U.S. 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, 2000

                [ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d)
            OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)

                           Commission File No. 0-26351


                                   DIGS, Inc.
            --------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)


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


         17327 Ventura Boulevard, Suite 200,  Encino, California  91316
  -----------------------------------------------------------------------------
                      Address of principal executive office


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

Check  whether  the issuer has (1) filed all  reports  required by Section 12 or
15(d) of the  Exchange  Act during the past 12 months,  and (2) been  subject to
such filing requirements for the past ninety (90) days. Yes ( X ) No ( )


     As of March 31, 2000,  6,658,631  shares of the  registrant's  common stock
were outstanding.

     The  aggregate  market  value of the voting  stock  held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked prices of such stock, as of May 18, 2000 was $16,247,0059.



<PAGE>1


                           DIGS, INC. AND SUBSIDIARIES


<TABLE>
<S>                                                                                  <C>
                                      INDEX

                                                                                        Pages
                                                                                       --------
PART 1: FINANCIAL INFORMATION

ITEM 1 - Financial Statements

      Independent Accountants' Report                                                     2

      Consolidated Balance Sheet (Unaudited) as of March 31, 2000                         3

      Consolidated Statements of Operations (Unaudited)
          For the Three Months Ended March 31, 2000 and 1999                              4

      Consolidated Statements of Cash Flow (Unaudited)
          For the Three Months Ended March 31, 2000 and 1999                              5

      Selected Information - Substantially All Disclosures Required by Generally
           Accepted Accounting Principles are Not Included                              6-9

ITEM 2 - Management's Discussion And Analysis Of Financial Condition And
               Results Of Operations                                                  10-11

</TABLE>


<PAGE>2

                         INDEPENDENT ACCOUNTANTS' REPORT



May 17, 2000


To The Board of Directors and Stockholders of
DIGS, Inc. and Subsidiaries
Encino, California

We have reviewed the accompanying  condensed consolidated balance sheet of DIGS,
Inc.  and  Subsidiaries  as  of  March  31,  2000  and  the  related   condensed
consolidated  statements  of income  and cash  flows for the  three-months  then
ended.  These financial  statements are the  responsibility of the Corporation's
management.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A review  of  interim  financial
information consists principally of applying analytical  procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with  generally  accepted  auditing  standards,  the  objective  of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material  modifications that should
be made to such condensed  consolidated  financial  statements for them to be in
conformity with generally accepted accounting principles.

The financial statements for the three-months ended March 31, 1999 have not been
reviewed  by us,  and  accordingly,  we  express  no  opinion  or other  form of
assurance on them.



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


<PAGE>3
                           DIGS, INC. AND SUBSIDIARIES
                          PART 1: FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2000
                                   (UNAUDITED)


                                     ASSETS

<TABLE>
<S>                                                                      <C>

CURRENT ASSETS
     Cash                                                                 $        1,658,473
     Loan receivable - officer                                                        50,558
     Other                                                                           263,797
                                                                          -------------------
             Total Current Assets                                                  1,972,828

PROPERTY AND EQUIPTMENT,
  net of accumulated depreciation                                                    179,380

PROGRAM DEVELOPMENT COSTS,
  net of accumulated amortization                                                    154,376
                                                                          -------------------
             Total Assets                                                 $        2,306,584
                                                                          ===================


                                    LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES                                                       $           39,479
                                                                         -------------------
STOCKHOLDERS' EQUITY
     Preferred stock,  par value $.01 per share;  20,000,000
       shares   authorized,    2,500   shares   issued   and
       outstanding                                                                        25
     Common  stock,  par value  $.001 per share;  80,000,000
       shares   authorized,   6,658,631  shares  issued  and
       outstanding                                                                     6,659
     Additional paid-in capital                                                    3,712,569
     Accumulated other comprehensive income                                           20,378
     Retained (deficit)                                                           (1,472,526)
                                                                          -------------------
             Total Stockholders' Equity                                            2,267,105
                                                                          -------------------
             Total Liabilities and Stockholders' Equity                   $        2,306,584
                                                                          ===================

</TABLE>

See  Accompanying  Selected  Information  to  Unaudited  Consolidated  Financial
Statements


<PAGE>4



                           DIGS, INC. AND SUBSIDIARIES
                          PART 1: FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (UNAUDITED)

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

                                                                     For the Three Months Ended
                                                                             March 31,
                                                                   -------------------------------
                                                                        2000           1999
                                                                   -------------  ----------------

REVENUE                                                            $    214,280   $     291,964
COST OF SALES                                                            71,113          26,009
                                                                   -------------  --------------
        Gross Profit                                                    143,167         265,955
                                                                   -------------  --------------
OPERATING EXPENSES
    Accounting                                                           27,004          10,678
    Legal                                                                31,390              35
     Marketing                                                           29,368          64,118
    Outside services                                                      7,300          30,500
    Payroll expenses                                                    123,886          66,150
    Other                                                                75,646          68,355
                                                                   -------------  --------------
        Total Operating Expenses                                        294,594         239,836
                                                                   -------------  --------------
        Income (Loss) From Operations                                  (151,427)         26,119
OTHER INCOME (EXPENSE)                                                     (801)          1,950
                                                                   -------------  --------------
        Income (Loss) Before Income Taxes                              (152,228)         28,069
(PROVISION) FOR INCOME TAX                                                 (800)           (800)
                                                                   -------------  --------------
        Net Income (Loss)                                              (153,028)         27,269

OTHER COMPREHENSIVE INCOME, net of tax;
    Unrealized holding gain arising during period                        23,125              --
    Add reclassification adjustment for (loss) included in
      net income                                                             --           7,850
                                                                   -------------  --------------
        Comprehensive Income (Loss)                                $   (129,903)  $      35,119
                                                                   =============  ==============
        Income  (Loss)  per common  share and common  share
         equivalent                                                $      (0.02)  $         .01
                                                                   =============  ==============
Weighted average common shares outstanding                            6,649,864       5,272,280
                                                                   =============  ==============

</TABLE>

See  Accompanying  Selected  Information  to  Unaudited  Consolidated  Financial
Statements

<PAGE>5

                           DIGS, INC. AND SUBSIDIARIES
                          PART 1: FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (UNAUDITED)

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

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

CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
      Net income (loss)                                                 $        (153,028)     $          27,269
      Adjustments to reconcile net (loss) to net cash provided
      (used) by operating activities:
     Amortization and depreciation                                                 14,043                  7,902
     (Increase) in accounts receivable                                            (55,020)              (199,828)
     (Decrease) in current liabilities and accrued expenses                       (48,662)               (19,369)
     Realized loss on sale of marketable equity securities                             --                  7,850
     (Increase) in deposits                                                          (922)                    --
     (Decrease) in deferred rent credit                                            (5,000)                (5,001)
                                                                       ---------------------  -------------------
                 Net Cash Flows (Used) by Operating Activities                   (248,589)              (181,177)
                                                                       ---------------------  -------------------

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
      Acquisition of property and equipment                                       (49,906)                (7,475)
      (Increase) in program development cost                                      (59,127)               (13,500)
      (Increase) in loan receivable - officer                                     (20,000)                    --
      Sale of marketable equity securities                                             --                  1,150
                                                                       -------------------    -------------------
                 Net Cash Flows (Used ) by Investing Activities                  (129,033)               (19,825)
                                                                       -------------------    -------------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
      Proceeds from issuance of preferred stock                                 2,230,000                     --
      Proceeds from issuance of short-term debt                                   150,000                     --
      Proceeds from short-term loan - officer                                      30,000                     --
      Principal payment of short-term loan - officer                              (30,000)                    --
      Principal payment of short-term debts                                      (450,000)                    --
                                                                       -------------------    -------------------

                 Net Cash Flows Provided by Financing Activities                1,930,000                     --
                                                                       -------------------    -------------------

NET INCREASE (DECREASE) IN CASH                                                 1,552,378               (201,002)

CASH AT THE BEGINNING OF THE YEAR                                                 106,095                515,920
                                                                       -------------------    -------------------
CASH AT THE END OF THE PERIOD                                           $       1,658,473      $         314,918
                                                                       ===================    ===================
ADDITIONAL DISCLOSURES:

      Interest paid                                                     $           6,147      $              --
                                                                       ===================    ===================
      Income taxes paid                                                 $             800      $             800
                                                                       ===================    ===================
</TABLE>

See  Accompanying  Selected  Information  to  Unaudited  Consolidated  Financial
Statements


<PAGE>6



                           DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION
     Substantially All Disclosures Required By Generally Accepted Accounting
                          Principles are Not Included
                                 MARCH 31, 2000

NOTE 1 - MANAGEMENT'S STATEMENT

In  the  opinion  of  the  management,   the  accompanying  unaudited  financial
statements  contain all  adjustments  (all of which are normal and  recurring in
nature)  necessary to present  fairly the financial  position of DIGS,  Inc. and
Subsidiaries  (the Company) at March 31, 2000, and the results of operations and
cash flows for the quarter ended March 31, 2000.

The notes to the  Consolidated  Financial  Statements  that are  incorporated by
reference  into the 1999 Form 10-KSB  should be read in  conjunction  with these
Consolidated Financial Statements.

NOTE 2 - 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.

NOTE 3 - PRIVATE PLACEMENT OF PREFERRED STOCK

On March 14, 2000, the Company  completed a private placement (the Placement) of
2,500 shares of the Company's Series "A" Convertible  Preferred Stock, par value
$.01 per share and warrants to purchase 40 shares of common stock for each share
of  preferred  stock.  The net  proceeds  to the  Company  from the sale,  after
underwriting costs, are approximately $2,230,000. In connection with the sale of
preferred  stock and issuance of warrants,  the Company  registered with the SEC
1,175,000 shares of common stock on April 19, 2000.

In addition  the  Company  will issued to the  underwriter  200,000  warrants to
purchase the Company's  common stock at the exercise  price equal to 110% of the
closing bid price of the common stock on the closing date.

A portion of the net proceeds was used to repay a short-term  loan in the amount
of  $450,000,  which as of March 14,  2000 had a balance of  $450,000.  The loan
carried an annual  interest rate of 5% per annum.  The Company also used $30,000
of the  proceeds to pay-off a  short-term  loan from an officer.  The  remaining
balance of the net proceeds,  including any  additional  proceeds  received upon
exercise of the warrants,  will be added to working capital,  of which a portion
will  be used to pay  operating  expenses,  program  development  costs  and any
necessary capital expenditures.

NOTE 4 - SHAREHOLDERS' EQUITY

Common Stock

In connection with the Placement discussed in Note 3, the Company issued 100,000
new warrants to the buyers of the  Convertible  Preferred  Stock and 200,000 new
warrants to the  underwriters.  Each new 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 the closing date. The warrants expire on May 13, 2003. At
March 31, 2000, there were 300,000 warrants outstanding.


<PAGE>7

                           DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION
     Substantially All Disclosures Required By Generally Accepted Accounting
                          Principles are Not Included
                                 MARCH 31, 2000


NOTE 4 - SHAREHOLDERS' EQUITY (CONTINUED)

Preferred Stock

In  connection  with the  Placement  discussed  in Note 3, the Company has 2,500
shares of Series "A" Convertible Preferred Stock, par value of $0.01 outstanding
as of March 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.  Upon conversion,  the number of common stock received for each preferred
share will be calculated by dividing  conversion amount by the conversion price.
Conversion  amount is the sum of  accrued  and unpaid  dividends  and the stated
value, which is $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 price 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.

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  preference  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.

The following is an analysis of activities in the  Stockholders'  Equity for the
three months ended March 31, 2000:

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

                                                                                               Comp-
                                       Preferred            Common Stock          Additional   rehensive
                                    -----------------  ---------------------       Paid-In     Income       Retained
                                    Shares     Amount     Shares    Amount         Capital     (Loss)       (Deficit)      Balance
                                    ------    -------  ----------- ---------   ------------- ----------- --------------  -----------

      Balance at 12/31/99               --        --     6,658,631  $  6,659   $  1,482,594   $ (2,747)   $ (1,319,498)  $  167,008
      March 14, 2000
         Preferred stock issued      2,500        25            --        --      2,229,975         --              --    2,230,000
      March 31, 2000
         Unrealized                     --        --            --        --             --     23,125              --       23,125
         holding gain
         Net (loss)                     --        --            --        --             --         --        (153,028)    (153,028)
                                    ------    -------  ----------- ---------   ------------- ----------- --------------  -----------
      Balance at 3/31/00            2,500    $    25     6,658,631  $  6,659   $  3,712,569  $  20,378    $ (1,472,526)  $2,267,105
                                    ======    =======  =========== =========   ============= ============ =============  ===========

</TABLE>

NOTE 5 - STOCK OPTION PLANS

The Company has elected to follow the Accounting Principles Board Opinion (APBO)
No.  25,  "Accounting  for  Stock  Issued  to  Employees,  "and to  provide  the
disclosures  required  under  Statement of Financial  Standards  (SFAS) No. 123,
"Accounting  for Stock-Based  Compensation."  In electing to follow APBO No. 25,
the Company does not recognize any compensation  expense related to the granting
of any stock  options,  as no options  are  granted at a price  below the market
price on the date of grant.


<PAGE>8

                           DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION
     Substantially All Disclosures Required By Generally Accepted Accounting
                          Principles are Not Included
                                 MARCH 31, 2000


NOTE 5 - STOCK OPTION PLANS (CONTINUED)

The  Company's  1999 stock  option plan  provides  incentive  stock  options and
nonqualified  stock options to purchase common stock. The options may be granted
to  directors,  officers,  key  employees,  consultants  and  subsidiaries.  The
exercise  price  can be 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
March 31, 1999,  the maximum of 750,000  shares were approved to be issued under
the plan, of which 350,000 shares were available for future plans.

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

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

                                                                                        Weight-
                                                                                         Average
                                                               Stock Options         Exercise Price
                                                              ---------------       ----------------
       Outstanding at December 31, 1999                              295,000               $5.17
       Granted                                                       105,000                5.00
       Exercised                                                          --                  --
       Forfeited                                                          --                  --
       Expired                                                            --                  --
                                                             ----------------       ----------------
       Outstanding at March 31, 2000                                 400,000               $5.13
                                                             ================       ================
       Shares exercisable at March 31, 2000                           98,333               $5.17
                                                             ================       ================

</TABLE>

Exercise prices for options outstanding as of March 31, 2000 range from $5.00 to
$5.50.  The following table summarizes  information for options  outstanding and
exercisable at March 31, 2000:

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

                                       Options Outstanding                     Options Exercisable
                            -------------------------------------------     ---------------------------
                                                            Weighted
                                            Weight-         Average                         Weight-
                               Stock        Average        Remaining           Stock        Average
            Exercise          Options       Exercise      Contractual         Options       Exercise
             Prices         Outstanding      Price            Life          Exercisable      Price
       -------------------- ------------- -------------   -------------     ------------- -------------
              $5.00           300,000        $5.00            2.39             65,000        $5.00
              $5.50           100,000        $5.50            1.75             33,333        $5.50
                            -------------                                   -------------
                              400,000                                          98,333
                            =============                                   =============

</TABLE>

In electing to continue to follow APBO No. 25 for expense recognition  purposes,
the Company is obliged to provide the expanded  disclosures  required under SFAS
No. 123 for stock-based  compensation  granted in 2000. Had compensation expense
for the stock options been recognized  based on the fair value on the grant date
under the  methodology  prescribed  by FAS 123,  the  company  would  require to
present the  proforma  net income and  earnings  per share for the three  months
ended March 31, 2000, if there is any materially different.

Because the weighted-average fair values at date of granted were the same as the
market  values  during the three months ended March 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 had not been
presented.


<PAGE>9

                           DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION
     Substantially All Disclosures Required By Generally Accepted Accounting
                          Principles are Not Included
                                 MARCH 31, 2000


NOTE 5 - STOCK OPTION PLANS (CONTINUED)

The weighted-average  fair value at the date of grant for options granted during
the  period  ended  March 31,  2000,  was  $5.00,  and was  estimated  using the
Black-Scholes  option  valuation  model  with  the  following   weighted-average
assumptions:

                                                              2000
                                                           ----------
       Expected life in years                                      5
       Interest Rate                                             5.0%
       Volatility                                               33.0%
       Dividend Yield                                              0%

NOTE 6 - SEGMENT INFORMATION

Information  concerning  operations in different lines of business for the three
months ended March 31, 2000 is  presented  below.  Prior to August of 1999,  the
Company operated in one business  segment;  public relation CD-ROM. In August of
1999, the company operated in public relation CD-ROM products and graphic design
within the United States.  Intercompany  transactions  between  segments are not
material.

<TABLE>
<S>                                           <C>                <C>             <C>
                                                  CD-ROM
                                                Design and           Graphic
             2000                               Development          Design         Consolidated
-------------------------------------         ---------------    --------------   ---------------
Net Operating Revenues                        $        6,550     $     207,730    $      214,280
Operating Income                                    (241,819)           88,791          (153,028)
Identifiable Operating Assets                      2,089,837           165,107         2,254,944
Depreciation and Amortization                 $       13,516     $         527    $       14,043

</TABLE>

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

NOTE 7  - EARNINGS PER SHARE

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



<PAGE>10

                           DIGS, INC. AND SUBSIDIARIES
      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                   COMPUTATION OF NET INCOME PER COMMON SHARES


                               FINANCIAL CONDITION

     The financial  condition of the Company  greatly  improved during the first
quarter of 2000. The most apparent  improvement being the increased  strength of
the Company's  balance sheet.  The  improvement  in the Company's  balance sheet
strength at March 31,  2000 as compared to December  31, 1999 is due to the sale
of 2,500 shares of  convertible  preferred  stock that provided the Company with
$2,230,000 of cash.  This cash allowed the Company to pay all of its  short-term
debt as well as other accrued  expenses.  The remaining cash and  elimination of
short-term debt leaves the Company extremely liquid.

     During the quarter ended March 31, 2000, cash used for operating activities
was $248,589 and cash used for capital expenditures was $129,033.  The cash used
for  operations  is a result of a net  operating  loss but also an  increase  in
accounts receivables and a decrease in accounts payable. Cash used for investing
activities  consisted of $49,906 for property and equipment,  $59,127 in program
development  costs and $20,000 in advances.  The Company  expanded its corporate
office to accommodate  its growing staff while  continuing to develop and refine
the  iVideoNow!   player.  Net  cash  proceeds  from  financing  activities  was
$1,930,000 and is a result of the sale of convertible preferred stock as well as
the payment of all short-term debt.

                              RESULTS OF OPERATIONS

     The Company's  operations  during the quarter ended March 31, 2000 resulted
in a loss of $129,903 as compared to a gain of $35,119  during the same  quarter
ended  March  31,  1999.  The  difference  in  operating   results  between  the
comparative  quarters is due to a slight decrease in revenues and an increase in
operating costs.

Revenues

     Revenues for the quarter  ended March 31, 2000  decreased to $214,280  from
$291,964 for the same quarter in 1999. The consolidated  revenue decrease is the
result  of a  drop  in  sales  volumes  of  CD-ROM  products  by  the  Company's
subsidiary,  Digital Corporate Profiles (DCP). However, this decrease was offset
by a significant  increase in services performed by the Company's graphic design
subsidiary,  DXF Design.  DXF Design had its most  productive  quarter since its
formation in the middle of 1999.

Cost of Sales and Operating Expenses

     Cost of sales as a percent of revenue  decreased  to 33% during the quarter
ended March 31, 2000 as compared to 9% in the same quarter of 1999. The decrease
is a result of a change in consolidated product mix as the services performed by
DXF Design became a larger portion of the consolidated revenue. As a result, the
Company's  gross  profit  decreased  to  $143,167  or 67% of revenue  during the
quarter  ended  March 31, 2000 from  $265,955 or 91% of revenue  during the same
quarter of 1999.

     Operating  expenses  during the quarter  ended March 31, 2000  increased to
$294,594 as compared to $239,836  during the same quarter  ended 1999.  The most
significant  operating expense increase is for payroll. The Company has expanded
its current  staff of  programmers,  graphic  designers  and  administrators  to
accommodate and guide the growth of the Company.  Legal costs  increased  during
the quarter as a result of the Company  retaining outside counsel to consult and
review the terms  regarding  the private  placement of  preferred  stock and the
registration of any securities connected with the private placement.


<PAGE>11

                           DIGS, INC. AND SUBSIDIARIES
      ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                   COMPUTATION OF NET INCOME PER COMMON SHARES


                                     OUTLOOK

     The  Company's  emphasis  continues  to be  on  effectively  marketing  and
enhancing  its current  products and services  while  researching  potential new
products.  New product development,  such as the iVideoNow!  player, is targeted
towards the business to business  market and  complement  the Company's  current
business to business  products.  The strength of the  Company's  balance  sheet,
combined with revenues,  should allow for more  aggressive  marketing of current
products as well as aggressive development of potential new products.

<PAGE>12

PART II. OTHER INFORMATION

Item 5. Other Information

On April 27, 2000,  shareholders holding a majority of voting power approved the
name  change of the Company  from DIGS,  Inc. to  iVideoNow.com,  Inc.  The name
change to iVideoNow.com,  Inc. is more descriptive of the Company's business and
will align the name of the Company more closely with the technical, internet and
media industries in which the Company operates.  The notices are scheduled to be
sent to  shareholders  on or before May 24, 2000.  The Company  expects the name
change to be  effective  approximately  20 days  after  notices  are sent to the
shareholders.


Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits.

          None

     (b)  Reports on Form 8-K.

          None


SIGNATURES

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


                                                       DIGS, INC.



     Dated:       May 19, 2000                 By:     PETER B. DUNN
                                                       ------------------------
                                                       Peter B. Dunn, President