SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

             [X] Quarterly report pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 2001

       [ ] Transition report under Section 13 or 15(d) of the Exchange Act

                         Commission file number 0-21934

                              DIGITAL PRIVACY, INC.
        (Exact name of small business issuer as specified in its charter)

                                    Delaware
                         (State or other jurisdiction of
                         incorporation or organization)

                                   52-1680936
                        (IRS Employer Identification No.)

            1433 Utica Avenue South, Suite 290, Minneapolis, MN     55416
               (Address of principal executive offices)           (Zip Code)


                                 (763) 544-2200
                           (Issuer's telephone number)

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, and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X]  No [  ]

As of May 15, 2000, the Registrant had 3,968,113 shares of its Common Stock
outstanding.

Transitional Small Business Disclosure Format:    Yes  [  ]   No [X]

<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements.



                              Digital Privacy, Inc.
                            Condensed Balance Sheets

<TABLE>
<S>                      <C>                                <C>               <C>

                                                            March 31,         December 31,
                         ASSETS                                2001               2000
                                                         ---------------   ----------------
                                                           (unaudited)

CURRENT ASSETS
       Cash                                                      $ 1,545            $ 5,279
       Accounts Receivable, net of allowance for doubtful         19,144             24,411
          accounts of $18,500
       Inventory                                                  36,614             36,737
       Other                                                      18,324              4,836
                                                         ---------------   ----------------
          TOTAL CURRENT ASSETS                                    75,627             71,263
                                                         ---------------   ----------------
PROPERTY AND EQUIPMENT                                            30,019             34,877
                                                         ---------------   ----------------
OTHER ASSETS
       Patents and trademarks                                    411,286            407,041
       License fee escrow                                         49,978             49,978
                                                         ---------------   ----------------
                                                                 461,264            457,019
                                                         ---------------   ----------------
                                                               $ 566,910          $ 563,159
                                                         ===============   ================

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
       Current maturities of notes payable                     $ 889,000          $ 748,000
       Accounts payable                                          184,267            149,327
       Accrued interest                                           41,603             18,574
       Accrued expenses - other                                  209,498            183,386
                                                         ---------------   ----------------
          TOTAL CURRENT LIABILITIES                            1,324,368          1,099,287
                                                         ---------------   ----------------
NOTES PAYABLE, net of current maturities                          81,000             81,000
                                                         ---------------   ----------------
STOCKHOLDERS' DEFICIT
       Preferred stock:
          Series A, 8% cumulative convertible - $.01
             par value, $10 stated and liquidation value
             (authorized - 40,000 shares; issued and
             outstanding - 30,000 shares)                        300,000            300,000
          Undesignated - $.01 par value (authorized -
             4,960,000 shares; no shares issued and
             outstanding)                                              -                  -
       Common stock - $.01 par value (authorized -
          95,000,000 shares; issued and outstanding -
          3,968,113 shares)                                       39,681             39,681
       Additional paid-in capital                                714,469            714,469
       Options and warrants                                       96,460             96,460
       Accumulated deficit                                    (1,989,068)        (1,767,738)
                                                         ---------------   ----------------
                                                                (838,458)          (617,128)
                                                         ---------------   ----------------
                                                               $ 566,910          $ 563,159
                                                         ===============   ================

</TABLE>

See notes to condensed financial statements.

<PAGE>

                              Digital Privacy, Inc.
                       Condensed Statements of Operations
                                   (unaudited)

<TABLE>
<S>                                                                <C>                  <C>


                                                                   Three months ended March 31,
                                                                   -----------------------------
                                                                          2001             2000
                                                                   --------------    -----------
REVENUE                                                                  $ 228         $ 14,615

COST OF GOODS SOLD                                                         130              411
                                                                   --------------    -----------
GROSS PROFIT                                                                98           14,204

OPERATING EXPENSES                                                     197,978          287,262
                                                                   --------------    -----------
OPERATING LOSS                                                        (197,880)        (273,058)

INTEREST EXPENSE                                                        23,450           15,042
                                                                   --------------    -----------
NET LOSS                                                              (221,330)        (288,100)

DIVIDENDS ON PREFERRED STOCK                                              6,000           4,691
NET LOSS APPLICABLE TO COMMON                                      --------------    -----------
  STOCKHOLDERS                                                       $ (227,330)     $ (292,791)
                                                                 =================   ==============
NET LOSS PER SHARE OF COMMON STOCK -
  BASIC AND DILUTED                                                  $    (0.06)     $    (0.08)
                                                                 =================   ==============
WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                                                  3,968,113       3,714,575
                                                                 =================   ==============
</TABLE>

See notes to condensed financial statements.

<PAGE>

                           Digital Privacy, Inc.
                    Condensed Statements of Cash Flows
                                (unaudited)

<TABLE>
<S>                                                                             <C>                    <C>

                                                                                 Three Months Ended March 31,
                                                                                ------------------------------------
                                                                                      2001                 2000
OPERATING ACTIVITIES                                                             --------------         -----------
      Net loss                                                                    $ (221,330)           $ (288,100)
      Adjustments to reconcile net loss
      to net cash used by operating activities:
             Depreciation                                                              4,858                 7,087
             Changes in operating assets and liabilities:
               Accounts receivable                                                     5,267               (14,429)
               Inventory                                                                 123                  (114)
               Other current assets                                                  (13,488)                1,974
               Accounts payable and accrued liabilities                               84,081                  (910)
                                                                                --------------           ----------
                  Net cash used by operating activities                             (140,489)             (294,492)
                                                                                --------------           ----------
INVESTING ACTIVITIES
      Purchases of property and equipment                                                  -               (15,850)
      Patent and trademark costs                                                      (4,245)               (4,328)
                                                                                --------------           ----------
                  Net cash used by investing activities                               (4,245)              (20,178)
                                                                                --------------           ----------
FINANCING ACTIVITIES
      Proceeds from notes payable                                                    141,000                     -
      Proceeds from issuance of stock and option exercises                                 -               716,000
                                                                                --------------           ----------
                  Net cash provided by financing activities                          141,000               716,000
                                                                                --------------           ----------
NET INCREASE (DECREASE) IN CASH                                                       (3,734)              401,330

CASH
      Beginning of period                                                              5,279                84,493
                                                                                --------------           ----------
      End of period                                                                  $ 1,545             $ 485,823
                                                                                ===============         ===========
</TABLE>

See notes to condensed financial statements.

<PAGE>

                              DIGITAL PRIVACY, INC

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 March 31, 2001

                                   (unaudited)

1.       Basis of Presentation:
     The interim financial statements are unaudited, but in the opinion of
     management reflect all adjustments necessary for a fair presentation of
     results of such periods. All such adjustments are of a normal recurring
     nature. The results of operations for any interim period are not
     necessarily indicative of results for a full fiscal year.

     The condensed balance sheet as of December 31, 2000, is derived from the
     audited financial statements but does not include all disclosures required
     by accounting principles generally accepted in the United States of
     America. The notes accompanying the financial statements in the Company's
     Annual Report on form 10-KSB for the year ended December 31, 2000, include
     accounting policies and additional information pertinent to an
     understanding of both the December 31, 2000, condensed balance sheet and
     the interim financial statements. The information has not changed
     substantially except as a result of normal transactions in the three months
     ended March 31, 2001.

<PAGE>

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

         The  following  discussion  should  be read  in  conjunction  with  the
financial  statements  and  related  notes  which  are  included  under  Item 1.
Statements  made  below  which  are not  historical  facts  are  forward-looking
statements.   Forward-looking   statements   involve   a  number  of  risks  and
uncertainties  including,  but not limited to, general economic conditions,  our
ability  to  complete  development  and then  market our  products,  competitive
factors and other risk factors as stated in other of our public filings with the
Securities and Exchange Commission.

Overview

         We were  initially  formed in  December  1990 and filed for  bankruptcy
under  Chapter  11  of  the  U.S.  Bankruptcy  Code  on  January  6,  1999.  Our
Reorganization  Plan was confirmed by the U.S. Bankruptcy Court for the District
of Minnesota on September 8, 1999.

         We began  commercial  activity in the first quarter of 2000 and are now
in a position to offer a diverse range of products  designed  around the concept
of providing useful products and services in an attractive, convenient format to
people in their everyday environments.

         From December 7, 1990 through  December  1998, we raised  approximately
$5,000,000  through  equity and debt  financings  from private  investors.  As a
development stage enterprise, we incurred losses in excess of $8 million.

         Our ability to continue  in  business  is  dependent  on our ability to
raise additional capital and, ultimately,  to generate sufficient cash flow from
operations to support our cost  structure.  The following are primary  obstacles
which we feel  contributed to our inability to generate cash flow  sufficient to
meet  scheduled  payments  and  sustain  further  operations  and forced us into
bankruptcy:

         1.  We  experienced   significant   delays,   some   unforseeable   and
uncontrollable, in the design and development of our products;

         2. We experienced  delays in bringing our products to market because of
the slow  adaptation and development of the smart card and security market place
in the United States, and the lack of established distribution channels;

         3. Our inability to deliver to the government market our hardware based
product and the significant time delay in developing new software products; and

         4. We expended a considerable amount of time and resources in preparing
for further  financing  and growth.  It was  necessary to engage an  independent
auditor to review and audit historical financials and operational procedures and
to retain  consultants to provide marketing research and prepare a comprehensive
business  plan.  We also  retained the services of corporate  counsel to prepare
private placement memorandum, review our past sales of securities for compliance
with  applicable   securities  laws  and  applicable   contractual   shareholder
obligations,   assist  in  reducing  potential  liability  resulting  from  past
transactions,  and advise on the  revaluation  and  related  issues  involved in
recapitalization efforts.

         We  recognized  only  very  nominal  revenues  in 1998.  Revenues  were
generated primarily on integration services and the sale of our developer's tool
kit product. 1998 was the first year we realized sales.

         Inadequate cash flow and lack of capital resources  continued to be the
most serious  concerns  facing our management  coming into 1999. At December 31,
1998,  we had a  significant  negative  net  worth.  Having  taken  steps to cut
expenses  and  extend  the  payment  schedule  on  long-term  payables,  we then
developed a proposal  for a  restructuring  of our debts that would  involve the
conversion of secured and certain unsecured debt into common stock.  Ultimately,
we concluded that a non-bankruptcy restructuring was unlikely to be completed in
a timely  manner.  We therefore  decided to file a Chapter 11  bankruptcy as the
best method for restructuring our obligations.

         Following  the  bankruptcy  proceedings  we  added  to  our  management
structure  and board of  directors.  Current  management  is  familiar  with our
history and  recognizes  the problems  that plagued us prior to the  bankruptcy.
Accordingly, we are now focused on two aspects: (i) raising sufficient financing
to  support  us until  positive  cash flow from  sales  are  generated  and (ii)
generating sales.

Liquidity

         During the  quarter  we raised  $141,000  from the sale of  convertible
debentures.  We have no  meaningful  cash on hand.  Our expenses  are  currently
approximately $25,000 per month and they are being funded by personal loans from
management.  There  is no  obligation  for  these  loans to be made and they may
terminate at any time. Without these loans or other immediate financing, we will
have to cease  operations.  We currently have no plans on how to raise any funds
and avoid closing operations.

         We currently project requiring  approximately an additional  $1,500,000
to allow us to grow the business.  In the event we are  unsuccessful  in raising
such  funds  in this  offering,  we will  have to seek  alternative  sources  of
funding. We currently have no plans how to raise such additional funds.

         There can be no assurance  that we will be able to raise any additional
proceeds  from private  offerings  of our  securities  or  otherwise  obtain the
substantial  additional  capital  necessary to permit us to attract and retain a
sufficient  number  of  subscribers  or that  any  assumptions  relating  to our
business  plan  will  prove to be  accurate.  While we hope to raise  additional
financing,  we have no current  arrangements  with  respect  to, or sources  of,
additional  financing  and there can be no  assurance  that any such  financing,
particularly the significant  amounts of financing that would be required,  will
be available to us on commercially reasonable terms, or at all. Any inability to
obtain  additional  financing could have a material  adverse  effect,  including
possibly requiring us to significantly curtail or cease operations.

<PAGE>

First Quarter Activities

         We continued to actively market our computer security products.  During
the  quarter,  our  family of Privacy  products  consisting  of  PrivacyWeb(TM),
Privacy.AccessTM  and  Privacy.FileTM  completed final stage Beta testing and we
began  actively  marketing  them.  The  development   efforts  relating  to  our
e-commerce  security products are currently on hold as we are continuing to meet
with potential joint venture partners to produce a multi-purpose SmartCard(TM).

         We incurred a loss during the quarter of $221,330 from  operations  (as
compared to $288,100  during the first quarter of 2000) and had revenues of $228
(as compared to $14,615 during the first quarter of 2000).

         Our primary  objective  now is to obtain  financing.  We can reach this
goal by making sales, forming joint ventures or through sales of securities.  In
the event we are  unsuccessful  in these  efforts,  we will either have to cease
operations or sell the company.


                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings.

         None.

Item 2.  Changes in Securities.

         During  the  quarter we sold an  aggregate  of  $141,000  face value of
convertible debentures to three shareholders  consisting of an executive officer
and his family members. The debentures were sold pursuant to the exemptions from
registration contained in Regulation S and Regulation D, Rule 506.

Item 3.  Defaults Upon Senior Securities.

         None.

Item 4.  Submission of Matters to Vote of Security Holders.

         None.

Item 5.  Other Information.

         None.

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

         (a) None.

         (b) None.


<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the  undersigned  thereto  duly
authorized.

Date: May 14, 2001                           DIGITAL PRIVACY, INC.



                                          By: /s/Howard Miller
                                                 Howard Miller
                                                 Chief Executive Officer