U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            FORM 10-QSB SEC File No:
                                   33-14982-LA

        [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31,
                                      1999

   [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ___________




                           DIGITAL D.J. HOLDINGS, INC.
                                formerly known as

                         BREAKTHROUGH ELECTRONICS, INC.
                         -------------------------------
             (Exact name of registrant as specified in its charter)


   Nevada                            33-14982-LA               77-0530472
   ------                            -----------               ----------
(State or other                      (Commission             (IRS Employer
jurisdiction of                      File Number)          Identification No.)
incorporation)


           1658 E. Capitol Expressway, #294San Jose, California 95121
--------------------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)


Company's telephone number, including area code:      (408) 946-8500
                                                --------------------


                        Breakthrough Electronics, Inc.,
             2612 East Kentucky Avenue, Salt Lake City, Utah 84117
--------------------------------------------------------------------------------
         (Former name or former address, if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act  during  the past 12 months  (or 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.

                                        1


<PAGE>



                                                           [ X ] Yes   [   ] No

State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:

     13,177,528 Shares as of the date of this report.

Transitional Small Business Disclosure Format (check one): [   ] Yes   [ X ] No



                                        2


<PAGE>



                            BREAKTHROUGH ELECTRONICS

               Form 10-QSB for the Quarter ended December 31, 1999

                                Table of Contents

                                                                         Page

PART 1 - ITEM 2.............................................................4

     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS FOR DIGITAL D.J. HOLDINGS, INC...............4
     CAUTION REGARDING FORWARD-LOOKING INFORMATION..........................4
     OVERVIEW OF THE COMPANY................................................4

PART II - OTHER INFORMATION.................................................8
     ITEM 1 - LEGAL PROCEEDINGS.............................................8
     ITEM 2 - CHANGES IN SECURITY...........................................8
     ITEM 3 - DEFAULTS ON SENIOR SECURITIES.................................9
     ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........9
     ITEM 5 - OTHER INFORMATION.............................................9
     ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K..............................9
     SIGNATURE.............................................................10

EXHIBIT....................................................................11


                                        3


<PAGE>



PART 1 - ITEM 2

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS FOR DIGITAL D.J. HOLDINGS, INC.

     The  following  discussion  of the  financial  conditions  and  results  of
operations  of the  Company  should be read in  conjunction  with the  financial
statements, including notes thereto, for the Company.

CAUTION REGARDING FORWARD-LOOKING INFORMATION
---------------------------------------------

         This quarterly report contains certain  forward-looking  statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to  the  Company  or  management.   When  used  in  this  document,   the  words
"anticipate,"   "believe,"   "estimate,"   "expect"  and  "intend"  and  similar
expressions,  as they relate to the Company or its  management,  are intended to
identify forward- looking  statements.  Such statements reflect the current view
of the  Company  regarding  future  events and are  subject  to  certain  risks,
uncertainties  and  assumptions,  including  the risks or  uncertainties  noted.
Should  one or more of  these  risks or  uncertainties  materialize,  or  should
underlying  assumption prove incorrect,  actual results may vary materially from
those  described  herein  as  anticipated,   believed,  estimated,  expected  or
intended. In each instance,  forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.

OVERVIEW OF THE COMPANY
-----------------------

         Digital D.J. Holdings, Inc. (the "Company") was incorporated as "Golden
Queens  Mining  Company" on July 31, 1986 under the laws of the State of Nevada,
primarily for the purpose of exploration,  development and production of certain
mining  properties  located in Esmeralda  County,  Nevada.  In July,  1987,  the
Company changed its name to  "Breakthrough  Electronics,  Inc.,"  terminated its
activities  in the mining  business,  and began  efforts  to develop  and market
electronic  products,  including a telephone device designed to screen telephone
calls,  acquired from its then President.  This business was terminated  several
years ago. On November  22,  1999,  the Company  acquired  Digital  D.J.,  Inc.,
pursuant to a reverse triangular merger in a transaction in which  approximately
12,466,992  shares of the Company's common stock were issued to the shareholders
of Digital D.J., Inc. (the  "Reorganization").  The  Reorganization  resulted in
control of the Company  transferring from the former  shareholders to the former
shareholders   of  Digital   D.J.,   Inc.  The  terms  and   conditions  of  the
Reorganization are set forth in the Company's Form 8-K filed with the Commission
for the period beginning on November 22, 1999.

         Digital DJ Inc. was incorporated in December 1991. Its primary business
activity  was the  development  and  marketing  of a digital  data  system  that
provides  a  variety  of  information  services  to  radio  listeners  using  FM
subcarrier technology.  On April 1, 1999, the Company established a wholly owned
subsidiary, FM Intelligent  Transportation Systems, Inc. (FMITS), which provided
a

                                        4


<PAGE>



traffic  information service in the mobile market, with an initial investment of
$5,000  for  5,000,000  shares of common  stock.  On June 1, 1999,  the  Company
transferred  1,142,376  shares of the common stock of FMITS  (approximately  23%
interest)  to  Nichimen  America,   Inc.  (Nichimen)  in  consideration  of  the
cancellation of accounts payable to Nichimen in the amount of $951,980.

Results of Operations

         As of December 31, 1999, the Company is in the development stage and is
primarily  engaged in research  and  development  activities.  Accordingly,  the
accompanying  consolidated  statements of  operations  should not be regarded as
typical for normal periods of operation. The Company's development stage status,
recurring  net losses and  capital  deficit  raise  substantial  doubt about its
ability to continue as a going concern. Additional financing or restructuring of
its  liabilities  will be  required  in order for the  Company to  complete  its
development stage activities. Management believes that it will be able to obtain
such financing from new investors, and restructure its liabilities.

         The Company had no operations  or revenues,  or  significant  assets or
liabilities over the past several years until  completion of the  Reorganization
on November 22, 1999. All  representations  of the Company prior to November 22,
1999,  set forth in this  Management's  Discussion  and Analysis  are  therefore
provided  on a pro forma  basis as if the  Reorganization  had  occurred in such
period.  In August,  1998,  the Company  entered into a License  Agreement  with
Deutsche  Telekom  AG to use the  Company's  Radio  Information  System - Europe
Version,  for a term of 5 years  for a total  license  fee of  $1,625,000,  paid
$1,250,000 in 1998, and $125,000, in March of the years 1999, 2000 and 2001 (the
"DT Contract"). The DT Contract constituted the Company's sole source of revenue
in 1998. In January 1999, the Company entered into a license  agreement with its
only other customer, the Netherlands Broadcasting  Transmission Company, for the
same technology for a five year contract,  which  constituted the Company's sole
new source of revenue in 1998. The Netherlands  Broadcasting  contract was for a
five year term for total  license  fees of $300,000,  paid  $200,000 in 1999 and
$25,000 per year in 2000, 2001, 2002 and 2003.  Because the Company licensed its
technology over a five year term it was forced to recognize the revenue from the
licenses over a five year period, rather than on a cash basis.

Three Months Ended  December 31, 1999,  Compared to Three Months Ended  December
31, 1998

         Revenue.  During the quarter ended  December 31, 1999,  the Company had
revenues of $116,500,  which  constituted  a decrease in revenue of $19,750 from
$136,250 for the quarter ended December 31, 1998.

         Cost of Sales.  The  Company  incurred no cost of sales for the quarter
ended  December  31,  1999,  compared  to cost of sales  for the  quarter  ended
December 31, 1998,  of $18,755.  This decrease is primarily due to the fact that
the Company did not sell any new products  during the quarter ended December 31,
1999.

         Gross Profit. Gross profit as a percentage of revenue increased to 100%
for the three  months ended  December  31,  1999,  from 86% of net sales for the
corresponding  period  ended  December 31,  1998.  The gross  profit  percentage
increase is attributed to the fact that the Company had no cost of sales for the
revenues incurred in the three months ended December 31, 1999.

                                        5


<PAGE>



         Operating  Expenses.  Operating  expenses increased by $541,090 or 370%
from  $146,239 in the three months ended  December 31, 1998,  to $687,329 in the
three months ended December 31, 1999. The increase was attributable to increases
in  both   research  and   development   expenses   and  selling,   general  and
administrative expenses.  Research and development expenses increased by $22,852
or 20% from  $115,215 for the three months ended  December 31, 1998, to $138,067
for the three months  ended  December  31,  1999.  The  increase  was  primarily
attributable  to  modifications  of  the  Company's  hardware  and  software  to
accommodate  changes in its business plan.  Selling,  general and administrative
expenses increased by $518,238 or 1770%, from $31,024 for the three months ended
December  31, 1998,  to $549,262  for the three months ended  December 31, 1999.
This increase was  primarily  attributable  to $330,000 in commission  and legal
fees paid by the Company as part of the Reorganization.

         Other Income (Expense).  Other income (expense) decreased by $12,504 or
approximately  260% from  ($20,304) in the three months ended December 31, 1998,
to ($7,800) in the three months ended December 31, 1999.  While interest expense
increased by $9,666,  or 47% from $20,493 in the three months ended December 31,
1998,  to $30,159 in the three months ended  December 31,  1999,due to increased
convertible  promissory notes during the period, the Company  experienced a gain
on the sale of assets of $18,843 in the three  months  ended  December 31, 1999,
compared to no gain on the sale of assets in the three months ended December 31,
1998.

Six Months Ended  December 31, 1999,  Compared To Six Months Ended  December 31,
1998

         Revenues.  Revenues  increased  by $46,171 or  approximately  124% from
$190,000  for the six months ended  December  31,  1998,  to $236,171 in the six
months ended December 31, 1999. The increase is primarily due to the addition of
the DT Contract.

         Cost of Sales.  The cost of sales for the six months ended December 31,
1999, decreased to zero from $27,505 for the six months ended December 31, 1998.
The decrease is primarily due to the fact that the costs  associated with the DT
Contract  sale were not  incurred  during this six month  period and the Company
made no other sales during the period.

         Gross  Profit.  Gross profit as a percentage  of revenues  increased to
100% for the six months  ended  December 31 1999,  from 86% of revenues  for the
corresponding  period  in 1998,  increasing  by  $73,676  for a gross  profit of
$236,171 in the six months ended December 31, 1999,  compared to gross profit of
$162,495  for the  same  period  ended  December  31,  1998.  The  gross  profit
percentage  increase is  attributed  primarily to the fact that no cost of sales
were incurred during the current period.

         Operating  Expenses.  Operating  expenses increased by $543,841 or 143%
from $380,179 in the six months ended December 31, 1998 to $924,020,  in the six
months ended December 31, 1999. The increase was  attributable  to a decrease in
research and development expenses,  which was more than offset by an increase in
selling, general and administrative expenses.  Research and development expenses

                                        6


<PAGE>



decreased by $14,988 or 7% from $230,275 in the three months ended  December 31,
1998, to $215,287 in the three months ended December 31, 1999. Selling,  general
and  administrative  expenses increased by $558,829 or 373% from $149,904 in the
three  months ended  December  31,  1998,  to $708,733 in the three months ended
December 31, 1999. The increase was primarily  attributable to costs  associated
with the Reorganization.

         Other Income  (Expense).  Interest income increased by $7,150 or 3,357%
from $213 in the six months ended December 31, 1998, to $7,363 in the six months
ended December 31, 1999, due primarily to higher cash deposits on hand resulting
from the Company's recent  financing.  Interest expense  increased by $73,724 or
176% from $41,885 in the six months ended  December 31, 1998, to $115,609 in the
six months ended  December 31, 1999,  primarily due to interest  accruing on the
Company's debt financing. Other income increased by $18,709 or 100% from $134 in
the six months  ended  December  31,  1998,  to $18,843 in the six months  ended
December 31, 1999, due to the gain on the sale of fixed assets.

Liquidity and Capital Resources

         Cash and cash  equivalents  and net working capital  (deficit)  totaled
$284,164 and  ($503,367),  respectively,  as of December  31, 1999.  The primary
source of cash has been net proceeds generated from debt financings. The Company
has relied upon loan  proceeds  from  convertible  promissory  notes to fund its
operations  during the periods  discussed.  The Company  received  $575,000  and
$208,090 in debt  financing for the year ended June 30, 1999, and the six months
ended December 31, 1999, respectively.

         The Company  anticipates  that its  primary  use of working  capital in
future  periods  will be for  increases  in product  research  and  development,
expansion of its marketing plan and general and administrative expenses.

         The Company believes that existing cash and cash equivalents, cash flow
from operations and cash raised through private placements will be sufficient to
meet the Company's  presently  anticipated working capital needs for the next 13
months.  To the extent the Company uses its cash  resources for its  operations,
the Company will be required to obtain additional  funds, if available,  through
borrowings  or equity  financings.  There can be no assurance  that such capital
will be  available  on  acceptable  terms.  If the  Company  is unable to obtain
sufficient financing, it may be unable to fully implement its growth strategy.

         The Company  also  intends to begin  operations  of its  subsidiary  in
Japan, Digital D.J. Internet Solutions, Inc., a Japan corporation, to market the
licensing of the Company's technology in Japan. The Company anticipates that its
subsidiary's  operational costs will be approximately $40,000 per month and that
the Company will need to raise  additional  funds of  approximately  $500,000 to
$1,000,000  to fund the  operations  of its  Japanese  subsidiary.  The  Company
intends to attempt to raise  capital  necessary  to operate  the  subsidiary  in
Japan,  but the Company  does not have any  definitive  capital  raising plan or
agreement with any sources of such capital at this time.

                                        7


<PAGE>



         In  addition  to the  uncertainties  of  sources  of  capital  for  the
Company's  operations,  the Company  continues to experience  uncertainties  and
difficulties  within the marketplace for its technology.  The Company originally
sought to offer high speed  data  broadcasting  systems  using  conventional  FM
subcarrying, which would provide stock market and other data to subscribers on a
real time  basis for a  monthly  fee.  Shortly  after  the  introduction  of the
Company's  product and services,  several  online  brokerages  and pager service
began offering free real time stock market quotations. The Company then modified
its business  plan to license its  technology  to users in Europe and attempt to
joint  venture  with a  major  broadcasters  in the  United  States  to  provide
subcarrier textual information in addition to the audio broadcasts.  The Company
competes with numerous  other types of carriers in this  marketplace,  including
Digital  FM   broadcasters,   satellite  FM  broadcasters   and  competitors  in
conventional FM subcarrier  systems which claim to offer the ability to transmit
at higher speeds than that of the Company. The Company has no active sales force
within the U.S. and sales and marketing  depends upon the Company's CEO,  Thomas
Takahisa.  There are no  assurances  that the  Company  will be able to  compete
successfully within this marketplace.

Material Changes in Operations

         As discussed  above,  in the calendar year ended December 31, 1999, the
Company  changed  the focus of its  marketing  plan to shift  from a retail  and
wholesale  provider of FM  subcarrier  content and hardware and  software,  to a
licensor of the Company's technology to individual users and resellers in Europe
and Asia.  The Company also completed the  Reorganization  on November 22, 1999,
which resulted in the Company's  combination  with Digital D.J. The Company also
formed its Japan  subsidiary  for the marketing of licenses of its technology in
Japan.

Year 2000 Compliance

         The Company experienced no Year 2000 complications with its products or
services and experienced no problems due to Year 2000  complications with any of
its key customers, licensees, licensors or vendors.

PART II - OTHER INFORMATION

         ITEM 1 - LEGAL PROCEEDINGS

         The  Company  is not a  party  to or  aware  of any  legal  proceeding,
involving the Company and the Company is not aware of any proceedings  involving
any of the Company's  directors,  officers,  agents,  representatives or persons
that beneficially own 5% or more of the Company's voting securities.

         ITEM 2 - CHANGES IN SECURITY

         On November 22, 1999,  pursuant to the terms of the  Agreement and Plan
of Merger entered into among the Company,  Digital D.J.,  Inc., and Digital D.J.

                                        8


<PAGE>



Subsidiary,  Inc., the Company issued a total of 12,466,992  shares.  All of the
shares that were issued by the Company were common  stock.  The common stock was
issued to each of the  shareholders of Digital D.J., Inc., in exchange for their
shares in Digital  D.J.,  Inc. As  consideration  for the shares,  Digital D.J.,
Inc.,  merged with a wholly owned subsidiary of the Company resulting in Digital
D.J.  becoming a wholly owned subsidiary of the Company.  No cash  consideration
was issued. The Company relied upon exemptions from registration available under
Sections  4(1) and 4(2) of the Act.  The shares of common stock were issued on a
one for one  basis,  one share of the  Company's  common  stock for one share of
Digital D.J., Inc. The terms of the issuance are described in more detail within
the Form 8-K as amended, filed with the Commission as of November 22, 1999.

         ITEM 3 - DEFAULTS ON SENIOR SECURITIES

         None.

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

         As described in the  Company's  Form 8-K filed as of November 22, 1999,
the Company  conducted a special  meeting of its  shareholders  on November  22,
1999.  The meeting  involved the election of directors in which each of the then
existing  members of the Board of Directors  tendered their  resignation and the
following  persons  were elected to serve as members of the  Company's  Board of
Directors until the next annual meeting of the Company.

                                Tsutomu Takahisa
                                 Yoshiki Ohmori
                                  Koyo Hasagawa

         In addition to the election of new directors, the shareholders voted to
ratify the Agreement and Plan of Merger between the Company and Digital D.J. and
the  issuance  of shares of the  Company  pursuant  thereto.  At the time of the
Company's  shareholder meeting, the Company had approximately  710,250 shares of
record outstanding of which a total of 386,250 shares or approximately 54% voted
in favor of the election of the directors and the approval of the merger.

         A copy of the Proxy Statement  circulated to the shareholders  prior to
the special meeting of the shareholders was filed as an exhibit to the Company's
Amended 8-K, dated as of November 22, 1999.

         ITEM 5 - OTHER INFORMATION

         None.

         ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         The Company's financial statements for the periods described herein are
attached.

                                        9


<PAGE>



         The  Form  8-K  filed by the  Company  as of  November  22,  1999,  and
amendments  thereto and  exhibits  and  financial  statements  filed  therewith,
including a copy of the Company's  Agreement  and Plan of Merger,  the Company's
Proxy,  and pro forma financial  information are hereby  incorporated  herein by
reference.

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

February __, 2000               DIGITAL DJ HOLDINGS, INC.



                                By: Thomas Takahisa, President
                                ------------------------------
                                Thomas Takahisa, President

                                DIGITAL DJ HOLDINGS, INC.


                                By: Thomas Takahisa
                                -------------------
                                Thomas Takahisa, Secretary/Treasurer

                                       10


<PAGE>



                                     EXHIBIT

                              Financial Statements

DIGITAL DJ HOLDINGS, INC.
AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 (UNAUDITED) AND

FOR THE SIX MONTHS ENDED
DECEMBER 31, 1999 AND 1998 (UNAUDITED)

                                       11


<PAGE>



                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                                    CONTENTS

                          December 31, 1999 (unaudited)



                                                               Page

FINANCIAL STATEMENTS

     Consolidated Balance Sheet                                  1
     1 - 2

     Consolidated Statements of Operations                     2 - 3

     3

     Consolidated Statements of Cash Flows                       4

     4

     Notes to Consolidated Financial Statements                5 - 7
     5 - 6

                                       12


<PAGE>




                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                          December 31, 1999 (unaudited)



                                     ASSETS

                                               December 31,
                                                     1999

Current assets
     Cash and cash equivalents                           $ 284,164
     Accounts receivable                                       668
     Prepaid expenses                                        1,519
                                                             -----

         Total current assets                              286,351

Property and equipment, net                                 44,624
Other assets                                                29,420
                                                            ------

                      Total assets                       $ 360,395
                                                         =========



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

                                        1


<PAGE>




                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                          December 31, 1999 (unaudited)

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

                                                      December 31,
                                                            1999

Current liabilities
     Accounts payable                                    $  88,189
     Deferred revenue                                      465,000
     Accrued liabilities                                   236,529
                                                           -------

         Total current liabilities                         789,718

Deferred revenue                                           860,000
Notes payable                                              100,000
Other liabilities                                           18,894
                                                            ------

              Total liabilities                          1,768,612
                                                         ---------

Minority interest                                            1,142
                                                             -----


Shareholders' deficit
     Common stock, $0.001 par value
         50,000,000 shares authorized
         13,177,528 shares issued and outstanding           13,178

     Paid-in capital                                    13,260,143

     Accumulated deficit                               (14,682,680)
                                                       -----------


                 Total shareholders' deficit            (1,409,359)
                                                        ----------

         Total liabilities and shareholders' deficit    $  360,395
                                                        ==========


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

                                        2


<PAGE>




                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

    For the Three and Six Months Ended December 31, 1999 and 1998 (unaudited)

<TABLE>
<CAPTION>


                                             Three Months Ended                   Six Months Ended
                                                   December 31,                       December 31,
                                        -----------------------            -----------------------
                                              1999             1998              1999             1998
                                        ----------       ----------        ----------       ----------


<S>                                       <C>            <C>            <C>            <C>
Revenues                                  $   232,500    $ 1,059,234    $   236,171    $ 1,176,143

Cost of sales                                    --           18,755              5         27,505
                                          -----------    -----------    -----------    -----------

Gross profit                                  232,500      1,040,479        236,166      1,148,638
                                          -----------    -----------    -----------    -----------

Operating expenses

   Research and development                   138,067        115,215        215,287        230,275

   Selling, general, and administrative       475,105         31,024        708,728        149,904
                                          -----------    -----------    -----------    -----------


     Total operating expenses                 613,172        146,239        924,015        380,179
                                          -----------    -----------    -----------    -----------


Income (loss) from operations                (380,672)       894,240       (687,849)       768,459
                                          -----------    -----------    -----------    -----------


Other income (expense)

   Interest expense                           (30,159)       (20,493)      (115,609)       (41,885)


   Interest income                              3,516            189          7,363            213

   Other income                                  --             --           74,157            134
                                          -----------    -----------    -----------    -----------


     Total other income                       (26,643)       (20,754)       (34,089)       (41,538)
                                          -----------    -----------    -----------    -----------


Income (loss) before provision for

   income taxes                              (407,315)       873,675       (721,938)       726,921

Provision for income taxes                       --             --           30,800          1,180
                                          -----------    -----------    -----------    -----------

</TABLE>

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

                                        3


<PAGE>

<TABLE>
<CAPTION>



<S>                                                <C>                  <C>           <C>                <C>
Net income (loss)                                  $        (407,315)   $   873,675   $      (752,738)   $  725,741
                                                   ==================   ===========   ================   ==========

Basic earnings (loss) per share                    $           (0.06)   $      1.75   $         (0.19)  $     1.45
                                                   ==================   ===========   ================   ==========

Diluted earnings (loss) per share                  $           (0.06)   $      1.75   $         (0.19)  $     1.45
                                                   ==================   ===========   ================   ==========
Weighted-average common shares
   outstanding                                             7,137,867        500,000         3,924,201       500,000
                                                   ==================   ===========   ================   ==========

</TABLE>

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

                                        4


<PAGE>




                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

         For the Six Months Ended December 31, 1999 and 1998 (unaudited)
<TABLE>
<CAPTION>



                                                                         1999           1998
                                                                     ----------       ----------
                                                                      (unaudited)    (unaudited)
<S>                                                                     <C>          <C>
Cash flows from operating activities

     Net income (loss)                                                  $(752,738)   $ 725,741

     Adjustments to reconcile net income (loss) to net cash
         provided by (used in) operating activities
              Depreciation                                                 18,573       23,703

     (Increase) decrease in

         Accounts receivable                                                  236      250,603

         Prepaid expenses                                                   2,088       26,551

     Increase (decrease) in

         Accounts payable                                                 (83,747)      67,580

         Accrued liabilities                                              108,273     (248,514)

         Deferred revenue                                                (232,500)        --
         Other liabilities                                                 (1,000)      95,490
                                                                         --------      -------

                  Net cash provided by (used in) operating activities    (940,815)     941,154
                                                                         --------      -------

Cash flows from investing activities

     Purchases of property and equipment                                  (11,990)     (13,058)

     Other assets                                                            (500)      13,809
                                                                         --------      -------


                  Net cash provided by (used in) investing activities     (12,490)         751
                                                                         --------      -------

Cash flows from financing activities

     Proceeds from notes payable                                          208,090       13,960
                                                                         --------      -------


                  Net cash provided by financing activities               208,090       13,960
                                                                         --------      -------

</TABLE>

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

                                        5


<PAGE>

<TABLE>
<CAPTION>


<S>                                                                   <C>           <C>

                      Net increase (decrease) in cash and cash
                           equivalents                                   (745,215)     955,865

Cash and cash equivalents, beginning of year                            1,029,379        4,859
                                                                      -----------  -----------


Cash and cash equivalents, end of year                                $   284,164  $   960,724
                                                                      ===========  ===========

</TABLE>

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

                                        6


<PAGE>


                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 1999


NOTE 1 - DESCRIPTION OF BUSINESS

         Digital  DJ  Holdings,   Inc.  ("DDJ  Holdings"),   formerly  known  as
         Breakthrough Electronics,  Inc., a Nevada publicly-traded  corporation,
         and  subsidiaries  (collectively,  the "Company") are in the design and
         development  stage of  developing a digital data system that provides a
         variety  of  information  services  to  radio  listeners  using FM sub-
         carrier technology.

         Digital DJ, Inc.  ("DDJ") was formed  under the laws of  California  in
         December  1991.  On November  22, 1999,  DDJ  Holdings  entered into an
         Agreement  and  Plan  of  Merger,   whereby  it  acquired  all  of  the
         outstanding  common stock of DDJ in exchange for  15,161,909  shares of
         newly issued common stock.  The common stock of DDJ included  3,840,883
         shares  issued  upon   conversion  of  DDJ's   preferred  stock  (after
         anti-dilution),  6,031,700  issued  shares  of  common  stock,  800,000
         unissued  shares  of  common  stock  held in  escrow  for a  consultant
         agreement with MacKenzie Shea,  Inc.,  1,279,917  shares issued for all
         the outstanding stock options of DDJ, 615,000 shares issued for all the
         outstanding  warrants of DDJ and  2,394,255  shares and 200,154  shares
         issued upon  conversion  of  convertible  promissory  notes and related
         accrued  interest  for  $2,412,705  and  $215,473,   respectively.  The
         aforementioned  preferred  stock,  common  stock held in escrow,  stock
         options,  warrants and convertible promissory notes and related accrued
         interest were  converted into shares of DDJ common stock as a result of
         and  concurrently  with  the  Agreement  and  Plan of  Merger  with DDJ
         Holdings.  For accounting purposes, the transaction has been treated as
         a recapitalization of DDJ, with DDJ as the accounting acquirer (reverse
         acquisition),  and has  been  accounted  for in a manner  similar  to a
         pooling of interests. The operations of DDJ Holdings have been included
         with those of the DDJ from the acquisition date.

         DDJ Holdings was  incorporated in Nevada on July 31, 1986. DDJ Holdings
         had minimal assets and  liabilities at the date of the  acquisition and
         did  not  have   significant   operations  prior  to  the  acquisition.
         Therefore, no pro forma information is presented.

                                        7


<PAGE>


                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 1999

DRAFT - 2/18/00


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation
         ---------------------

         The accompanying  consolidated  financial statements have been prepared
         in conformity with generally accepted accounting principles for interim
         financial  information  and with the  instructions  to Form  10-QSB and
         Regulation S-B. 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
         normal,   recurring   adjustments   considered  necessary  for  a  fair
         presentation  have been included.  The financial  statements  should be
         read in conjunction with the audited financial  statements  included in
         the Company's  annual report on Form 10-KSB for the year ended June 30,
         1999.  The results of operations  for the six months ended December 31,
         1999 are not necessarily indicative of the results that may be expected
         for the year ended June 30, 2000.

         Principles of Consolidation
         ---------------------------

         The accompanying consolidated financial statements include the accounts
         of Digital DJ Holdings,  Inc. and its  wholly-owned  or majority  owned
         subsidiaries.  All  intercompany  balances and  transactions  have been
         eliminated.

         Earnings per Share
         ------------------

         The Company  calculates  earnings (loss) per common share in accordance
         with  Statement of  Financial  Accounting  Standards  ("SFAS") No. 128,
         "Earnings  per Share." Basic  earnings  (loss) per share is computed by
         dividing  the income  (loss)  available to common  shareholders  by the
         weighted-average number of common shares outstanding.  Diluted earnings
         (loss)  per share is  computed  similar  to basic  earnings  (loss) per
         share,  except that the  denominator is increased to include the number
         of  additional  common shares that would have been  outstanding  if the
         potential  common shares had been issued and if the  additional  common
         shares were dilutive.

                                        8


<PAGE>


                            DIGITAL DJ HOLDINGS, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 1999

DRAFT - 2/18/00

NOTE 3 - PROPERTY AND EQUIPMENT

         Property and equipment at December 31, 1999 consisted of the following:

              Computers and software                           $ 182,355


              Furniture and fixtures                               1,571
                                                               ---------


                                                                 183,926

              Less accumulated depreciation                      139,302



                  Total                                        $  44,624
                                                               =========

NOTE 4 - EXTRAORDINAY ITEM

During the three  months  ended  Deceber  31,  1999,  the  Company  and  certain
creditors  arrived at  settlements,  whereby  $55,314 of the Company's  accounts
payable were forgiven.

                                        9