SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

 For the fiscal quarter ended                    Commission file number
       03/31/99                                       333-6440

                          DOWNSTREAM INCORPORATED - DSI
                 (Name of Small Business Issuer in its Charter)


             Utah                                      87-0567618
   -------------------------------             ----------------------------
   (State or Other Jurisdiction of             (IRS Employer Identification
   Incorporation or Organization)                          No.)

                    6337 Highland Drive
                    Salt Lake City, Utah                   84121
          ----------------------------------------       ----------
          (Address of Principal Executive Offices)       (Zip Code)

                    Issuer's telephone number: (801) 916.1371

         Securities registered under Section 12(b) of the Exchange Act:

                   Common Stock - Par Value: $0.001 Per Share
                                (Title of class)


         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                                  Yes X No ____


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest praA Fcticable date.

         As  of  March  31,  1999,  the  issuer  had  outstanding  approximately
4,600,000 shares of its Common Stock, $0.001 par value.

<PAGE>

                         PART I - FINANCIAL INFORMATION



ITEM 1.  Financial Statements.

         The  unaudited  balance  sheet  of  Downstream   Incorporated-DSI  (the
"Company")  as of March 31, 1999 and the related  audited  balance  sheet of the
Company as of December 31, 1998, the unaudited related  statements of operations
and cash flows for the three month period ended March 31, 1999, and the notes to
the financial  statements are attached  hereto as Appendix "A" and  incorporated
herein by reference.

         The accompanying  financial  statements reflect all adjustments,  which
are, in the opinion of  management,  necessary to present  fairly the  financial
position of the Company.


History

         The  Company  was  organized  on  November  26,  1996,  as a  financial
consulting firm, and soon thereafter issued 3,300,000 shares of its common stock
to its  founders  and to other  shareholders.  The  Company  commenced  a public
offering  of its  common  stock on April 28,  1997  pursuant  to which it raised
$51,000 in gross offering proceeds and issued an additional  1,034,000 shares of
its common stock at the public offering price of $0.05 per share. An officer and
director of the Company was issued  166,000  shares of common  stock  during the
forth  quarter of 1998 for services  rendered to the Company over the  preceding
two years. In January of 1999, the Company issued 100,000 shares of common stock
to an officer  and  director of the  Company in  exchange  for $5000,  which the
Company has used as working capital during the first quarter of 1999.

         In the third quarter of 1997, a Security  Division was created when the
Company  was  presented  with an  opportunity  to  participate  in the  security
industry.  The Security Division was the primary source of operating revenue for
the  Company  from  inception.  During the last  quarter of 1997,  and the first
quarter of 1998, the Company received and completed 12 security contacts awarded
to the Company by U.S. Satellite, a division of the American Stores Company. Due
to a change in management at U.S. Satellite precipitated by Albertson's purchase
of the  American  Stores  Company,  no  further  contracts  were  awarded to the
Company.  The  Security  Division  was  subsequently  closed  early in the third
quarter of 1998.  During that time the Company's Board decided to seek out other
opportunities as potential sources of revenue for the Company.

         Negotiations  were entered  into during the third  quarter of 1998 with
three  different  physicians  concerning  opening and  operating  cosmetic  hair
removal  centers  across the country  using a machine known as the EpiLight Hair
Removal  System.  During said  negotiations,  Robert W. Later,  M.D. was made an
officer and a director of the Company on an interim basis to act as a consultant
for the Company until such negotiations could be finalized.  However, due to the
high cost of the machines themselves,  and numerous difficulties  encountered in
attempting to negotiate  agreements  with  physicians  that would be financially
beneficial to the Company, it was decided not to enter the cosmetic hair removal
business, and said negotiations were terminated.

         During  the  fourth  quarter  of 1998,  the Board of  Directors  made a
decision that it would be in the best interest of the Company, and the Company's
shareholders,  to attempt to seek out and acquire the  business  and assets of a
going  concern.  The Company began its search  focusing  primarily on profitable
companies  doing  business  on  the  Internet.  Many  different  companies  were
contacted and evaluated.  The Company  entered into  negotiations to acquire the
business and assets of Netbilling,  Inc. of Valencia,  CA in January of 1999. As
of the date of this writing, those negotiations are still under way. The Company
is currently waiting for needed financial information to be received so an audit
of Netbilling's financial records can be completed.

         The Company entered into negotiations with a German concern in February
of 1999. As of the date of this  writing,  letters of intent have been signed by
the  principles  of the  German  concern  and the  Company  to  acquire  certain
businesses,  assets  and sales  and  licensing  rights  of and from said  German
concern.

                                       2
<PAGE>

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

Results of Operations

         During the three  month  period  ended  March 31,  1999 the Company had
operating  revenues of $0.00 compared to operating  revenues of $103,607 for the
three months ended March 31, 1997.  Loss per share was  approximately  $0.00 for
the quarter  ended March 31,  1999,  compared to a profit of $0.01 per share for
the same  period a year  earlier.  The  notable  difference  in revenues in 1999
compared  to the  first  quarter  of 1998 was due to the 12  security  contracts
awarded to the Company  during the first quarter of 1998 vs. no contracts  being
awarded in 1999. No operating  revenues were generated  during the first quarter
of 1999.  Five  thousand  dollars  ($5,000)  was received by the Company from an
officer and a director of the Company in exchange  for 100,000  shares of common
stock. Said is restricted under "Rule 144".

         Costs of sales for the  three-month  period  ended  March 31, 1999 were
$000.00  compared to costs of sales of $44,417 for the same period  during 1998.
For the three month period  ended March 31, 1999,  the Company had a net loss of
$(9,793),  resulting in a net loss per share of approximately $0.00, compared to
a net profit of $40,161  during the first  quarter of 1998,  resulting  in a net
profit per share of $0.01.

         General and administrative  expenses for the first quarter of 1999 were
$9,746 compared to general and  administrative  expenses of $19,168 for the same
period in 1998.

         The  Company's  losses  during the first  quarter of 1999 were due to a
lack of revenues, and costs associated with general and administrative  expenses
and the Company's search for a going concern.

         General  and  administrative  expenses  should  generally  be viewed as
likely to recur in the normal  course of business,  although the amounts of such
expenditures will vary.

         Professional fees represent one component of general and administrative
expenses. Professional fees reflect legal, accounting and other consulting costs
associated with the preparation and filing of reports to the U.S. Securities and
Exchange  Commission,  services  rendered in connection with capital raising and
financing transactions, and other general legal and accounting work.

         During  the  fourth  quarter  of 1998,  the Board of  Directors  made a
decision that it would be in the best interest of the Company, and the Company's
shareholders,  to attempt to seek out and acquire the  business  and assets of a
going  concern.  The Company began its search  focusing  primarily on profitable
companies  doing  business on the Internet.  Several  different  companies  were
contacted and evaluated.  The Company  entered into  negotiations to acquire the
business and assets of Netbilling,  Inc. of Valencia,  CA in January of 1999. As
of the date of this  writing,  those  negotiations  are still under way, and the
Company is waiting for an audit of  Netbilling's  business to be completed.  The
Company entered into  negotiations with a German concern in February of 1999. As
of the  date  of this  writing,  letters  of  intent  have  been  signed  by the
principles of the German concern and the Company to acquire certain  businesses,
assets and sales and licensing rights of and from said German concern.

         The Company  believes that either or both of these  acquisitions can be
made, and that the Company and its  shareholders  will be benefited by doing so.
However,  no  assurance  can be given that the  Company  will be  successful  in
completing either of the said acquisitions.

Balance Sheet Information.

Assets

         As of March 31, 1999, the Company reported total assets of $4,834, down
$4,910 from the $9,744  reported as of December 31, 1998.  Current  assets as of
March 31, 1999 were $4,054,  down $4,842 from the $8,896 reported as of December
31,  1998.  The  changes in total and  current  assets as of March 31, 1999 from
those reported as of December 31, 1998 reflect primarily an decrease in cash due
to general and administrative  expenses incurred during the first quarter of the
year.

                                       3
<PAGE>

         Fixed  assets were $780 as of March 31,  1999,  down $68 from the fixed
assets  of $848  reported  as of  December  31,  1998.  This  change  was due to
accumulated depreciation.

Liabilities

         The Company had liabilities of $0.00 as of March 31, 1999.  Liabilities
of $117 were reported as of December 31, 1998.


Liquidity and Capital Resources as of March 31, 1999.

         The  Company  received a small  infusion  of  capital  during the first
quarter  of the year  from  stock  that was  purchased  by one of the  Company's
officers during the quarter. Said capital has allowed the Company to continue as
a "going  concern"  over the past three months.  However,  that capital has been
reduced  significantly due to general and administrative  expenses incurred over
the past three months. To continue as a "going concern" the Company will need to
find other sources of revenue and/or debt or equity financing of some kind.

         The Company's most  significant  cash needs in the  foreseeable  future
will include payment of general and administrative expenses, expenses related to
the Company's  attempts to complete the aforementioned  acquisitions,  and other
expenses related to the Company's business.

         The Company is currently  attempting  to complete,  one or both, of the
aforementioned  acquisitions.  No assurance can be given that such  acquisitions
can be  completed,  or that the  Company's  resources  will be  adequate to take
advantage of any other such opportunities if they were to materialize.



                           PART II - OTHER INFORMATION


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

         (a)      There are no exhibits included with this report.

         (b) The Company filed no reports on Form 8-K during the quarter.







                      (This Space Intentionally Left Blank)


                                       4
<PAGE>



                                   SIGNATURES

   In accordance  with Section 13 or 15(d) of the Exchange  Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                             DOWNSTREAM INCORPORATED - DSI
                                                  (Registrant)


Date: April 26, 1999                         By /s/ Barry A. Ellsworth 
                                                --------------------------------
                                                Barry A. Ellsworth
                                                President

                                       5
<PAGE>

April 26, 1999


The accompanying balance sheet was prepared by Downstream  Incorporated - DSI (a
development  stage  company) as of March 31,  1999.  The related  statements  of
operations, stockholders' equity and cash flows for the three months ended March
31, 1999 have not been audited.  However,  management  believes  they  represent
fairly the  financial  operations  and condition of the Company for said period.
The  accompanying  balance  sheet as of December  31, 1998 was audited by Jones,
Jensen & Company who  expressed an  unqualified  opinion on it in their  report,
dated February 3, 1999.


/s/ Downstream Incorporated - DSI

                                       6
<PAGE>



                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                      March 31, 1999 and December 31, 1998


   

                                   F-1
<PAGE>


                                 C O N T E N T S


Balance Sheets........................................................... F-3

Statements of Operations................................................. F-4

Statements of Stockholders' Equity....................................... F-5

Statements of Cash Flows................................................. F-6

Notes to the Financial Statements........................................ F-7


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                                 Balance Sheets


                                     ASSETS

                                                                             March 31,           December 31,
                                                                               1999                  1998       
                                                                         -----------------     -----------------
                                                                             (Unaudited)
CURRENT ASSETS
<S>                                                                      <C>                   <C>              
   Cash                                                                  $           4,054     $           8,896
                                                                         -----------------     -----------------

     Total Current Assets                                                            4,054                 8.896
                                                                         -----------------     -----------------

FIXED ASSETS (Note 6)                                                                  780                   848
                                                                         -----------------     -----------------

     TOTAL ASSETS                                                        $           4,834     $           9,744
                                                                         =================     =================


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable                                                      $          -          $             117
                                                                         -----------------     -----------------

     Total Current Liabilities                                                      -                        117
                                                                         -----------------     -----------------

     Total Liabilities                                                              -                        117
                                                                         -----------------     -----------------

STOCKHOLDERS' EQUITY

   Preferred stock: 50,000,000 shares authorized
    of $0.001 par value, -0- shares issued and
    outstanding                                                                     -                     -
   Common stock: 100,000 shares authorized of
    $0.001 par value, 4,500,000 shares issued
    and outstanding                                                                  4,600                 4,500
   Additional paid-in capital                                                      137,904               133,004
   Deficit accumulated during the development stage                               (137,670)             (127,877)
                                                                         -----------------     -----------------

     Total Stockholders' Equity                                                      4,834                 9,627
                                                                         -----------------     -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $           4,834     $           9,744
                                                                         =================     =================
</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>


                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                            Statements of Operations
                                   (Unaudited)

                                                                                              
                                                                                                     From       
                                                                                                 Inception on  
                                                         For the Three Months Ended               November 26,
                                                         March 31,           March 31,           1996 Through  
                                                           1999                1998                  1999        
                                                    ------------------   -----------------     -----------------
<S>                                                 <C>                  <C>                   <C>              
REVENUES                                            $           -        $         103,607     $         116,692

COST OF SALES                                                   -                   44,417                45,473
                                                    ------------------   -----------------     -----------------

GROSS PROFIT                                                    -                   59,190                71,219

EXPENSES

   General and administrative                                    9,746              19,168               208,916
   Depreciation and amortization                                    68                  84                   898
                                                    ------------------   -----------------     -----------------

     Total Expenses                                              9,814              19,252               209,814
                                                    ------------------   -----------------     -----------------

NET INCOME (LOSS) FROM
 OPERATIONS                                                     (9,814)             39,938              (138,595)

OTHER INCOME                                                        21                 223                   925
                                                    ------------------   -----------------     -----------------

NET INCOME (LOSS)                                   $           (9,793)  $          40,161     $        (137,670)
                                                    ==================   =================     =================

NET INCOME PER SHARE                                $             0.00   $           (0.01)
                                                    ==================   =================

WEIGHTED AVERAGE NUMBERS
 OF SHARES OUTSTANDING                                       4,583,333           4,334,000
                                                    ==================   =================
</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>


                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                       Statements of Stockholders' Equity


                                                                                                     Deficit
                                                                                                    Accumulated
                                                                                   Additional        During the
                                                          Common Stock              Paid-in         Development
                                                    Shares          Amount          Capital           Stage     
                                               --------------   --------------   --------------   --------------
<S>                                             <C>            <C>              <C>              <C>      
Balance, November 26, 1996                             -        $       -        $       -        $       -

Common stock issued for services
 rendered valued at $0.005 per share                1,500,000            1,500            6,000           -

Common stock issued for cash
 valued at $0.005 per share                         1,800,000            1,800            7,200           -

Net loss from inception on
  November 26, 1996 through
  December 31, 1996                                    -                -                -               (10,991)
                                               --------------   --------------   --------------   --------------

Balance, December 31, 1996                          3,300,000            3,300           13,200          (10,991)

Common stock issued for cash
 valued at $0.05 per share                          1,034,000            1,034           50,666           -

Stock offering costs                                   -                -               (13,696)          -

Net loss for the year ended
 December 31, 1997                                     -                -                -               (25,446)
                                               --------------   --------------   --------------   --------------

Balance, December 31, 1997                          4,334,000            4,334           50,170          (36,437)

Common stock issued for services
 at $0.50 per share                                   166,000              166           82,834           -

Net loss for the year ended
 December 31, 1998                                     -                -                -               (91,440)
                                               --------------   --------------   --------------   --------------

Balance, December 31, 1998                          4,500,000            4,500          133,004         (127,877)

Common stock issued for cash
 valued at $0.05 per share                            100,000              100            4,900           -

Net loss for the three months ended
 March 31, 1999 (unaudited)                            -                -               -                 (9,793)
                                               --------------   --------------   --------------   --------------

Balance, March 31, 1999 (unaudited)                 4,600,000   $        4,600   $      137,904   $      137,670
                                               ==============   ==============   ==============   ==============
</TABLE>

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

                                      F-5
<PAGE>
<TABLE>
<CAPTION>
           

                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                            Statements of Cash Flows

                                                                                                
                                                                                                       From       
                                                                                                   Inception on  
                                                              For the Three Months Ended            November 26,
                                                              March 31,         March 31,          1996 Through 
                                                               1999               1998                 1999       
                                                           ---------------   ----------------    ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                        <C>               <C>                 <C>             
   Net income (loss)                                       $        (9,793)  $         40,161    $      (137,670)
   Adjustments to reconcile net income (loss) to
    net cash used in operating activities:
     Stock issued for services                                      -                  -                  90,500
     Depreciation and amortization                                      68                 84                888
     Increase (decrease) in accounts payable                          (117)            -                  -     
                                                           ---------------   ----------------    ---------------

       Net Cash (Used) by Operating Activities                      (9,842)            40,245            (46,282)
                                                           ---------------   ----------------    ---------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of fixed assets                                         -                  -                  (1,359)
   Organization costs paid                                          -                  -                    (309)
                                                           ---------------   ----------------    ---------------

       Net Cash (Used) by Investing Activities                      -                  -                  (1,668)
                                                           ---------------   ----------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Stock issuance costs                                             -                  -                 (13,696)
   Common stock issued for cash                                      5,000             -                  65,700
                                                           ---------------   ----------------    ---------------

       Net Cash Provided by Financing Activities                     5,000             -                  52,004
                                                           ---------------   ----------------    ---------------

NET INCREASE IN CASH AND
 CASH EQUIVALENTS                                                   (4,842)            40,245              4,054

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD                                                 8,896             16,706             -     
                                                           ---------------   ----------------    ---------------

CASH AND CASH EQUIVALENTS AT END
 OF PERIOD                                                 $         4,054   $         56,951    $         4,054
                                                           ===============   ================    ===============

Cash Paid For:

   Interest                                                $        -        $         -         $        -
   Income taxes                                            $        -        $         -         $        -

</TABLE>
              The accompanying notes are an integral part of these
                             financial statements.

                                      F-6
<PAGE>

                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                        Notes to the Financial Statements
                      March 31, 1999 and December 31, 1998


NOTE 1 -      ORGANIZATION AND HISTORY

              a.  Organization

              The  financial   statements  presented  are  those  of  Downstream
              Incorporated - DSI (a development stage company).  The Company was
              incorporated  under the laws of the State of Utah on November  26,
              1996.  The Company was  incorporated  to engage in the business of
              financial consulting.  During 1997, the Company formed a dba named
              Security  Solutions,  Inc. to engage in the business of installing
              security systems.

              b.  Accounting Method

              The Company's financial  statements are prepared using the accrual
              method of  accounting.  The  Company  has  elected a  December  31
              year-end.

              c.  Cash and Cash Equivalents

              Cash equivalents  include  short-term,  highly liquid  investments
              with   maturities   of  three  months  or  less  at  the  time  of
              acquisition.

              d.  Basic Loss Per Share

              The computations of basic loss per share of common stock are based
              on the weighted  average number of shares  outstanding  during the
              period of the financial statements.

              e.  Provision for Taxes

              At  March  31,   1999,   the  Company  had  net   operating   loss
              carryforwards of approximately  $63,000 that may be offset against
              future  taxable  income  through  2013.  No tax  benefit  has been
              reported in the financial  statements because the Company believes
              there  is  a  50%  or  greater   chance  the  net  operating  loss
              carryforwards will expire unused.  Accordingly,  the potential tax
              benefits of the net operating loss  carryforwards  are offset by a
              valuation allowance of the same amount.

              f.  Estimates

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

                                      F-7
<PAGE>


                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                        Notes to the Financial Statements
                      March 31, 1999 and December 31, 1998


NOTE 1 -      ORGANIZATION AND HISTORY (Continued)

              g.  Property, Equipment and Depreciation

              Property  and  equipment  are  carried  at cost.  Depreciation  is
              calculated  using the  straight-line  method over their  estimated
              useful life of 5 years.

NOTE 2 -      GOING CONCERN

              The Company's  financial  statements are prepared using  generally
              accepted accounting principles applicable to a going concern which
              contemplates   the   realization  of  assets  and  liquidation  of
              liabilities in the normal course of business. However, the Company
              does not have significant cash or other material assets,  nor does
              it have an established source of revenues  sufficient to cover its
              operating  costs and to allow it to continue  as a going  concern.
              The   accompanying   financial   statements  do  not  include  any
              adjustments   that  might   result   from  the   outcome  of  this
              uncertainty.  In addition to its  continued  search for  financial
              consulting  clients,  the Company's Board of Directors  decided it
              would be in the best  interest of the Company to attempt to locate
              and acquire the assets and business of an already  going  concern.
              Their  search  was  began  with  companies  that  were in some way
              related to the Internet.  Locating additional  consulting clients,
              and/or  locating  and  acquiring  the  business  and  assets of an
              Internet related concern will be the Company's primary  objectives
              in the coming months.

NOTE 3 -      STOCK TRANSACTIONS

              On December  10,  1996,  the Company  issued  1,500,000  shares of
              common stock for services  rendered by a related party. The shares
              were valued at $0.005 per share.

              On December 10, 1996, the Company issued 1,800,000 shares of stock
              for cash at $0.005 per share.

              On October 2, 1998, the Company issued 166,000 shares of stock for
              services  rendered by a related  party.  The shares were valued at
              $0.50 per share.

              On January 16, 1999,  the Company  issued  100,000 shares of stock
              for cash at $0.05 per share.

NOTE 4 -      PUBLIC OFFERING

              The  Company  completed  an offering  of  1,034,000  shares of its
              previously unissued common stock to the public at $0.05 per share.
              The Company  incurred  offering costs of $13,696 which were offset
              against the proceeds of the offering.

                                      F-8
<PAGE>

                          DOWNSTREAM INCORPORATED - DSI
                          (A Development Stage Company)
                        Notes to the Financial Statements
                      March 31, 1999 and December 31, 1998


NOTE 5 -      COMMITMENTS

              Officer  Compensation - The Company committed to pay the President
              $2,000 per month since more than  $50,000 was raised in the public
              offering.  In addition to the salaries,  the Company has agreed to
              pay its President and its other officers a commission of up to 20%
              of revenues generated by their efforts.  As of March 31, 1999, the
              President is no longer being paid a salary by the Company.

NOTE 6 -      FIXED ASSETS

               Fixed assets at March 31, 1999 consisted of the following:

                                                             March 31,
                                                               1999        
                                                        ------------------
                Fax machine                             $              424
                Televisions                                            935
                                                        ------------------

                Less accumulated depreciation                         (579)
                                                        ------------------

                Net fixed assets                        $              780
                                                        ==================

               Depreciation  expense for the three  months  ended March 31, 1999
               and for the  year  ended  December  31,  1998  was $68 and  $272,
               respectively.

                                      F-9