SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

/x/Annual  Report  Pursuant  to  Section  13 or 15(d) of the Securities Exchange
                                  Act of 1934.

/ /Transition  Report  under  Section  13  or  15(d)  of the Securities Exchange
                                  Act of 1934.

                  For the fiscal year ended December 31, 2000.

                             Commission File Number
                             ----------------------
                                     0-26351

                                 iVIDEONOW, INC.
                              (formerly DIGS, Inc.)
                                   ----------
                 (Name of Small Business Issuer in its charter)

             DELAWARE                                   95-4603237
      -------------------------------               -------------------
      (State or other jurisdiction of                 (I.R.S. Employer
      incorporation or organization).                Identification No.)


          17327 VENTURA BOULEVARD, SUITE 200, ENCINO, CALIFORNIA 91316
          -------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                    Issuer's telephone number: (818) 995-3650

        Securities registered pursuant to Section 12 (b) of the Act: None

        Securities registered pursuant to Section 12 (g) of the Act: None

Check whether Issuer:  (1) has filed all reports required to be filed by section
13 or 15 (d) of the  Securities and Exchange Act of 1934 during the preceding 12
months and (2) has been  subject  to such  filing  requirements  for the past 90
days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent  filers  pursuant to Rule 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of  issuer's  knowledge,  in  definitive  proxy or  information  statements
incorporated by reference in Part III of this Form or any amendment to this Form
10-KSB. / /

Issuer's Revenues for its most recent fiscal year:   $524,848.

                                       1
<PAGE>

As of March 22,  2001,  the  aggregate  market value of the voting stock held by
non-affiliates of the Issuer,  shares were $758,247.  The market value of Common
Stock of the Issuer,  par value $.001 per share was computed by reference to the
average of the closing bid and asked prices of one share on such date, which was
$0.15.

The number of shares  outstanding of the Issuer's Common Stock,  par value $.001
per share, as of March 22, 2001, was 6,648,631 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Documents  incorporated by reference:  The information required by Part III
of Form 10-KSB is  incorporated  by reference to the Issuer's  definitive  proxy
statement  relating to the 2001  Annual  Meeting of  Shareholders  which will be
filed with the Securities and Exchange Commission on or before April 30, 2001.


                                     PART 1


ITEM 1. DESCRIPTION OF BUSINESS
-------------------------------

    iVideoNow,  Inc.  (formerly  DIGS,  Inc.) is a  developer  and  producer  of
comprehensive  multimedia and Internet communication software.  iVideoNow,  Inc.
(VNOW or The  Company)  provides  its  specific  services  to  other  businesses
interested in  communicating  with their clients,  investors,  employees and the
general  public through the use of Internet  Video.  The Company is comprised of
three wholly owned  subsidiaries,  Digital Corporate  Profiles (DCP), DXF Design
(DXF)  and Digs Web  Video  (DWV).  Digs Web  Video is  currently  inactive  and
generates no revenue and incurs no operating expenses.

     DCP began  offering  customized  CD-ROM Annual  Reports in early 1997.  The
CD-ROM business has expanded from financial CD's to video based CD's designed to
provide our clients with an  interactive  marketing and public  relations  tool.
Each CD presents  the clients  information  in an  informative  and  interactive
format through the use of graphs, music, and most importantly, video. It was the
video  programming  expertise gained from the CD-ROM activities that resulted in
research and  development  efforts  focused on an Internet  video library player
system. These specific research and development efforts began in June 1999.

     In November 1998, Digital Corporate Profiles  reorganized through a reverse
merger with a publicly traded company shell (DIGS, Inc.) and became a subsidiary
of DIGS, Inc. The shareholders of Digital Corporate Profiles became the majority
owners of DIGS, Inc. The merger qualified for a tax-free  reorganization and was
accounted for as a recapitalization of Digital Corporate Profiles, Inc.

     In August of 1999, DIGS, Inc. formed DXF Design, Inc. DXF Design provides a
complete range of digital  graphic design  services that  complement and enhance
the digital media services of Digital Corporate Profiles.  In addition,  DXF has
established an outside clientele base, thus adding an independent  profit center
to VNOW's operations. DXF Design provides graphic services to Disney, Universal,
Merv Griffin Enterprises and USA Studios among others.


                                       2
<PAGE>

     DCP's research and development efforts on the Internet video library player
concept  began to  materialize  in early  2000.  The  concept  was to develop an
Internet video delivery system that would enhance the viewing  experience of the
end users through  superior  video quality,  operation  simplicity and decreased
download  times.  The player would require no downloads or  "plug-ins,"  provide
instant  screening  for  multiple  videos and would be designed  around a custom
interface.   The  target  market  would  be  the   business-to-business   arena,
specifically  organizations  interested in maximizing  their existing  videos to
effectively  inform Internet users. A prototype of the iVideoNow  System meeting
the above  requirements  was developed in March 2000. By October,  the prototype
was refined into a fully working  production  model, the VNOW 1.0 Internet Video
Player.  In  addition,   the  company  developed  a  companion   Internet  video
distribution  system  using  specially  designed  video  servers and a series of
repeater servers.

     On June 15, 2000 the name of the parent company was  officially  changed to
iVideoNow,  Inc. (VNOW). The name change allows the company to align itself more
closely to its flagship  product,  the iVideoNow Player, as well as align itself
more  closely  to the  technical,  Internet  and  media  industries  in which it
operates.  Digital Corporate Profiles,  DXF Design and Digs Web Video (inactive)
remain wholly owned subsidiaries of iVideoNow, Inc.

Overview of the Industry.

     VNOW is operating in the Internet  video  application  and delivery  system
industry.  Though our  subsidiaries may operate in other  industries,  it is our
intention  to have  their  sales  key  off our  success  in the  Internet  video
industry.  With this in mind,  VNOW is positioned to take  advantage of both the
growing  penetration  rate of  Internet  access  and the  increasing  growth  of
broadband  connections.  The  number  of  Internet  users  around  the  world is
constantly growing.  The Computer Industry Almanac projected by the end of 2002,
490 million people around the world will have Internet access. The United States
has an  overwhelming  lead in Internet users.  Nielsen/Net  Rating reported more
than 153 million  Americans had Internet  access as of November 2000.  eMarketer
projects  broadband access will grow nearly six-fold to 32 million users by 2003
and Forrester  predicts  broadband  connections  will be used in over 50% of all
online households by the end of 2004.

     Although Internet use and penetration has grown tremendously,  only a small
percentage of today's Internet users view video via the Internet. Internet video
use is expected to increase in tandem with the growth of  broadband  connections
as slow data  transfer  rates  currently  make  viewing  video over the Internet
cumbersome.  Even though the amount of people  regularly  viewing video over the
Internet may be small, Media Matrix reported that media players are installed on
99% of all personal computers.  This means 99% of personal computers are capable
of playing online and stored digital audio and video.

     Movie  trailers and music videos are the most viewed  online video  content
today. In a survey  conducted by Internet World,  40% of those surveyed  visited
the film's website prior to seeing the movie in a theater or on home video.  The
entertainment industry may have the most obvious use for Internet video but VNOW
is interested in working with any company, regardless of industry, interested in
using Internet video to communicate with the general public.

     The  industry  we  operate  in  is   characterized   by  rapidly   changing
technologies,  frequent  new  product and service  introductions,  and  evolving

                                       3
<PAGE>

industry  standards.  The future  success of VNOW will depend on how we adapt to
rapidly  changing  technologies.  We plan to adapt by  using  new  technological
developments to continually improve the performance features and the reliability
of our  services.  In  addition,  we have an active  commitment  to research and
development  and believe we will  benefit  greatly as new  bandwidth  technology
develops.


The Market.

     Specifically,  VNOW's markets are the entertainment  (film,  television and
music), travel, sports (professional and college), retail, education and medical
industries.  All these  industries  use video to promote and sell their products
and services as well as communicate to constituents.  A potential client of VNOW
is any organization interested in using Internet video as a marketing, sales and
communication tool.

     The  iVideoNow!   System  has  an  obvious  appeal  to  movie  studios,  TV
distribution  companies and video retailers that want to provide previews of new
releases.  There are also  applications  for the system in the travel and retail
industries.  In  the  travel  industry,  hotels  can  preview  their  rooms  and
facilities to potential  clients.  Cruise lines can display ship  amenities,  on
board entertainment and destinations. Travel agents can provide visual and audio
information on resorts,  golf packages,  European  tours,  etc.  Travel industry
websites  are the  second  most  popular  sites on the  Internet.  In the retail
industry,  retailers  can put on  Internet  video  fashion  shows  and  sell the
products with the integration of an e-commerce function.

     Other  applications  for the iVideoNow!  System include  Corporate Training
Players   and   Distance   Learning   Applications.   Corporations   can   place
employee-training videos on their Intranet,  reducing training and travel costs.
Distant learning  applications will provide Universities with a tool that allows
students to access pre-recorded course lectures,  discussion groups or seminars.
Students  with  schedule  conflicts  will still be able to attend these  special
events vicariously through the use of video.

     VNOW is  aggressively  marketing  its  products  and services to our target
industries.  Our overall marketing plan is to increase awareness of our products
and our  messages.  The key  product is the  iVideoNow  System  and the  primary
messages  are  "Quality  Internet  video is a mouse click away" and the "instant
Internet  video library  player." We operate in the  business-to-business  (B2B)
marketplace,  and  focus  our  sales  efforts  on  mid  to  large  companies  or
organizations  seeking a unique,  efficient and  inexpensive  means of utilizing
Internet video as a  communication  tool. The important  elements of our current
marketing activities are market research, developing appropriate advertising and
collateral  materials,  public relations,  tradeshow  participation and creating
strategic programs.

     The Company is marketing its services utilizing direct marketing techniques
including  direct  mail  brochures,   email  brochures  and  specially  designed
websites.  Except for  special  situations,  paid  advertising  will be limited.
VNOW's  most  effective  marketing  tool is the  creation  of demo  players  for
prospective  clients.  The demo players  illustrate  how an iVideoNow  System is
customized to maximize the branding of our clients,  not VNOW.  Demo players are
normally built for prospective clients at no cost to them.

                                       4
<PAGE>

     European marketing efforts are led by our strategic  partner,  Holtermann &
Thouet (H&T). H&T is an investor  relations firm located in Frankfurt,  Germany.
Their primary expertise is in financial communications and they believe Internet
video will prove to be a valuable tool. By developing this strategic partnership
our own  resources  and  efforts  will not be diverted  from our primary  target
industries  and markets,  yet we will be able to build brand  awareness  for the
iVideoNow System in Europe. VNOW hopes to establish another strategic partner in
England by the end of 2001.

      Sales   are   conducted   through   our   commissioned    in-house   sales
representatives.  Leads are provided through market research, referrals and cold
calls.  Presentations  are made to each  prospective  client  demonstrating  the
products  capabilities  and how each product can be  customized to fit a clients
needs.  Each  sales  person  also acts as the  account  service  representative,
ensuring  the  Company's   production   staff  promptly   responds  to  customer
instructions and meets customer needs.

     VNOW is not  dependent on long-term  clientele  and  traditionally  has not
entered into long-term contracts  (contracts with terms exceeding twelve months)
with its clients.  We do have the opportunity to provide  multiple  products and
services to each  client and  actively  solicit  such  business.  The growth and
expansion of our business is built on constant  recruitment  of new accounts and
the maintenance of relationships with current clients.


Competition.

     There  is  direct  competition  in  the  production  of  CD-ROM's  for  the
investment and corporate communications community; however, we believe our early
entrance into this market will allow us to continue providing this complementary
service to clients.  Digital graphic design services offered by DXF compete with
other digital designers as well as traditional print media.

     At the present time video on the Internet is in its infancy and competitive
offerings  are limited to single unit  players.  There are three major  Internet
video  players,   Apple's   QuickTime(TM),   Microsoft's   MediaPlayer(TM)   and
RealNetworks.  Fortunately two of them,  QuickTime(TM) and  MediaPlayer(TM)  are
also our greatest allies.

     Apple and Microsoft provide, among other things, Internet video technology.
They are the engines that play the video. The iVideoNow System is a presentation
application  and  uses  these  "engines"  as  a  part  to  operate  efficiently.
RealNetworks,  however, provides a complete Internet video solution. Though they
are best  known for their audio streaming  technology,  their video player has a
strong  following.  They  obtained  this  position  by  being  the  first  major
independent audio and video player on the market.  Their video codec is designed
to host and serve  streaming  video.  For archive  video,  the quality that Real
Networks provides is not as advanced as QuickTime or MediaPlayer.

     Though  all  three  companies  provide  technology  to  play  video  on the
Internet, none offer the functionally or design features of our player. There is
no player on the market today that uses the video library and multiple play back
system.  A user of the  system  can view six video  clips  without  leaving  our
players interface.  In addition, only Microsoft has the ability to create custom
interfaces and even at that, the customization is minimal.

                                       5
<PAGE>

     Fortunately the distribution of both QuickTime(TM) and  MediaPlayer(TM) for
free actually  benefits  VNOW.  The iVideoNow  System is codec agnostic and will
work with either of these two Internet video leaders. Together, these two codecs
come installed on 98% of the computers sold today. If the end-users computer has
either  QuickTime or  MediaPlayer,  the iVideoNow  System will work with it. The
more end-users with either of these two video  applications  on their  computers
equates to a larger  audience  for our system.  In  addition,  as  technological
improvements increase the viewing qualities of QuickTime(TM) and MediaPlayer(TM)
the viewing quality and experience provided by our system will also be enhanced.

     Although  QuickTime(TM),  MediaPlayer(TM)  and RealNetworks are distributed
for  free  and do  allow  for  some  customization,  they do not  provide  video
encoding,  hosting and distribution  services.  VNOW provides a turnkey solution
and the support required to setup, customize,  host and distribute the iVideoNow
System. VNOW customizes the player, provides state of the art compression, hosts
and   maintains   all   video,   and   provides  a   high-powered   distribution
infrastructure.  Though this helps  differentiate VNOW from the largest Internet
video providers,  it does not make the iVideoNow System completely unique. There
are  other  companies  that  offer  a video  player,  compression,  hosting  and
distribution;  however, none offer a player with a video library concept similar
to VNOW.


Subsequent Event.

None


Employees.

     As of December 31, 2000, the Company has 15 full time employees.


ITEM 2. DESCRIPTION OF PROPERTY
-------------------------------

     iVideoNow,  Inc. is leasing  from a third party 6,153 square feet of office
space at 17327 Ventura  Boulevard,  Suite 200,  Encino,  California,  91316. The
lease calls for monthly rent of $8,307 and  terminates  July 31, 2003. The lease
can be renewed for an additional five years at our discretion. VNOW has no plans
to change its  corporate  office  location or purchase any real property at this
time.

ITEM 3. LEGAL PROCEEDINGS
-------------------------

     None.

ITEM 4. SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS
--------------------------------------------------------

     The Company did not hold a security  holders  meeting in the fourth quarter
of its fiscal year ended  December  31,  2000.  A security  holders'  meeting is
scheduled to be held in June 2001.

                                       6
<PAGE>
                                     PART II

ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
--------------------------------------------------------------------------------

    (a) The Company's  Common Stock is trading on the NASD's OTC Bulletin  Board
under the symbol "VNOW". The following  quotations reflect the high and low bids
for VNOW's Common Stock based on  inter-dealer  prices,  without retail mark-up,
mark-down or commission and may not represent actual transactions.  The high and
low prices on a quarterly basis for the last two years are as follows:

         2000                        High Bid                         Low Bid
------------------------    ---------------------------     --------------------
First Quarter                         $9.38                            $4.88
Second Quarter                        $5.62                            $1.50
Third Quarter                         $2.25                            $0.25
Fourth Quarter                        $0.38                            $0.13

         1999                        High Bid                         Low Bid
------------------------    ---------------------------     --------------------
First Quarter                         $7.00                            $3.00
Second Quarter                        $8.50                            $8.50
Third Quarter                         $7.75                            $7.75
Fourth Quarter                        $8.25                            $8.00

     (b) As of March 13, 2001,  there were  approximately  350 record holders of
the  Company's  Common  Stock.  In  addition,   there  were   approximately  800
shareholders in street name whose shares are held in the name of other nominees.

     (c) There have been no  dividends  declared  or paid by the  Company on its
Common Stock during the past three years.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
-----------------------------------------------------------------

     The  information  included  in  this  discussion  contains  forward-looking
statements  that are based on  current  expectations  and  beliefs  and  involve
numerous  risks and  uncertainties  that could  cause  actual  results to differ
materially.  Readers are cautioned not to place undue  reliance on these forward
looking statements, which speak only as of the date hereof.

Corporate History.

    iVideoNow,  Inc.  (formerly  DIGS,  Inc.) is a  developer  and  producer  of
comprehensive  multimedia and Internet communication software.  iVideoNow,  Inc.
(VNOW or The  Company)  provides  its  specific  services  to  other  businesses
interested in  communicating  with their clients,  investors,  employees and the
general  public through the use of Internet  video.  The Company is comprised of
three wholly owned  subsidiaries,  Digital Corporate  Profiles (DCP), DXF Design
and Digs Web Video (DWV). Digs Web Video is currently  inactive and generates no
revenue and incurs no operating expenses.

     DCP began  offering  customized  CD-ROM Annual  Reports in early 1997.  The
CD-ROM business has expanded from financial CD's to video based CD's designed to
provide our clients with an  interactive  marketing and public  relations  tool.
Each CD presents  the clients  information  in an  informative  and  interactive
format through the use of graphs, music, and most importantly, video. It was the
                                       7
<PAGE>
video  programming  expertise  gained  from the  CD-ROM  activities  that led to
research and  development  efforts  focused on an Internet  video library player
system. These specific research and developments efforts began in June 1999.

     In November 1998, Digital Corporate Profiles  reorganized through a reverse
merger with a publicly traded company shell (DIGS, Inc.) and became a subsidiary
of DIGS, Inc. The shareholders of Digital Corporate Profiles became the majority
owners of DIGS, Inc. The merger qualified for a tax-free  reorganization and was
accounted for as a recapitalization of Digital Corporate Profiles, Inc.

     In August of 1999, DIGS, Inc. formed DXF Design, Inc. DXF Design provides a
complete range of digital  graphic design services to complement and enhance the
digital media services of Digital Corporate Profiles. In addition,  DXF began to
establish an outside clientele base, thus adding an independent profit center to
VNOW's  operations.  DXF Design provides graphic services to Disney,  Universal,
Merv Griffin Enterprises and USA Studios among others.

     DCP's research and development efforts on the Internet video library player
concept  began to  materialize  in early  2000.  The  concept  was to develop an
Internet video delivery system that would enhance the viewing  experience of the
end users through  superior  video quality,  operation  simplicity and decreased
download  times.  The  player  would  require  no  "plug-ins,"  provide  instant
screening for multiple videos and would be designed  around a custom  interface.
The  target  market  would  be  the  business-to-business   arena,  specifically
organizations  interested  in  maximizing  their  existing  videos to inform the
Internet user  universe.  A prototype of the iVideoNow  System meeting the above
requirements was developed in March 2000. By October,  the prototype was refined
into a fully working  production  model, the VNOW 1.0 Internet Video Player.  In
addition,  the company developed a companion Internet video distribution  system
using specially designed video servers and a series of repeater servers.

     On June 15, 2000 the name of the parent company was  officially  changed to
iVideoNow,  Inc. (VNOW). The name change allows the company to align itself more
closely to its flagship  product,  the iVideoNow Player, as well as align itself
more  closely  to the  technical,  Internet  and  media  industries  in which it
operates.  Digital  Corporate  Profiles  and DXF Design  remained  wholly  owned
subsidiaries of iVideoNow, Inc.

Operating Results for the Years Ended December 31, 2000 and 1999.

     Consolidated  revenue  remained  relatively  flat,  decreasing  only  7% to
$524,848 in 2000 from  $564,022 in 1999.  This decrease is primarily due to VNOW
changing its focus away from CD-ROM's to Internet Video.  VNOW's  subsidiary DCP
completed one CD-ROM in 2000 as compared to six CD-ROM's in 1999.  This resulted
in the subsidiary's 2000 revenue decreasing to $109,300 from $413,743 in 1999.

DCP's efforts  during 2000 were focused on completing  and refining its Internet
video system, not CD-ROM sales.  CD-ROM's will continue to be a service provided
to clients,  however,  the service  will act as a  complement  to the  iVideoNow
System.  Future iVideoNow System revenues are projected to more than make up for
decreases  in CD-ROM  activity.  Revenue  generated  by DXF Design  increased to
$415,548,  representing  nearly 80% of consolidated  revenue in 2000. DXF's 2000
revenue is  difficult  to compare to 1999  because  DXF only  operated  for four
months during 1999.  DXF's future  revenues are  projected to remain  consistent
with those experienced in 2000.

     Gross  profit  decreased by  approximately  50% to   $141,964  in 2000 from
$283,953 in 1999.  The  decrease in gross profit is the result of an increase in
                                       8
<PAGE>
depreciation expenses allocated to cost of sales.  Depreciation and amortization
costs  allocated to cost of sales increased to  $196,383 in 2000 from $26,777 in
1999.  This  increase   reflects  the  amortization  of  the  capitalized  costs
associated with the  development and refinement the iVideoNow  System over a two
year period.  In 1999, only the amortization of costs associated with developing
our CD-ROM  technology  was  allocated to cost of sales.  Direct labor and other
production  related  costs  decreased  as the  Company's  programming  resources
shifted their efforts away from CD-ROM production to completion of the iVideoNow
System.

     Operating  expenses  increased to $1,394,599 in 2000 from $801,799 in 1999.
Nearly 80% of this change is the result of increases  in salaries,  research and
development costs and professional costs. Salaries increased $346,894 in 2000 as
the  Company  retained   additional   programming,   marketing,   financial  and
administrative  staff.  The  additional  staffing  resources are focusing  their
efforts  on  refining  the  iVideoNow  System,  creating  marketing  collateral,
preparing sales material and handling  increasing  administrative  and reporting
functions.  VNOW  anticipates  staffing  and costs in all these  areas will also
increase in 2001.  Research and development  costs increased $28,385 in 2000 and
relate to  potential  future  modifications  and  adaptations  of the  iVideoNow
System.  The $70,191  increase in  professional  services,(accounting  and legal
fees) are a result of new SEC  reporting  regulations  requiring a review of all
quarterly  financial  filings  as well  as  fees  associated  with  the  private
placement and registration of 2,500 shares of preferred stock.  Other income and
(expenses)  were $61,280 in 2000  compared to $52,733 in 1999.  This increase is
the result of additional interest income earned on the cash received through the
private placement of 2,500 preferred shares.

     Federal  income tax  provisions  for the years ended  December 31, 2000 and
1999 have not been recorded due to operating losses and the inability to benefit
from  deferred  tax assets.  However,  the minimum  state income tax expense for
iVideoNow and its subsidiaries in the amounts of $3,200 and $5,364 were incurred
in 2000 and 1999  respectively.  As of December 31, 2000, VNOW has net operating
loss  carryforwards  of  $2,303,761  that may be used to offset  future  federal
taxable income.  These net operating loss  carryforwards will begin to expire in
2011 if not used.

Liquidity and Capital Resources.

     VNOW has funded its  operations  and met its capital  requirements  through
private sales of equity  securities,  short-term  loans and cash  generated from
sales.  Negative  cash  flows  from  operating  activities  are a result  of net
operating  losses.  Net cash used for operations was $1,022,937  during 2000 and

$523,047 in 1999.  Cash used for investing  activities  increased to $331,035 in
2000 from $186,778.  $163,161 of the cash used for  investment  purposes in 2000
relate  to the  capitalized  programming  costs  of the  iVideoNow  System.  The
remaining   amount  used  for   investing   purposes   was  spent  on  leasehold
improvements,  office furniture and computer  equipment  required to accommodate
the  additional  personnel  hired in 2000.  Cash  expenditures  for property and
equipment should remain constant during 2001 as the Company  anticipates  hiring
additional  programming,  marketing,  sales and administrative  personnel.  2001
development  costs  related  to  adaptations  of the  iVideoNow  System  and new
possible  products are also  anticipated to remain  consistent  with the amounts
experienced  during  2000.  Net cash  proceeds  from  financing  activities  was
$1,930,000  and is the  result  of the  private  placement  of 2,500  shares  of
convertible preferred stock as well as the payment of all short-term debt.

                                       9
<PAGE>
     VNOW is currently seeking additional  financing to continue  developing the
iVideoNow System and expand its personnel base. Capital expenditures in 2001 are
projected  to be in the range of $100,000 to $200,00 and will be for  additional
furniture and computer  equipment to accommodate a growing staff. If the company
experiences  the  growth it has  projected  for 2001 an  additional  $1,000,000,
$700,000 and  $450,000  will be required for  salaries,  marketing  expenses and
general operating costs  respectively.  2001 projected  research and development
costs are included in the salary figure of $1,000,000.

     The Company  anticipates it will continue to report operating losses for at
least one more year as the Company  continues  refining the iVideoNow System and
build its marketing,  production and management  teams.  The additional  capital
required to continue operations may be raised through public financing,  private
financing or some other  arrangement.  If additional capital were raised through
the issuance of equity  securities,  the percentage of ownership held by current
shareholders  would be  reduced.  Furthermore,  such  equity  may  have  rights,
preferences or privileges senior to the current common stock.

New Accounting Pronouncements.

In 2000,  the  Company  adopted  Financial  Accounting  Standards  Board  (FASB)
Statement No. 2,  "Research and  Development  Costs," and FASB Statement No. 86,
"Accounting  for Costs of Computer  Software to Be Sold,  Leased,  or  Otherwise
Marketed."  The  Company   expenses  all  costs  incurred  in  establishing  the
technological  feasibility  of a computer  software  product that is to be sold,
leased, or otherwise  marketed as research and development costs, as is required
by FASB Statement No. 2. After  technological  feasibility is  established,  all
costs incurred from that point on are  capitalized as required by FASB Statement
No. 86 and  amortized  over two (2) years.  When the software is  available  for
general release to customers, all costs such as maintenance and customer support
related to the software will be expensed as incurred.

In  April  2000,   the  Financial   Accounting   Standards   Board  issued  FASB
Interpretation No. 44 (FIN 44), "Accounting for Certain  Transactions  Involving
Stock Compensation." An interpretation of APB Opinion No. 25 FIN 44 is effective
for transactions occurring after July 1, 2000. The application of FIN 44 did not
have a material impact on the Company's financial statements.


ITEM 7.  FINANCIAL STATEMENTS
-----------------------------

     The financial  statement and supplementary  data listed in the accompanying
Index to Financial Statements are attached as part of this report.

List of Financial Statements.

The  following  financial  statements of iVideoNow,  Inc. and  Subsidiaries  are
included in Item 7:

Consolidated Balance Sheet                                               F-3

Consolidated Statement of Operations                                     F-4

Consolidated Statement of Stockholders' Equity                           F-5

Consolidated Statement of Cash Flows                                     F-6

                                       10
<PAGE>

All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                FINANCIAL DISCLOSURE.
------------------------------------------------------------------------

     None.



                                    PART III


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
------------------------------------------------------------

     The present directors, executive officers, key employees and consultants of
VNOW, their ages,  positions held with the Company, and duration as such, are as
follows:

     Name                Title                Age         Period of Service
----------------  -----------------------  --------   -----------------------
Peter B. Dunn     CEO and Chairman            61      November 1998 - Present

Allen Dunn        Chief Operating Officer     32      November 1998 - Present
                        and Director

David Fleming     Secretary and Director      50      November 1998 - Present

Karl Ehlert       CFO and Controller          32      February 2000 - Present

Robert Rhoades    Director of Marketing       32      August 2000 - Present


Business Experience.

     Peter B. Dunn,  CEO and  President:  Prior to  founding  Digital  Corporate
     ----------------------------------
Profiles,  Peter Dunn was the founder and  President  of Lucky Dog  Productions.
From  1987 to  1996  Peter  produced,  directed  and  wrote  television  pilots,
television  movies,  commercials  and golf  home  videos.  Clients  of Lucky Dog
Productions included Paramount Home Video, British Broadcasting Corp and Classic
Golf  International.  From 1980 to 1987,  Peter was  President of  International
Special  Promotions  (ISP), a special event marketing company founded by him. At
ISP Peter  produced  special  marketing  events for  Coca-Cola,  R.J.  Reynolds,
Proctor  and Gamble as well as other  major  corporations.  Peter  also  founded
Western Corporate Services,  Inc. and acted as its CEO from 1972 to 1980. As CEO
of Western  Corporate  Services,  Peter  spearheaded  the founding of U.S. Stock
Transfer,  the third largest  independent  stock  transfer  agency in the United
States.  Peter is involved in the  day-to-day  operations of VNOW,  however,  he
focuses  his  talents  and  experience  on  guiding  VNOW's  marketing  efforts,
financing efforts and public relations.

                                       11
<PAGE>

     Allen Dunn, Chief Operating  Officer:  Allen Dunn joined Digital  Corporate
     ------------------------------------
Profiles  as a  computer  programmer  in July  1996.  Prior to  joining  Digital
Corporate Profiles,  Allen worked as an independent computer  programmer.  Allen
received a Bachelor of Arts in Economics  from  California  State  University of
Northridge  in 1993 and is  currently  pursuing an  advanced  degree in computer
science. Allen has been serving as Vice President and Chief Operating Officer of
the Company since November 1998. Serving in this capacity, Allen has managed the
research and  development  efforts of the company as well as the  completion  of
client contracts. Allen not only manages our staff of programmers but also works
closely with the clients to ensure product quality.

     David Fleming,  DXF Design  President:  David Fleming joined the company in
     -------------------------------------
August  1999 and took the lead in forming  its  graphic  design  subsidiary  DXF
Design.  As the President of DXF Design,  David manages the  subsidiaries  daily
operations  and also acts as one of its primary  artists.  David has over twenty
years of  experience  in design and  advertising.  From 1992 until joining VNOW,
David was the  managing  partner of DGF Design.  Since  graduating  from the Art
Center in  Pasadena,  David has built a  reputation  that has made him a coveted
designer in the entertainment industry.

     Karl Ehlert,  CFO and Controller:  Karl Ehlert joined VNOW in February 2000
     --------------------------------
and has  taken  over  the  responsibility  of all the  company's  financial  and
administrative affairs. A California licensed Certified Public Accountant,  Karl
was most recently a senior supervisor with Cohen, Miskei and Mowrey, CPA's. From
January 1994 through  February  1999 Karl held a similar  position  with Matson,
Driscoll and Damico,  CPA's. Prior professional  experiences include supervising
and performing financial audits as well as other types of financial and economic
consulting  engagements.  Karl  received  a  Bachelor  of  Science  in  Business
Administration/Accounting from California State University of Northridge in 1993
and is a member  of the  AICPA  and the  California  Society  of  CPA's.  As the
company's  CFO,  Karl  assures  all SEC  filings  are  current  and  manages all
accounting, financing and administrative functions.

     Robert Rhoades, Director of Marketing: Robert Rhoades joined the company to
     -------------------------------------
lead its  marketing  efforts in August  2000.  Robert  brings to VNOW over seven
years of marketing and sales  experience with various start-up  companies,  most
recently USSEARCH.COM.  Robert established  USSEARCH.COM's  business-to-business
marketing program,  adding approximately 2,000 new clients and over $2.5 million
in revenues.  Robert earned an MBA in  International  Business from the Monterey
Institute of  International  Studies and a Bachelor of Science in  International
Business from San Diego State University.

Committees of the Board.

     The Board currently has no committees.

Family Relationships.

     Peter Dunn is the father of Allen Dunn.

                                       12
<PAGE>

Employment/Consulting Agreements.

     In February  2000, the Company  renewed its  employment  agreement with its
President, Peter Dunn. The employment agreement was extended for three years and
provides  for a base salary of $120,000  as well as annual  vacation,  sick pay,
bonus and reimbursement of out-of-pocket business expenses.

     In May  2000,  the  Company  retained  the  professional  services  of Suia
Technologies to provide  programming  expertise as it relates to the development
and improvement of the iVideoNow System. The professional  programming  services
are to be  provided  for one  year at a cost of  $10,000  per  month  as well as
reimbursement of related out-of-pocket expenses.


ITEM 10.  EXECUTIVE COMPENSATION.
---------------------------------

     The  following  table sets forth the  compensation  of all officers with an
annual compensation in excess of $100,000 during the past fiscal year.
<TABLE>
<S>             <C>    <C>        <C>         <C>            <C>          <C>           <C>         <C>

                              Annual Compensation                           Long Term Compensation
                    ----------------------------------- -------------------------------------------------
                                           Other Annual   Restricted   Securities     LTIP      All Other
                                  Bonus    Compensation     Stock      Underlying    Payout   Compensation
                 Year   Salary     ($)         ($)        Awards ($)    Options (#)   ($)         ($)
                ----- ---------- -------- ------------- ------------ -------------- -------  -------------
Peter B. Dunn   2000   $120,000     0         $7,920         0               0          0           0
                1999    116,000     0          7,920         0            100,000       0           0
                1998     80,000     0          6,174         0               0          0           0
                1997      5,000     0              0         0               0          0           0

Allen Dunn      2000   $108,000   $5,000      $5,493         0            62,000        0           0
                1999     64,500     0          2,460         0            62,000        0           0
                1998     42,000     0              0         0               0          0           0

David Fleming   2000   $117,500     0         $6,000         0               0          0           0
                1999     22,500     0              0         0            50,000        0           0
---------------------------------
</TABLE>
Other annual compensation is as follows:
         Peter Dunn:   Represents  monthly  car  allowance of $7,920, $7,920 and
         ----------    $6,174 in 2000, 1999 and 1998 respectively.

         Allen Dunn:   Represents  monthly car allowance of $5,493 and $2,460 in
         ----------    2000 and 1999 respectively.

         David Fleming:    Represents monthly car allowance of $6,000 in 2000.
         -------------

                                       13
<PAGE>

     On January 2,  1999,  pursuant  to the 1999  Stock  Incentive  Plan,  stock
options  were  granted to Peter Dunn,  Allen Dunn and David  Fleming to purchase
100,000,  62,000 and 50,000  shares  respectively.  The exercise  price of Peter
Dunn's  options is $5.50 per share and  expires  five years from the grant date.
The  exercise  price of Allen Dunn's and David  Fleming's  options are $5.00 per
share and expire ten years from the grant date.  As of March 31,  2001,  none of
the options issued in 1999 to these officers have been exercised.

     On  February  1, 2000,  pursuant to the 1999 Stock  Incentive  Plan,  stock
options  were  granted to Karl Ehlert to purchase  60,000  shares at an exercise
price of $5.00 per share. These options expire ten years from the grant date. On
July 10,  2000,  the Company  issued  additional  options to Allen Dunn and Karl
Ehlert to purchase 62,000 and 60,000 shares respectively at an exercise price of
$0.50.  These additional  options also expire ten years from the grant date. The
Company  granted these  additional  options to its officers as well as other key
personnel in an attempt to  illustrate  its  dedication  to its key personnel in
spite of the decreasing trading value of the Company's stock.

Stock Options Plans.

     On January 2,  1999,  the  Company's  Board of  Directors  approved a Stock
Incentive  Plan  referred  to as the "1999  Plan."  The  Company's  shareholders
approved the Plan on July 9, 1999. The purpose of the 1999 Plan is to enable the
Company to recruit and retain  selected  officers and key personnel by providing
equity  participation in the Company.  Under the 1999 Plan,  full-time  salaried
employees,  including directors,  may be granted options at an exercise price of
100% of the fair  market  value of the shares on the grant  date.  The  exercise
price of options  granted to an individual  whose holdings  exceed 10% of voting
power  must be at 110% of the fair  market  value on the  grant  date.  Any such
options expire within five years. Options generally become exercisable at a rate
of 33% a year over three years.  The options,  unless  subject to the 10% voting
power rule, are generally  exercisable  up to ten years.  Options under the 1999
Plan can not be assigned  except in the case of death and may be exercised  only
while an  optionee is employed by the  Company,  or in certain  cases,  within a
specified  period after employment ends. The purchase price and number of shares
of each  option  may be  adjusted  in certain  cases,  including  stock  splits,
recapitalizations  and  reorganizations.  The Board of Directors  determines the
number of options and the optionee's.

     The 1999 Plan provides the Board of Directors  authorization to grant up to
750,000  shares.  During the year ended December 31, 2000,  the Company  granted
325,000  shares of  qualified  stock  options and 85,000 of  nonqualified  stock
options at the average exercise price of $1.79 per share.

Options granted in the year ended December 31, 2000.

     The  following  table  summarizes  stock  options  granted to officers  and
directors of the Company during the year ended December 31, 2000:



                                       14
<PAGE>

        Name     Number of      % of Total        Exercise or    Expiration Date
                 Securities     Options/SAR's     Base Price
                 Underlying     Granted to        ($/share)
                 Options/SAR's  Employees in
                 Granted (#)    Fiscal Year 2000
--------------- --------------  ----------------  ----------- ------------------
Karl Ehlert        60,000           15%             $5.00       February 1, 2010
Allen Dunn         62,000           15%             $0.50          July 10, 2010
Karl Ehlert        60,000           15%             $0.50          July 10, 2010
Robert Rhoades     25,000            6%             $0.50     September 26, 2010


Fiscal year end option value at December 31, 2000.

              Number of Securities Underlying  Value of Unexercised in the Money
                Unexercised Options/SAR's at   Options/SAR's at Fiscal Year End
                        Fiscal Year End

    Name           Exercisable/Unexercisable   Exercisable/Unexercisable Options
                Options as of December 31,2000     as of December 31, 2000
--------------    --------------------------   ---------------------------------
Peter Dunn               33,333/66,667                          0/0
Allen Dunn               20,666/103,000                         0/0
David Fleming            16,666/33,334                          0/0
Karl Ehlert                0/120,000                            0/0

     The value of unexercised in-the-money options is based on a per share value
of $0.19 as quoted on the OTC Bulletin  Board on December 31, 2000.  The cost of
the  exercisable  options at December  31, 2000  range from $0.50 to $5.50.  The
value of the above options was determined to be $0 since the Company's  stock at
December 31, 2000 was trading below the option exercise price.

Director Compensation.

     VNOW  reimburses  its  directors for expenses  incurred in connection  with
attending  Board  meetings  but did  not  pay  director's  fees  or  other  cash
compensation for services rendered as a director in 2000.

Limitation of Liability and Indemnification Matters.

     Section 145 of the  General  Corporate  Law ("GCL") of Delaware  empowers a
company incorporated in Delaware,  such as iVideoNow, to indemnify its directors
and  officers  under  certain   circumstances.   The  Company's  Certificate  of
Incorporation  provides  that the Company  shall  indemnify  such persons to the
fullest extent of Delaware law.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Company  under  Delaware  law or  otherwise,  the Company  has been  advised the
opinion of the Securities  and Exchange  Commission is such  indemnification  is
against  public  policy  as  expressed  in the  Act of 1933  and is,  therefore,


                                       15
<PAGE>

unenforceable. In the event a claim for indemnification against such liabilities
(other than payment by the Company for expenses  incurred or paid by a director,
officer  or  controlling  person of the  Company  in  successful  defense of any
action,  suit, or proceeding) is asserted by a director,  officer or controlling
person in connection  with the securities  being  registered,  the Company will,
unless in the opinion of its counsel the matter has been settled by  controlling
precedent,  submit  to a court of  appropriate  jurisdiction,  the  question  of
whether such indemnification by it is against public policy in said Act and will
be governed by the final adjudication of such issue.

     Article seven of the Company's  Certificate of Incorporation  provides that
the Company shall,  to the full extent  permitted by Section 145 of the Delaware
General  Corporation  law, as amended from time to time,  indemnify  all persons
whom it may indemnify pursuant thereto.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------------------------------------------------------------------------------

     The following table sets forth, as of March 15, 2000,  certain  information
with respect to the  beneficial  ownership of the Company's  Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more then 5%
of the Company's  Common Stock and (ii) each  executive  officer and director of
the Company,  and directors  and  executive  officers of the Company as a group.
Except as indicated it is our  understanding  that each individual  listed below
has sole power to vote and dispose of the number of shares owned.

(a)      Ownership of Certain Beneficial owners:

Name and Address                         Number of Shares        Percentage
                                                             Beneficially Owned
                                         ----------------    ------------------
Dunn Family Trust (Peter Dunn)                1,308,650            19.7%
17327 Ventura Blvd., Suite 200
Encino, CA 91316

Allen Kelsey Grammer Trust                      450,000            6.8%
15456 Ventura Blvd. Suite 200
Encino, CA 91316

Worldwide Insurance Consultants                 318,278            4.7%
c/o Corporate Financial Enterprises
2224 Main Street
Santa Monica, CA 90405

Jamie Mazur                                     219,996            3.3%
27549 Pacific Coast Hwy
Malibu CA 90265

Jennifer Mazur                                  219,996            3.3%
c/o Corporate Financial Enterprises
2224 Main Street
Santa Monica, CA 90405

                                       16
<PAGE>

Emily Mazur                                     219,996            3.3%
c/o Corporate Financial Enterprises
2224 Main Street
Santa Monica, CA 90405

Trent Mazur                                     219,996            3.3%
c/o Corporate Financial Enterprises
2224 Main Street
Santa Monica, CA 90405
------------------------------

Worldwide   Insurance   Consultants  is  a  subsidiary  of  Corporate  Financial
Enterprises.  Mr.  Regis  Possimo is an officer  and  principal  shareholder  of
Corporate  Financial  Enterprises  and is deemed to be the  beneficial  owner of
these shares.

Emily and Trent Mazur are minors.  Michelle  Mazur,  their  mother,  holds their
shares as custodian.


         (b)      Security Ownership of Management:


Name, Title and Address                Number of Shares*      Percent of Class
                                       ----------------       ----------------
Peter Dunn                                  1,308,650            19.7%
President and Director
17327 Ventura Blvd., Suite 200
Encino, CA 91316

Allen Dunn                                    165,000            2.5%
COO and Director
17327 Ventura Blvd., Suite 200
Encino, CA 91316

David Fleming                                 120,000            1.8%
DXF Design President and Director
17327 Ventura Blvd., Suite 200
Encino, CA 91316

Karl Ehlert                                         0            0.0%
Chief Financial Officer
17327 Ventura Blvd., Suite 200
Encino, CA 91316

Officers and Directors as a Group           1,593,650            24.0%
(4 individuals)
-----------------------------

*   Does not include exercisable options of Messrs.  Peter and Allen Dunn, David
    Fleming and Karl Ehlert. See Item 10, Executive Compensation, for details of
    all stock options held by these officers and their current values.


                                       17
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
---------------------------------------------------------

     Except  as  otherwise  indicated  below,  we have  not  been a party to any
transaction, proposed transaction, or series of transactions in which the amount
involved exceeds $60,000, and in which, to our knowledge,  any of our directors,
officers,  five  percent  beneficial  security  holder,  or  any  member  of the
immediate  family  of the  foregoing  persons  has had or will  have a direct or
indirect material interest.

     In 1997 and  1998,  the  Company  borrowed  monies  from  Peter  Dunn,  its
President,  evidenced by a demand loan agreement with interest at 10% per annum.
In December  1998,  the Company  repaid  $47,321 to Mr. Dunn,  representing  all
amounts owed to Mr. Dunn,  including  interest.  In 1999, the Company received a
short-term  loan of $25,000 from Peter Dunn. The loan was repaid on November 30,
1999.

     In 1999, DXF loaned $30,000 to its President, David Fleming. The loan bears
an annual interest rate of 5% and is due on July 30, 2000. In addition,  in 1998
and 1999,  iVideoNow  paid its  Secretary,  David  Fleming  $9,000  and  $10,316
respectively,  for professional  graphic art services  provided by David to VNOW
prior to the formation of DXF Design, Inc.

     In March 22, 2000,  DXF loaned an additional  $15,000 to Mr.  Fleming.  The
loan bears an annual interest rate of 5% and is due on March 31, 2001. The terms
of the $30,000  due from David  Fleming on July 30,  2000 were  extended  for an
additional  twelve months.  The $30,000 note continues to accrue  interest at an
annual  rate of 5% and is now due July 30,  2001.  On August 30, 2000 DXF Design
loaned David Fleming an additional  $24,000 on a note bearing 5% annual interest
and due is August 31, 2001. At December 31, 2000,  the total amount owed to VNOW
or its subsidiary,  DXF Design, from David Fleming including accrued interest is
$72,430.

     On March 10, 2000,  VNOW borrowed  $30,000 from its  President  Peter Dunn.
This  short-term  loan was repaid by VNOW on March 15, 2000. On October 2, 2000,
the Company  loaned Peter Dunn  $121,200 on a short-term  note bearing 5% annual
interest. Peter Dunn repaid the full amount on December 28, 2000.



ITEM 13. EXHIBITS, AND REPORTS ON FORM 8-K.
------------------------------------------

         (a)  Exhibits

               None



         (b)  Reports on Form 8-K.

               None.




                                       18
<PAGE>

                                   SIGNATURES


     Pursuant  to the  requirements  of  Section  13 or 15(d) 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, in the City of Encino,
California, on the April 12, 2001.




                           iVIDEONOW, INC.



                           /s/ Peter B. Dunn
                           --------------------------------
                           Peter B. Dunn, President


     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
this  report  has been  signed  below by the  following  persons  on  behalf  of
registrant and in the capacities and on the dates stated.


Signatures                                             Date


/s/ Peter B. Dunn                                      April 12, 2001
-------------------------                              ---------------------
Peter Dunn
President and Director


/s/ Allen Dunn                                         April 12, 2001
--------------------------                             ---------------------
Allen Dunn
Vice President, COO and Director


/s/ David Fleming                                      April 12, 2001
--------------------------                             ---------------------
David Fleming
Secretary and Director



/s/ Karl Ehlert                                        April 12, 2001
---------------------------                            ---------------------
Karl Ehlert
Chief Financial Officer


                                       19
<PAGE>




















                        iVIDEONOW, INC. AND SUBSIDIARIES

                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2000






























<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                        CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000



                          INDEX TO FINANCIAL STATEMENTS

                                                                      Pages

Independent Auditors' Report                                            F-2

Consolidated Balance Sheet as of December 31, 2000                      F-3

Consolidated Statements of Operations
   For the Years Ended December 31, 2000 and 1999                       F-4

Consolidated Statements of Stockholders' Equity
   For the Years Ended December 31, 2000 and 1999                       F-5

Consolidated Statements of Cash Flows
   For the Years Ended December 31, 2000 and 1999                    F-6 - F-7

Notes to Consolidated Financial Statements                           F-8 - F-22

Additional Information:
   Independent Auditors' Report on Additional Information               F-23

  Schedule of Cost of Goods Sold and Operating Expenses                 F-24
     For the Years Ended December 31, 2000 and 1999























                                      F-1
<PAGE>



                          INDEPENDENT AUDITORS' REPORT


March 29, 2001


To the Board of Directors and Stockholders of
iVideoNow, Inc. and Subsidiaries


We have audited the accompanying  consolidated balance sheet of iVideoNow,  Inc.
(a  Delaware  corporation)  and  Subsidiaries  as of  December  31, 2000 and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for each of the two years in the period ended  December  31,  2000.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the 2000 consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial position of iVideoNow,
Inc.  and  Subsidiaries  as of  December  31,  2000,  and the  results  of their
operations  and their cash  flows for each of the two years in the period  ended
December 31, 2000, in conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in Note 20 of the
financial  statements,  the  Company has  incurred  net losses and does not have
sufficient  cash to meet its cash  flow  requirements.  Those  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's plans in regard to those matters also are described in Note 20. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



CALDWELL, BECKER, DERVIN, PETRICK & CO., L. L. P.
Woodland Hills, California 91364








                                      F-2
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2000

                                     ASSETS


CURRENT ASSETS
    Cash                                                     $       682,123
    Marketable equity securities                                      25,010
    Accounts receivable - trade                                       68,185
    Loan receivable - officers                                        76,422
                                                           -----------------
             Total Current Assets                                    851,740
                                                           -----------------
PROPERTY AND EQUIPMENT,
  net of accumulated depreciation                                    196,847

PROGRAM DEVELOPMENT COSTS,
  net of accumulated amortization                                     98,969

LONG-TERM ASSET
    Deferred tax asset                                                    --
                                                           -----------------
             Total Assets                                    $     1,147,556
                                                           =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable and accrued expenses                   $        59,568
    Sublease deposits                                                 2,400
                                                          -----------------
             Total Current Liabilities                               61,968
                                                          -----------------
STOCKHOLDERS' EQUITY
  Preferred stock,  par value $.01 per share;
   20,000,000  shares  authorized, 2,500
   shares issued and outstanding; Aggregate
   liquidation preference of $2.62 million                               25
  Common stock, par value $.001 per share;
   80,000,000 shares authorized, 6,648,631
   shares issued and outstanding                                      6,649
    Additional paid-in capital                                    3,712,579
    Accumulated other comprehensive (loss)                         (119,612)
    Retained earnings (deficit)                                  (2,514,053)
                                                          -----------------
             Total Stockholders' Equity                           1,085,588
                                                          -----------------
             Total Liabilities and Stockholders' Equity     $     1,147,556
                                                          =================

    The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements


                                      F-3
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                                  2000                   1999
                                        -----------------       ----------------
REVENUE
    CD-ROM and Web Video revenue        $       109,300        $       414,145
    Graphic design revenue                      415,548                149,877
                                      -----------------       ----------------
        Total Revenue                           524,848                564,022
                                      -----------------       ----------------
COST OF SALES                                   382,884                280,069
                                      -----------------       ----------------
        Gross Profit                            141,964                283,953

OPERATING EXPENSES                            1,394,599                801,799
                                      -----------------       ----------------
        (Loss) from Operations               (1,252,635)              (517,846)

OTHER INCOME (EXPENSE)
    Rental income                                15,100                 22,300
    Interest income                              50,062                    863
    Miscellaneous income                             --                  1,351
    Gain on sale of asset                            --                 38,722
     Realized loss on sale of securities             --                 (7,850)
     Interest expense                            (3,882)                (2,653)
                                      -----------------       ----------------
        Total Other Income                       61,280                 52,733
                                      -----------------       ----------------
        (Loss) Before Income Taxes
         and Cumulative Effect of
         Accounting Change                   (1,191,355)              (465,113)

PROVISION FOR INCOME TAX                         (3,200)                (5,364)
                                      -----------------       ----------------
        Net (Loss) Before Cumulative
         Effect of Accounting Change         (1,194,555)              (470,477)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE
    Organizational costs, net of
      income tax benefit of $0                       --                 (2,625)
                                      -----------------       ----------------
        Net (Loss)                           (1,194,555)              (473,102)

OTHER COMPREHENSIVE INCOME (LOSS),
  net of tax:
 Unrealized holding (loss) arising
  during period, net of tax benefit            (116,865)                (2,747)
    Add reclassification adjustment
      for (loss) included in net income              --                  7,850
                                      -----------------       ----------------
        Comprehensive (Loss)           $     (1,311,420)       $      (467,999)
                                      =================       ================
          (Loss) per common share      $          (0.18)       $          (.07)
                                      =================       ================
    The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                      F-4
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<S>            <C>   <C>      <C>        <C>     <C>          <C>            <C>           <C>
                                                  Additional      Other      Retained
            Preferred Stock       Common Stock     Paid-In    Comprehensive  Earnings
           -----------------  ------------------
           Shares    Amount    Shares     Amount   Capital        (Loss)     (Deficit)        Total
            -------- ------   ---------  ------- -----------  -------------- ------------  -----------
Balance at
Dec. 31,1998      -- $   --   6,648,631  $ 6,649 $ 1,434,604  $    (7,850)   $  (846,396)  $   587,007

Shares issued
for services      --     --      10,000       10      47,990           --             --        48,000
Nov.17, 1999

Net(loss)for
the year ended    --     --          --       --          --           --       (473,102)     (473,102)
Dec.31,1999

Net unreal-
ized holding
(loss) and        --     --          --       --          --        5,103             --         5,103
Reclassi-
fication
Dec.31, 1999
               ----- ------   ---------  ------- -----------  -----------    -----------   -----------
Balance at
Dec. 31,1999      --     --   6,658,631    6,659   1,482,594       (2,747)    (1,319,498)      167,008


March 14,
2000 Pre-
ferred stock   2,500     25          --       --   2,229,975           --             --     2,230,000
issued

To cancel         --     --     (10,000)     (10)         10           --             --            --
shares issued
for services

Net (loss)for     --     --          --       --          --           --     (1,194,555)   (1,194,555)
the year ended
Dec. 31, 2000

Net unrealized
holding (loss)    --     --          --       --          --     (116,865)            --      (116,865)
on investments
Dec. 31, 2000
               ----- ------   ---------  ------- -----------  -----------    -----------   -----------
Balance at
Dec. 31,2000   2,500 $   25   6,648,631  $ 6,649 $ 3,712,579  $  (119,612)   $(2,514,053)  $ 1,085,588

               ===== ======   =========  ======= ===========  ===========    ===========   ===========
</TABLE>
    The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                      F-5
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<S>                                                    <C>                    <C>
                                                             2000                    1999
                                                       --------------------   -------------------
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
  Net (loss)                                           $      (1,194,555)     $        (473,102)
  Adjustments to reconcile net (loss) to net
    cash provided (used)by operating activities:
    Cumulative effect of accounting
    change-organizational costs                                       --                  2,625
    Operating expenses paid by issuance of stock                      --                 48,000
    Equity securities received for payment of services           (25,000)               (75,000)
    Amortization and depreciation                                228,121                 48,386
    (Increase) in accounts receivable                               (490)               (64,512)
    Decrease (increase) in deposit                                   160                   (160)
    (Decrease) increase in accounts payable and
    accrued expenses                                             (12,596)                35,278
    Increase (decrease) in income taxes payable                   (4,564)                 4,564
    Increase (decrease) in interest payable                       (2,346)                 2,346
     (Decrease) increase in sublease deposits                         --                   (600)
     (Decrease) in deferred rent credit                          (11,667)               (20,000)
     Gain on sale of asset                                            --                (38,722)
     Realized loss on sale of marketable equity securities            --                  7,850
                                                       -----------------      -----------------
        Net Cash Flows (Used) by Operating Activities         (1,022,937)              (523,047)
                                                       -----------------      -----------------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
    Acquisition of property and equipment                       (122,010)               (48,550)
    (Increase) in program development cost                      (163,161)              (108,820)
    (Increase) in loan receivable - officer                     (167,064)               (30,558)
    Proceeds from payment of loan receivable - officer           121,200                     --
    Proceeds from sale of marketable equity securities                --                  1,150
                                                       -----------------      -----------------
        Net Cash Flows (Used) by Investing Activities           (331,035)              (186,778)
                                                       -----------------      -----------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
    Issuance of convertible preferred stock                    2,230,000                     --
    Proceeds from short-term loan - officer                       30,000                     --
    Principal payment on short-term loan - officer               (30,000)                    --
    Proceeds from short-term loan                                180,000                325,000
    Principal payment on short-term loan                        (480,000)               (25,000)
                                                       -----------------      -----------------
        Net Cash Flows Provided by Financing Activities        1,930,000                300,000
                                                       -----------------      -----------------
NET INCREASE (DECREASE) IN CASH                                  576,028               (409,825)

CASH AT THE BEGINNING OF THE YEAR                                106,095                515,920
                                                       -----------------      -----------------
CASH AT THE END OF THE YEAR                            $         682,123      $         106,095
                                                       =================      =================
</TABLE>
    The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                      F-6
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
<TABLE>
<S>                                                    <C>                    <C>
                                                              2000                   1999
                                                       -----------------      -----------------
ADDITIONAL DISCLOSURES:
    Cash paid during the year for:
    Interest                                           $           6,228      $             307
                                                       =================      =================

    Income Taxes                                       $           3,200      $             800
                                                       =================      =================

NON-CASH INVESTING AND FINANCING TRANSACTIONS:

    Disposal of asset in exchange for equity securities$              --      $          44,622
                                                       =================      =================
</TABLE>






























The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements



                                      F-7
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE 1 - DESCRIPTION OF BUSINESS

iVideoNow,  Inc.  (the  Company),  formerly  known as  DIGS,  Inc.,  a  Delaware
corporation,  acquired Digital  Corporate  Profiles (DCP) in a reverse merger on
November 9, 1998.  In  connection  with the  agreement  of  reorganization,  the
"Reorganization,"  the Company  issued  5,l94,968  shares of its common stock at
$.001 par value per share, in exchange for all of the  outstanding  common stock
of DCP, in which DCP became a wholly owned  subsidiary of the Company based on a
conversion  ratio of 3 shares of the  Company's  common  stock for each share of
DCP's stock.  Prior to the  reorganization,  the Company was  considered a shell
organization   and  was   inactive.   The  merger   qualified   for  a  tax-free
reorganization  and has been  accounted  for as a  recapitalization  of  Digital
Corporate Profiles, Inc. at book value. As a result of the recapitalization, the
owners of Digital  Corporate  Profiles,  Inc.  (DCP)  maintained  control of the
Company. In 1999, the Company formed two wholly owned subsidiaries,  DXF Design,
Inc.  (DXF)  and DIGS Web  Video,  Inc.  (DWV).  DWV  currently  is an  inactive
subsidiary  generating  no revenue and  incurring  no operating  expenses.  As a
result,  the consolidated  financial  statements  presented are those of Digital
Corporate Profiles and DXF Design, Inc.

DCP provides  complete  multimedia  and Internet  communications  solutions  for
companies to proactively  tell their story.  One of DCP's services is to produce
custom CD-ROM packages for clients focusing on investor relations, environmental
health and safety  issues and  employee  orientation.  Each CD-ROM  presents the
information in an interactive way through the use of graphs,  charts,  music and
most importantly, video.

In late 1999 and into  2000 DCP began  developing  a real  time  Internet  Video
screening  application  known as iVideoNow!  The experience in video compression
and presentation  formats related to CD-ROM production was directly  responsible
for DCP's entry to the Internet Video market.  Currently, the iVideoNow!  system
has the  capability  of allowing the user to  instantly  view up to 200 separate
videos. This multi-screening technology is currently being marketed to companies
in the film,  television,  music, travel, and retail industries.  The iVideoNow!
system can be designed to a client's  specification  and will provide  companies
new ways to use Internet Video as a promotional tool.

DXF is a fully functional digital and graphic design studio providing a complete
range of Internet, CD-ROM and promotional print design services. DXF specializes
in designing brochures, corporate identity graphics, corporate and entertainment
promotional  kits,  as well as providing key art for  theatrical  and home video
advertisement.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation
----------------------
The consolidated  financial  statements include the accounts of iVideoNow,  Inc.
and its wholly owned  subsidiaries,  Digital Corporate  Profiles,  Inc. (DCP), a
California corporation,  DXF Design, Inc., a California corporation and DIGS Web
Video, Inc., a California corporation (inactive).  All intercompany accounts and
transactions have been eliminated in consolidation.

                                      F-8
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Segment Information
-------------------
The  company  adopted  Statement  of  Financial  Accounting  Standards  No. 131,
"Disclosures  about Segments of an Enterprise and Related  Information" (SFAS No
131) in 1999. This statement  establishes for the reporting of information about
a company's operating segments.  Operating segments are defined as components of
an enterprise  for which  separate  financial  information  is available that is
evaluated  regularly by the chief operating decision maker(s) in deciding how to
allocate  resources  and in assessing  performance.  SFAS No. 131 also  requires
disclosures  about products and services,  geographic areas and major customers.
The adoption of SFAS No. 131 did not affect  results of  operations or financial
position of prior reports.
(See Note 13 for additional information)

Reclassifications
-----------------
Certain  prior year balances  have been  reclassified  to conform to the current
year presentation.

Cash and Cash Equivalents
-------------------------
For purposes of the  statement of cash flows,  the Company and its  subsidiaries
consider cash and cash  equivalents  to include cash on hand,  bank balances and
short-term investments with a maturity of three months or less.

Accounts Receivable
-------------------
Uncollectible accounts receivable are written off as bad debt expense at the end
of the year.  For the years ended  December 31, 2000 and 1999,  there was no bad
debt expense.  The current  accounts  receivable is  considered  collectible  by
management.

Marketable Securities
---------------------
Marketable securities consist of common stock.  Marketable securities are stated
at market value as determined by the most recently traded price of each security
at the balance sheet date,  with the  unrealized  gains and losses,  net of tax,
reported  as a  separate  component  of  stockholders'  equity.  All  marketable
securities  are defined as  available-for-sale  securities  under  provisions of
Statement of Financial  Accounting  Standards ("SFAS") No. 115,  "Accounting for
Certain  Investments in Debt and Equity  Securities." For purpose of determining
realized  gains and losses,  the cost of securities  sold was based on first-in,
first-out method (see Note 3).

Comprehensive Income
--------------------
Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  130,  Reporting
Comprehensive  Income,  establishes  a standard  for  reporting  and  displaying
comprehensive  income  and  its  components  within  the  financial  statements.
Comprehensive  income  includes  charges  and credits to equity that are not the
result of transactions with  stockholders.  Comprehensive  income is composed of
two  subsets - net  income and other  comprehensive  income.  Included  in other
comprehensive  income for the Company are  unrealized  losses and adjustment for
realized  losses of  available-for-sale  securities  as of December 31, 2000 and
1999.
                                      F-9
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition
-------------------
Design  and  development  of  CD-ROM  revenues  are  billed  in equal  one-third
installments  as the contract  progresses.  All payments are  nonrefundable  and
revenue is  recognized  when earned.  Revenue is deemed  earned when there is no
future performance  obligation.  Future  performance  obligation ceases when the
product is approved  and shipped to the client.  The average  length of a CD-ROM
contract is  approximately  two months.  As of December  31, 2000 and 1999,  the
Company did not have any open contracts.

iVideoNow System revenues are initially billed upon completion of the contracted
set-up fees.  Set-up fees include  customizing the iVideoNow  System software to
the  client's  specific   requirements,   compressing  and  encoding  videos  to
standards, and providing a link to a hosting infrastructure. Thereafter, monthly
hosting  fees are billed at the  beginning of each month,  providing  the client
with a predetermined  amount of data transfer use. Any additional  usage charges
are billed quarterly. The average set-up time is one business week.

Graphic design  revenue is billed when the project is completed.  As of December
31, 2000, the Company did not have any open contracts.

Earnings Per Share
------------------
In 1998 the Company adopted the Financial  Accounting  Standards Board Statement
(SFAS) No. 128,  "Earning Per Share."  SFAS No. 128  establishes  standards  for
computing   and   presenting   earnings  per  share  ("EPS")  and  requires  the
presentation  of both basic and  diluted  EPS.  Unlike  primary  EPS,  basic EPS
excludes any dilutive effects of options,  warrants,  and convertible securities
and is computed  on the basis of the  weighted-average  number of common  shares
outstanding  during the year. The diluted EPS calculation is very similar to the
previous fully diluted EPS calculation  method. The Company has a simple capital
structure  and  there  were no  changes  under the SFAS 128  methodology  to the
previously  reported EPS amounts for any of the fiscal years.  Fully diluted per
share data is not presented, as the effects would be antidilutive.
(See Note 11).

Property and Equipment
----------------------
Depreciation  of  equipment  and  amortization  of  leasehold   improvements  is
calculated by the straight-line  and accelerated  methods based on the following
estimated useful lives:

                                                                    Years
                                                              -----------------
      Computer                                                        5
      Furniture and fixtures                                          7
      Computer software                                               5
      Leasehold improvements                                          10

Long-Lived Assets
-----------------
In 1998,  the  Company  adopted  SFAS 121,  "Accounting  for the  Impairment  of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of." In accordance
with SFAS 121,  long-lived  assets held and used by the Company are reviewed for

                                      F-10
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

impairment  when events or changes in  circumstances  indicate that the carrying
amount of an asset might not be fully  recoverable.  For purposes of  evaluating
the  recoverability  of  long-lived  assets,  the  estimated  future  cash flows
associated  with the asset would be compared to the asset's  carrying  amount to
determine  if a  write-down  to market  value or  discounted  cash flow value is
required.  The  adoption  of SFAS 121 had no impact on the  Company's  financial
position or on its results of operations.

Program Development Costs
-------------------------
In March 1998, the Company adopted  Statement of Position 98-1,  "Accounting for
Costs of Computer Software  Developed or Obtained for Internal Use." Capitalized
program  development  costs consist of consulting  and  programming  costs.  The
Company   capitalizes   internally   developed   software   costs   based  on  a
project-by-project  analysis of each project's  significance  to the Company and
its estimated  useful life.  All  capitalized  software costs are amortized on a
straight-line method over a period of five (5) years.

In 2000,  the  Company  adopted  Financial  Accounting  Standards  Board  (FASB)
Statement No. 2,  "Research and  Development  Costs," and FASB Statement No. 86,
"Accounting  for Costs of Computer  Software to Be Sold,  Leased,  or  Otherwise
Marketed."  The  Company   expensed  all  costs  incurred  in  establishing  the
technological  feasibility  of a computer  software  product that is to be sold,
leased,  or  otherwise  marketed as research  and  development  costs,  which is
required  by FASB  Statement  No. 2. After  technological  feasibility  has been
established,  all costs  incurred will be  capitalized,  as required  under FASB
Statement  No.  86,  and  amortized  over two (2) years.  When the  software  is
available  for  general  release to  customers,  all costs will be  expensed  as
incurred, including costs of maintenance and customer support.

Stock-Based Compensation
------------------------
The Company has elected to follow Accounting Principles Board Opinion (APBO) No.
25,  "Accounting for Stock Issued to Employees," and related  interpretations in
accounting  for its  stock-based  compensation  and to provide  the  disclosures
required under Statement of Financial Standards (SFAS) No. 123,  "Accounting for
Stock-Based Compensation."

APBO No. 25  requires no  recognition  of  compensation  expense for most of the
stock-based  compensation  agreements provided by the Company where the exercise
price is equal to the market  value at the date of grant.  However,  APBO No. 25
requires  recognition of compensation  expense for variable award plans over the
vesting periods of such plans, based upon the then-current  market values of the
underlying stock. In contrast, SFAS No. 123 requires recognition of compensation
expense for grants of stock,  stock options,  and other equity  instruments over
the vesting  periods of such  grants,  based on the  estimated  grant-date  fair
values of those grants (see Note 12 for additional information).

Income Taxes
------------
This  Company has adopted SFAS No. 109,  "Accounting  for Income  Taxes",  which
requires a liability  approach to financial  accounting and reporting for income
taxes.  The difference  between the financial  statement and tax basis of assets
and  liabilities  is  determined  annually.   Deferred  income  tax  assets  and
liabilities are computed for those differences that have future tax consequences

                                      F-11
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

using the  currently  enacted  tax laws and rates that  apply to the  periods in
which they are  expected to affect  taxable  income.  Valuation  allowances  are
established,  if necessary, to reduce deferred tax asset accounts to the amounts
that will more  likely than not be  realized.  Income tax expense is the current
tax payable or  refundable  for the period,  plus or minus the net change in the
deferred tax asset and liability accounts.

Consolidated Tax Returns
------------------------
The Company  files  consolidated  federal and state  income tax returns with its
subsidiaries.  In accordance with the  intercorporate tax allocation policy, the
Company  and its  subsidiaries  will pay to or  receive  from the other  entity,
amounts  equivalent  to federal and state income tax charges or credits based on
each separate entity's taxable income or loss using the statutory rates.

Use of Estimates
----------------
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect certain  reported amounts and  disclosures.  Accordingly,  actual results
could differ from those estimates.

Accounting Change
-----------------
In 1999,  the Company  adopted  Accountants'  Statement of Position  (SOP) 98-5,
"Reporting on the Costs of Start-Up  Activities."  This statement  requires that
costs of start-up  activities and organizational  costs be expensed as incurred.
The cumulative  effect of this  accounting  change on years prior to 1999 was in
the amount of $2,625 (net of $0 tax  effect) or $0.00 per common  share that was
reflected in the first quarter of 1999. This new accounting  requirement did not
have a  significant  effect on 1999 income before the  cumulative  effect of the
accounting change.

Name Change
-----------
On June 15, 2000, the Company  officially  changed its corporate name from DIGS,
Inc. to iVideoNow,  Inc. In addition,  the Company's  stock began trading on the
NASDAQ OTC  Bulletin  Board  under its new symbol  "vnow".  The name  change was
approved on April 27, 2000 by stockholders with a majority voting interest.

Recent Accounting Pronouncements
--------------------------------

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 133 (SFAS 133),  "Accounting for Derivative
Instruments  and Hedging  Activities."  SFAS 133  established  new  standards of
accounting and reporting for derivative instruments and hedging activities. SFAS
133 requires that all  derivatives  be recognized at fair value in the statement
of financial  position,  and that the corresponding  gains or losses be reported
either in the statement of operations or as a component of comprehensive income,
depending on the type of hedging  relationship  that exists.  In July 1999,  the
Financial Accounting Standards Board issued SFAS No. 137 (SFAS 137), "Accounting
for Derivative  Instruments  and Hedging  Activities - Deferral of the Effective

                                      F-12
<PAGE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements (Continued)
--------------------------------------------

Date of SFAS No. 133." SFAS 137 deferred  the  effective  date of SFAS 133 until
the first fiscal  quarter of fiscal  years  beginning  after June 15, 2000.  The
Company does not  currently  hold  derivative  instruments  or engage in hedging
activities.  The Company  expects  the  adoption of SFAS 133 and SFAS 137 in the
first quarter of fiscal year 2001 will have no material  impact on its financial
statements and related disclosures.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB 101), "Revenue  Recognition in Financial  Statements." SAB
101 provides guidance on applying  accounting  principles  generally accepted in
the  United  States  to  revenue  recognition  in  financial  statements  and is
effective in the fourth quarter of all fiscal years beginning after December 15,
1999. The Company's  accounting policies are consistent with the requirements of
SAB 101, so the  implementation  of SAB 101 in the fourth  quarter of the fiscal
year 2000 is not expected to have an impact on the Company's operating results.

In  April  2000,   the  Financial   Accounting   Standards   Board  issued  FASB
Interpretation No. 44 (FIN 44), "Accounting for Certain  Transactions  Involving
Stock Compensation," an interpretation of APB Opinion No. 25 FIN 44 is effective
for transactions occurring after July 1, 2000. The application of FIN 44 did not
have a material impact on the Company's financial statements

NOTE 3 - MARKETABLE EQUITY SECURITIES

Cost and fair value of marketable  equity securities at December 31, 2000 are as
follows:

                                           Gross       Gross
                                        Unrealized  Unrealized
                             Cost          Gains      Losses      Fair Value
                           -----------  ----------  -----------  -----------
December 31, 2000
Available for sale
     Equity securities     $   144,622  $       --  $ (119,612)  $    25,010
                           ===========  ==========  ==========   ===========


Net unrealized  losses from available for sale securities  during the year ended
December  31,  2000 and 1999  amounted  to  $116,865  and  $2,747  respectively,
resulting  in  net  changes  of  $116,865  and  $2,747  respectively,  to  Other
Comprehensive  Loss. For the year ended December 31, 1999, the Company  received
proceeds of $1,510 as the result of sales of securities  available for sale. The
tax   benefit   for  each   component   of   comprehensive   income,   including
reclassification  adjustments  is $0 for the years ended  December  31, 2000 and
1999.




                                      F-13


<PAGE>

NOTE 4 - INCOME TAXES

The Company has available at December 31, 2000, net operating loss carryforwards
totaling  $2,303,761  that may be offset against future taxable  income.  If not
used, the net operating loss carryforwards will expire as follows:

      Operating Losses
     --------------------
         Year 2011                                            $          81,269
         Year 2012                                                      190,049
         Year 2018                                                      470,148
         Year 2019                                                      512,295
         Year 2020                                                    1,050,000
                                                             ------------------
                                                              $       2,303,761
                                                             ==================
The net  deferred  tax  asset,  resulting  from the net  operating  loss and the
difference  between  book and tax  depreciation,  included  in the  accompanying
balance  sheet  include  the  following  amounts  of  deferred  tax  assets  and
liabilities at December 31, 2000:

     Deferred Tax Asset - Current                          $              --
     Deferred Tax Asset - Non-Current                                835,000
                                                          ------------------
                                                                     835,000
     Valuation allowance                                            (835,000)
                                                          ------------------
                                                           $              --
                                                          ==================
For the years ended December 31, 2000 and 1999, valuation allowance increased by
$407,084 and $203,679 respectively. Due to the uncertainty of the realization of
the net operating loss  carryforwards,  the Company has  established a valuation
allowance against the carryforward benefits in the amount of $835,000.

The  components  of the  (provision)  benefit  for income  taxes for  continuing
operations are as follows:
                                                 2000                1999
                                        -------------------  ------------------
Current (provision)
     Federal                             $              --   $              --
     State                                          (3,200)             (5,364)
                                       -------------------  ------------------
                                         $          (3,200)  $          (5,364)
                                       ===================  ==================

NOTE 5 - PROPERTY AND EQUIPMENT
     Computer equipment                                     $         148,990
     Furniture and fixtures                                            39,409
     Computer software                                                 21,180
     Leasehold improvements                                            77,409
                                                           ------------------
                                                                      286,988
     Less accumulated amortization and depreciation                   (90,141)
                                                           ------------------
                                                            $         196,847
                                                           ==================
                                      F-14
<PAGE>

NOTE 5 - PROPERTY AND EQUIPMENT (CONTINUED)

Amortization and depreciation expenses for the years ended December 31, 2000 and
1999 were  $35,974  and  $25,666,  respectively.  In 2000 and 1999,  the Company
allocated  depreciation  expense  to cost of sales in the  amount of $4,236  and
$4,057, respectively.

NOTE 6 - PROGRAM DEVELOPMENT COSTS

     Program development costs                             $         324,092
     Less accumulated amortization                                  (225,123)
                                                          ------------------
                                                           $          98,969
                                                          ==================

Amortization expense for the years ended December 31, 2000 and 1999 was $192,147
and $22,720 respectively.  All development amortization expense was allocated to
cost of sales in both 2000 and 1999.  For the year ended  December 31, 2000, the
Company  capitalized an additional $163,161 of program development costs. During
the years ended December 31, 2000, and December 31, 1999,  amortization of costs
related to  computer  software  products  held for lease  totaled  $181,017  and
$10,383, respectively.

NOTE 7 - COMMITMENTS

On February 23, 2000, the Company  renewed its operating  lease agreement on its
current premises for an additional three years,  with a monthly lease payment of
$8,307. The new lease will expire on July 31, 2003. The lease agreement contains
certain terms and conditions,  which include, but are not limited to, payment of
property taxes, insurance, rent increases, repairs and maintenance.

The following is a schedule of future minimum rental payments required under the
above operating lease as of December 31, 2000:

                  Year Ending
                  December 31,                                Amount
          ------------------------                     ------------------
                    2001                               $          99,679
                    2002                                          99,679
                    2003                                          58,146
                                                      ------------------
                                                       $         257,504
                                                      ==================
The above rental  expenses  will be offset by $19,440 in sublease  rental income
through December 31, 2001.

For the years ended December 31, 2000 and 1999, rental expenses, net of deferred
rent credit,  were $92,371 and $70,277,  respectively.  Rental  income under the
subleases  amounted to $15,100 and $22,300 for the years ended December 31, 2000
and 1999, respectively.

In 1998,  the lessor  compensated  DCP in an amount of $40,000 for moving to its
current  facility.  The amount was  classified  as  deferred  rental  credit and
amortized  on a  straight-line  method  over the term of the lease.  In 2000 and
1999,  the amortized  credits of $11,667 and $20,000 were offset  against rental
expense, respectively.

                                      F-15
<PAGE>

NOTE 7 - COMMITMENTS (CONTINUED)

In 1999,  the Company  entered into a 36-month  operating  lease  agreement  for
various  office  equipment  with a monthly  payment  of $822,  plus  over  usage
charges.  For the year ended December 31, 2000, total lease payments amounted to
$13,057,  which is  reported as part of cost of goods sold under  other.  Future
obligations  under the operating  lease total $9,864,  and $4,932 for 2001,  and
2002, respectively.

On February 28, 2000, the Company renewed an officer's  employment  contract for
an  additional  three  years.  The new terms  provide the officer with an annual
salary  of  $120,000  as  well  as  annual   vacation,   sick  pay,  bonus,  and
miscellaneous  reimbursement  of  out-of-pocket  costs.  The contract expires on
February  28, 2003.  For the years ended  December  31,  2001,  2002,  and 2003,
minimum  obligation  under this  contract is  $120,000,  $120,000,  and $20,000,
respectively. Total compensation to all officers for the year ended December 31,
2000  was  approximately  $438,000  including  auto  allowances.   During  2000,
approximately  $27,000 was  recorded as auto  expense,  and $58,750 of officers'
salary was allocated to cost of goods sold.

NOTE 8 - CONCENTRATION

The  Company  maintains  its cash  balances  at several  financial  institutions
located in  Southern  California.  The  Federal  Deposit  Insurance  Corporation
insures the  balances  up to  $100,000.  At December  31,  2000,  the  Company's
uninsured cash balance totaled $475,078.

For the  years  ended  December  31,  2000 and  1999,  sales  to three  and five
customers   accounted  for   approximately   88%  and  60%  of  total   revenue,
respectively.  The total revenue  received from these customers in 2000 and 1999
was as follows:
                                   For the Years Ended December 31,
                       -------------------------------------------------------
                                 2000                           1999
                       ------------------------        -----------------------
       Customer A       $    219,160     41.8%        $          --       --%
       Customer B            107,100     20.4                    --       --
       Customer C                 --       --                60,118     10.6
       Customer D                 --       --                84,500     15.0
       Customer E                 --       --               130,680     23.2
       Customer F            133,554     25.5                59,183     10.5
                        ------------ --------        -------------- --------
                        $    459,814     87.7%        $     334,481     59.3%
                     =============== ========        ============== ========


As of December 31, 2000,  receivables  from three  customers  account for 93% of
total accounts receivable.

The Company relies solely on the performance of DXF's officer,  Mr. Fleming,  to
generate revenue for its graphic design subsidiary, DXF Design, Inc. (DXF).






                                      F-16
<PAGE>

NOTE 9 - STOCKHOLDERS' EQUITY

Warrants

In connection with the March 14, 2000 private placement of convertible preferred
stock, the Company issued 100,000 warrants to the investors and 200,000 warrants
to the underwriters.  Each warrant may be converted into one share of new common
stock at an exercise  price equal to 110% of the closing bid price of the common
stock on March 14, 2000. The warrants expire on May 13, 2003. As of December 31,
2000, all 300,000 warrants remained outstanding.

The following summarizes the warrants issued by the Company:

                                                    For the Year Ended
                                                    December 31, 2000
                                          -------------------------------------
                                                              Stock Warrant
                                              Shares          Exercise Price
                                         -----------------   -----------------

     Outstanding at December 31, 1999                   --                  --
        Granted                                    300,000                9.90
        Exercised                                       --                  --
        Expired                                         --                  --
                                         -----------------   -----------------
     Outstanding at December 31, 2000              300,000                9.90
                                         =================   =================
     Exercisable at December 31, 2000              300,000                9.90
                                         =================   =================

Preferred Stock

In connection with the March 14, 2000 private placement of convertible preferred
stock,  the Company has issued 2,500 shares of Series "A" Convertible  Preferred
Stock,  par value of $0.01 as of December 31,  2000.  The  preferred  shares are
convertible,  in whole or in part,  at the option of the holders  thereof,  into
non-assessable  shares of common  stock.  The  conversion  rate  (calculated  by
dividing  the  conversion  amount  by the  conversion  price)  will  be  used to
determine  the amount of common stock  received for each  preferred  share.  The
conversion  amount is the sum of any accrued and unpaid dividends and the stated
value of $1,000 per preferred  share.  The conversion price would be either 125%
of the  closing  bid price on the  issuance  date,  or the average of 75% of the
lowest  closing bid prices of the common stock during any three (3) trading days
during the twenty (20) consecutive trading days ending on and including any date
of determination, whichever is lower.

Holders  of the  preferred  shares  are  entitled  to  receive  cumulative  cash
dividends at the annual rate of 6% when the shares are converted.  At the option
of the holders,  dividends may be paid in shares of common stock or in cash. The
preferred shares mature on May 13, 2003.






                                      F-17
<PAGE>

NOTE 9 - STOCKHOLDERS' EQUITY (CONTINUED)

Preferred Stock (Continued)

If any preferred  shares remain  outstanding on the maturity date, then all such
preferred  shares shall be converted at the maturity  date  conversion  price or
shall be  redeemed  for an  amount  in cash  per  preferred  share  equal to the
liquidation preference, which is the sum of (a) stated value and (b) any accrued
and unpaid  dividend.  Maturity date  conversion  price is defined as 75% of the
arithmetic  average of the lowest closing bid price on any three trading days of
the  common  stock  during  the  twenty  consecutive  trading  days  immediately
preceding the maturity date.

Holders of the  preferred  shares have no voting  rights,  except as required by
law,  including but not limited to the General  Corporation  Law of the State of
Delaware.  All preferred  shares rank senior to the common stock.  The preferred
shares have  liquidation  preferences that equal the sum of the stated value and
any accrued and unpaid  dividends.  The preferred shares are redeemable,  at the
option  of the  Company,  for  consideration  equal  to 120% of the  liquidation
preference.

NOTE 11 - EARNINGS (LOSS) PER COMMON SHARE

The following table sets forth the computation of basic (loss) per common share:

                                                    2000                1999
                                       -------------------  ------------------
   Basic EPS:
    (Loss) from continuing operations      $        (0.18)  $           (0.07)
    Cumulative effect of accounting change             --                  --
                                      -------------------  ------------------
       Net (Loss) Per Common Share         $        (0.18)  $            (.07)
                                      ===================  ==================
   Weighted-average shares outstanding          6,648,631           6,649,864
                                      ===================  ==================

Fully  diluted  per  share  data  is not  presented,  as the  effects  would  be
antidilutive.

NOTE 12 - STOCK OPTION PLANS

The  Company's  1999 stock  option plans  provide  incentive  stock  options and
nonqualified  stock options to purchase the Company's common stock. These may be
granted to directors,  officers,  key employees,  consultants,  and subsidiaries
with an  exercise  price of up to 110% of  market  price  at the date of  grant.
Generally,  options are exercisable in equal  installments over three years from
the date of grant,  and expire  five to ten years from the date of grant.  As of
December 31, 2000,  the maximum of 750,000  shares were approved under the plan,
of which 109,000 shares were available for future grants.

During the year ended December 31, 2000, the Company  granted  325,000 shares of
qualified  stock  options and 85,000  shares of  nonqualified  stock  options to
various individuals at the average exercise price of $1.79 per share.



                                      F-18
<PAGE>

NOTE 12 - STOCK OPTION PLANS (CONTINUED)

In  electing  to follow  Accounting  Principles  Board  Opinion  (APBO)  No. 25,
"Accounting  for  Stock  Issued  to  Employees,"   the  Company   recognizes  no
compensation expense related to employee stock options for the year December 31,
2000,  as no options are granted at a price below the market price on the day of
grant.

Presented below is a summary of stock option plan activity for the year shown:

                                                                   Weighted-
                                                                    Average
                                           Stock Options         Exercise Price
                                         ------------------  -------------------
 Outstanding at December 31, 1999               295,000                  5.17
 Granted                                        410,000                  1.79
 Exercised                                           --                    --
 Forfeited                                      (64,000)                 4.68
 Expired                                             --                    --
                                    -------------------    ------------------
 Outstanding at December 31, 2000               641,000                  3.06
                                    ===================    ==================
 Options exercisable at December 31, 2000        78,500                  5.21
                                    ===================    ==================

Exercise prices for options outstanding as of December 31, 2000 range from $0.50
to $5.50. The following table summarizes information for options outstanding and
exercisable at December 31, 2000:

                            Options Outstanding         Options Exercisable
                ----------------------------------- ---------------------------
                                                     Weighted-
                                        Weighted-     Average      Weighted-
                    Stock      Average  Remaining      Stock        Average
  Exercise         Options    Exercise  Contractual   Options       Exercise
    Prices       Outstanding    Price      Life      Exercisable      Price
 -------------- ------------- --------  ----------- ------------   -----------
      $0.50        350,000      $0.50       3.0             --        $0.50
 $4.25 - $5.00     191,000      $4.95       2.25        45,167        $4.95
      $5.50        100,000      $5.50       2.0         33,333        $5.50
                 -----------                         ----------
                   641,000                              78,500
                 ===========                         ==========

In electing to continue to follow APBO No. 25 for expense recognition  purposes,
the Company is obligated to provide the expanded disclosures required under SFAS
No.  123  for  stock-based  compensation  granted  in  2000.  This  may  include
materially  different  information from reported results,  such as pro forma net
income and earnings  per share had  compensation  expenses  relating to the year
ended December 31, 2000 grants been recognized under the fair value  recognition
provisions of SFAS No. 123.

Because the  weighted-average  fair  values at date of granted  were the same or
lower than the market values at December 31, 2000,  the Company's net income and
earnings  per share will be the same as the proforma net income and earnings per
share. Therefore, the Company's proforma information has not been presented.

                                      F-19
<PAGE>

NOTE 12 - STOCK OPTION PLANS (CONTINUED)

The weighted-average fair values at date of grant for options granted during the
year  ended  December  31,  2000  were  $4.68,  and  were  estimated  using  the
Black-Scholes  option  valuation  model  with  the  following   weighted-average
assumptions:
                                                               2000
                                                           -------------
       Expected life in years                                    5
       Interest Rate                                            6.2     %
       Volatility                                              152.5    %
       Dividend Yield                                            --     %

NOTE 13 - SEGMENT INFORMATION

Information concerning operations in different lines of business at December 31,
2000 and for the year then ended is presented below.  Intercompany  transactions
between segments are not material.

                                     DCP          DXF
                               Internet Video    Graphic
                2000             and CD-ROM      Design     Consolidated
--------------------------------------------  -----------  --------------
Net Operating Revenues        $    109,300    $  415,548   $     524,848
Operating Income (Loss)         (1,293,736)       41,102      (1,252,635)
Identifiable Operating Assets      894,612       108,337       1,002,949
Capital Expenditures               254,478        30,693         285,171
Depreciation and Amortization $    222,933    $    5,188   $     228,121

                                    DCP
                                  CD-ROM           DXF
                                Design and       Graphic
                1999            Development      Design      Consolidated
---------------------------  ---------------  -----------    --------------
Net Operating Revenues        $    413,743    $  150,279    $    564,022
Operating Income (Loss)           (541,211)       23,365        (517,846)
Identifiable Operating Assets      449,591       100,090         549,681
Capital Expenditures               143,861        13,509         157,370
Depreciation and Amortization $     47,080    $    1,306    $     48,386

Identifiable operating assets include cash, available-for-sale securities, trade
accounts receivable, and fixed assets.

NOTE 14 - RELATED PARTY TRANSACTIONS

In 2000, the President  provided the Company an unsecured  non-interest  bearing
short-term loan of $30,000,  which was repaid within one month. In addition, the
Company also provided its President with a short-term loan of $121,200,  bearing
interest at 5% per annum. This loan was repaid within two months. As of December
31, 2000, interest accrued on the short-term loan to the officer was $1,426.

In 2000,  the  Company  extended  the due  date of a loan  made in 1999 to DXF's
officer,  Mr. Fleming,  from July 30, 2000 to July 30, 2001. The note was issued
in 1999 and bears interest at 5% per annum.  As of December 31, 2000, the amount


                                      F-20
<PAGE>

NOTE 14 - RELATED PARTY TRANSACTIONS (CONTINUED)

due on this note including interest is $32,122. In addition,  the Company loaned
Mr.  Fleming  $39,000  during 2000 under the same terms as the 1999 note.  As of
December  31,  2000,  the amount due on the second  note  including  interest is
$40,232.  For the year ended December 31, 2000,  interest income accrued for the
above notes totaled $1,564.

In 2000,  the Company  over-reimbursed  one of the  officers  for  out-of-pocket
expenditures  related to business activities.  The amount of  over-reimbursement
was $2,642 and remained  due from the officer at December  31, 2000.  The amount
was subsequently paid in full on March 2, 2001.

NOTE 15 - SHORT-TERM NOTE

At January 1, 2000,  the Company had a short-term  note of  $302,346,  including
accrued interest of $2,346. In early 2000, the Company borrowed another $180,000
from the same  creditor,  bringing  the total  principal  due to  $480,000.  The
Company paid the entire  principal  due and accrued  interest of $6,228 on March
15, 2000.  Interest  expense for the year ended  December 31, 2000 for this note
totaled $3,882.

NOTE 16 - MARKETING DISCOUNTS

The Company has recognized $40,000 in marketing  discounts during the year ended
December 31, 2000. These marketing  discounts relate to the completion of CD-ROM
production  contracts.  Marketing  discounts  are applied to the gross  contract
amounts,  the net of which is  normally  paid in cash by the  client.  The gross
contract  amounts  are  booked as  revenue  by the  Company,  and any  marketing
discounts  are  recognized  as marketing  expenses  during the same period.  The
Company bases the value of the marketing  discounts on its  historical  costs to
expose and distribute the CD-ROM  products to prospective  clients.  Each CD-ROM
product  bears the  Company's  subsidiary  name Digital  Corporate  Profiles and
provides the end-user contact  information.  Many of the CD-ROM products created
by Digital  Corporate  Profiles  are  distributed  at trade shows or in mailers,
providing the Company with exposure to many prospective clients.

NOTE 17 - SHARES ISSUED FOR SERVICES

On November 17, 1999, the Company  authorized the issuance of 10,000  restricted
shares of common  stock for  services  rendered  relating  to the listing of the
Company's  stock  on the  Frankfurt  Stock  Exchange.  The  Company  recorded  a
stockholder  expense in an amount of $48,000,  which  represents 50% of the fair
market value of the Company's share at $9.60 per share.  The 50% value is deemed
reasonable  considering  the  inability  of the  stockholder  to  dispose of the
restricted stock.

As of December 31, 2000,  the  authorization  for the issuance of the shares was
rescinded.  As of December 31, 2000,  these  expenses were paid to the vendor by
one of the Company's stockholders. Therefore, the Company will record the entire
expenses against additional paid-in capital.

NOTE 18 - SALE OF ASSETS

On September 1999, the Company received from Monia Investment, Inc. (MII) 10,000
shares of Global  Electronics  Manufacturing,  Inc.  (ECSW)  common stock with a

                                      F-21
<PAGE>

NOTE 18 - SALE OF ASSETS (CONTINUED)

market value of  $122,500.  In  exchange,  the Company gave MII,  Stocknet-USA's
domain  name  and  Web  site,  as  well  as  redesigning  the  Web  site  to MII
specifications   and  providing  MII  with  a  lifetime  of  non-exclusive   and
non-transferable  use of the Company  proprietary  system. The net book value of
Stocknet-USA's  domain  name and Web site was $5,900.  The  Company  recorded an
after tax gain of $38,722 for the exchange of Stocknet-USA's domain name and Web
site, net of agent fee of $2,878. The Company also recorded the redesigning fees
and the  non-exclusive  use of the Company  proprietary  system as revenue in an
amount of $75,000 for the year ended December 31, 1999.

NOTE 19 - SIGNIFICANT ITEM AFFECTING FOURTH QUARTER RESULTS OF OPERATIONS

In the fourth quarter of 2000, the Company recorded additional  depreciation and
amortization expenses of $171,407, primarily as a result of under amortizing its
software  developed for lease. This adjustment  increased the fourth quarter net
loss per share by $0.03.

NOTE 20 - UNCERTAINTY OF ABILITY TO CONTINUE AS A GOING CONCERN

The financial  statements have been prepared  assuming the Company will continue
as a going  concern.  The Company has incurred net losses during the year.  With
the cash available on hand at December 31, 2000 of $682,123, the Company may not
have enough funds to meet its cash flow requirements within the next twelve (12)
months.  The Company plans to generate the  additional  cash needed  through the
completion of additional equity, debt, or joint venture  transactions.  There is
no  assurance,  however,  that the Company will be able to complete its plans in
the future at commercially reasonable terms, if at all, or that the Company will
be able to meet its future contractual obligations.
























                                      F-22
<PAGE>






             INDEPENDENT AUDITORS' REPORT ON ADDITIONAL INFORMATION






To the Board of Directors and Stockholders of
iVideoNow, Inc. and Subsidiaries

Our report on our audit of the basic financial statements of iVideoNow, Inc. and
Subsidiaries  for December 31, 2000 and 1999 appears on Page F-2. That audit was
conducted  for  the  purpose  of  forming  an  opinion  on the  basic  financial
statements  taken as a whole.  The schedules of cost of goods sold and operating
expenses on Page F-23 are presented for the purposes of additional  analysis and
are not a required part of the basic financial statements.  Such information has
not been subjected to the auditing  procedures applied in the audit of the basic
financial statements, and, accordingly, we express no opinion on them.






CALDWELL, BECKER, DERVIN, PETRICK & CO., L.L.P.
Woodland Hills, California 91364























                                      F-23
<PAGE>

                        iVIDEONOW, INC. AND SUBSIDIARIES
                 (FORMERLY KNOWN AS DIGS, INC. AND SUBSIDIARIES)
              SCHEDULE OF COST OF GOODS SOLD AND OPERATING EXPENSES
                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
                                   (UNAUDITED)

                                                 2000                 1999
                                         ------------------    -----------------

COST OF GOODS SOLD
    Depreciation and amortization        $        196,383     $         26,777
    Labor costs                                    92,353              124,380
    Production costs                               67,542               87,381
    Other                                          26,606               41,531
                                        -----------------   ------------------

        Total Cost of Sales              $        382,884     $        280,069
                                       ==================    =================


OPERATING EXPENSES
     Auto expense                        $         46,402     $         28,001
    Depreciation                                   31,738               21,609
    Insurance                                      43,115               12,027
     Marketing                                    113,951              109,005
    Office expense                                 31,994               15,681
     Outside services                              14,550               22,867
     Professional services                        136,213               66,022
     Rent                                          92,371               70,277
     Research and development                      28,385                   --
     Salaries - officers                          352,250              156,725
     Salaries - other                             258,616              107,247
    Stockholder expenses                           24,475               69,972
     Taxes - payroll                               50,162               24,941
     Other                                        170,377               97,425
                                        -----------------   ------------------

        Total Operating Expenses         $      1,394,599     $        801,799
                                       ==================    =================












    The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements


                                      F-24