<PAGE>


DME INTERACTIVE HOLDINGS INC - 10QSB - Quarterly Report
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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                   FORM 10-QSB

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

                  For the quarterly period ended March 31, 2000

(    ) Transition Report under Section 13 or 15(d) of the Exchange Act of 1934
     for the transition period from __________ to _________

                         DME INTERACTIVE HOLDINGS, INC.
--------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in Charter)


Delaware                               0-27944                  98-0157860
--------------------------------------------------------------------------------
(State of Other Jurisdiction         (Commission              (IRS Employer
   of Incorporation)                 File Number)         Identification Number)


39 Broadway, New York                                                      10006
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                             (Zip Code)

Registrant's telephone number, Including area code                 212-422-6600
--------------------------------------------------------------------------------


                                 Not Applicable
--------------------------------------------------------------------------------
          (Former Name of Former Address, if Changed Since Last Report)



     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 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 requirement for the past 90 days. Yes X   No
                                            ---    ---
     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

     As of May 1, 2000 there were 25,964,666 shares of common stock
outstanding.

===============================================================================

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                         DME INTERACTIVE HOLDINGS, INC.

                                TABLE OF CONTENTS

PART I    FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS

          Consolidated Balance Sheets as of March 31, 2000 (Unaudited) and
          December 31, 1999

          Consolidated Statements of Operations for the three months ended March
          31, 2000 (Unaudited) and March 31, 1999 (Unaudited)

          Consolidated Statements of Changes in Shareholders' Deficit for the
          Period Ended March 31, 2000 (Unaudited)


          Consolidated Statements of Cash Flows for the three months ended March
          31, 2000 (Unaudited) and March 31, 1999 (Unaudited)

          Notes to Consolidated Financial Statements

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

PART II   OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

ITEM 2.   CHANGES IN SECURITIES

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

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

ITEM 5.   OTHER INFORMATION AND SUBSEQUENT EVENTS

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K



                                       2
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                          PART I FINANCIAL INFORMATION

ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS



                 DME Interactive Holdings, Inc. and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


                              ASSETS
<TABLE>
<CAPTION>

                                                          As of                    As of
                                                       March 31,                December 31,
                                                           2000                     1999
                                                           -----                   -----
<S>                                                    <C>                     <C>
 CURRENT ASSETS:

 Cash and cash equivalents                             $  312,051              $  171,996
 Accounts receivable, net                                 157,396                 116,168
 Prepaid expenses                                          36,422                  28,661
                                                       -----------             -----------

 Total current assets                                     505,869                 316,825

 Security deposits                                        167,257                 167,257
 Property and equipment, net                              379,459                  62,980
                                                       -----------             -----------

 Total assets                                          $1,052,585               $ 547,062
                                                       ===========             ===========

             LIABILITIES AND SHAREHOLDERS' DEFICIT

 CURRENT LIABILITIES:

 Accounts payable and accrued expenses                    531,881                 460,695
 Due to affiliated company                                  1,446                   1,297
 Note payable to employee                                  41,000                  41,000
 Loan from shareholder                                         --                  50,000
                                                       -----------             -----------

 Total current liabilities                                574,327                 552,992

 Notes payable                                             86,805                  86,805
 Loans from shareholder                                   456,906                 158,906
 Unearned revenue                                         138,922                      --
                                                       -----------             -----------

 Total liabilities                                      1,256,960              $  798,703
                                                       ===========             ===========

 Commitments and Contingencies(Note 10)

 Common stock, par value $0.001; 60,000,000
 shares authorized; 25,964,666 and
 23,714,666 issued and outstanding as of
 March 31, 2000 and December 31, 1999,
 respectively                                               25,965                 23,715
 Additional paid-in capital                             25,059,980                980,980
 Accumulated deficit                                    (2,110,320)            (1,256,336)
 Less deferred strategic agreement expense             (23,180,000)                    --
                                                       -----------             -----------

 Total shareholders' deficit                              (204,375)              (251,641)
                                                       -----------             -----------

 Total liabilities and shareholders' deficit           $ 1,052,585             $  547,062
                                                       ===========             ===========
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       F-1

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                 DME Interactive Holdings, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)


                                        For the            For the
                                       3-months            3-months
                                     period ended        period ended
                                    March 31, 2000     March 31, 1999
                                    ------------     ----------------

GROSS REVENUES                       $   218,766        $      87,589
                                     ------------        ------------
COST OF OPERATIONS
Salaries and employee benefits            407,644              18,983
Project expense                            12,003               6,270
Consulting services                        70,586              34,959
                                     ------------        ------------

Total cost of operations                  490,233              60,212
                                     ------------        ------------

GROSS PROFIT (LOSS)                      (271,467)             27,377

GENERAL AND ADMINISTRATIVE
  EXPENSES                                581,709              10,085
                                     ------------        ------------
INCOME (LOSS) FROM OPERATIONS            (853,176)             17,292
                                     ------------        ------------
OTHER INCOME AND (EXPENSES)
Interest and rental income                  6,539                -
Interest expense                            7,347              1,820
                                     ------------        ------------
                                             (809)             1,820
                                     ------------        ------------
NET INCOME (LOSS)                    $   (853,984)       $    15,472
                                     ============        ============
INCOME (LOSS) PER SHARE:
Basic                                $      (0.03)       $     0.001
                                     ============        ============
Diluted                              $      (0.03)       $     0.001
                                     ============        ============

WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:

Basic                                  25,964,666          23,347,999
                                     ------------        ------------

Diluted                                25,964,666          25,942,999
                                     ------------        ------------




          See accompanying notes to consolidated financial statements.

                                      F-2

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                 DME Interactive Holdings, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT FOR THE PERIOD ENDED
                                MARCH 31, 2000.
                                   (UNAUDITED)


<TABLE>
<CAPTION>


                                       Common Stock               Additional                          Deferred          Total
                                                                   Paid-in          Accumulated       Strategic      Shareholders'
                                    Number         Amount          Capital            Deficit          Expense           Deficit
                                  ---------     -----------      -----------        -----------      ----------       -------------
<S>                             <C>           <C>              <C>              <C>                 <C>              <C>
Balance, December 31, 1999       23,714,666    $     23,715     $    980,980      $ (1,256,336)              --       $   (251,641)

Common shares issued to           1,250,000           1,250               --                --               --              1,250
strategic agreement

Stock issuance for strategic
agreement                                --              --       11,210,000                --               --         11,210,000

Strategic agreement deferred
expense recognition                      --              --               --                --      (11,210,000)       (11,210,000)

Warrants issuance for
strategic agreement                      --              --       11,970,000                --      (11,970,000)                --

Common Shares issued              1,000,000           1,000          899,000                --               --            900,000

Net loss                                 --              --               --          (853,984)              --           (853,984)

Balance, March 31, 2000          25,964,666    $     25,965     $ 25,059,980      $ (2,110,320)     (23,180,000)      $   (204,375)

                                ============    ============     ============      ============     ============       ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       F-3
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                 DME Interactive Holdings, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                     For the                For the
                                                     3-month                3-month
                                                   period ended           period ended
                                                 March 31, 2000         March 31, 1999
                                                 -----------------      -----------------
<S>                                              <C>                   <C>
 CASH FLOWS FROM OPERATING
 ACTIVITIES:

Net income (loss)                                   $  (853,984)          $    15,742
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities:
Depreciation                                             41,287                   697
Decrease in accounts receivable                         (41,228)                1,800
(Increase) in prepaid expenses                           (7,760)                   --
Increase in due to affiliated company                       149                    --
Increase in accounts payable                             71,186                33,143
Increase in advances/unearned revenue                    56,250                    --
                                                    -----------           -----------

Net cash used in provided by
operating activities                                   (734,100)               50,415
                                                    -----------           -----------

INVESTING ACTIVITIES
Purchases of property and equipment                    (357,767)                   --
                                                    -----------           -----------

Net cash used in investing activities                  (357,767)                   --
                                                    -----------           -----------

FINANCING ACTIVITIES
Proceeds from loans and notes payable                   300,000                30,000
Payments on loans and notes payable                     (52,000)                   --
Proceeds from sale of common stock                      901,250                    --
Increase in capital lease obligation                     82,672                    --
                                                    -----------           -----------

Net cash provided by financing activities             1,231,922                30,000
                                                    -----------           -----------

Net increase in cash
and cash equivalents                                    140,055                80,415

CASH AND CASH EQUIVALENTS:
Beginning of period                                     171,996                   629
                                                    -----------           -----------

End of period                                       $   312,051           $    81,044
                                                    ===========           ===========
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       F-4
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                         DME Interactive Holdings, Inc.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.           BASIS OF PRESENTATION:

                  The accompanying unaudited consolidated financial
                  statements, which include the accounts of DME Interactive
                  Holdings, Inc. and its wholly owned subsidiaries, have been
                  prepared in accordance with generally accepted accounting
                  principles for interim financial information and with the
                  instructions to Form 10-QSB 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 only of normal
                  recurring accruals considered necessary for a fair
                  presentation, have been included in the accompanying
                  unaudited consolidated financial statements. All significant
                  intercompany transactions and balances have been eliminated
                  in consolidation. Operating results for the three months
                  ended March 31, 2000 are not necessarily indicative of the
                  results that may be expected for the full year ending
                  December 31, 2000. For further information, refer to the
                  consolidated financial statements and notes thereto,
                  included in the Company's Annual Report on Form 10-KSB for
                  the fiscal year ended December 31, 1999.

NOTE 2.           ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

                  Organization and Business

                  Pride Automotive Group ("Pride") was incorporated in 1995 in
                  the State of Delaware as a "C" Corporation. On June 18, 1999,
                  Pride changed its name to DME Interactive Holdings, Inc. ("DME
                  or Company") following a reverse merger (re-capitalization)
                  with Digital Mafia Entertainment, LLC. ("Digital Mafia"), a
                  New Jersey Limited Liability Company (the "Transaction"). The
                  re-capitalization occurred pursuant to the Exchange of Common
                  Stock agreement dated March 30, 1999 (as amended). In
                  connection with the re-capitalization, Pride exchanged
                  14,800,000 shares of its Common Stock (representing
                  approximately 64% of the outstanding shares after the
                  exchange) for all of the membership interests of Digital
                  Mafia. In addition, Pride sold all of its interest in its two
                  operating subsidiaries to Pride, Inc., its parent and owner of
                  more than 50% of its outstanding common stock prior to the
                  transaction, for $1.00 each. As a result, Digital Mafia became
                  a wholly owned subsidiary of Pride. For accounting purposes,
                  the exchange was treated as a re-capitalization, as if Digital
                  Mafia acquired Pride.

                                       F-5

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NOTE 2.           ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
                  (Continued)

                  Digital Mafia is deemed to be the predecessor company and
                  all financial information prior to June 18, 1999 is that of
                  Digital Mafia.

                  DME is an advanced technology company that provides corporate
                  internet strategy, development services and advertising
                  services ("digital communications solutions") primarily to
                  clients seeking to reach the urban African-American and Latino
                  markets. We are in the process of expanding our business
                  by developing online resource communities which are
                  designed to provide a variety of content of interest to
                  our urban target market. Currently, we are developing
                  two on-line resource communities, Places of Color and
                  Fan4Life.

                  On February 2, 2000, DME and Places of Color entered into a
                  "strategic agreement" with CompuServe Interactive Service,
                  Inc. subsidiary of America Online, Inc., an internet service
                  provider ("ISP"). The agreement expires 18 months after the
                  launch date and requires the ISP to provide hosting and
                  other technical and support services for a website
                  customized Service for internet users from the urban market.
                  Places of Color will receive a stated percentage of the
                  monthly subscription fees received by the ISP. DME has
                  issued 1,250,000 common shares to the ISP. In addition to the
                  shares, DME has granted a warrant for 4,000,000 additional
                  shares to the ISP at a purchase price of $8.563 per share.
                  The warrants are only exercisable if, at the end of the
                  strategic agreement, the parties negotiate an extension of the
                  strategic agreement, or enter into a new agreement
                  substantially similar to the strategic agreement.

                  Principles of Consolidation
                  The accompanying consolidated financial statements include the
                  accounts of DME and its wholly owned subsidiaries, Digital
                  Mafia Entertainment, LLC, and DME 39 Broadway Corporation
                  ("DME 39"). All material intercompany transactions and
                  balances have been eliminated in consolidation.

                  Fixed Assets
                  Fixed assets are recorded at cost and are depreciated on the
                  straight-line basis over the estimated useful lives of the
                  assets.

                  Use of Estimates
                  The preparation of financial statements in conformity with
                  generally accepted accounting principles requires management
                  to make estimates and assumptions that affect the reported
                  amount of assets and liabilities and disclosures of contingent
                  assets and liabilities at the date of the consolidated
                  financial statements and the reported amounts of revenues and
                  expenses during the reported period. Actual results could
                  differ from those estimates.

                  Statement of Cash Flows
                  For financial statement purposes, cash in demand deposit
                  accounts and money market accounts with maturities of ninety
                  days or less are considered to be cash equivalents.

                                       F-6

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                  NOTE 2. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
                  POLICIES: (Continued)

                  Allowance for Doubtful Accounts The Company establishes an
                  allowance for uncollectible accounts receivable based on
                  historical collection experience and management's evaluation
                  of collectibility of outstanding accounts receivable. Accounts
                  receivable is shown net of allowance for doubtful accounts in
                  the accompanying consolidated financial statements. The
                  allowance for uncollectible accounts receivable as of March
                  31, 2000 and December 31, 1999, was $17,424 and $50,030,
                  respectively.

                  Revenue Recognition
                  The Company bills for services recognizes project revenues
                  based on time-and-materials arrangements, fixed-price
                  contracts and maintenance agreements. The Company recognizes
                  project revenues on a percentage of completion method.
                  Maintenance revenue is recognized on a monthly basis while
                  the relevant maintenance agreement is in effect, and the
                  Company has performed the agreed-upon maintenance services.

                  Reclassification

                  Certain reclassifications have been made to the prior period's
                  financial statements in order to conform them to the
                  classifications used for the current year.

NOTE 3.           INCOME TAXES:


                  DME accounts for income taxes under Statement of Financial
                  Accounting Standards No. 109, "Accounting for Income Taxes"
                  (SFAS 109). SFAS 109 is an asset and liability approach that
                  requires the recognition of deferred tax assets and
                  liabilities for the expected future tax consequences of
                  events that have been recognized in the Company's financial
                  statements or tax returns. In estimating future tax
                  consequences, SFAS 109 generally considers all expected
                  future events other than enactment of changes in the tax law
                  or rates. Any available deferred tax assets arising from net
                  operating loss carryforwards has been offset by a deferred
                  tax valuation allowance on the entire amount.

                                      F-7


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NOTE 4.           PROPERTY AND EQUIPMENT, NET:

                  Property and equipment, net is comprised of the following:

<TABLE>
<CAPTION>

                                              Estimated      March 31,     December 31,
                                             Useful Life        2000           1999
                                             -----------       ------         ------
<S>                                          <C>            <C>            <C>
                  Office equipment                5         $   319,351     $   74,952
                  Furniture and fixtures          5             104,064          6,490
                  Software                        3              18,806          4,628
                                                            -----------    -----------
                                                                443,837         86,070
                  Accumulated  depreciation                     (64,378)       (23,090)
                                                            ------------   ------------

                                                            $   379,459    $    62,980
                                                            ===========    ===========
</TABLE>

                  Depreciation expense for the three-month period ended March
                  31, 2000 and March 31, 1999, was $41,287 and $2,091.

NOTE 5.           NOTES PAYABLE:

                  The Company has two notes payable outstanding, one for $50,000
                  and another for $36,805. The $50,000 note bears interest at a
                  rate of 9% per annum and matures on March 21, 2001. The
                  $36,805 note bears interest at a rate of 9% per annum and has
                  no stated maturity date.

NOTE 6.           EQUITY FINANCING:

                  In January 2000, we issued 500,000 shares of Common Stock at
                  par value, 500,000 warrants at a $2.00 strike price, and
                  500,000 shares at $2.00 per share in a private placement to
                  satisfy our working capital requirements. Gross proceeds
                  totaled $1,000,000.

NOTE 7.           STOCK OPTIONS AND WARRANTS:

                  Employee Stock Options
                  DME has an incentive stock option plan (the "Plan") for key
                  management employees. On May 8, 2000, the Board of
                  Directors increased the maximum shares of common stock
                  that may be issued under the Plan to 12,000,000 from
                  3,000,000. The option price, number of shares and grant
                  date are determined at the discretion of the Board of
                  Directors. Options granted under the Plan are exercisable
                  at dates determined by the Board of Directors. If an
                  employee is terminated, all unexercised options
                  expire automatically. An employee has ninety days from
                  date of voluntary termination to exercise options to the
                  extent such options were exercisable at the time of
                  termination. As of March 31, 2000, no employee
                  compensation expenses was incurred nor were any options
                  exercised.

                  As of March 31, 2000 a total of 1,210,000 options had
                  been granted to nineteen employees of the Company. These
                  options were not granted pursuant to the Plan.

                  On May 11, 2000 the Board of Directors granted Darien Dash the
                  option to purchase up to 4,000,000 shares of common stock
                  pursuant to the Plan for a period  over 10 years from July 1,
                  1999, at the purchase price of $2.81 per share per first 2.5
                  million shares, $4.00 per additional 750,000 shares, and $5.00
                  per remaining 750,000 shares. The shares can be exercised pro
                  rata over three years after the anniversary of the grant date.

                  On May 11, 2000 the Board of Directors granted Thomas O'Rourke
                  the option to purchase up to 4,000,000 shares of common stock
                  pursuant to the Plan for a period over 10 years, at the
                  purchase price of $2.81 per share per first 1.33 million
                  shares, $4.00 per additional 1.33 million shares, and $5.00
                  per remaining 1.33 million shares. The shares can be exercised
                  pro rata over three years after the anniversary of the grant
                  date.

                  Warrants
                  As of March 31, 2000, DME had 2,595,000 redeemable purchase
                  warrants outstanding. Each warrant allows the holder to
                  purchase one share of the Company's common stock at a price
                  of $5.75. DME may redeem the warrants at anytime upon 30
                  days' written notice at a price of $0.05 per warrant subject
                  to certain conditions. The expiration date on the warrants
                  is April 23, 2001.

                                       F-8

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NOTE 8.           NET LOSS PER COMMON SHARE:

                  The following table presents the calculation of basic and
                  diluted net loss per common share required under SFAS 128:

                                                     Period            Period
                                                      Ended             Ended

                                                  March 31,          March 31,
                                                      2000              1999
                                                     ------            ------

                  Net (loss)/Net income            ($ 853,984)     $     15,472
                                                 =============    =============

                  Weighted average shares -
                   basic                            25,964,666       23,347,999

                  Effect of dilutive securities:
                    Warrants and employee
                     stock options                         --         2,595,000
                                                 -------------    --------------

                  Weighted average shares -
                   diluted                          25,964,666        25,942,999
                                                 -------------    --------------

                  Net (loss)/Net income per
                   common share - basic          ($     0.033)      $      0.001
                                                 ------------     -------------

                  Net (loss)/Net income          ($     0.033)      $      0.001
                  Per share - diluted             ------------     -------------


NOTE 9.           RELATED PARTY TRANSACTION:

                  Due to Affiliated Company

                  Digital Mafia shares office space with an affiliated company.
                  Certain administrative expenses incurred by Digital Mafia may
                  from time to time be paid by the affiliated company. The
                  amount payable to the affiliated company as of March 31, 2000
                  and December 31, 1999 was $1,446 and $1,297, respectively.

                  Loan Payable to Employee

                  DME also issued a $41,000 note payable to an employee pursuant
                  to  an asset purchase agreement executed on September 1, 1999.
                  There is no stated interest rate. The note will be settled
                  from collections on accounts receivable assigned by the
                  employee to DME.

                  Principal Shareholder Loans

                  As of March 31, 2000, the Company owes its principal
                  shareholder a total of $456,906. The majority loan of
                  $300,000 has an interest rate of 13% and matures on May
                  31, 2000. The remaining loans carry an interest rate of 9%
                  per annum and mature on from December 31, 2001.

                                       F-9

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NOTE 10.         STRATEGIC AGREEMENT:

                 In February 2000, the Company entered into a strategic
                 partnership with AOL. In connection with this agreement DME
                 issued 1,250,000 common shares to AOL valued at $11,210,000,
                 based upon the trading price of the stock on the issuance
                 date. In addition the Company also issued  4,000,000 options
                 with an exercise price of $8.563 exercisable at the end of the
                 term of the strategic agreement. The value of the Warrants on
                 the issuance date was $11,970,000 using the Black-Scholes
                 Option-Pricing Model.

The effect of applying Statement No. 123 is not likely to be representative of
the effects on reported net income for future months due to, among other things,
DME reaching certain performance milestones. The deferred strategic agreement
expense is recognized straight line over the 18 months after the POC launch. As
of March 31, 2000, no strategic agreement expenses has been recognized.

                                      F-10

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NOTE 11.          COMMITMENTS AND CONTINGENCIES:

                  (A)  Employment Agreement

                  On April 18, 2000, the Company entered into an
                  employment agreement with its President and Chief
                  Operating Officer, Thomas O'Rourke. The effective date
                  of this agreement is April 18, 2000, and is for a period
                  of three years at which time it can be renewed by mutual
                  agreement of both parties. The agreement may be
                  terminated at any time by mutual written agreement by
                  the parties. The consideration is $150,000 annually to
                  be paid at regular payroll periods. As additional
                  compensation, the Company has issued a total of
                  4,000,000 stock options excisable at annual intervals
                  ranging from April 18, 2000 to April 18, 2003 at varying
                  exercise prices between $2.81 to $5.00.

                  (B)  Rental Lease

                  On September 23, 1999, DME 39 entered into two
                  non-cancelable office space rental lease agreements with a
                  real estate company. The agreements became effective in
                  March 2000 and expires in July 2010. In addition to base
                  rent and electricity, DME 39 is required, under the lease
                  agreements, to pay real estate taxes equal to 2.4% of base
                  tax, as defined in the agreement.

                  In conjunction with DME 39's lease signings, DME signed an
                  absolute and unconditional deed guaranteeing the full, prompt
                  and complete performance of all of the terms, covenants and
                  conditions of the lease agreements entered into by DME 39. The
                  guaranty expires if, at any time, DME and/or DME 39 pays the
                  landlord base rent equal to $450,000 or more under the above
                  mentioned leases.

                  Future minimum lease payments under the lease agreements are
                  as follows:

                  For the Year Ending December 31,
                  --------------------------------
                                    2000                    $       189,361
                                    2001                            245,909
                                    2002                            297,695
                                    2003                            305,798
                                    2004                            314,148
                                    Thereafter                    2,226,440
                                                            ---------------

                                        Total               $     3,579,351
                                                            ===============

                  Total rent expense under all operating leases amounted to
                  $38,744 and $6,450 for the three-month period ended March
                  31, 2000, and March 31, 1999, respectively.

                                      F-11

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NOTE 11.          COMMITMENTS AND CONTINGENCIES:  (Continued)

                  (C) Litigation

                  The Receiver of Autokraft Limited and ACL(1996) Limited,
                  both in Administrative Receivership in the United Kingdom
                  have asserted a claim against us for monies allegedly due
                  under (i) a guarantee agreement and (ii) a variation
                  agreement executed by us pursuant to which the loan
                  allegedly guaranteed was restructured. The amount claimed to
                  be due is British pounds 281,107 plus interest. The
                  obligations arise out of the purchase by a former subsidiary
                  of ours, when we were Pride Automotive Group, Inc. ("PAG"),
                  of certain assets of the claimants. We are currently
                  investigating the claim; however, we believe that the
                  existence of the liability for the claim constitutes a
                  breach of the representations and warranties made to Digital
                  Mafia LLC in the agreement pursuant to which it was acquired
                  by PAG in the June 1999 reverse merger (the
                  "re-capitalization"). Therefore, we have asserted a claim for
                  indemnification against Pride Inc. (now known as Mason Hill
                  Holdings, Inc.), the then parent of PAG, who, in the
                  exchange agreement for the acquisition, joined in the
                  foregoing representations and agreed to indemnify Digital
                  Mafia LLC in connection with any breach of those
                  representations. If it is determined that we are liable to
                  the Receiver, we intend to vigorously assert our rights
                  against Pride, Inc.

                                      F-12

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

         The following discussion contains forward-looking statements involving
risks and uncertainties based on management's current expectations, which
involve risks and uncertainties, estimates and projections about the internet
industry and the evolution of on-line Internet commerce. All statements in this
10-QSB related to DME's changing financial operations and expected future growth
or profitability constitute forward-looking statements. The actual results may
differ significantly from those anticipated or expressed in these statements.
The following discussion and analysis should be read in conjunction with the
unaudited consolidated financial statements. The results of interim periods are
not necessarily indicative of the results to be obtained in a full fiscal year.

OVERVIEW

          DME Interactive Holdings, Inc. is an interactive services firm and is
a leader in developing Internet marketing services aimed at the urban market. We
provide creative, technology and strategic services that we believe will enable
our clients to gain a competitive advantage in creating, enhancing and
benefiting from relationships with African-American and Latino-American
customers. We are in the process of expanding our business by developing online
resource communities which are designed to provide a variety of content of
interest to our urban target markets. Currently, we are developing two on-line
resource communities, Places of Color and Fan4Life.

         In February 2000, the company entered into a strategic partnership with
America Online, Inc. and its wholly owned subsidiary CompuServe Interactive
Services, Inc. This alliance will enable the official launch of an urban branded
Internet service provider hosted by AOL/CompuServe and featuring the Places of
Color online resource community. AOL, through CompuServe, will provide all
interactive services, including email, instant messaging, chat rooms and news
briefs as well as "back end" services for Places of Color, including customer
service, billing, dial up access numbers, and web site hosting and other
technical infrastructure. We will provide relevant content and be responsible
for all marketing and advertising for Places of Color. We will receive a portion
of the subscriber fee from AOL and derive revenue from the advertising and
affiliate relationships with content providers and e-commerce partners.


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         Fan4Life is an online resource community aimed at fans of celebrities
who represent, and have popularized, the urban culture, as well as personalities
from sports and entertainment. In conjunction with the celebrity, we develop
personal histories, current news, an e-commerce souvenir gift shop, horoscopes
and chat rooms about or related to the celebrity. Fan4Life is almost fully
operational and presently we are negotiating with additional celebrities to be
added to the site.

         As of March 31, 2000, we have not realized any income from Places of
Color and Fan4Life. We derive our interactive service revenues from one of three
pricing arrangements: maintenance, time-and-materials and fixed-price.

         We bill and recognize revenues from time-and-materials projects on the
basis of costs incurred in the period. We use a standardized estimation and work
plan development process to determine the requirements and estimated price for
each project. This process takes into account the type and overall complexity of
the project, the anticipated number of personnel of various skill sets needed
and their associated billing rates, and the estimated duration of and risks
associated with the project. Management personnel familiar with the production
process evaluate and price all project proposals.

         We recognize revenues from fixed-price projects using the
percentage-of-completion method based on the ratio of costs incurred to the
total estimated project costs. Fees are billed to the client over the course of
the project. We estimate the price for fixed-price projects using the same
methodology as time-and-materials projects. All fixed-price proposals must first
be approved by a member of our senior management team. Provisions for estimated
losses on contracts are made during the period in which such losses become
probable and can be reasonably estimated. To date, such losses have not been
significant.

         We bill and recognize revenues from maintenance agreements on a monthly
basis while the agreement is in effect. We believe that maintenance arrangements
are indicative of our strong, long-term relationships with clients which yield
significant benefits both to our clients and to us. We believe that we will
achieve greater predictability of revenues and higher revenue growth with
clients who engage us in maintenance-based relationships. Maintenance agreements
are generally one to two years in length and include a renewal clause.
Typically, maintenance relationships with clients result in additional
fixed-price and time-and-materials projects. Maintenance fees currently
represent a small percentage of our overall revenues. Consistent with our focus
on long-term relationships, our goal is to increase our number of
maintenance-based arrangements.

         Our revenues and earnings from our digital communication solutions
business are affected by a number of factors, including:

         -     the amount of business developed from existing relationships;

         -     our ability to meet the changing needs of the marketplace;

         -     employee retention;

         -     billing rates;

         -     our ability to deliver complex projects on time; and

         -     efficient utilization of our employees.

         Many of our business initiatives are aimed at enhancing these factors.
Further, we believe that our focus on maintenance-based arrangements will


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continue to improve the predictability of our quarter-to-quarter results.

         Our expenses include direct salaries and costs, selling, general and
administrative and depreciation. Direct salaries and costs includes salaries,
benefits and incentive compensation of billable employees and other direct costs
associated with revenue generation. Sales and marketing expenses include
promotion and new business generation expenses. General and administrative
expenses include benefits costs of management, rent and human resources costs.
Professional fees include accounting, legal and consulting costs. Depreciation
expenses primarily include depreciation of technology equipment and furniture
and fixtures. Personnel compensation and facilities costs represent a high
percentage of our operating expenses and are relatively fixed in advance of each
quarter. Expenses related to our online resource community were expensed to
operations for the quarter ended March 31, 2000. For full year 2000, we expect
such expenses to increase significantly as we complete development and prototype
testing and commence marketing and operations.

         As a strategic response to changes in the competitive environment, we
may from time to time make certain pricing, service, technology or marketing
decisions or business or technology acquisitions that could have a material
adverse effect on our business, results of operations and financial condition.
DME may also experience seasonality in its business in the future, resulting in
diminished revenues as a consequence of decreased demand for Internet
professional services during summer and year-end vacation and holiday periods.

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2000 TO THREE MONTHS ENDED MARCH 31,
1999

GROSS REVENUES AND OTHER INCOME. Gross Revenues for the first quarter of 1999
were $225,305 as compared to $87,589 in 1999. The increase of $137,716, or 157%,
was attributable to several factors, including an increase in the number of
clients served, sales of additional projects to existing clients and additional
service offerings.

TOTAL EXPENSES. For the first quarter of 2000, total expenses were $1,079,290 as
compared to $72,117 in 1999. The increase of $1,007,173, was primarily due to an
increase in accounting, management consulting and legal services to build the
necessary infrastructure for the anticipated expansion of our business and to
commence development of our online resource communities. In particular, salaries
and employee benefits were $407,644 in the first quarter of 2000 as compared to
$18,983 in 1999. The increase of $388,661 was the result of hiring additional
salaried employees to support our internal growth and expanded service
offerings.

NET INCOME (LOSS). As a result of the foregoing, in the first quarter of 2000,
we had a net loss of $853,984 as compared to a net income of $15,472 in 1999.


LIQUIDITY

         At March 31, 2000, the Company had $321,051 of cash and cash
equivalents compared to $81,044 at March 31, 1999. Prior to the reverse
merger (re-capitalization) transaction on June 18, 1999, the Company's primary
source of liquidity had been proceeds from officer's loan and operating cash
flows.

         Net cash used in operating activities for the first quarter of 2000 was
$734,100. In 2000, net cash used in operating activities was primarily
attributable to our net loss that resulted primarily from establishing the
necessary infrastructure for the expansion of our business and commencing the
development of our online resource communities.

         Net cash used in investing activities was $357,767 for first quarter of
2000. This was attributable to the acquisition of property and equipment.


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         Net cash provided by financing activities was $1,231,922. The cash
provided for financing activities during 2000 was primarily the result of
proceeds from the January 2000 private placement of common stock and the March
2000 loan from principal shareholder to meet our working capital requirements.

         We believe that current cash on hand and cash generated from operations
in 2000 is sufficient to fund our digital communication solutions business at
our current levels but is not sufficient to allow us to implement our expansion
strategy or properly develop our online resource communities. Therefore, we are
pursing external financing. We cannot assure you that such additional capital
will be available when needed on terms acceptable to us. The inability to obtain
such financing, if needed, could adversely affect our ability to achieve our
business objectives.

                            PART II-OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Litigation noted in Note 10.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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

         During the first quarter of 2000, DME acting by written consent of a
         majority of its shareholders adopted an amended and restated
         certificate of incorporation. Request notice of such action was given
         to shareholders prior to the filing of such certificate of amendment.

ITEM 5.  OTHER INFORMATION AND SUBSEQUENT EVENTS

         Mark Herlitz-Ferguson resigned as President in April 2000. Carlton
         Charles resigned as Chief Financial Officer in May 2000.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS.

           Exhibit 3.1.  Certificate of Amendment of Restated Certificate of
                         Incorporation of DME Interactive Holdings, Inc.


                              DME Interactive Holdings, Inc.

                                   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.

                         DME Interactive Holdings, Inc.


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DATE: March 2, 2000                 SIGNATURE:/s/ Darien Dash
                                                 -----------------------
                                                 Darien Dash
                                                 President and Chief Executive
                                                 Officer

 Exhibit 3.1

      CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION OF
                         DME INTERACTIVE HOLDINGS, INC.

     DME Interactive Holdings, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify:

             I. The name of the Corporation is DME Interactive Holdings, Inc.
and the Corporation was originally incorporated under the name Pride Automotive
Group, Inc., and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on March 20,
1995.

             II. The Certificate of Incorporation was amended previously on June
15, 1999 and June 18, 1999.

             III. Pursuant to Sections 242 and 245 of the Delaware General
Corporation Law ("DGCL"), this Restated Certificate of Incorporation restates
and integrate and further amends the provisions of the Certificate of
Incorporation of the Corporation, as amended, and has been consented to in
writing by the Board of Directors and the sole stockholder of the Corporation.

             IV. The sole amendment adopted hereby is the increase in the number
of authorized shares of common stock and the addition of preferred stock.

             V. The text of the Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:


             FIRST: The name of the corporation is:

                         DME Interactive Holdings, Inc.

             SECOND: Its registered office in the State of Delaware is to
be located at 1013 Centre Road, Wilmington, Delaware 19805, County of New
Castle. The registered agent in charge thereof is The Company Corporation, 1013
Centre Road, Wilmington, Delaware 19805, County of New Castle.

             THIRD: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the corporation
laws of the State of Delaware.

             FOURTH: Capital Stock

                     (A) Authorized Capital Stock. The total number of shares of
all classes of stock which this Corporation shall have authority to issue is
SIXTY TWO MILLION (62,000,000) shares, consisting of SIXTY MILLION (60,000,000)
shares of common stock, $.001 par value per share (hereinafter, the "Common
Stock"), and TWO MILLION (2,000,000) shares of Preferred Stock, $.01 par value
per share (hereinafter, the "Preferred Stock").

                     (B) Preferred Stock.

                         (i) Shares of Preferred Stock may be issued from time
to time in one or more series as may from time to time be determined by the
Board of Directors. Each series shall be distinctly designated. The relative
rights, preferences and limitations of shares of undesignated Preferred Stock
are as provided for in this Article THIRD.

                        (ii) Undesignated Preferred Stock.  Shares of Preferred
Stock may be issued from time to time in one or more series as may from time to
time be


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determined by the Board of Directors. Each series shall be distinctly
designated. All shares of any one series of the Preferred Stock shall be alike
in every particular event except that there may be different dates from which
dividends thereon, if any, shall be cumulative, if made cumulative. The powers,
preferences and relative, participating, optional and other rights of each
series, and the qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time outstanding. Subject
to the provisions of this Article THIRD, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of each particular
series of Preferred Stock, the designation, powers, preferences and relative,
participating, optional and other rights, and the qualifications, limitations
and restrictions thereof, if any, of such series, including, but without
limiting the generality of the foregoing, the following:

                                    (1) the distinctive designation of and the
number of shares of Preferred Stock which shall constitute the series, which
number may be increased (except as otherwise fixed by the Board of Directors) or
decreased (but not below the number of shares thereof then outstanding) from
time to time by action of the Board of Directors;

                                    (2) the rate and times at which, and the
terms and conditions upon which, dividends, if any, on shares of the series
shall be paid, the extent of preferences of relation, if any, of such dividends
to the dividends payable on any other class or classes of stock of this
corporation, or on any series of Preferred Stock or of any other class or
classes of stock of this corporation, and whether such dividends shall be
cumulative or non-cumulative;

                                    (3) the right, if any, of the holders of
shares of the series to convert the same into, or exchange the same for, shares
of any other class or classes of stock of this corporation, or of any series of
Preferred Stock of this corporation, and the terms and conditions of such
conversion or exchange;

                                    (4) whether shares of the series shall be
subject to redemption, and the redemption price or prices including, without
limitation, a redemption price or prices payable in shares of the Common Stock
and the time or times at which, and the terms and conditions upon which, shares
of the series may be redeemed;

                                    (5) the rights, if any, of the holders of
shares of the series upon voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding up of this
corporation;

                                    (6) the terms of the sinking fund or
redemption or purchase account, if any, to be provided for shares of the series;
and

                                    (7) the voting powers, if any, of the
holders of shares of the series which may, without limiting the generality of
the foregoing, include (i) the right to more or less than one vote per share on
any or all matters voted upon by the stockholders and (ii) the right to vote, as
a series by itself or together with other series of Preferred Stock or together
with all series of Preferred Stock as a class, upon such matters, under such
circumstances and upon such conditions as the Board of Directors may fix,
including, without limitation, the right, voting as a series by itself or
together with other series of Preferred Stock or together with all series of
Preferred Stock as a class, to elect one or more directors of this corporation,
or to elect one or more directors of this corporation, or to elect a majority of
the members of the Board, under such circumstances and upon such conditions as
the Board may determine.

                           (C) Common Stock.

                               (i) After the requirements with respect to
preferential dividends on Preferred Stock (fixed in accordance with provisions
of this Article THIRD), if any, shall have been met and after this corporation
shall have complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or purchase accounts (fixed
in accordance with the provisions of paragraph (C) of this Article THIRD) and
subject further to any other conditions which may be fixed in accordance with
the provisions of paragraph (C) of this Article THIRD, then but not otherwise,
the holders of Common Stock shall be entitled to receive such dividends, if any,
as may be declared from time to time by the Board of Directors.


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                               (ii) After distribution in full of the
preferential amount (fixed in accordance with the provisions of paragraph (C) of
this Article THIRD), if any, to be distributed to the holders of Preferred Stock
in the event of voluntary or involuntary liquidation, distribution or sale of
assets, dissolution or winding-up of this corporation, the holders of the Common
Stock shall be entitled to receive all the remaining assets of this corporation,
tangible and intangible, of whatever kind available for distribution to
stockholders, ratably in proportion to the number of shares of the Common Stock
held by each.

                              (iii) Except as otherwise be required by law, this
Certificate of Incorporation or the provisions of the resolution or resolutions
as may be adopted by the Board of Directors pursuant to this Article THIRD, each
holder of Common Stock shall have one vote in respect of each share of Common
Stock held by such holder on each matter voted upon by the stockholders.

                       (D)    Other Provisions.

                              (i) The relative powers, preferences and rights of
each series of Preferred Stock in relation to the powers, preferences and rights
of each other series of Preferred Stock shall, in each case, be as fixed from
time to time by the Board of Directors in the resolution or resolutions adopted
pursuant to authority granted in this Article THIRD, and the consent, by class
or series vote or otherwise, of the holders of the Preferred Stock of such of
the series of the Preferred Stock as are from time to time outstanding shall not
be required for the issuance by the Board of Directors of any other series of
Preferred Stock whether the powers, preferences and rights of such other series
shall be fixed by the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or any of them,
provided, however, that the Board of Directors may provide in such resolution or
resolutions adopted with respect to any series of Preferred Stock that the
consent of the holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other shares of Preferred Stock.

                              (ii) Subject to the provisions of subparagraph (i)
of this paragraph, shares of any series of Preferred Stock may be issued from
time to time as the Board of Directors shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.

                             (iii) Shares of the Common Stock may be issued from
time to time as the Board of Directors shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.

                              (iv) No holder of any of the shares of any class
or series of stock or of options, warrants or other rights to purchase shares of
any class or series of stock or of other securities of the corporation shall
have any preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be issued by
reason of any increase of the authorized capital stock of the corporation of any
class or series, or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the corporation of any
class or series, or carrying any right to purchase stock of any class or series.

                  FIFTH: The name and mailing address of the sole incorporator
is Mitchell Lampert, Lampert & Lampert, 10 East 40th Street, New York, New York
10016.

                  SIXTH: The personal liability of the directors of the
corporation is hereby eliminated to the fullest extent permitted by the
provisions of paragraph (7) of subsection (b) of Section 102 of the General
Corporation Law of the State of Delaware, as the same may be amended and
supplemented.

                  SEVENTH: The corporation shall, to the fullest extent
permitted by the provisions of Section 145 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified may
be entitled under any By-Law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as


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to action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.

                  EIGHTH: (A) The Business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors, which may
exercise all such powers of the Corporation and do all such lawful acts as are
not by law or by the Certificate of Incorporation of the Corporation directed or
required to be exercised or done by the shareholders.

                          (B) The number of Directors of the Corporation shall
be as from time to time provided by or pursuant to the By-Laws of the
Corporation, but shall be not less than three. A director shall hold office
until the annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible.

                          (C) Newly created directorships resulting from any
increase in the authorized number of Directors constituting the entire Board of
Directors or vacancies on the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or any other
cause shall be filled only by the affirmative vote of a majority of the
remaining directors then in office, even if less than a quorum, or by the sole
remaining director. Directors elected to fill vacancies shall hold office for
the remainder of the full term of the class of Directors in which the vacancy
occurred and until such director's successor shall be elected and shall qualify.
The directors of any class of directors of the Corporation may be removed by the
shareholders only for cause by the affirmative vote of the holders of at least
70% of the combined voting power of all outstanding voting stock. For the
purpose of this Article SEVENTH, "cause" shall mean the willful failure of a
director to perform in any substantial respect such Director's duties to the
Corporation (other than any such failure resulting from incapacity due to
physical or mental illness), willful malfeasance by a Director in the
performance of his duties to the Corporation which is materially and
demonstrably injurious to the Corporation, the commission by a Director of an
act of fraud in the performance of his duties, the conviction of a Director for
a felony punishable by confinement for a period in excess of one year, or the
ineligibility of a Director for continuation in office under any applicable
rules, regulations or orders of any federal or state regulatory authority.

                          (D) Notwithstanding the foregoing, whenever the
holders of any one or more classes or series of preferred stock or preference
shares issued by the Corporation shall have the right to vote separately by
class or series to elect Directors at an annual or special meeting of
shareholders, the election, term of office, filling of vacancies and other
features of such directorships shall be governed by the terms of this
Certificate of Incorporation applicable thereto, and such Directors so elected
shall not be divided into classes pursuant to this Article SEVENTH unless
expressly provided by such terms.

                          (E) Where the term "Board of Directors" is used in
this Certificate of Incorporation, such term shall mean the Board of Directors
of the Corporation; provided, however, that to the extent any committee of
Directors of the Corporation is lawfully entitled to exercise the powers of the
Board of Directors, such committee may exercise any right or authority of the
Board of Directors under this Certificate of Incorporation.

                          (F) Notwithstanding any other provisions of this
Certificate of Incorporation or the By-Laws of this Corporation (and
notwithstanding the fact that a lesser percentage or separate class vote may be
specified by law, this Certificate of Incorporation, the By-Laws of the
Corporation or otherwise), the affirmative vote of the holders of at least 70%
of the combined voting power of all outstanding voting stock shall be required
to adopt any provisions inconsistent with, or to amend or repeal, this Article
SEVENTH.

                  NINTH: The Corporation indemnifies each director, officer,
employee or agent of the corporation or any other person who serves or has
served at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership,


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joint venture, trust or other enterprise to the fullest extent permitted by the
General Corporation Law of Delaware.

                  I, being the President and Chief Executive Officer hereby sign
this certificate this 31st day of March, 2000.

                                          DME INTERACTIVE HOLDINGS, INC.

                                          ---------------------------------
                                          Darien Dash
                                          President and Chief Executive Officer

(b) REPORTS ON FORM 8-K.

The registrant filed a Form 8-K with the Securities and Exchange Commission on
February 24, 2000. In this filing the registrant disclosed that on February 2,
2000, along with its subsidiary, Places of Color, Inc., they entered into a
Strategic Agreement with CompuServe Interactive Services, Inc., a subsidiary of
America Online, Inc., whereby the parties have agreed to develop and market an
urban-oriented online service. The service shall be marketed under the name
"Places of Color, Powered by CompuServe" (the "Service"). CompuServe shall
charge subscribers a monthly fee. The registrant shall receive a monthly fee
from CompuServe for all subscribers to the Service, as well as all revenue
generated by advertising and e-commerce opportunities on the Places of Color web
site. The initial term of the Strategic Agreement is eighteen months.

In connection with the Strategic Agreement, the registrant agreed to issue to
America Online, Inc., 1,250,000 shares of its common stock for an aggregate
purchase price of $1,250. Additionally, America Online was issued a warrant to
purchase up to 4,000,000 shares at a purchase price of $8.563 per share.
However, the warrant only becomes exercisable if, at the end of the eighteen
month term, the parties negotiate an extension of the Strategic Agreement or
enter into a substantially similar agreement. The parties also entered into an
Investor Rights Agreement granting America Online registration rights with
respect to the common stock it has acquired as well as the common stock it may
acquire through exercise of the warrant.



SIGNATURE

         Pursuant to requirements of the Securities Exchange Act of 1934, as
amended, the Issuer has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

May 15, 2000                    DME Interactive Holdings, Inc.


                                By:
                                   ----------------------------------------
                                      Thomas O'Rourke
                                      Director, President and Chief Operating
                                      Officer


                                By:
                                   ----------------------------------------
                                         Andre H. McKoy
                                      Executive Vice President and Chief
                                      Financial Officer
                                      (principal accounting officer)

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