<PAGE>
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                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, DC  20549


                                      FORM 10-Q


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

                    For the Quarterly Period Ended:  JUNE 30, 1998

     ( )  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          AND EXCHANGE ACT.

                           Commission File Number:  0-25602


                                  TECH SQUARED INC.
                (Exact name of registrant as specified in its charter)


               MINNESOTA                                 41-1591872
     (State or other jurisdiction            (IRS Employer Identification No.)
           of incorporation)


                                5198 WEST 76TH STREET
                               EDINA, MINNESOTA  55439
                       (Address of principal executive offices)


                                    (612) 832-5622
                           (Registrant's telephone number)





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

           As of the close of business on August 1, 1998, 11,039,179 shares of
     Common Stock, no par value, of the Company were outstanding.

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

<PAGE>

                                  TECH SQUARED INC.

                                        INDEX


<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION                                              PAGE
                                                                           ----
<S>                                                                        <C>
     Item 1.  Financial Statements

       Consolidated Balance Sheets at June 30, 1998
       (unaudited) and December 31, 1997                                      3

       Consolidated Statements of Operations (unaudited) for the three
       months and six months ended June 30, 1998 and 1997                     4

       Consolidated Statements of Cash Flows (unaudited) for the six
       months ended June 30, 1998 and 1997                                    5

       Notes to Financial Statements                                          6

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

     Item 3.  Quantitative and Qualitative Disclosure About Market Risk      11


PART II. OTHER INFORMATION

     Item 1.  Legal Proceedings                                              12

     Item 2.  Changes in Securities                                          12

     Item 3.  Defaults upon Senior Securities                                12

     Item 4.  Submission of Matters to a Vote of Security Holders            12

     Item 5.  Other Information                                              12

     Item 6.  Exhibits and Reports on Form 8-K                               12



SIGNATURES                                                                   14


                                       2
<PAGE>

ITEM 1.                       FINANCIAL STATEMENTS

TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


                                                                     June 30,            December 31,
ASSETS                                                                 1998                  1997
                                                                    ----------           ------------
                                                                  (Unaudited)
<S>                                                               <C>                    <C>
CURRENT ASSETS
 Cash and cash equivalents                                                $300                   $300
 Restricted cash                                                       202,369                143,623
 Available-for-sale securities                                         135,600                467,438
 Accounts receivable, net of allowance
     for doubtful receivables of $198,000
     and $180,000 respectively                                       2,863,507              2,727,883
 Inventories                                                         1,948,627              1,890,480
 Prepaids and other current assets                                     304,606                234,936
                                                                    ----------             ----------
    TOTAL CURRENT ASSETS                                             5,455,009              5,464,660

 Property and equipment, net                                           387,429                346,419
 Receivable from officer/stockholder                                   201,512                201,512
 Mining assets                                                         748,276                748,276
 Investment in Digital River                                         2,365,420                839,202
                                                                    ----------             ----------

                                                                    $9,157,646             $7,600,069
                                                                    ----------             ----------
                                                                    ----------             ----------

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
 Revolving line of credit                                             $274,445               $765,728
 Current maturities of long term debt                                   55,000                 80,000
 Accounts payable                                                    4,058,119              2,816,959
 Accrued compensation and benefits                                     173,119                239,748
 Accrued expenses                                                      540,578                791,743
 Dividends payable to officer/shareholder                              200,721                200,721
                                                                    ----------             ----------
    TOTAL CURRENT LIABILITIES                                        5,301,982              4,894,899

Dividends payable to officer/shareholder                                83,136                283,136
Long term debt, less current maturities                                   -                    15,000

Deferred income taxes                                                1,104,300                   -
Redeemable preferred stock, 12% cumulative convertible,
$1 par value; 1,000,000 shares authorized; 160,000
shares issued and outstanding                                          216,700                216,700

STOCKHOLDERS' EQUITY:
 Common stock: no par value; 25,000,000 shares authorized
 11,039,179 and 10,374,870 issued and outstanding                         -                      -
 Additional paid-in capital                                          3,166,106              3,189,436
 Retained earnings (deficit)                                          (578,978)              (912,539)
 Unrealized loss on available-for-sale securities                     (135,600)               (86,563)
                                                                    ----------             ----------
   TOTAL STOCKHOLDERS' EQUITY                                        2,451,528              2,190,334
                                                                    ----------             ----------
                                                                    $9,157,646             $7,600,069
                                                                    ----------             ----------
                                                                    ----------             ----------
</TABLE>


Note:  The consolidated statement of financial position at December 31, 1997 has
       been from the audited financial statements at that date.

See accompanying notes to financial statements.


                                       3
<PAGE>

TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


<TABLE>
<CAPTION>
                                                                  Three Months Ended                       Six Months Ended
                                                             ------------------------------         ------------------------------
                                                               June 30,          June 30,             June 30,           June 30,
                                                                 1998              1997                 1998               1997
                                                             ------------------------------         -----------        -----------
<S>                                                          <C>                 <C>                <C>                <C>

 Net Sales                                                    $9,502,285         $8,484,181         $18,095,013        $18,448,039
 Cost of sales                                                 8,309,159          7,422,079          15,815,384         16,295,646
                                                             -----------         ----------         -----------         ----------
    GROSS PROFIT                                               1,193,126          1,062,102           2,279,629          2,152,393

 Selling and marketing expenses                                  763,645            466,898           1,283,994            943,390
 General and administrative expenses                             544,565            559,519           1,047,080          1,111,963
                                                             -----------         ----------         -----------         ----------
  Total Operating Expenses                                     1,308,210          1,026,417           2,331,074          2,055,353
                                                             -----------         ----------         -----------         ----------
   INCOME (LOSS) FROM OPERATIONS                                (115,084)            35,685             (51,445)            97,040

 Interest expense, net                                           (18,374)           (26,595)            (41,506)           (53,170)
 Investment income                                                  -                34,638               4,611             34,638
 Equity in losses of Digital River                              (909,553)          (295,335)         (1,459,178)          (581,130)
                                                             -----------         ----------         -----------         ----------

   NET LOSS                                                  ($1,043,011)         ($251,607)        ($1,547,518)         ($502,622)
                                                             -----------         ----------         -----------         ----------
                                                             -----------         ----------         -----------         ----------

 Net loss per common share, basic and diluted                    ($0.09)            ($0.02)             ($0.14)            ($0.05)
                                                             -----------         ----------         -----------         ----------
                                                             -----------         ----------         -----------         ----------

 Weighted average shares outstanding, basic and               11,001,020         10,374,870          10,776,464         10,374,870
                                                             -----------         ----------         -----------         ----------
                                                             -----------         ----------         -----------         ----------
</TABLE>



See accompanying notes to financial statements.


                                       4
<PAGE>

TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                 ------------------------------
                                                                   June 30,           June 30,
                                                                     1998               1997
                                                                 -----------          ---------
<S>                                                              <C>                  <C>
Cash Flows From Operating Activities:
    Net Loss                                                     ($1,547,518)         ($502,622)
    Non-cash items included in loss:
        Depreciation and amortization                                 92,318            109,289
        Equity in losses of Digital River                          1,459,178            581,130
        Gain on sale of available-for-sale securities                 (4,611)           (26,438)
        Changes In Operating Assets And Liabilities:
           Accounts receivable, net                                 (135,624)           355,208
           Inventories                                               (58,147)           400,041
           Prepaid and other current assets                          (69,670)            54,025
           Accounts payable                                        1,241,160           (991,262)
           Accrued compensation and benefits                         (66,629)           (25,417)
           Other accrued expenses                                   (291,165)           153,431
                                                                 -----------          ---------
             Net cash provided by operating activities               619,292            107,385
                                                                 -----------          ---------
Cash Flows From Investing Activities:
   Change in restricted cash                                         (58,746)              -
   Purchases of property and equipment                              (133,344)           (86,601)
   Proceeds from sale of available-for-sale securities               287,411               -
   Decrease in cash due to deconsolidation of digital                   -              (799,721)
                                                                 -----------          ---------
         Net Cash Used In (Provided By) Investing                     95,321           (886,322)
                                                                 -----------          ---------

Cash Flows From Financing Activities:
   Net change in revolving line of credit                           (491,283)           226,436
   Stock options exercised, net of payroll tax                       (23,330)               -
   Dividends paid                                                   (200,000)           (35,380)
                                                                 -----------          ---------
         Net cash used in financing activities                      (714,613)           191,056
                                                                 -----------          ---------
         Net decrease in cash                                              0           (587,881)

Cash at beginning of period                                              300            898,558
                                                                 -----------          ---------
Cash at end of period                                                   $300           $310,677
                                                                 -----------          ---------
                                                                 -----------          ---------
Supplemental Cash Flow Information:
    Cash paid for interest                                           $41,987            $53,170

</TABLE>


See accompanying notes to consolidated financial statements.


                                       5
<PAGE>


                          TECH SQUARED INC.
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                            JUNE 30, 1998



NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in 
accordance with generally accepted accounting principles for interim 
financial information and with the instructions to Form 10-Q and Article 10 
of Regulation S-X. Accordingly, they do not include all of the information 
and footnotes required by generally accepted accounting principles for 
complete financial statements. In the opinion of management, all adjustments 
(consisting of normal recurring accruals) considered necessary for a fair 
presentation have been included. Operating results for the three and six 
month period ended June 30, 1998 are not necessarily indicative of the 
results that may be expected for the year ending December 31, 1998.  The 
accompanying consolidated financial statements and notes should be read in 
conjunction with the audited financial statements and notes thereto included 
in the Company's 1997 annual report on Form 10-K.

NOTE 2  -  INVENTORIES

The Company's inventories consist primarily of goods held for resale and are 
stated at the lower of cost or market.  Cost is determined using the 
first-in, first-out method.

NOTE 3 - DIGITAL RIVER

In December 1995 the Company obtained an option to acquire 3,200,000 shares 
of Digital River common stock from the Company's majority stockholder and 
chief executive officer, representing at the time a 60% ownership of Digital 
River. The option is exercisable at any time through December 31, 2000 for a 
total exercise price of $1.00.  Digital River has developed and is operating 
a proprietary system, which allows the secure sale and delivery of software, 
fonts and images on-line, via the Internet.  Digital River's first on-line 
software sale and delivery occurred in August 1996.

During the six month period ended June 30,1998, Digital River completed 
various private placements of its common stock which resulted in net proceeds 
of approximately $12,936,000 and issuance of 3,472,000 new shares of its 
common stock and 1,500,000 new shares of Series A preferred stock which are 
convertible into 1,000,000 shares of common stock, thereby reducing the 
Company's effective ownership of Digital River to approximately 23% as of 
July 1998. For the three and six month period ended June 30, 1998 the Company 
recorded gain on issuance of stock by Digital River of approximately $403,000 
and $1,864,000 respectively, net of deferred income taxes, which was recorded 
through stockholder's equity.


                                       6
<PAGE>

Summarized unaudited condensed financial information of Digital River is as
follows:  (In 000's)

<TABLE>
<CAPTION>

  BALANCE SHEET INFORMATION

                                                 JUNE 30,        DECEMBER 31,
                                                   1998              1997
                                                 --------        ------------
<S>                                              <C>             <C>
 Current assets                                  $10,266           $  2,126
 Total assets                                     12,697              3,316
 Current liabilities                               2,414              1,076
 Stockholders' equity                            $10,283           $  2,540
</TABLE>

<TABLE>
<CAPTION>
  OPERATING INFORMATION

                            THREE MONTHS ENDED            SIX MONTHS ENDED
                                   JUNE, 30                    JUNE 30,
                              1998           1997         1998         1997
                            -------         ------      -------       ------
<S>                        <C>             <C>         <C>           <C>
 Sales                      $ 3,477         $  282      $ 5,747       $  461
 Cost of product sold and
 operating expenses           7,397            978       11,249        1,661
 Interest income, net           108             12          150           24
 Net loss                  ($ 3,812)       ($  684)    ($ 5,352)     ($1,176)
</TABLE>

NOTE 4 - COMPREHENSIVE INCOME

During June 1997, the Financial Accounting Standards Board released SFAS No. 
130, "Reporting Comprehensive Income," effective for fiscal years beginning 
after December 15, 1997.  SFAS No. 130 established standards for reporting 
and display in the financial statements of total net income and the 
components of all other nonowner changes in equity, referred to as 
comprehensive income.  The Company has adopted SFAS No. 130 beginning in 
1998.  Other comprehensive income for the three and six month period ending 
June 30, 1998 was approximately ($110,000) and ($93,000), respectively 
compared to $111,000 and ($29,000) for the same periods of 1997.  Other 
comprehensive income was solely comprised of changes in the market value of 
the available-for-sale securities.

NOTE 5 - Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS 
AND HEDGING ACTIVITIES.  The Statement establishes accounting and reporting 
standards requiring that every derivative instrument (including certain 
derivative instruments embedded in other contracts) be recorded in the 
balance sheet as either an asset or liability measured at its fair value.  
The Statement requires that changes in the derivative's fair value be 
recognized currently in earnings unless specific hedge accounting criteria 
are met.  Statement 133 is effective for fiscal years beginning after June 
15, 1999.  The Company believes that the adoption of Statement 133 will have 
no material impact on its financial condition or results of operations.


                                       7
<PAGE>

                            TECH SQUARED INC.

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

Certain statements contained herein are forward-looking statements within the 
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 
that involve a number of risks and uncertainties.  Such forward-looking 
information may be indicated by words such as will, may be, expects or 
anticipates.  In addition to the factors discussed herein, among the other 
factors that could cause actual results to differ materially are the 
following: business conditions and growth in the personal computer industry 
and the general economy; competitive factors such as rival computer and 
peripheral product sellers and price pressures; availability of vendor 
products at reasonable prices; inventory risks due to shifts in market 
demand; and risks presented from time to time in reports filed by the Company 
with the Securities and Exchange Commission, including but not limited to the 
annual report on Form 10-K for the year ended December 31, 1997.

The Company through its DTP Direct catalog sells computer and peripheral 
products targeted at the graphic arts market, which currently includes 
primarily Macintosh related products.  In May 1998, the Company launched a 
new catalog, Net Direct, which is directed at developers of intranet/Internet 
sites. The Company markets through direct marketing channels and to value 
added resellers.

The following table is a summary of the operating results for Tech Squared 
Inc. consolidated, Tech Squared Inc., excluding Digital River, and Tech 
Squared Inc., excluding Digital River, for the three and six months ended 
June 30, 1998 and 1997, respectively:




<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED                          SIX MONTHS ENDED
                                                              JUNE, 30                                    JUNE 30,
                                                    1998                   1997                  1998                   1997
                                               ------------            ----------             ------------           ---------
<S>                                            <C>                     <C>                    <C>                    <C>
 Net income/(loss) - Tech Squared              ($ 1,215,000)           ($ 252,000)            ($ 1,719,000)          ($503,000)
 Consolidated
   Per Share                                        ($ 0.11)              ($ 0.02)                 ($ 0.16)            ($ 0.05)
 Net income/(loss) - Tech Squared (excluding      ($133,000)              $44,000               ($  88,000)           $ 79,000
 Digital River)

</TABLE>


RESULTS OF OPERATIONS

NET SALES

Net sales for the Company's second quarter ended June 30, 1998 totaled 
$9,502,000 compared to $8,484,000 for the corresponding period of 1997, an 
increase of 12.0%.  Sales to DTP Direct catalog customers increased 11.5% 
while sales through the Company's distribution business increased 7.3% in the 
second quarter.  The Company also launched its network-focused catalog, Net 
Direct, during the second quarter.  Sales to Net Direct catalog customers 
contributed $159,000 to the second quarter sales. The fastest growing product 
categories, based on the percentage increase in dollar sales over the second 
quarter of 1997, were software, printers, magnetic drives and computer 
systems.  Computer system sales increased 9.1% from the same quarter a year 
ago which was attributed to increases of 167% in Macintosh system sales and 
1073% in PC/Wintel computer systems sales partially offset by a decrease in 
Macintosh clone system sales of 43%.  PC/Wintel computer system sales 
comprised 10% of all computer system sales in the second quarter of 1998 
compared to 1% in the same period of 1997. Net sales for the first six months 
of 1998 totaled $18,095,000 compared to $18,448,000 for the same period of 
1997.

Fluctuations in the Company's net sales from period to period can be expected 
due to a number of factors, including the timing of new product introductions 
by the Company's major vendors and their competitors, seasonal cycles 
commonly experienced in computer-related industries, and changes in product 
mix and product pricing.  As a result, the operating results for any 
particular period are not necessarily indicative of the results of any future 
period.


                                       8
<PAGE>

GROSS PROFIT

Gross profit for the quarter ended June 30, 1998, was $1,193,000 or 12.6% of 
net sales compared to $1,062,000 or 12.5 % of net sales for the comparable 
period of 1997. Gross profit for the six-month period ended June 30, 1998 was 
$2,280,000 or 12.6% compared to $2,152,000 or 11.7% of net sales for the same 
period in 1997.  The increase in gross profit percentage in the six-month 
period ended June 30, 1998, is primarily the result of a reduction in 
variable overhead expenses.  The Company expects ongoing competitive pressure 
on gross profit, and, consequently, changes in pricing and product 
configuration will be necessary in order to remain competitive.

SELLING AND MARKETING EXPENSES

Selling and marketing expenses totaled $764,000 or 8.0% of sales during the 
quarter ended June 30, 1998, compared to $467,000 or 5.5% of sales during the 
corresponding period of 1997.  For the six month period ended June 30, 1998, 
selling and marketing expenses were $1,284,000 or 7.1% of sales versus 
$943,000 or 5.1% of sales for the same period in 1997.  This increase was 
mainly attributable to an increase in net marketing costs related to the 
development, production and distribution of DTP Direct catalogs, and the 
costs associated with the May 1998 launch of a new catalog, Net Direct, which 
is directed at developers of intranet/Internet sites.  Although the Company 
believes the target market for the Net Direct catalog is substantially larger 
than the DTP Direct catalog, and that the new catalog could provide 
significant opportunity for revenue growth, there are significant risks 
associated with the launch of a new catalog including; a completely new 
target audience, lack of any historical direct marketing data on which to 
base mailing decisions, competitive forces and new product lines.  As a 
result, the Company believes the launch of the Net Direct catalog will have a 
negative impact on the profitability of the Company in 1998.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the quarter ended June 30, 1998 were 
$545,000 compared to $560,000 for the comparable period of 1997.  For the six 
month period ended June 30, 1998, general and administrative expenses were 
$1,047,000 compared to $1,112,000 for the related period of 1997.  The 
decrease of 5.8% for the six-month period ended June 30, 1998 over the same 
period of 1997 is attributable to several factors including the reduction in 
the use of temporary labor and transaction processing fees.  These savings 
were partially offset by increases in legal and consulting services. 
Additionally, an increase in the amount of warehouse and office space sublet 
to Digital River also contributed to the reduction in general and 
administrative expenses for the first six months of 1998.  In July 1998, 
Digital River moved its offices to Eden Prairie, Minnesota.  Digital River 
has signed an agreement to pay the Company for office space through December 
31, 1998, as well as the portion of warehouse space that they occupy.

INVESTMENT INCOME

The Company recorded no investment income for the second quarter of 1998 
compared to $35,000 for the corresponding period in 1997.  Investment income 
for the six-month period ended June 30, 1998 was $5,000 compared to $35,000 
for the related period in 1997.

NET INTEREST  EXPENSE

Net interest expense for the quarter ending June 30, 1998 was $18,000 
compared to $27,000 for the same period in 1997. Interest expense for the 
six-month period ended June 30, 1998 was $42,000 compared to $53,000 for the 
same period in 1997. The decrease is primarily due to a decrease in the 
average outstanding balance on the Company's line of credit.


                                       9
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of liquidity at June 30, 1998, consisted of 
liquid funds, a revolving line of credit agreement with US Bancorp National 
Association ("US Bank"), and vendor trade credit lines.

The Company has a Revolving Line of Credit Agreement with US Bank through 
June 1999.  Borrowings under the $2,500,000 agreement are payable on demand, 
limited by eligible percentages of accounts receivable and inventory and bear 
interest at the prime rate plus 1.75%.  Borrowings under the agreement are 
secured by substantially all the Company's assets, and are personally 
guaranteed up to $500,000 by the Company's Chairman.  As of June 30, 1998, 
the Company had unused availability under the line of credit of approximately 
$1,264,000 and outstanding borrowings of $274,000.

The Company has a flooring program with a financing company covering up to 
$625,000 in inventory purchases.  In July 1998, the Company increased by 
$150,000 its ability to utilize the advantages of using a flooring program 
for the purchase of strategic inventory.  The flooring program is secured by 
a standby letter of credit in the amount of $550,000 issued pursuant to the 
Company's line of credit with US Bank.  The Company uses the flooring program 
to take advantage of certain programs with its major distributors.

As of June 30, 1998, the Company had working capital of $153,000.  The 
working capital has been reduced by approximately $200,000, which represents 
the current portion of the remaining balance of a dividend declared in April 
1995, but not yet paid.  The dividend payable is subordinated to the 
Revolving Line of Credit and the aggregate payout of the dividend cannot 
exceed $200,000 in any calendar year.  In April 1998, the Company paid 
$200,000 related to the dividend payable to an officer/shareholder.

The working capital includes $136,000 relating to its investment in Cam 
Design, Inc. ("Cam Design") which is valued at the closing market price on 
June 30, 1998.  Of the Company's total shares of Cam Design stock, 
approximately 32% remained in escrow as of June 30, 1998, to secure payment 
of a note payable. The trading market for the Cam Designs shares may be 
limited and there can be no assurance that the Company will be able to 
realize a market value equal to or in excess of the value stated herein.  The 
Company may have to bear the economic risk of the entire investment for an 
indefinite period.

Inventories increased slightly from $1,890,000, as of December 31, 1997, to 
$1,949,000 as of June 30,1998.  Capital expenditures totaled $83,000 in the 
second quarter of 1998 compared to $58,000 in the second quarter of 1997.  
The increase in capital expenditures in the second quarter of 1998 is 
primarily due to office renovation and computer system upgrades and 
enhancements.

The Company's computer systems and those of third parties with whom it does 
business will be affected by issues and problems related to changes required 
in the year 2000 ("Y2K").  The Company is currently in the process of 
evaluating its information system requirements for Y2K issues and compliance. 
The Company does not anticipate at this time that the cost to modify its 
systems or the upgrading of its current system to be Y2K compliant will be 
material to its financial condition or results of operations.  The Company 
does not anticipate any material disruption in its operations as a result of 
any failure by the Company to be in compliance.  Failure to achieve timely 
completion of required modifications or conversions or failure of the third 
parties with whom the Company has relationships (e.g., vendors, clients, 
credit card processors) to be Y2K compliant could have a material affect on 
the financial condition and operations of the Company.  Maintenance and 
modification costs incurred by the Company specifically related to being Y2K 
will be expensed as incurred and costs of new software (whether purchased or 
internally developed) will be capitalized and amortized over the useful life 
of the applicable software.

                                       10
<PAGE>

The Company believes that funds generated from management of receivable and 
inventory levels, advances under its line of credit, further expansion of 
lines with trade creditors, the cash on hand and proceeds from the sale of 
its investments, will be sufficient to fund its operations through the end of 
1998. However, maintaining an adequate level of working capital through the 
end of 1998 and thereafter depends in part on the success of the Company's 
sales and marketing efforts and the Company's ability to control operating 
expenses. Furthermore, funding of the Company's operations in future periods 
may require additional investments in the Company in the form of equity or 
debt. There can be no assurance that the Company will achieve desired levels 
of sales or profitability or that future capital infusions will be available.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         None


                                       11
<PAGE>

                         PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

     HANOVER GOLD LITIGATION

     In March 1996, and as amended in April 1996, the Company entered into an 
Asset Purchase Agreement (the "Agreement") for the sale of substantially all 
of its mining properties and rights in the Alder Gulch area of the Virginia 
City Mining District in southwest Montana (the "Property") in exchange for 
525,000 shares of Hanover Gold Company, Inc. ("Hanover") common stock (the 
"Hanover Shares") subject to adjustment based on a $2.00 per share guaranteed 
market value.  Under Terms of the Agreement, the Property and 400,000 of the 
Hanover Shares were to be held in escrow pending completion of a registration 
statement covering the resale of the Hanover Shares and consent by the 
Company.

     In October 1996, Hanover filed a registration statement covering the 
Hanover Shares and filed suit against the Company in the United States 
District Court Eastern District of Washington.  The complaint sought to force 
the Company to break escrow and release title to its Montana Gold mining 
properties in exchange for 400,000 Hanover Shares held in escrow, along with 
certain other damages. The Company filed a counter-claim, which included 
claims of fraud and violation of Securities Laws.

     In April 1997, Hanover filed a Notice of Motion and Motion for Partial 
Summary Judgment, which the Company answered on April 13, 1997.  On September 
23, 1997 Hanover withdrew the motion for partial summary judgment.

     In April 1998, both parties agreed to the dismissal of all claims, 
counterclaims and cross-claims without prejudice.  The Hanover Shares held by 
the court were returned to Hanover, and the mining claims and rights were 
returned to the Company.  The Company is currently investigating the 
possibility of attempting to force Hanover to perform the terms of the 
original Agreement, while exploring the marketability of the Property.  There 
is no assurance that the Company will be successful in attempting to force, 
or if successful, that a market for the Hanover shares will exist, or if not 
successful, that the Company will be able to sell the Property elsewhere.

ITEM 2.   CHANGES IN SECURITIES

          None

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None

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

          None

ITEM 5.   OTHER INFORMATION

          None

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

               (a)  Exhibits

               10.60  Termination of Lease between Tech Squared Inc. and
                      Digital River, Inc. dated April 22, 1998

               10.61  Digital River, Inc. Lockup Agreement between Digital
                      River and Joel Ronning dated July 14, 1998


                                       12
<PAGE>

               10.62  Digital River, Inc. Lockup Agreement between Digital
                      River and MacUSA dated July 14, 1998

               10.63  Digital River, Inc. Lockup Agreement between Digital
                      River and Tech Squared Inc. dated June 5, 1998

               10.64  Release of Technology between Tech Squared Inc. and
                      Joel Ronning, Digital River, Inc. executed August 6,
                      1998

               10.65  Services Agreement between Tech Squared Inc. and
                      Digital River dated July 29, 1998

               27.1   Financial Data Schedule.

          (b)  Reports on Form 8-K

     None


                                       13
<PAGE>

SIGNATURE



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.



                                        TECH SQUARED INC.





August 13, 1998                         /s/ Richard Apple
                                        ----------------------------------------
                                        Richard Apple, Chief Executive Officer


                                        /s/ Jeff Abramovitz
                                        ----------------------------------------
                                        Jeff Abramovitz, Chief Financial Officer






                                       14
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Index        Description
-------------        -----------
<S>                  <C>
10.60                Termination of Lease between Tech Squared Inc. and Digital 
                     River, Inc. dated April 22, 1998
                     
10.61                Digital River, Inc. Lockup Agreement between Digital River 
                     and Joel Ronning dated July 14, 1998
                     
10.62                Digital River, Inc. Lockup Agreement between Digital River 
                     and MacUSA dated July 14, 1998
                     
10.63                Digital River, Inc. Lockup Agreement between Digital River 
                     and Tech Squared Inc. dated June 5, 1998
                     
10.64                Release of Technology between Tech Squared Inc. and Joel 
                     Ronning, Digital River, Inc. executed August 6, 1998
                     
10.65                Services Agreement between Tech Squared Inc. and Digital 
                     River dated July 29, 1998
                     
27.1                 Financial Data Schedule

</TABLE>


                                         15