proceeds,  increased  from  $22,000  to $39,000  as  compared  to the prior year
period,  while  interest  expense  decreased  from  $26,000 to $7,000 due to the
retirement of certain short-term and long-term debt obligations in 1996.

         Financial Condition, Liquidity and Capital Resources

         At  March  31,  1997,  the  Company's  principal  assets  consisted  of
approximately  $1.4  million of cash,  of which  approximately  $1.3 million was
invested  in  short-term,  interest-bearing  investments  with  banks  and other
financial  institutions,  and  approximately  $1.3 million of  short-term  notes
receivable.  The Company's total obligations of approximately $920,000 consisted
primarily of $305,000 in accounts payable and accrued expenses,  and $362,000 of
the current portion of long-term debt incurred by the Company's  Transit Network
Division.

         Cash used by operating  activities for the three months ended March 31,
1997 approximated  $300,000, of which approximately $100,000 and $37,000 was for
working  capital to fund the on-going  operations of Pro.Net and Cyber  America,
respectively,   and  the   remainder  was  for   corporate-related   activities.
Additionally,   the  Company  advanced  $1  million  to  a  potential   business
acquisition in the form of short-term,  interest-bearing  secured notes maturing
June 1997.

         The Company believes that its future operating results,  liquidity, and
capital resources will improve,  the result of anticipated revenue growth by the
companies it acquired in 1996.

         The Company  believes  that with the cash it has invested in short-term
financial instruments,  interest earned from these investments,  and anticipated
revenues from operations,  the Company's  working capital  requirements  will be
sufficient for at least the next twelve months.


                                       8

<PAGE>

         Effect of Recently Issued Accounting Standards

         Recently issued accounting  standards having relevant  applicability to
the Company consist primarily of Statement of Financial Accounting Standards No.
128 ("SFAS 128"),  which  establishes  standards  for  computing and  presenting
earnings per share ("EPS") and has the effect of  simplifying  the standards for
computing  earnings per share and makes them  comparable  to  international  EPS
standards. It is not expected that adoption of SFAS 128 will have a significant,
if any, effect on reported EPS data.










                                       9

<PAGE>


Item 1.  Legal Proceedings

         On November 6, 1996, Activeware Internet Corp.  ("Activeware") and Dick
Hardt ("Hardt"),  Plaintiffs,  filed a claim against Digital Data Networks, Inc.
("DDN") and its subsidiary, hip Communications Inc. ("hip"),  Defendants, in the
Supreme Court of British Columbia, in connection with certain agreements entered
into by all parties in September  1996,  whereby Hardt agreed to sell to DDN all
of the outstanding capital stock of hip. Hardt alleges that, among other things,
he signed one of the  agreements  against his will,  certain  agreements are not
enforceable,  DDN  failed  to  provide  him with  certain  payments  and a stock
certificate in a timely  fashion,  DDN and hip breached  certain  agreements and
obligations,  and  DDN and hip  have  failed  to pay  the  Plaintiffs  for  work
performed.  The  Plaintiffs  are seeking  against  DDN and/or  hip,  among other
things,  a  declaration  that certain  agreements  are  unenforceable,  specific
performance of certain agreements,  damages of $500,000 (Canadian) for breach of
the agreements,  monies owing pursuant to certain  agreements,  general damages,
punitive damages, and costs.

         The Company  denies these claims and intends to vigorously  defend this
lawsuit,  and further in that regard,  on January 22, 1997,  DDN and hip filed a
Counterclaim  against the  Plaintiffs,  alleging that,  among other things,  the
Plaintiffs  breached  certain  terms  of  the  Stock  Purchase  Agreement,   the
Consulting Agreement,  and the Intellectual Property Transfer and Use Agreement.
DDN and hip are seeking against the Plaintiffs,  among other things,  rescission
of certain agreements,  an order compelling the Plaintiffs to transfer ownership
of the hip.com  domain name to hip  forthwith,  an order for  possession  of the
office space,  an injunction  restraining  and  enjoining  the  Plaintiffs  with
respect to the design or hosting of Web sites and to return certain confidential
information  to hip,  damages  for  misrepresentation,  damages  for  breach  of
contract, punitive damages, and costs.

         Company  management   currently  believes  that  resolving  this  legal
proceeding  will not have a material  adverse impact on the Company's  financial
position, results of operations or cash flows.

Item 5.  Other Information

         On February  4, 1997,  the  Company's  Board of  Directors  approved an
amendment  to Article IV of the  Company's  By-laws to provide a method to break
any  ties  resulting  from a vote  of the  members  of the  Company's  Board  of
Directors. See Exhibit 3.2.

Item 6.  Exhibits

         Exhibit 3.2 - By-laws of the Company


                                       10

<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  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.



                                    Digital Data Networks, Inc.
                                    (Registrant)


Date:     May 14, 1997              By:    /s/   Donald B. Scott, Jr.
                                           ------------------------------
                                           Donald B. Scott, Jr., President



Date:     May 14, 1997              By:    /s/   Richard J. Boeglin
                                           ----------------------------
                                           Richard J. Boeglin
                                           Vice President, Finance & Operations



                                       11

<PAGE>