<PAGE>

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

                       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: MARCH 31, 1999

         ( )      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
             of incorporation)                       Identification No.)


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


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





         Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Security Exchange Act during
the preceding 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 April 22, 1999, 12,102,950 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 March 31, 1999
            (unaudited) and December 31, 1998                                           3

           Consolidated Statements of Operations (unaudited) for the three
             months ended March 31, 1999 and 1998                                       4

           Consolidated Statements of Cash Flows (unaudited) for the three
             months ended March 31, 1999 and 1998                                       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            10


PART II. OTHER INFORMATION

         Item 1.  Exhibits and Reports on Form 8-K                                     11



SIGNATURES                                                                             12
</TABLE>

                                       2

<PAGE>

ITEM 1.                           FINANCIAL STATEMENTS

TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       March 31,              December 31,
                                                                         1999                     1998
                                                                     -------------             -------------
ASSETS                                                                (Unaudited)
<S>                                                                  <C>                       <C>
CURRENT ASSETS
 Cash and cash equivalents                                           $   2,224,128             $   4,436,276
 Restricted cash                                                           273,588                   229,466
 Accounts receivable, net of allowance
     for doubtful receivables of $382,000
     and $365,000 respectively                                           2,982,497                 3,387,907
 Inventories                                                             2,174,876                 1,783,905
 Prepaids and other current assets                                         574,065                   416,666
                                                                     -------------             -------------
    TOTAL CURRENT ASSETS                                                 8,229,154                10,254,220

 Property and equipment, net                                               516,573                   499,874
 Mining assets                                                             190,000                   190,000
 Investment in Digital River                                           120,000,000               106,500,000
                                                                     -------------             -------------
                                                                     $ 128,935,727             $ 117,444,094
                                                                     -------------             -------------
                                                                     -------------             -------------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
 Revolving line of credit                                            $     685,617             $       7,395
 Current maturities of long term debt                                         --                      15,000
 Accounts payable                                                        3,059,583                 5,008,449
 Accrued compensation and benefits                                         196,966                   205,156
 Accrued expenses                                                          799,981                 1,404,776
 Dividends payable to officer/shareholder                                     --                     200,000
                                                                     -------------             -------------
    TOTAL CURRENT LIABILITIES                                            4,742,147                 6,840,776

Dividends payable to officer/shareholder                                      --                      83,857

Deferred income taxes                                                   44,837,000                39,815,000

Redeemable preferred stock, 12% cumulative convertible,
$1 par value; 1,000,000 shares authorized; 160,000
shares issued and outstanding                                              247,744                   247,744


STOCKHOLDERS' EQUITY:
 Common stock: no par value; 25,000,000 shares authorized
 12,102,950 and 11,603,075 issued and outstanding                             --                        --
 Additional paid-in capital                                              4,193,584                 3,990,200
 Stock subscription receivable                                            (134,000)                 (284,000)
 Retained earnings                                                       2,715,080                 2,894,345
 Unrealized gain on available-for-sale securities                       72,334,172                63,856,172
                                                                     -------------             -------------
   TOTAL STOCKHOLDERS' EQUITY                                           79,108,836                70,456,717
                                                                     -------------             -------------
                                                                     $ 128,935,727             $ 117,444,094
                                                                     -------------             -------------
                                                                     -------------             -------------
</TABLE>


See accompanying notes to financial statements.


                                        3


<PAGE>

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



<TABLE>
<CAPTION>
                                                                          Three Months Ended
                                                                  -------------------------------------
                                                                    March 31,               March 31,
                                                                      1999                    1998
                                                                  ------------             ------------
<S>                                                               <C>                      <C>
Net Sales                                                         $ 11,103,411             $  8,592,728
Cost of sales                                                        9,726,578                7,506,225
                                                                  ------------             ------------
   GROSS PROFIT                                                      1,376,833                1,086,503

Selling and marketing expenses                                         752,223                  520,349
General and administrative expenses                                    827,317                  502,515
                                                                  ------------             ------------
 Total Operating Expenses                                            1,579,540                1,022,864
                                                                  ------------             ------------
  INCOME (LOSS) FROM OPERATIONS                                       (202,707)                  63,639

Interest income/(expense), net                                          21,394                  (23,132)
Investment income                                                        2,048                    4,611
Equity in losses of Digital River                                         --                   (549,625)
                                                                  ------------             ------------
  NET LOSS                                                        $   (179,265)            $   (504,507)
                                                                  ------------             ------------
                                                                  ------------             ------------
Net loss per common share, basic and diluted                      $      (0.02)            $      (0.05)
                                                                  ------------             ------------
                                                                  ------------             ------------
Weighted average shares outstanding, basic and diluted              11,822,603               10,549,413
                                                                  ------------             ------------
                                                                  ------------             ------------
</TABLE>


See accompanying notes to financial statements.


                                        4

<PAGE>

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


<TABLE>
<CAPTION>
                                                                               Three Months Ended
                                                                        -----------------------------------
                                                                         March 31,               March 31,
                                                                            1999                   1998
                                                                        -----------             -----------
<S>                                                                     <C>                     <C>
Operating Activities:
    Net Loss                                                            $  (179,265)            $  (504,507)
    Non-cash items included in loss:
    Depreciation and amortization                                            54,006                  48,243
    Equity in losses of Digital River                                          --                   549,625
    Gain on sale of available-for-sale securities                            (2,048)                 (4,611)
    Changes In operating assets and liabilities:
       Accounts receivable, net                                             405,410                  77,102
       Inventories                                                         (390,971)               (103,034)
       Prepaid and other current assets                                    (157,400)               (244,872)
       Accounts payable                                                  (1,948,866)                733,985
       Accrued compensation and benefits                                     (8,190)                (91,511)
       Other accrued expenses                                              (619,799)               (199,309)
                                                                        -----------             -----------
         NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES             (2,847,123)                261,111

Investing Activities:
   Restricted cash                                                          (44,122)                (76,817)
   Purchases of property and equipment                                      (70,700)                (50,700)
   Proceeds from sale of available-for-sale securities                        2,048                 287,411
                                                                        -----------             -----------
         NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES               (112,774)                159,894

Financing Activities:
   Issuance of common stock, net                                            353,384                 (72,080)
   Net borrowings (payments) on revolving line of credit                    678,222                (348,925)
   Dividend paid                                                           (283,857)                   --
                                                                        -----------             -----------
         NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                747,749                (421,005)
                                                                        -----------             -----------
         NET DECREASE IN CASH                                            (2,212,148)                   --

Cash at beginning of period                                               4,436,276                     300
                                                                        -----------             -----------

Cash at end of period                                                   $ 2,224,128             $       300
                                                                        -----------             -----------
                                                                        -----------             -----------
</TABLE>


See accompanying notes to consolidated financial statements.


                                       5

<PAGE>


                                TECH SQUARED INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                 MARCH 31, 1999



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 month period ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. 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 1998 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 - INVESTMENT IN DIGITAL RIVER

         In December 1995, the Company's wholly-owned subsidiary, MacUSA, was
granted, by Joel Ronning, the majority shareholder and Chairman of the Board of
Directors of the Company, an option, exercisable through December 31, 2000 (the
"Digital River Option") to acquire 3,200,000 (post-split) shares (the "Digital
River Shares") of Digital River, Inc., a Minnesota corporation ("Digital River")
which was then privately held. At that time, such shares represented
approximately 60% of the outstanding common stock of Digital River.

         Digital River conducted its initial public offering in August 1998.
Prior to such offering, the Company's ownership percentage of Digital River had
been reduced to approximately 23% and was being accounted for using the equity
method of accounting. Upon completion of such offering, the Company's ownership
percentage was reduced to approximately 19% at which time the Company began
accounting for its investment in Digital River as an available-for-sale security
in accordance with Statement of Financial Accounting Standards (SFAS) No. 115.
Digital River's shares are traded on the NASDAQ stock market under the symbol
"DRIV."

           In December 1998, the Company participated in Digital River's
secondary offering by exercising and selling 200,000 shares subject to the
Digital River Option realizing net proceeds of $4,430,000. The Company continues
to hold an option to purchase 3,000,000 shares, which would represent ownership
of approximately 15% of Digital River as of March 31, 1999. The option is not
transferable and the balance is exercisable at any time through December 31,
2000 for total consideration of $0.93 (ninety-three cents). During the term of
the option, Mr. Ronning has agreed to vote the Digital River Shares at the
direction of the Company's Board of Directors. As additional consideration, the
Company has agreed to reimburse Mr. Ronning for any tax liability incurred in
connection with the transfer of the Option or the shares of Digital River stock
issuable upon the exercise thereunder.


                                       6
<PAGE>




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 first quarter of 1999 was approximately $8,478,000 compared to $17,000
for the first quarter of 1998. The comprehensive income consisted of an increase
in the market value of the investment in Digital River during the first quarter
of 1999.


                                       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, 1998.

The Company sells microcomputer hardware and software products, primarily Apple
Macintosh(R) related products and, to a lesser degree, Microsoft Windows
95/Windows NT/MS-DOS ("Wintel") compatible products. The Company's current
target markets are (i) desktop publishing ("DTP"), graphic arts and pre-press
industries through its DTP Direct catalog, (ii) computer dealers and value added
resellers through its distribution business, and (iii) developers of internal
corporate intranet and external Internet sites and managers of local area
networks ("LAN") and wide area networks ("WAN") through its Net Direct catalog.

In February 1999, the board of directors of Tech Squared authorized the officers
of the Company to make investigations and, if appropriate, enter into
preliminary negotiations regarding possible changes in the Company's business
including, but not limited to, strategic alliances, joint ventures, mergers,
sale of the Company's operating business and other alternatives. In April 1999,
the Company retained Bayview Capital Group, Inc. of Wayzata, Minnesota to act as
its exclusive advisor to locate one or more potential purchasers of certain
operating assets and businesses of the Company, specifically the DTP Catalog
Operations, Net Direct Catalog Operations and Distribution Sales Operations. The
search is at a preliminary stage and no prediction can be made as to what, if
any, transaction or changes will transpire.

In December 1998, the Company sold a portion of the mining properties near
Virginia City, Montana to Conjecture Silver Mines, Inc.("Conjecture"). Under the
terms of the agreement, Conjecture has the first right of refusal to acquire the
remaining property near Virginia City, Montana. In April 1999, the Company
obtained an offer from an outside party for the remaining property near Virginia
City, Montana. Conjecture has been notified of the pending offer and must
respond by May 1999. In April 1999, the Company engaged Fidelity Real Estate to
offer for sale the mining property located near Rimini, Montana approximately 20
miles southwest of Helena, Montana.

For the three months ended March 31, 1999 the Company recorded a consolidated
net loss of ($179,000) or ($0.02) per share compared to a consolidated net loss
of ($505,000) or ($0.05) per share in the first quarter of 1998. The
consolidated losses from 1998 include the Company's share of losses of Digital
River, which amounted to $550,000 in the first quarter of 1998. Excluding the
Company's share of the Digital River losses, the Company recorded net income of
$45,000 in the first quarter of 1998. Digital River's issuance of additional
shares in 1998 resulted in the Company accounting for its investment in Digital
River as "available-for-sale" securities starting August 12, 1998.

RESULTS OF OPERATIONS

NET SALES

Net sales for the Company's first quarter ended March 31, 1999 totaled
$11,103,000, an increase of 29.2%, compared to $8,593,000 for the corresponding
period of 1998. The increase in sales includes an increase of 32.0% in sales to
the Company's DTP Direct catalog customers, the addition of the Net Direct
catalog which produced sales to its customers of $661,000, partially offset by a
decrease of 2.4% in sales to the Company's distribution customers. The increase
in sales to the

                                       8

<PAGE>

Company's DTP Direct catalog customers is due to an increase in the number of
outbound sales reps which contributed to significant increases in sales of
computer systems, printers, hard drives and software.

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.


GROSS PROFIT

Gross profit for the quarter ended March 31, 1999, was $1,377,000 or 12.4% of
net sales compared to $1,087,000 or 12.6% of net sales for the comparable period
of 1998. The decrease in gross profit percentage in the three month period ended
March 31, 1999, is primarily the result of continuing downward pressure on
product prices to the Company's DTP Direct catalog customers and on margins. 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 $752,000 during the quarter ended March
31, 1999, compared to $520,000 during the corresponding period of 1998. As a
percentage of sales, selling and marketing expenses increased to 6.8% in the
quarter ended March 31, 1999 from 6.1% for the same period in 1998. This
increase was mainly attributable to the costs associated with the May 1998
addition of the Net Direct catalog, which is directed at developers of internal
corporate intranet and external Internet sites and managers of LAN's and WAN's.
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
profitability of the Company in 1999, and possibly beyond.


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses for the quarter ended March 31, 1999 were
$827,000 compared to $503,000 for the comparable period of 1998. The increase is
attributable to several factors including increases in transaction-processing
fees, payroll and employee-related expenses and legal fees. Additionally, the
discontinuance of subletting office space to Digital River also contributed to
the increase in general and administrative expenses for the quarter.


INVESTMENT INCOME

The Company recorded investment income of $2,000 for the quarter ended March 31,
1999 compared to $5,000 for the same quarter of 1998.


NET INTEREST INCOME/(EXPENSE)

Net interest income for the first quarter of 1999 was $21,000 compared to net
interest expense of $23,000 for the same period in 1998. The reduction in
interest expense is primarily due to a decrease in the average outstanding
balance on the Company's line of credit, and the increase in interest income is
mainly attributed to an increase in cash in an interest bearing account.


                                       9

<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of liquidity at March 31, 1999, 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%. As of March 31, 1999, the Company had unused
availability under the line of credit of approximately $990,000 and outstanding
borrowings of $686,000.

The Company has a flooring program with a financing company covering up to
$633,000 in inventory purchases. The flooring program is secured by a standby
letter of credit in the amount of $560,000 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 March 31, 1999, the Company had working capital of $3,487,000. In
anticipation of increasing sales, inventories increased from $1,784,000, as of
December 31, 1998, to $2,175,000 as of March 31,1999. Inventory turns in the
first quarter of 1999 were 14.1 compared to 12.8 from the previous quarter.
Capital expenditures totaled $71,000 in the first quarter of 1999 compared to
$51,000 in the first quarter of 1998. The increase in capital expenditures in
the first quarter of 1999 is mainly attributed to computer system upgrades. The
Company paid the remaining $284,000 dividend payable to officer/shareholder in
February 1999.

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 the potential proceeds from the sale
of its investments, will be sufficient to fund its operations through the end of
1999. However, maintaining an adequate level of working capital through the end
of 1999 and thereafter depends in part on the success of the Company's sales and
marketing efforts, the Company's ability to control operating expenses and the
Company's ability to maintain its relationships with its bank and its suppliers.
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 those future capital infusions will be available on terms
acceptable to the Company, if at all.


YEAR 2000 COMPLIANCE

         The Company's computer system and those of third parties with whom it
does business will be affected by issues and problems related to changes
required as a result of the year 2000 problem ("Y2K"). The Company's three key
systems and assets that may be directly impacted by the Y2K issue are its
financial and data system, its telephone system and its voice mail system. The
financial and data system requirements have been assessed and are currently
being upgraded and modified to be Y2K compliant. Rollout and testing of the Y2K
compliant system began in April 1999. The telephone system is believed to be Y2K
compliant, and testing is scheduled for the second quarter of 1999. The voice
mail system is currently being analyzed to determine the degree of upgrade
needed. The upgrade to the voice mail system will be rolled out and tested
during the second quarter of 1999. The Company incurred expenses to modify its
systems and the upgrading of its current system to be Y2K compliant totaling
approximately $35,000 in 1998, and anticipates additional costs of approximately
$50,000 in 1999. Maintenance and modification costs incurred by the Company
specifically related to 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.

While the Company has exercised its best efforts to identify and remedy any
potential Y2K exposures within its control, certain risks exist with vendors and
suppliers which, to a significant extent, are beyond the immediate control of
the Company. To date, the Company has not identified any vendors or suppliers
who will not be Y2K compliant; however, this analysis is still in process.

                                       10

<PAGE>

The Company plans to develop appropriate contingency plans if non-compliant
vendors are identified. 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. The Company, however, is unable to assess disruption
that may occur as a result of supplier's and customer's non-compliance. Because
the Company markets products manufactured by multiple sources and typically
sells the products as `packages', Y2K problems affecting the Company's vendors
may have a significant affect on the Company. In addition, customers may delay
purchase decisions because of the uncertainty about Y2K issues.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

                  None

                                       11
<PAGE>


                           PART II - OTHER INFORMATION

ITEM 1.        EXHIBITS AND REPORTS ON FORM 8-K.

               (a)  Exhibits

                    10.70  Agreement between Tech Squared Inc. and Bayview
                           Capital Group, Inc. to locate potential purchasers of
                           certain operating assets and businesses.

                    27.1   Financial Data Schedule.

               (b)  Reports on Form 8-K

                    None

                                       12
<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.





May 12, 1999                              /s/ Charles E. Reese, Jr.
                                          ------------------------------------
                                          Charles E. Reese, Jr.
                                          President, Chief Executive Officer
                                          Chief Operation Officer


                                          /s/ Jeffrey F. Martin
                                          ------------------------------------
                                          Jeffrey F. Martin
                                          Chief Financial Officer
                                          And Principal Accounting Officer


                                       13

<PAGE>



                                  EXHIBIT INDEX



EXHIBIT INDEX       DESCRIPTION

10.70               Agreement between Tech Squared Inc. and Bayview Capital
                    Group, Inc. to locate potential purchasers of certain
                    operating assets and businesses.

27.1                Financial Data Schedule



                                       14