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 September 30, 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)


                                 (952) 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 October 31, 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>
                                                             September 30,       December 31,
                           ASSETS                                2001               2000
                                                             -------------       ------------
                                                             (unaudited)
<S>                                                          <C>                 <C>
CURRENT ASSETS
       Cash                                                      $ 1,038            $ 5,279
       Accounts receivable, net of allowance for doubtful         19,696             24,411
          accounts of $18,500
       Inventory                                                  20,722             36,737
       Other                                                      10,238              4,836
                                                             -----------          ---------
          TOTAL CURRENT ASSETS                                    51,694             71,263
                                                             -----------          ---------

PROPERTY AND EQUIPMENT                                            20,304             34,877
                                                             -----------          ---------

OTHER ASSETS
       Patents and trademarks                                    411,286            407,041
       License fee escrow                                         49,978             49,978
                                                             -----------          ---------
                                                                 461,264            457,019
                                                             -----------          ---------

                                                               $ 533,262          $ 563,159
                                                             ===========          =========

          LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
       Current maturities of notes payable                   $ 1,134,000          $ 748,000
       Accounts payable                                          183,011            149,327
       Accrued interest                                           64,891             18,574
       Accrued expenses - other                                  449,456            183,386
                                                             -----------          ---------
          TOTAL CURRENT LIABILITIES                            1,831,358          1,099,287
                                                             -----------          ---------

NOTES PAYABLE, net of current maturities                               -             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                                    (2,448,706)        (1,767,738)
                                                             -----------          ---------
                                                              (1,298,096)          (617,128)
                                                             -----------          ---------

                                                               $ 533,262          $ 563,159
                                                             ===========          =========
</TABLE>

See notes to condensed financial statements.

                                        2

<PAGE>

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

<TABLE>
                                             Three months ended September 30,          Nine months ended September 30,
                                             ---------------------------------        ---------------------------------
                                                 2001                  2000               2001                 2000
                                             -----------           -----------        -----------           -----------
<S>                                          <C>                   <C>                <C>                   <C>
REVENUES                                     $      552            $   22,588         $      780            $   97,676

COST OF GOODS SOLD                               17,498                 1,146             17,628                 2,504
                                             ----------            ----------         ----------            ----------
GROSS PROFIT                                    (16,946)               21,442            (16,848)               95,172

OPERATING EXPENSES                              195,960               272,429            582,379               910,494
                                             ----------            ----------         ----------            ----------
OPERATING LOSS                                 (212,906)             (250,987)          (599,227)             (815,322)

INTEREST EXPENSE                                 27,776                15,376             81,741                45,955
                                             ----------            ----------         ----------            ----------
NET LOSS                                       (240,682)             (266,363)          (680,968)             (861,277)

DIVIDENDS ON PREFERRED STOCK                      6,000                 6,005             18,000                16,696
                                             ----------            ----------         ----------            ----------
NET LOSS APPLICABLE TO COMMON
  STOCKHOLDERS                               $ (246,682)           $ (272,368)        $ (698,968)           $ (877,973)
                                             ===========           ===========        ===========           ----------

NET LOSS PER SHARE OF COMMON STOCK-
  BASIC AND DILUTED                          $   (0.06)            $   (0.07)         $   (0.18)            $   (0.23)
                                             ===========           ===========        ===========           ----------
WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING                          3,968,113             3,958,363          3,968,113             3,864,321
                                             ===========           ===========        ===========           ----------
</TABLE>

See notes to condensed financial statements.

                                        3

<PAGE>

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

<TABLE>
                                                                     Nine months ended September 30,
                                                                        2001                  2000
                                                                   ----------             ----------

<S>                                                                <C>                    <C>
OPERATING ACTIVITIES
  Net loss                                                         $ (680,968)            $ (861,277)
  Adjustments to reconcile net loss to net
  cash used by operating activities:
    Depreciation                                                       14,573                 21,835
    Changes in operating assets and liabilities:
      Accounts receivable                                               4,715                (40,491)
      Inventory                                                        16,015                (37,175)
      Other current assets                                             (5,402)                  (486)
      Accounts payable and accrued liabilities                        346,071                 87,523
                                                                   ----------             ----------
        Net cash used by operating activities                        (304,996)              (830,071)
                                                                   ----------             ----------

INVESTING ACTIVITIES
  Purchases of property and equipment                                       -                (34,664)
  Patent and trademark costs                                           (4,245)               (11,906)
                                                                   ----------             ----------
        Net cash used by investing activities                          (4,245)               (46,570)
                                                                   ----------             ----------

FINANCING ACTIVITIES
  Proceeds from notes payable                                         305,000                 50,000
  Proceeds from issuance of stock and option exercises                      -                783,500
                                                                   ----------             ----------
        Net cash provided by financing activities                     305,000                833,500
                                                                   ----------             ----------

NET DECREASE IN CASH                                                   (4,241)               (43,141)

CASH
  Beginning of period                                                   5,279                 84,493
                                                                   ----------             ----------
  End of period                                                       $ 1,038               $ 41,352
                                                                   ===========            ===========
</TABLE>

See notes to condensed financial statements.

                                        4

<PAGE>

                              DIGITAL PRIVACY, INC

                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                               September 30, 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 nine months
     ended September 30, 2001.

                                        5

<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.

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.

                                        6

<PAGE>

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.

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.

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 $75,000 from the issuance of  convertible  notes to
an entity  controlled by family members of our president.  We have no meaningful
cash on hand. Our cash outlay for expenses are currently  approximately  $25,000
per month and they are being funded by personal loans from  management and other
related  parties.  We are accruing an additional  $20,000 per month in salary to
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,
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 or sell the company.

                                        7

<PAGE>

Third Quarter Activities

We continued to actively market our computer  security  products.  Our family of
Privacy   products   consisting   of   PrivacyWeb(TM),    Privacy.AccessTM   and
Privacy.FileTM  are fully  developed and we are actively  marketing them. We are
actively  working with other solution  providers to develop a  multi-application
smartcard solution.

We incurred a loss during the quarter of $212,906 from  operations  (as compared
to $250,987 during the third quarter of 2000) and had $552 revenues (as compared
to $22,588 during the third quarter of 2000).

Our primary objective now is to obtain financing, 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 significantly  curtail or cease operations
or sell the company.

                                     PART II
                                OTHER INFORMATION

Item 1.           Legal Proceedings.

                            None.

Item 2.           Changes in Securities.

During the quarter we issued an aggregate  of $75,000  face value of  promissory
notes to an entity  controlled  by  relatives of our  president.  The notes were
issued  pursuant to the exemption from  registration  contained in 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.

                                        8

<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: November 13, 2001

                                              DIGITAL PRIVACY, INC.




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


                                        9