DIGS INC
10SB12G/A, 2000-04-13
BUSINESS SERVICES, NEC
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                    U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                 Amendment No. 3
                                       To

                                   Form 10-SB


                   GENERAL FORM FOR REGISTRATION OF SECURITIES
                            OF SMALL BUSINESS ISSUERS

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

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

17327 Ventura Boulevard, Suite 200      Encino, California 91316
- -----------------------------------   ------------------------------
(Address of principal executive offices)

Issuer's telephone number:     (818) 995 - 3650
                          --------------------------------------
Securities to be registered under Section 12(b) of the Act:

     Title of each class                        Name of each exchange on which
     to be so registered                        each class is to be registered

   ------------------------                     ------------------------------
   ------------------------                     ------------------------------


Securities to be registered under Section 12(g) of the Act:

                                     Common
                              --------------------
                                (Title of class)


                              --------------------
                                (Title of class)












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<PAGE>
PART I

Forward Looking Statements

     The sections of this Report on Form 10-SB  containing such  forward-looking
statements include "Description of Business," "Historical Background," "Growth,"
"Acquisitions,"   "Products  and   Services,"   "Marketing  and  Sales,"  Patent
Development,"  "Markets" and "Competition" under Item 1 below, and "Management's
Discussion and Analysis of Financial  Condition and Results of Operations" under
Item 2 below. Statements in this Form 10-SB which address activities,  events or
developments that the registrant expects or anticipates will or may occur in the
future,  including  such topics as future  issuances of shares,  future  capital
expenditures  (including  the amount and nature  thereof),  expansion  and other
development  and  technological   trends  of  industry  segments  in  which  the
registrant  is  active,   business   strategy,   expansion  and  growth  of  the
registrant's and its competitors' business and operations and other such matters
are   forward-looking   statements.   Although  the   registrant   believes  the
expectations   expressed  in  such  forward-looking   statements  are  based  on
reasonable  assumptions  within the bounds of its knowledge of its  business,  a
number of factors  could cause actual  results to differ  materially  from those
expressed in any forward-looking statements, whether oral or written, made by or
on behalf of the registrant.

     The registrant's operations are subject to factors outside its control. Any
one, or a combination,  of these factors could materially  affect the results of
the registrant's  operations.  These factors  include:  (a) changes in levels of
competition from current competitors and potential new competition;  (b) loss of
a  significant  customer;  and (c) changes in  availability  or terms of working
capital  financing from vendors and lending  institutions.  The foregoing should
not be  construed as an  exhaustive  list of all factors that could cause actual
results to differ materially from those expressed in forward-looking  statements
made by the registrant.  Forward-looking  statements made by or on behalf of the
registrant are based on a knowledge of its business and the environment in which
it operates,  but because of the factors listed above, actual results may differ
from those anticipated  results described in these  forward-looking  statements.
Consequently,  all of the forward-looking statements made are qualified by these
cautionary  statements  and there can be no assurance that the actual results or
developments  anticipated  by the  registrant  will  be  realized  or,  even  if
substantially  realized,  that they will have the  expected  consequences  to or
effects on the registrant or its business or operations.

ITEM 1.  DESCRIPTION OF BUSINESS.

General

     Digs, Inc. (the "Company" or "DIGS") provides comprehensive  multimedia and
Internet communication  solutions for public companies to proactively tell their
story to the investment community, its stockholders and employees. The Company's
CD-ROM  program is a state of the art story telling tool creating a virtual road
show of a company's  story.  The program tells a client's "story" on a specially
designed  Internet  linked  CD-ROM  and  delivers  it, in an  attention  getting
package,  to the  computer  screens  of the  client's  shareholders,  interested
investors, the business community and the media.

     The Company's  primary product is the Investor  Relations  CD-ROM ("IRCD").
The IRCD program tells a corporate story by integrating the traditional  printed
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<PAGE>
report approach with the latest CD-ROM and Internet  interactive  video,  audio,
and animation technology.  IRCD presents a company's story on an Internet-linked
multimedia  CD-ROM.  IRCD describes the business of a company  utilizing  video,
audio,  animated  graphics and text. The company's  message is communicated  via
CD-ROM  linked to the  Internet.  The  approach  makes the  often-dry  corporate
profile  come  alive,  by using  video,  audio,  text and  graphics to present a
company's  corporate story,  including  financial  highlights,  product data and
other information.  The IRCD is user-friendly and  Internet-linked.  A number of
specialized  IRCD  packages and  programs,  including a compacted  Annual Report
package as well as an Environmental, Health and Safety CD-ROM which offers a new
multimedia  approach  to  tell a  company's  Environmental,  Health  and  Safety
policies,  current results and achievements are available.  The Company believes
that its IRCD  packages  offer  savings to companies  over  traditional  written
reports in both production and mailing costs. In addition, once an IRCD has been
received by a shareholder,  additional  CD's are never sent as updates,  rather,
any new and updated  information  and statistics can be added to the existing CD
through a simple Internet uplink,  thus,  further reducing costs of handling and
mailing.  The Company  believes  that this means of delivery of  information  is
particularly  important in an era when millions of investors worldwide are using
their computers and Internet as investment tools.

     Traditional   Reports   (Annual   Reports,   Product   Catalogs,    Company
Communications and Video Presentations) may require design,  printing, new paper
and packaging to create a  presentation  for each update,  which adds expense to
both  production and postage.  Costs  associated with the design and printing of
these  presentations  can  vary  depending  on the size  and  complexity  of the
presentation.  The  cost to  design  and  produce  our  IRCD  package  may  have
similarities to that of the Traditional  Written  Report,  however,  replication
costs on the CD-ROM are substantially  lower than printing the written report or
duplicating  a video.  While  traditional  reports are still  required by law, a
condensed version can be inserted into the IRCD jacket,  thereby  decreasing the
cost of expensive postage.  The postage costs for the traditional written report
can be up to six  times  the  cost of the  postage  required  for the  Company's
product. Current postage charges for a standard written report are approximately
$3.00 in  comparison  to the cost of mailing  our IRCD,  which is  approximately
$0.55.

     The  Company  is not  dependent  on long  term  clientele;  rather it is in
constant  recruitment  of new  accounts.  In  1997,  the  three  companies  that
generated  86% of the  total  revenues  were  Mikohn  Gaming  Corporation  which
provided  approximately 16%, Terrace Towers USA which provided approximately 27%
and White Wings Lab which  provided  approximately  43%. In 1998,  the following
companies  contributed  approximately 96% of the Company's  revenues as follows:
Terrace  Towers USA - 63%;  Hartcourt,  Incorporated  - 17%;  and Mikohn  Gaming
Corporation - 16%.  During the fiscal year 1997 and 1998 the companies'  primary
activity was the  development of its IRCD product.  DIGS,  Inc. does not rely on
long-term  relationships  with its  clients  because  the  service  or  products
provided do not require  upgrades unless  specifically  requested by the client.
Currently,  there are no service or product  contracts  in force with any of the
above-mentioned  clients  and  accordingly  we do  not  know  whether  our  past
relationship with these clients will result in future revenue. We are certain no
future  services or products will be provided to Terrace  Towers USA because the
client is no longer in existence. DIGS, Inc. attempts to maintain a relationship
with current and past clients,  however, does not believe revenues are dependent
on any one client.



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<PAGE>
     The  material  term of our  product  supply  agreement  with our  customers
requires each client to supply our company with their "assets", which consist of
copy, photographs,  video, graphs, financial data and other corporate materials.
The company then converts the supplied  information into a digital  presentation
on Internet sites and on CD-ROM.  The material is delivered to the client in the
form of an operating Internet website and/or CD-ROM.

Products

     IRCD.  The Company's  principal  product is the Investor  Relations  CD-ROM
("IRCD").  Companies  can use this easy CD-ROM  format to  communicate  with its
stockholders,  market makers and investment  analysts.  One CD-ROM is capable of
providing   information  that  would  require  more  than  1,000  pages  if  the
traditional  written  report  was  prepared.   Complete  financial  information,
including  financial  statements,  schedules  and notes,  together  with  yearly
comparison graphs of revenues, sales, profits, earnings per share, etc., are all
set forth in a colorful and creative  manner.  Audio not only includes music and
sound effects but  conversation  by company  executives,  such as its President,
Chief Financial Officer or Chief Scientist,  explaining the company's  business,
financial  success  and/or  new  products  and  inventions.  The  IRCD  makes an
excellent  alternative to a written  annual report or other written  information
companies  periodically send to its  stockholders.  Through a direct link to the
Internet,  financial  statements  and  other  corporate  happenings  can be kept
current by accessing that company's Website.

     Each IRCD is equipped with a link that will access the particular company's
website.  This  feature is available as long as the computer in use has Internet
capabilities, and provided the computer user is already utilizing their Internet
connection when our IRCD product is inserted into their CD-ROM drive.  Each IRCD
has a "button  icon".  When an IRCD is viewed on a  computer  terminal  that has
Internet  access an individual  can locate the "button icon" created  within the
CD-ROM that is  technically  capable of providing a direct link to the company's
website. This enables the user to receive updated financial information, product
information  and new video.  Our  product  does not provide a direct link to the
Internet;  however,  the users Internet  connection used in conjunction with our
product will provide a direct link to the company's website.

     EHSCD.  The Company  developed its  Environmental  Health and Safety CD-ROM
("EHSCD")  for those  companies  that are  primarily  in  the  natural resources
business. The EHSCD utilizes text, graphics, video and audio in a dynamic manner
to describe and explain a company's environmental, health and safety and natural
resource preservation to investors,  environmental groups, media, the public and
to  governmental  agencies.  The  Company  has  produced  an EHSCD for  Atlantic
Richfield  Corporation  ("ARCO")  who is  using  it  primarily  for  information
regarding  their efforts in the  environmental,  health and safety areas. In May
1999, the Company launched its new Website,  EHSREPORTS.COM.  This Website helps
Internet  users search by company,  or industry,  for  environmental  health and
safety reports  available in print,  online and interactive  CD-ROM formats from
hundreds of leading international corporations.

     EOCD.  The Company,  using a similar  format as its IRCD,  has developed an
Employee Orientation CD-ROM ("EOCD"). The EOCD was developed for internal use by
companies.  It is designed to  familiarize  new employees  with their company by
providing a comprehensive look at the company's people,  products,  services and
policies.  The  production  uses video,  audio,  graphics  and text in a lively,
informative and fun presentation.

                                       4
<PAGE>
Marketing and Customers

     The Company markets its products to large public  companies who are seeking
unique,  efficient  and  inexpensive  distribution  of  corporate  business  and
financial  information.  The Company  markets these  services  through  personal
contacts with customers and investment relations firms.

     The Company  employs two full time  employees to market its  products.  The
Company's  sales  persons   solicit   business  from  existing  and  prospective
customers.  The sales person also acts as service  representative to ensure that
the Company's  production  staff promptly  respond to customer  instructions and
meets customer needs.

     Since  beginning  full time  operations in December,  1998, the Company has
provided its IRCD products for customers ranging from The Cheesecake  Factory to
Mikohn Corp., a  manufacturer  and developer of systems and games for the gaming
industry.  The first two customers  utilizing the Company's EOCD product are The
Limited,  Inc. and  Intimate  Brands,  Inc.,  the parent  company of  Victoria's
Secrets,  Inc.  The  Company's  EHSCD  product was chosen by Atlantic  Richfield
Corporation  to  communicate  their  commitment  to a clean  environment  to its
shareholders, government agencies and the media.

Production

     The Company creates or accepts a client's videos, pictures, copy ("assets")
and, using the Company's  proprietary  application  software,  produces a Master
CD-ROM of the client's story.

     The basic package  includes filming three corporate  executive  interviews,
programming a 10-page corporate profile section, a financial Bottom Line section
featuring charts  illustrating  all financial aspect of the company,  a products
and services  section,  a research  library  section,  and a proprietary  Uplink
function  with an update  feature.  Once the "master" is  produced,  the Company
contracts  with  outside  replication  houses and  printers to produce the final
product.

Competition

     The Company competes with many traditional  printers and producers of paper
annual reports and investor information, almost all of which are larger than the
Company, better financed and longer established. The Company is not aware of any
national  entity  directly  competing  with  the  Company's  CD-ROM  format  for
communicating with stockholders and investment analysts.

     Because  of the  interface  between  the  Company's  IRCD  program  and the
internet, the Company must continue to keep abreast of technology.  The internet
is a rapidly evolving technology. In order to effectively compete in this arena,
the Company must continually  improve the performance,  features and reliability
of its internet  access  capabilities.  Any  significant  failure on our part to
adapt and compete  effectively  in the online  commerce area would likely have a
material,  adverse  effect on our business  results of operations  and financial
position.

 Reorganization

     Prior to the reorganization with Digital Corporate Profiles,  Inc. ("DCP"),



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<PAGE>
DIGS, Inc. (the "Company"),  formerly known as Advanced Laser Products,  Inc. (a
Delaware  corporation),  has one inactive  subsidiary,  Advanced Laser Products,
Inc. ("ALP") (a Nevada  corporation).  Effective November 9, 1998, in connection
with the agreement of reorganization (the "Reorganization"),  the Company issued
5,194,968  shares of its common  stock at $.001 par value per share in  exchange
for all of the  outstanding  common stock of DCP. DCP then became a wholly owned
subsidiary  of the  Company  based on a  conversion  ratio  of 3  shares  of the
Company's  common  stock for each share of DCP's stock.  For further  discussion
relating to the  accounting  for  reorganization,  See Note 9 of DIGS,  Inc. and
Subsidiaries' Notes to Consolidated  Financial  Statements.  The shareholders of
DCP became  the owners of  approximately  99% of the  outstanding  shares of the
Company after the reorganization.

Employees

     The Company currently employs seven full time employees of which two are in
management and administration, two in marketing, two in computer programming and
research,  and one in finance.  The employees  are not unionized and  management
believes the Company's relationship with its employees is good.

     The Company is a Delaware corporation, its executive offices are located at
17327 Ventura Boulevard,  Suite 200, Encino, California 91316, and its telephone
number is 818-995-3650.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Overview:

     Effective   November  9,  1998,   in   connection   with  an  agreement  of
reorganization, the Company issued 5,194,968 shares of its common stock at $.001
par value per  share in  exchange  for all of the  outstanding  common  stock of
Digital Corporate Profiles, Inc., a California corporation ("DCP"), in which DCP
became a wholly-owned  subsidiary of the Company based on a conversion  ratio of
three shares of the  Company's  common stock for each share of DCP's stock.  The
reorganization had been accounted for as a  recapitalization  of DIGS and DCP at
their book values. Prior to the reorganization,  the Company was considered as a
shell   organization   and  was   inactive   with  no  revenues  and  a  minimal
administrative  expense of $300 and $4,730 for the year ended  December 31, 1998
and 1997, respectively.  As the result of the recapitalization  accounting,  the
Company's  consolidated  financial  statements  presented are those of DCP whose
owners   maintained   control   after  the   reorganization.   At  the  date  of
reorganization,  there were 53,663  shares  that were owned by the former  DIGS,
Inc. shareholders. All share and per share amounts have been adjusted to reflect
the 1 for 10  reverse  stock  split  effective  April 20,  1998 and the 1 for 20
reverse stock split effective October 16, 1998. For further discussion  relating
to the accounting for reorganization, see Note 9 of DIGS, Inc. and Subsidiaries'
Notes to Consolidated Financial Statements. DCP provides complete multimedia and
internet communications solutions for public companies to proactively tell their
story to the worldwide  investment  community.  DCP produces investor  relations
CD-ROM (IRCD)  packages for its corporate and investor  relations  clients.  DCP
also offers the  environmental  health and safety CD-ROM  (EHSCD) to dynamically
tell the  environmental,  health and safety  story to  investors,  environmental




                                       6
<PAGE>
groups, media and the public. The Company operates in only one business segment.
For the Years Ended December 31, 1998 and 1997, the Company  generated  revenues
of 96% and 87% from the  following  customers:

                                        For the Years Ended  December 31
                                        --------------------------------
                                        1998                        1997
                                        ----                        ----
Hartcourt Incorporated                 $   29,045   16.9%   $   0         0%
Mikohn Gaming Corporation                  27,541   16.0       18,325    16.6
Terrace Tower USA                         107,500   62.6       30,000    27.2
White Wings Lab                                 0     0        47,427    43.0
                                       ----------   ----    ---------    ----
                                       $  164,086   95.5%   $  95,752    86.8%
                                       ==========   ====    =========    ====

     Because our products are the  properties  of the Company,  and because they
can be used in several  different  capacities,  it is  possible  to have  repeat
customers  that  order   additional   products  and  request   upgrading  and/or
modification  to their products.  As shown above,  two of our customers in 1997,
Mikohn Gaming and Terrace Tower,  continued to utilize our products and services
in 1998.  However,  there is no guarantee that our current customers will remain
with us  through  1999  and  subsequently.  Our  clients  are in no  contractual
obligation  to use our  services  in the  future  after the  products  have been
delivered. As of December 31, 1998, the Company has no long-term agreements with
any of its  customers.  We believe that we have superior  products and services.
With a strong marketing  effort, we believe that we will be able to maintain and
increase our client base.

Years Ended December 31, 1998 and 1997:

     Revenues  increased to $171,694  for the year ended  December 31, 1998 from
$110,107 for the year ended December 31, 1997. The increase was primarily due to
the overall increase of sales volume and activity during the year ended December
31, 1998.

     Gross profit  increased by 1.4% to $74,713 for the year ended  December 31,
1998 from  $46,362  for the year ended  December  31,  1997.  The  increase  was
primarily due to the overall increase in sales volume. Gross profit percentages,
however,  remain approximately the same for the year ended December 31, 1998 and
1997, which were 43.5% and 42.1%, respectively.

     Cost of sales  increased  to $96,980 for the year ended  December  31, 1998
from $63,745 for the year ended  December 31, 1997.  The increase was  primarily
due to the Company's  overall  increase of sales volume and activity  during the
year ended December 31, 1998.

     Operating  expense  increased to $535,231  for the year ended  December 31,
1998 from  $233,620  for the year ended  December  31,  1997.  The  increase was
primarily due to hiring additional staff to manage and support the growth during
1998.  In 1998,  the  Company  entered  into an  employment  agreement  with its
President,  which accounts for an increase of officer  salaries by $83,489.  The
total increases in salaries and related personnel costs accounted for 85% of the
increase in operating expense. Increase in sales commission,  professional fees,
outside services, and rent expense also contributed to the increase of operating
expense.


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<PAGE>
     Other  income and  (expense)  decreased  to  $(113,761)  for the year ended
December  31, 1998 from  ($1,991)  for the year ended  December  31,  1997.  The
decrease was primarily due to the Company booking a non-cash  finance expense of
$134,930 in conjuction  with a short-term  loan  agreement.  The loan  agreement
called for the  Company  to sell  586,656  shares of common  stock for $0.02 per
share.  The non-cash finance expense is based on the difference of the estimated
value of the stock and the actual amount received. Factors used to determine the
fair market value of the stock  included  the price of previous  stock sales and
the  financial  condition  of the  Company  at March 20,  1998,  the date of the
agreement.  Interest  expense  decreased to ($1,831) for the year ended December
31, 1998 from ($2,814) for the year ended  December 31, 1997.  Interest  expense
consists primarily of interest expense on the note payable to stockholder.

     As a result of operating losses and the Company's  inability to recognize a
benefit from its  deferred tax assets,  the Company has not recorded a provision
for  federal  income  taxes  for the years  ended  December  31,  1998 and 1997;
however, the Company incurred a minimum state income tax expense of $800 in 1998
and 1997.  As of December  31, 1998,  the Company had $711,466 of net  operating
loss  carry forwards  for federal income tax purposes, which expire beginning in
2011.  The Company has provided a full  valuation  allowance on its deferred tax
assets,  consisting  primarily of net operating loss  carry forwards, due to the
likelihood  that the Company may not generate  sufficient  taxable income during
the carry-forward period to utilize the net operating loss carry forwards.

     Unrealized loss on investment in equity securities  increased to $7,850 for
the year ended  December 31, 1998 from $0 for the year ended  December 31, 1997.
The unrealized loss was  contributed by the decrease in market value,  comparing
to historical cost of investment securities as of December 31, 1998.

Three Months Ended March 31, 1999 and 1998:

     Revenues  increased  to $291,964  for the three months ended March 31, 1999
from  $37,543  for the three  months  ended March 31,  1998.  The  increase  was
primarily  due to the overall  increased  sales volume and  activity  during the
first quarter of 1999. The increase in revenues is primarily attributable to the
increase in the marketing effort.

     Gross  profit  increased  to 91% for the three  months ended March 31, 1999
from 44% for the year ended  December  31,  1998.  The  increase  was due to the
increase in sales volume and the  decrease in cost of goods sold.  Sales for the
first quarter of 1999 exceed sales for the year ended  December 31, 1998 by 70%.
While sales increased,  IRCD production expense decreased.  The decrease in IRCD
production  expense  mainly  due to the  reduction  in  IRCD  programming  cost.
Throughout  1998,  the  Company  constantly  improved  its  products.  All costs
associated  with  technology  enhancement  were expensed in 1998.  By the end of
1998, the Company developed two new products,  EOCD and EHSCD. In addition,  the
Company has made  arrangements  with outside sources to maintain and improve its
products at a fixed monthly rate. Such arrangements benefited the Company in the
first quarter of 1999 when sales increased substantially and costs remained low.
If sales do not sustain the same level  throughout the year, the Company expects
the gross profit to decrease  because of certain  fixed costs,  that will remain
the same throughout the year.

     Cost of sales  increased  to $26,009 for the three  months  ended March 31,
1999 from  $17,477 for the three  months  ended March 31 1998.  The increase was
primarily  due to the overall  increase of sales volume and activity  during the
first quarter of 1999.

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<PAGE>
     Operating  expense  increased  to $239,836 for the three months ended March
31, 1999 from $56,190 for the three  months  ended March 31, 1998.  The increase
was primarily due to the significant  increase in marketing  expense,  personnel
related costs, and outside service costs.

      Other income (and  expense) increased to $1,950 for the three months ended
March 31, 1999 from ($1,203) for the three months ended  December 31, 1998.  The
increase was primarily due to net changes in sublease  rental  income,  interest
expense,  and  realized  loss on  sale of  securities.  Sublease  rental  income
increased to $9,800 for the three months ended December 31, 1998 from $0 for the
year ended December 31, 1997. Interest expense decreased to $0 from ($1,203) for
the three  months  ended  March 31,  1999 and 1998,  respectively.  The  Company
recognized a realized  loss on sale of investment  securities,  which was offset
against unrealized loss, recorded as of December 31, 1998.

Six Months Ended June 30, 1999 and 1998:

     Revenues  increased to $314,154 for the six months ended June 30, 1999 from
$159,080 for the same period ended June 30, 1998.  This overall  increase is due
to increased  sales volumes  during the first  quarter of 1999.  Revenue for the
second  quarter or three  months  ended June 30,  1999  decreased  to $22,190 as
compared to $121,150 for the same period in 1998.  The revenue  decrease in this
quarter as compared to the same quarter in 1998 was due to a temporary  decrease
in the sales volume of the Company's CD-ROM products.

     Gross  profit  increased to $228,120 for the six months ended June 30, 1999
from $121,972 for the same period ended June 30, 1998. Gross profit as a percent
of revenue  remained  relatively  constant  at 28% and 24% during the six months
ended June 30, 1999 and 1998  respectively.  Gross profits for the quarter ended
June 30, 1999 decreased to ($37,835) from $101,907 during the same quarter ended
June 30,  1998.  The  quarterly  decrease  in gross  profit  is  related  to the
quarterly  decrease in revenues  as well as an  increase  in  production  costs.
Production  costs for the  quarter  ended  June 30,  1999  increased  due to the
complexity of the CD-ROM's being produced during the quarter.  The complexity of
the CD-ROM's being produced in this quarter did not allow for normal  production
efficiencies.  The  decreased  production  efficiencies  resulted  in  increased
production costs.

     Operating  expenses increased to $443,768 for the six months ended June 30,
1999 from $202,762 for the six months ended June 30, 1998. For the quarter ended
June 30, 1999,  operating  expenses  increased to $203,931 from $146,573 for the
comparable  quarter ended June 30, 1998.  The increase in operating  expenses is
primarily  due to  increases  in outside  service  costs,  payroll  expense  and
marketing costs.

     As a result of operating losses and the Company's  inability to recognize a
benefit from its  deferred tax assets,  the Company has not recorded a provision
for federal  income  taxes for the three  months  ended March 31, 1999 and 1998;
however,  the Company  paid a minimum  state  income tax expense of $800 for the
first quarter of 1998. As of December 31, 1998,  the Company had $711,466 of net
operating  loss  carry forwards  for federal  income tax  purposes, which expire
beginning in 2011.  The Company has provided a full  valuation  allowance on its
deferred tax assets, consisting  primarily of net operating loss carry forwards,
due to the  likelihood  that the Company  may not  generate  sufficient  taxable
income  during  the  carry-forward  period to  utilize  the net  operating  loss
carry forwards.


                                       9
<PAGE>
     The Company  currently  anticipates that its revenue for 1999 will increase
by  approximately  250%.  This is because  revenue for the first quarter of 1999
exceeded 1998 revenue by 70%. In addition, revenue for anticipated new contracts
for the  remainder of the year would help to increase the  Company's  revenue by
approximately  250% in 1999.  However,  the  Company  anticipated  that it would
generate a net loss of  approximately  $500,000  in 1999 due to the  increase in
marketing expenses,  personnel related costs, and outside service costs of 780%,
71%,  and 167%,  respectively.  The Company  also  expects to incur  significant
marketing  and  outside  service  expenses to promote  all CD-ROM  products.  If
revenues fall below the Company's expectations,  the Company will not be able to
reduce its expense rapidly in response to a shortfall without raising additional
capital  through  public or private  financing,  or other  arrangements.  In the
long-term,  the Company will  continue to maintain  and  increase its  marketing
expense.  In addition,  the Company will  continue to spend money to improve and
develop its technology for existing and new products.

Liquidity and Capital Resources:

     Since  1996,  the  Company  has funded its  operations  and met its capital
expenditure  requirements  through  private sale of equity  securities,  through
short-term  loans from  stockholders  and  unrelated  parties,  and through cash
generated from sale of its CD-ROM  products and annual service  contracts of its
Internet  Website.  Proceeds  from sale of common  stock  through  March 31 1999
totaled approximately $1,306,000.

     The Company had negative cash flows from operating  activities  since 1997.
Net cash used in operating  activities  was $135,084 in 1997,  $383,189 in 1998,
and  $181,177  in the first  three  months of 1999.  Net cash used in  operating
activities  in each of these  periods was  primarily the result of net operating
losses.  These operating cash outflows were partially offset by the increases in
deferred  rent credit and  accounts  receivable,  and the  decreases in accounts
payable and accrued expenses.

     Net cash used by investing activities was $51,750 in 1997, $88,042 in 1998,
and $0 in the  first  three  months  of 1999.  To date,  the  Company  investing
activities  have consisted of purchases of property and equipment and investment
in program development.  Capital expenditures for property and equipment totaled
$12,615 in 1997, $79,042 in 1998, and $7,475 for the first three months of 1999.
Capital  expenditures  for program  development  totaled  $39,135 in 1997, $0 in
1998, and $13,500 for the first three months of 1999.

     As of December 31, 1998, the Company's principal commitments consisted of a
two-year operating lease of the corporate office, which is due to expire on July
31,  2000.  The Company is  obligated to pay $92,295 and $53,837 of rent expense
for 1999 and 2000,  respectively.  Rent expense for 1999 and 2000 will be offset
against  deferred rent credit of $20,000 and $11,667 and sublease  rental income
of $21,000 and $0, respectively.  The Company anticipates that it will renew the
lease  agreement  for an  additional 3 years with an annual lease  obligation of
approximately $100,000.

     The Company also has an employment  agreement with the Company's President,
which is due to expire on February 28, 2000. The Company is obligated to pay its
President  a salary  of  $96,000  and  $16,000  for 1999 and 2000.  The  Company
anticipates  that it will renew the  employment  agreement with the President in
February of the year 2000 for an additional 3 years with an  approximate  annual
compensation of $120,000.


                                       10
<PAGE>
     The Company's  working capital remained  approximately the same for the 1st
quarter of 1999,  despite an increase in revenue which had already exceeded 1998
revenue by $120,270.  This is because  cash used for  operations  exceeded  cash
generated  from the  operation by $181,177.  In  addition,  accounts  receivable
during the first quarter of 1999  increased to $203,011  from $3,183  because of
the increase in sales.

     The Company plans to make capital expenditures of approximately $150,000 in
1999.  In addition,  the Company  anticipates  that it will spend  approximately
$300,000,  $80,000,  and $100,000 for  personnel,  outside  service  costs,  and
marketing expense.

     As of March 31,  1999,  the  Company  had  $314,918  in cash.  The  Company
anticipates  that the existing cash and any cash generated from  operations will
be sufficient to fund its operating  activities,  capital expenditures and other
obligations through at least December 31, 1999. However, the Company may need to
raise  additional  funds in order to fund more  rapid  expansion,  to expand its
marketing  activities,  to develop and enhance existing products,  or to acquire
businesses  or  technologies.  If the company is not  successful  in  generating
sufficient cash flow from operations,  it may need to raise  additional  capital
through public or private financing or other  arrangements.  If additional funds
were raised  through the issuance of equity  securities,  the  percentage of the
stock owned by the then current stockholders would be reduced. Furthermore, such
equity might have rights,  preferences  or privileges  senior to current  common
stock.

Year 2000 Issue:

     The Year 2000 Issue refers  generally to the  problems  that some  computer
systems may have in determining  the correct year for the century.  For example,
software with  date-sensitive  functions that is not Year 2000 compliant may not
be able to  distinguish  whether  "00" means  1900 or 2000,  which may result in
failures or the creation of erroneous results.

     The  Company's  primary  management  information  and business  systems are
running on third party  software  packages  purchased and  implemented  in 1997.
These  software  packages  are  maintained  and  upgraded  annually.  Management
anticipates  that these packages are Year 2000 compliant;  however,  the Company
will  obtain Year 2000  compliance  statements  from the  software  makers.  The
Company believes that the total cost of Year 2000 compliance efforts will not be
material;  however, if the Company experiences  unforeseen problems with respect
to the Year 2000,  such as unused  computer  hardware and software,  the Company
could incur additional expense to correct these problems,  which is estimated to
be no more than $3,000.

     In addition,  the Company intends to obtain Year 2000 compliance statements
from other third  parties,  including  the  landlord,  banks,  Internet  service
providers,  customers,  and  major  suppliers.  Failure  to  achieve  Year  2000
readiness  by any of the  Company's  vendors and third  parties  could delay the
payments of the Company's  month-to-month  obligations and the collection of the
Company's accounts receivable for an estimated period of two weeks. However, the
Company does not expect the results to have a material  impact on the  Company's
financial position.

New Accounting Pronouncements:

     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting  Comprehensive  Income" ("SFAS No. 130"), which is effective for
financial  statements issued for fiscal years beginning after December 15, 1997.
                                       11
<PAGE>
SFAS  No.  130   establishes   standards   for  the  reporting  and  display  of
comprehensive  income, its components and accumulated  balances in a full set of
general purpose financial statements.  SFAS No. 130 defines comprehensive income
to include all changes in equity  except those  resulting  from  investments  by
owners  and  distributions  to owners.  Among  other  disclosures,  SFAS No. 130
requires  that all  items  that are  required  to be  recognized  under  current
accounting  standards as  components  of  comprehensive  income be reported in a
financial  statement  that is  presented  with  the  same  prominence  as  other
financial  statements.  The  Company  adopted  SFAS No. 130 for its fiscal  year
beginning January 1, 1998, and does not anticipate that adoption of SFAS No. 130
will  have  a  material  effect  on its  financial  statement  presentation  and
disclosures.

     In June 1997, the Financial Accounting Standards Board issued Statement No.
131,  "Disclosures  about  Segments of an Enterprise  and Related  Information "
("SFAS No.  131"),  which  supersedes  SFAS No.  14,  "Financial  Reporting  for
Segments  of a  Business  Enterprise,"  and  which is  effective  for  financial
statements  issued for fiscal years  beginning after December 15, 1997. SFAS No.
131 establishes  standards for the way that public companies report  information
about operating  segments in annual financial  statements and requires reporting
of selected information about operating segments in interim financial statements
issued to the public. SFAS No. 131 also establishes standards for disclosures by
public companies  regarding  information about their major customers,  operating
segments, products and services, and the geographic areas in which they operate.
SFAS No. 131 defines  operating  segments as components  of an enterprise  about
which separate financial information is available that is evaluated regularly by
the chief operating  decision maker in deciding how to allocate resources and in
assessing performance. SFAS No. 131 requires comparative information for earlier
years to be  restated.  The  Company  adopted  SFAS No. 131 for its fiscal  year
beginning  January  1,  1998.  Adoption  of SFAS No. 131 did not have a material
effect on the Company's financial statement presentation and disclosures.

     In February 1998, the Financial Accounting Standards Board issued Statement
No.  132,  "Employers'  Disclosures  about  Pensions  and  Other Post retirement
Benefits" ("SFAS No. 132"),  which is effective for financial  statements issued
for fiscal  years  beginning  after  December  15,  1997.  SFAS No. 132  revises
employers'  disclosures  about pension and other post retirement  benefit plans.
SFAS No. 132 requires comparative  information for earlier years to be restated.
The Company adopted SFAS No. 132 for its fiscal year beginning  January 1, 1998.
Adoption  of SFAS No.  132 did not have any  effect on the  Company's  financial
statement presentation and disclosures.

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133,  "Accounting for Derivative  Instruments and Hedging Activities" ("SFAS No.
133"),  which is effective for financial  statements for all fiscal  quarters of
all fiscal years beginning after June 15, 2000.  SFAS No. 133  standardizes  the
accounting for derivative instruments,  including certain derivative instruments
embedded in other  contracts,  by requiring that an entity recognize those items
as assets or liabilities in the statement of financial position and measure them
at  fair  value.  SFAS  No.  133  also  addresses  the  accounting  for  hedging
activities.  The Company  will adopt SFAS No. 133 for its fiscal year  beginning
January 1, 2000, and does not anticipate that adoption of SFAS No. 133 will have
any effect on its financial statement presentation and disclosures.

ITEM 3.  DESCRIPTION OF PROPERTY.

     The Company  presently  leases,  from a third  party,  6,153 square feet of
office space at 17327 Ventura  Boulevard,  Suite 200, Encino,  California 91316,
                                       12
<PAGE>
pursuant to a lease with a term ending July 31, 2000, providing for monthly rent
of $7,691.  The lease provides options to renew for an additional three and five
years. The Company does not anticipate changing its present leasing situation or
purchasing any real property in the near future.

ITEM 4.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND  MANAGEMENT.

         (a)  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:

     The following table sets forth certain information  regarding the ownership
of the Company's Common Stock known by the Company to be the beneficial owner of
more than 5% of the Common  Stock of the Company as of May 31,  1999.  Except as
otherwise  indicated,  the Company has been advised that all individuals  listed
below have the sole power to vote and  dispose of the number of shares set forth
opposite  their names.

                                           Beneficial
                                           Ownership of
Name and Address                           Common Stock        Percent of Class
- -------------------------------------------------------------------------------
Peter B. Dunn                            1,330,500                     20.0
17327 Ventura Boulevard, Suite 200
Encino, CA 91316

Allen Kelsey Grammer Trust                 450,000                      6.8
c/o Donald J. Miod
Miod & Company
15456 Ventura Boulevard, Suite 500
Sherman Oaks, CA 91403

First Capital Network, 1                   439,992                       6.6

Worldwide Insurance Consultants, 1         439,992                       6.6

Jamie Mazur 1, 2                           219,996                       3.3

Jennifer Mazur 1, 2                        219,996                       3.3

Emily Mazur 1, 2                           219,996                       3.3

Trent Mazur 1, 2                           219,996                       3.3


     1   The  address  of  each  of  the  beneficial  owners  identified  is c/o
         Corporate  Financial  Enterprises,  2224 Main Street,  Santa Monica, CA
         90405.  Mr. Regis  Possino is an officer and principal  shareholder  of
         these beneficial owners.

     2   Jamie,  Jennifer,  Emily and Trent Mazur are siblings and their parents
         disclaim  beneficial  ownership of these shares.  Emily and Trent Mazur
         are minors,  and their shares are held by Michelle Mazur, their mother,
         as custodian.

         (b)  SECURITY OWNERSHIP OF MANAGEMENT:

     The following table sets forth certain information  regarding the ownership
of the  Company's  Common Stock which are deemed under the current  rules of the
                                       13
<PAGE>
Securities  and Exchange  Commission to be  beneficially  owned by the Company's
executive officers and directors,  individually,  and all executive officers and
directors as a group,  as of May 31, 1999.  Except as otherwise  indicated,  the
Company has been advised that all  individuals  listed below have the sole power
to vote and dispose of the number of shares set forth opposite their names.

Name, Title and Address                     Number of Shares    Percent of Class
- -----------------------                     ------------------------------------
Peter B. Dunn                               1,330,500                     20.0
President and Director
17327 Ventura Boulevard, Suite 200
Encino, CA 91316

Allen Dunn                                    165,000                      2.5
Vice President, COO and Director
17327 Ventura Boulevard, Suite 200
Encino, CA 91316

David L. Fleming                              120,000                      1.8
Secretary and Director
17327 Ventura Boulevard, Suite 200
Encino, CA 91316

Officers and Directors as a Group
  (3 Persons)                               1,615,500                     24.3

         (c)  CHANGES IN CONTROL:


     There are no arrangements known to the Company which may result in a change
in control of the Company.


ITEM 5.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.

     (a)  OFFICERS AND  DIRECTORS:  The  following  table  provides  information
concerning  each  executive  officer and director of the Company.  All directors
hold  office  until the next  annual  meeting  of  shareholders  or until  their
successors have been elected and qualified.

                           Age               Title
                           ---               -----
Peter B. Dunn              59           President, Chief Financial Officer and
                                        Director

Allen Dunn                 32           Chief Operating Officer and Director

David L. Fleming           48           Secretary and Director

     PETER  B.  DUNN  founded  Digital  Corporate  Profiles,   Inc.  ("DCP"),  a
wholly-owned  subsidiary of the Company, in July 1996 and has served as Chairman
of the Board,  President,  Chief Executive officer,  Chief Financial Officer and
Treasurer of DCP since that time, and as President and Chief  Financial  Officer
for the Company since November  1998.  From 1987 to 1996, Mr. Dunn was President
of Lucky Dog  Productions  where he produced,  directed  and/or wrote 12 Golf TV
shows/videos, one commercial, two cable TV pilots and a made-for-video movie for
such  clients as  Paramount  Home Video,  Classic  Golf  International,  British

                                       14
<PAGE>
Broadcasting Corp.,  Lifetime Vision, Ltd, and Best of British Film and TV, Ltd.
From 1980 to 1987, he was President of International Special Promotions (ISP), a
special events  marketing  company  serving  companies  such as Coca-Cola,  R.J.
Reynolds,  and  Proctor  and  Gamble.  From  1972 to 1980,  Mr.  Dunn was  Chief
Executive Officer of Western Corporate Services, Inc., which he founded in 1972.
Western  Corporate  Services is the owner of U.S.  Stock  Transfer  Corporation,
which is the third  largest  independent  stock  transfer  agency in the  United
States.  Mr.  Dunn  remains  a major  shareholder  and  member  of the  Board of
Directors of Western Corporate Services.  Mr. Dunn received his Bachelor of Arts
in Industrial Management from Clarkson University,  and attended graduate school
at the  University  of  California,  Los  Angeles,  where  he  studied  Math and
Business.

     ALLEN DUNN joined Digital Corporate Profiles,  Inc. ("DCP"), a wholly-owned
subsidiary  of the  Company  at its  inception,  in July 1996,  in its  computer
department and, since November 1998, has been serving as Chief Operating Officer
and director of both the Company and DCP. Mr. Dunn has been  responsible for the
Company's web page design and Html coding, as well as website maintenance of the
Company's  UNIX operating  system.  From August 1997 to March 1998, Mr. Dunn was
director  of sales and  marketing.  From  June 1994 to January  1996,  Mr.  Dunn
freelanced as a computer  programmer and a children's  self-defense  instructor.
During this time, the primary focus of Mr. Dunn's  athletic career was competing
in national Tae Kwon Do tournaments highlighted in an attempt to qualify for the
U.S.  National  Tae  Kwon Do Team at the  Olympic  Training  Center  located  in
Colorado Springs,  Colorado. Mr. Dunn received his Bachelor of Arts in Economics
from California State University at Northridge in 1993, and is an alumnus of the
University of Colorado School of Astrophysics and Atmospherics.  He is currently
pursuing an advanced degree in Computer  Science at California  State University
at  Northridge,  as well as  completing  a  Microsoft  certified  program at New
Horizons  Computer  School in Los  Angeles,  California.  Mr. Dunn is the son of
Peter Dunn.

     DAVID L.  FLEMING  joined  the  Board of  Directors  of  Digital  Corporate
Profiles,  Inc., a wholly-owned  subsidiary of the Company, in July 1996 and has
been a director and Secretary of the Company since  November  1998.  Since 1991,
Mr.  Fleming  has been a managing  partner in DG&F  Design,  a  privately  owned
graphic arts company.

ITEM 6.  EXECUTIVE COMPENSATION.

     (a) SUMMARY  COMPENSATION TABLE: The following  information is provided for
the Company's Chief Executive officer during the Company's last completed fiscal
year. The Company had no executive  officers whose total annual salary and bonus
exceeded $100,000 for such year.

              Annual Compensation               Long Term Compensation
              -------------------              -------------------------
                                                  Awards          Payouts
                                              -----------------------------
                                                        Secur-
                                                        ities
                                     All       Rest-    Under-           All
                                     Other     ricted   lying            Other
Name and                             Compen-   Stock    Options/ LTIP    Compen-
Position     Year   Salary   Bonus   sation    Awards   SARs     Payouts sation
- --------------------------------------------------------------------------------

                                       15
<PAGE>
Peter B.
 Dunn, CEO   1998   $80,000   -0-     -0-        -0-      -0-      -0-     -0-
             1997   $ 5,000   -0-     -0-        -0-      -0-      -0-     -0-
             1996     -0-     -0-     -0-        -0-      -0-      -0-     -0-
- --------------------------------------------------------------------------------

     OPTIONS/SAR GRANTS in Last Fiscal Year: None. On January 2, 1999,  pursuant
to a 1999 Stock  Incentive  Plan, the Company  granted options to Peter Dunn and
Allen Dunn to  purchase  100,000  shares and 80,000  shares,  respectively.  The
exercise price for Peter Dunn was $5.50 per share,  and for Allen Dunn $5.00 per
share. For Peter Dunn, the options expire five years from date of grant and, for
Allen Dunn, the options expire ten years from date of grant. As of May 31, 1999,
no options have been exercised.

ITEM 7.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     In 1997 and  1998,  the  Company  borrowed  monies  from  Peter  Dunn,  its
President,  evidenced by a demand loan agreement with interest at 10% per annum.
In December  1998,  the Company  repaid  $47,321 to Mr. Dunn,  representing  all
amounts owed to Mr. Dunn, including interest.

ITEM 8.  DESCRIPTION OF SECURITIES.

         (a)  GENERAL:

     The Company has  authorized  100,000,000  shares  consisting  of 80,000,000
shares of Common  Stock,  $.001 par value,  and  20,000,000  shares of Preferred
Stock,  $.01 par value.  There are issued and  outstanding,  as of May 31, 1999,
6,648,631 shares of Common Stock (258 holders of record). No Preferred Stock has
been issued.

         (b)  COMMON STOCK:

     Each share of Common Stock entitles the holder thereof to one vote,  either
in  person or by  proxy,  at a meeting  of  shareholders.  The  holders  are not
permitted to vote their shares  cumulatively.  Accordingly,  the holders of more
than 50% of the issued and  outstanding  shares of Common Stock can elect all of
the directors of the Company.

     All shares of Common Stock are entitled to participate ratably in dividends
when and as  declared  by the  Company's  Board of  Directors  out of the  funds
legally available therefore. Any such dividends may be paid in cash, property or
additional  shares of Common Stock. The Company has not paid any dividends since
its inception and presently  anticipates  that no dividends  will be declared in
the foreseeable  future.  Any future dividends will be subject to the discretion
of the Company's  Board of Directors  and will depend upon,  among other things,
future  earnings,  the  operating and  financial  condition of the Company,  its
capital  requirements,  general  business  conditions and other pertinent facts.
Therefore, there can be no assurance that any dividends on the Common Stock will
be paid in the future.

     Holders of Common Stock have no  preemptive or other  subscription  rights,
conversion  rights,  redemption or sinking fund provisions.  In the event of the
dissolution,  whether  voluntary or involuntary,  of the Company,  each share of
Common  Stock  is  entitled  to  share  ratably  in  any  assets  available  for
distribution  to  holders  of  the  equity   securities  of  the  Company  after
satisfaction of all liabilities.

                                       16
<PAGE>
         (c)  PREFERRED STOCK:

     The Company is  authorized  to issue up to  20,000,000  shares of Preferred
Stock, $.01 par value, of which no shares are issued and outstanding.

     The Board of  Directors  has  authority to issue the  authorized  Preferred
Stock in one or more series,  each series to have such designation and number of
shares as the Board of Directors  may fix prior to the issuance of any shares of
such series. Each series may have such preferences and relative,  participating,
optional or other  special  rights,  with such  qualifications,  limitations  or
restrictions,  as are stated in the resolution or resolutions  providing for the
issue  of such  series  as may be  adopted  from  time to time by the  Board  of
Directors prior to the issuance of any shares of such series.

         (d)  1999 STOCK INCENTIVE PLAN:

     On January 2, 1999, the Company's Board of Directors  approved a 1999 Stock
Incentive Plan (the "1999 Plan"), subject to approval,  within twelve months, by
the  stockholders.  The  purpose  of the 1999 Plan is to enable  the  Company to
recruit and retain  selected  officers and other  employees by providing  equity
participation in the Company to such individuals.  Under the 1999 Plan,  regular
salaried employees,  including  directors,  who are full time employees,  may be
granted  options  exercisable  at not less than 100 percent of the fair value of
the shares at the date of grant.  The exercise price of any option granted to an
optionee who owns stock  possessing more than ten percent of the voting power of
all classes of stock of the Company must be 110 percent of the fair market value
of the common  stock on the date of grant,  and the duration may not exceed five
years.  Options  generally  become  exercisable  at a rate of 33  percent of the
shares subject to option one year after grant.  The remaining  shares  generally
become exercisable ratably over an additional 24 months. The duration of options
may not exceed ten years.  Options under the Plan are  nonassignable,  except in
the case of death and may be  exercised  only while the  optionee is employed by
the Company, or in certain cases, within a specified period after termination of
employment  (within three months) or death (within twelve months).  The purchase
price and number of shares that may be  purchased  upon  exercise of options are
subject   to   adjustment   in   certain   cases,    including   stock   splits,
recapitalizations and reorganizations.

     The number of options  granted and to whom,  are determined by the Board of
Directors, at their discretion.

     Under the 1999 Plan,  there were 750,000 shares  available for grant. As of
May 31, 1999,  289,000 options have been granted and are  outstanding  under the
1999 Plan, leaving a balance of 461,000 shares available for grant.

(e)  TRANSFER AGENT:

     The  Transfer  Agent for the  Company's  common  stock is  Signature  Stock
Transfer, Inc., 14675 Midway Road, Suite 229, Dallas, Texas 75244.









                                       17
<PAGE>
                                     PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS.

Market Information

     The  Common  Stock of the  Company is traded  under the symbol  DIGS in the
over-the-counter  market  through  the  NASD's  electronic  OTC  Bulletin  Board
service. The following table sets forth the range of high and low bid prices per
share of the Common Stock for each of the periods  indicated.  These  quotations
reflect inter-dealer prices,  without retail mark-up,  mark-down or commissions,
and may not  necessarily  represent  actual  transactions.  In November 1998 the
Company acquired Digital Corporate  Profiles,  Inc. ("DCP").  For a period of at
least two years  prior  thereto,  the Company  was  inactive  and trading in its
common stock was very sporadic.  There was very little  liquidity due to the low
volume.  Therefore,  any  quotations  prior  to the  DCP  transaction  would  be
meaningless and misleading.
                                                               Bid Prices
                                                     -------------------------
                                                            High      Low
                                                            ----      ---
Quarter  ended:
- ---------------
March 31, 1998                                              $ .09     $ .03
June 30, 1998                                               $1.50     $ .04
September 30, 1998                                          $2.62     $ .25
December 31, 1998                                           $6.87     $4.87*

March 31, 1999                                              $7.00     $3.00
June 30, 1999                                               $8.50     $8.50
September 30, 1999                                          $7.75     $7.75
December 31, 1999                                           $9.62     $4.87
Through February 10, 2000                                   $6.25     $5.12

*   Reflects a 1 for 20 reverse stock split.

Holders of Common Stock

    As of May 31, 1999, the number of holders of record of common stock was 258.

Dividends


     To date,  the company has not paid any cash  dividends  on its common stock
and does not anticipate  paying cash dividends in the  foreseeable  future.  The
Company  anticipates that all earnings,  if any, for the foreseeable future will
be retained for development of the Company's business.

ITEM 2.  LEGAL PROCEEDINGS.

     The Company is not a party to any pending legal proceedings.

ITEM 3.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

     None.

                                       18
<PAGE>
ITEM 4.  RECENT SALES OF UNREGISTERED SECURITIES.

     (1) On April 8, 1997,  the Company sold  300,000  shares of Common Stock to
         two investors for an aggregate amount of $100,000.  The two individuals
         were sophisticated  investors and were given full opportunity to review
         the business and  financial  operations of the Comjpany and to question
         officers and  directors.  Each of the  investors  purchased  the shares
         without a view to  further  distribute  the  shares.  Accordingly,  the
         Company believes that this transaction was exempt from the registration
         provisions of the Securities  Act of 1933, as amended,  pursuant to the
         exemption under Section 4(2) of the Act.

     (2) Pursuant to an agreement  entered  into on March 20, 1998,  the Company
         issued  1,759,968  shares on September  15, 1998 of its Common Stock to
         three purchasers for $11,734.  All of the purchasers were sophisticated
         investors and were in fact business  consultants for the Company.  Each
         of the investors  acquired the stock for investment  purposes without a
         view to further  distribution.  Accordingly,  the Company believes that
         this  transaction  was exempt from the  registration  provisions of the
         Securities  Act of 1933, as amended,  pursuant to the  exemption  under
         Section 4(2) of the Act.

     (3) On  November  9,  1998,  in  connection  with a Plan and  Agreement  of
         Reorganization (the "Plan"), the Company issued 5,194,968 shares of its
         Common  Stock in exchange  for all of the  outstanding  common stock of
         Digital Corporate Profiles,  Inc. ("DCP").  Upon the close of the Plan,
         DCP's  shareholders  owned  approximately 99% of the outstanding Common
         Stock of the Company. as a Result, DCP became a wholly-owned subsidiary
         of the Company.

     (4) On November 10, 1998, the Company sold 1,400,000 shares of Common Stock
         to four  individuals  pursuant to a Rule 504 offering.  The shares were
         sold at $0.71 per share for gross proceeds of $994,000. The Company had
         reasonable  grounds  to  believe  that each  purchaser  was  capable of
         evaluating  the  merits and risks of his  investment  and  bearing  the
         economic risks of his investment.  The Company had not raised, over the
         prior twelve  months,  more than one million  dollars  inclusive of the
         proceeds from this  offering.  Accordingly,  the Company  believes that
         this  transaction  was exempt from the  registration  provisions of the
         Securities  Act of 1933, as amended,  pursuant to the  exemption  under
         Regulation  D of that Act,  and the Rules and  Regulations  promulgated
         thereunder.

     (5) On January 2, 1999,  the Board of Directors duly adopted a stock option
         plan,  subject to  shareholder  approval,  pursuant to which options to
         purchase  up to 750,000  shares of the  Company's  Common  Stock may be
         granted by a committee of directors to key employees  and others.  Each
         option will have a term not to exceed ten years, or such shorter period
         as is determined by the Board of Directors,  and will be exercisable at
         the per share fair market value of the Company's Common Stock as at the
         date of grant. As of May 31, 1999, option to purchase 287,000 shares of
         Common Stock have been granted.






                                       19
<PAGE>
ITEM 5.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

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

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors  and officers and  controlling  persons of
the Company pursuant to the provisions of Delaware law or otherwise, the Company
has been advised that, in the opinion of the Securities and Exchange Commission,
such  indemnification  is against public policy as expressed in said Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Company of expenses incurred or
paid  by a  director,  officer  or  controlling  person  of the  Company  in the
successful  defense  of any  action,  suit,  or  proceeding)  is  asserted  by a
director,  officer or controlling person in connection with the securities being
registered,  the Company  will,  unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction  the  question  of whether  such  indemnification  by it is against
public policy in said Act and will be governed by the final adjudication of such
issue.

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





























                                       20
<PAGE>
PART F/S
     The  following  financial  statements  are  included as a separate  section
following the signature page to this Form 10-SB and are  incorporated  herein by
reference.
                    INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                            Page
                                                            ----
 Audited Financial Statements:

 Independent Auditors' Report                               F-2

 Prior Independent Auditors' Report                         F-3

 Consolidated Balance Sheet as of December 31, 1998         F-4

 Consolidated Statements of Operations - Years Ended
  December 31, 1998 and 1997                                F-5

 Consolidated Statements of Stockholders' Equity -
  Years Ended December 31, 1998 and 1997                    F-6

 Consolidated Statements of Cash Flows - Years Ended
  December 31, 1998 and 1997                                F-7

 Notes to Consolidated Financial Statements                 F-8 - F-15































                                       21
<PAGE>
                                    PART III

ITEM 1.  INDEX TO EXHIBITS.

     Item     Description

     2.       Plan and Agreement of  Reorganization  between the  Registrant and
              Digital Corporate Profiles, Inc. dated October 3, 1998.*

     3.(i)    Articles of Incorporation and Amendments thereto.*

      (ii)    By-Laws of Registrant.*

     10.(i)   Registrant's 1999 Stock Incentive Plan.*

      (ii)    Employment Agreement between Registrant's  wholly-owned subsidiary
              and Peter Dunn.*

       23.         Subsidiaries of Registrant.

- -------------------
* Previously filed.







                                   SIGNATURES


     In accordance  with Section 12 of the Securities  Exchange Act of 1934, the
registrant caused this registration  statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                                     DIGS, INC.

Date:  April 6, 2000

                            By: /s/ Peter B. Dunn
                            ----------------------------------------------------
                            Peter B. Dunn, President and Chief Financial Officer















                                       22
<PAGE>



















                           DIGS, INC. AND SUBSIDIARIES

                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1998
































                                       23
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                        CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


                          INDEX TO FINANCIAL STATEMENTS
                                                                  Pages
                                                            ------------------

Independent Auditors' Report                                      F - 2

Prior Independent Auditors' Reports                               F - 3

Consolidated Balance Sheet as of December 31, 1998                F - 4

Consolidated Statements of Operations
    For the Years Ended December 31, 1998 and 1997                F - 5

Consolidated Statements of Stockholders' Equity
    For the Years Ended December 31, 1998 and 1997                F - 6

Consolidated Statements of Cash Flows
    For the Years Ended December 31, 1998 and 1997                F - 7

Notes to Consolidated Financial Statements                    F - 8 - F - 15



     Unaudited  Financial  Statements

Consolidated  Balance  Sheet - Three Months
Ended March 31, 1999                                              F-16

Consolidated Statements of Operations - Three
    Months Ended March 31, 1999 and 1998                          F-17

Consolidated Statements of Cash Flows - Three
    Months Ended March 31, 1999 and 1998                          F-18

Notes to Consolidated Financial Statements                        F-19

Consolidated Balance Sheet (Unaudited) as of June 30, 1999        F-20

Consolidated Statements of Operations (Unaudited)
      For the Quarters and Year-To-Date Periods
      Ended June 30, 1999 and 1998                                F-21

Consolidated statements of Cash flow (Unaudited)
      For the Year-To-Date Periods Ended June 30, 1999
      And 1998                                                    F-22

Selected Information - Substantially All Disclosures
      Required by Generally Accepted Accounting
      Principles are Not Included                                 F-23 - F-25
 ITEM 2 - Management's Discussion And Analysis Of Financial
      Condition And Results Of Operations                         F-26

                                      F-1
                                        24
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


April 5, 1999


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

     We have audited the accompanying  consolidated  balance sheet of DIGS, Inc.
(a  Delaware  corporation)  and  subsidiaries  as of  December  31, 1998 and the
related consolidated  statements of operations,  stockholders'  equity, and cash
flows for the year then ended. These consolidated  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these  consolidated  financial  statements  based on our  audit.  The
financial  statements of Digital  Corporate  Profiles,  Inc.  (Subsidiary) as of
December  31, 1997 were audited by other  auditors  whose report dated April 10,
1998, expressed an unqualified opinion on those statements.

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

     In our opinion,  the 1998  consolidated  financial  statements  referred to
above present fairly, in all material respects,  the financial position of DIGS,
Inc.  and  subsidiaries  as of  December  31,  1998,  and the  results  of their
operations  and their  cash  flows for the year then  ended in  conformity  with
generally accepted accounting principles.




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














                                      F-2

                                       25
<PAGE>

KELLOGG & ANDELSON
ACCOUNTANCY CORPORATION







Board of Directors
Digital Corporate Profiles, Inc.
(Formerly known as StockNet, Inc.)
Encino, California


                          Independent Auditor's Report
                          ----------------------------

     We have  audited  the  accompanying  balance  sheet  of  Digital  Corporate
Profiles,  Inc.  (formerly known as StockNet,  Inc.) as of December 31, 1997 and
the related statements of operations and accumulated  deficit and cash flows for
the year then ended.  These financial  statements are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

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

     In our opinion,  the financial statements referred to above present fairly,
in all material respects,  the financial position of Digital Corporate Profiles,
Inc. (formerly known as StockNet, Inc.), as of December 31, 1997 and the results
of its operations and its cash flows for the year then ended in conformity  with
generally accepted accounting principles.

(X) Kellogg & Andelson
- ----------------------
signature

April 10, 1998


MEMBERS AMERICAN  INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
C.P.A. ASOCIATES OFFICES IN PRINCIPLE CITIES

14724 VENTURA BOULEVARD. SECOND FLOOR, SHERMAN OAKS, CALIFORNIA 91403
PHONE (818) 971-5100 FAX (818) 971- 5155

                                      F-3

                                       26
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1998
                                     ASSETS
CURRENT ASSETS
   Cash (Note 2)                                             $         515,920
   Marketable equity securities (Notes 2 and 3)                          1,150
   Accounts receivable - trade                                           3,183
                                                             -----------------
            Total Current Assets                                       520,253

PROPERTY AND EQUIPTMENT,
  net of accumulated depreciation (Notes 2 and 5)                       90,552

PROGRAM DEVELOPMENT COSTS,
  net of accumulated amortization (Notes 2 and 6)                       47,755

LONG-TERM ASSETS
     Deferred tax assets (Note 4)                                           --
                                                            ------------------
            Total Assets                                     $         658,560
                                                            ==================
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                          $          20,912
   Payroll tax liabilities                                              11,339
   Accrued vacation pay                                                  4,635
   Sub-lease deposits                                                    3,000
                                                            ------------------
            Total Current Liabilities                                   39,886

OTHER LIABILITIES
   Deferred rent credit (Note 7)                                        31,667
                                                            ------------------
            Total Liabilities                                           71,553
                                                            ------------------
STOCKHOLDERS' EQUITY
   Preferred  stock,  par value $.01 per  share;
     20,000,000 shares authorized, 0 shares
     issued and outstanding                                                 --
   Common  stock,  par  value  $.001 per  share;
     80,000,000 shares   authorized,   6,648,631
     shares   issued  and  outstanding                                   6,649
   Additional paid-in capital                                        1,434,604
   Accumulated other comprehensive income (loss)                        (7,850)
   Retained (deficit)                                                 (846,396)
                                                            ------------------
            Total Stockholders' Equity                                 587,007
                                                            ------------------
            Total Liabilities and Stockholders' Equity       $         658,560
                                                            ==================
   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                      F - 4
                                       27
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
                                                 1998                   1997
                                            ---------------      --------------
REVENUE (Notes 2 and 8)
  Investor relations CD-ROM (IRCD)             $     166,564     $     82,770
  Stocknet-USA directories                             5,130           27,337
                                               -------------     ------------
        Total Revenue                                171,694          110,107
                                               -------------     ------------
COST OF SALES
    IRCD production costs                             72,972           59,815
    Others                                            24,008            3,930
                                               -------------     ------------
      Total Cost of Sales                             96,980           63,745
                                               -------------     ------------
      Gross Profit                                    74,714           46,362
                                               -------------     ------------
OPERATING EXPENSES
      Auto expense                                    18,282            7,624
      Depreciation and amortization (Note 12)         14,717           17,767
      Commissions                                     17,974            3,124
      Marketing                                       14,400           34,358
      Outside services                                43,817           27,025
      Printing                                        19,824            5,122
      Professional services                           33,126           13,916
      Rent (Note 7)                                   44,445           18,000
      Salaries - officers                            121,989           38,500
      Salaries - other                               113,257           16,000
      Taxes - payroll                                 20,565           14,740
      Others                                          72,835           37,444
                                               -------------     ------------
      Total Operating Expenses                       535,231          233,620
                                               -------------     ------------
      (Loss) from Operations                        (460,517)        (187,258)
OTHER INCOME (EXPENSE)
      Rental income (Note 7)                          23,000               --
      Financing expense (Note 10)                   (134,930)              --
      Other income                                        --              823
      Interest expense                                (1,831)          (2,814)
                                               -------------     ------------
      (Loss) Before Income Taxes                    (574,278)        (189,249)
PROVISION FOR INCOME TAX (Note 4)                       (800)            (800)
                                               -------------     ------------
      Net (Loss)                                    (575,078)        (190,049)
OTHER COMPREHENSIVE INCOME, net of tax:
  Unrealized holding (loss) arising during period     (7,850)              --
     (Notes 2 and 3)                           -------------     ------------
      Comprehensive Income (Loss)              $    (582,928)    $   (190,049)
                                               =============     ============
(Loss) per common share and common share       $        (.14)    $       (.06)
  equivalent (Note 2)                          =============     ============
The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                      F - 5
                                       28
<PAGE>
  DIGS, INC. AND SUBSIDIARIES (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S>              <C>        <C>    <C>             <C>         <C>                   <C>         <C>            <C>
                                                            Additional         Other          Retained
               Preferred Stock          Common Stock          Paid-In      Comprehensive      Earnings
              ------------------  ----------------------
               Shares    Amount     Shares       Amount        Capital          Income         (Deficit)         Total
              -------- ---------  ------------ ---------  --------------   --------------   --------------   -------------
Balance as
 previously reported
 Dec. 31, 1996   --         --     3,135,000    $  3,135    $  197,453               --      $   (81,269)     $  119,319
 (Note 9)
Stock sales
April 8, 1997
(Note 10)        --         --       300,000         300        99,700               --               --         100,000
Net (loss)for
the year ended
Dec. 31, 1997    --         --            --          --            --               --         (167,504)       (167,504)
Prior  period
 adjustment
 Dec. 31, 1997
 (Note 12)       --         --            --          --            --               --          (22,545)       (22,545)
            ------- ----------  ------------  ---------- -------------  ---------------   --------------    -----------
Balance at
Dec. 31, 1997    --         --     3,435,000       3,435       297,153               --         (271,318)        29,270
Stock  sales
Mar. 20, 1998    --         --     1,759,968       1,760       144,905               --               --        146,665
(Note 10)
Reorganization
with DIGS, Inc.  --         --        53,663          54           (54)              --               --              0
Nov. 9, 1998
(Note 9)
Stock sales
Nov.  10, 1998
(Note 11)         --         --    1,400,000       1,400       992,600               --               --        994,000
Net  (loss)for
the year ended
Dec. 31, 1998     --         --           --          --            --               --         (575,078)      (575,078)
Unrealized
 holding (loss)
 Dec. 31, 1998    --         --           --          --            --           (7,850)              --         (7,850)
 (Notes 2 and 3)
            --------  ----------  -----------   ---------   ----------    -------------   --------------     ----------
Balance at        --   $      --    6,648,631   $   6,649   $1,434,604    $      (7,850)  $     (846,396)  $    587,007
Dec.31,1998 ========  ==========  ===========   =========   ==========    =============   ==============   ============
</TABLE>
    The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                     F - 6
                                       29
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
               (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<S>                                                                             <C>                     <C>
                                                                               1998                   1997
                                                                       ---------------------  -------------------
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
  Net loss                                                              $        (575,078)     $        (190,049)
  Adjustments to reconcile net (loss) to net cash provided (used)
    by operating activities:
    Operating expenses paid by issuance of stock                                  134,930                     --
    Amortization and depreciation                                                  31,607                 17,766
    (Increase) in accounts receivable                                              (3,183)                    --
    (Decrease) Increase in current liabilities and accrued expenses                (6,101)                37,199
     Increase in deposits                                                           3,000                     --
     Increase in deferred rent credit                                              31,667                     --
                                                                       -------------------    -------------------
        Net Cash Flows (Used) by Operating Activities                            (383,158)              (135,084)
                                                                       -------------------    -------------------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
    Acquisition of property and equipment                                         (79,042)               (12,615)
    (Increase) in program development cost                                             --                (39,135)
    Acquisition of marketable equity securities                                    (9,000)                    --
                                                                       -------------------    -------------------

        Net Cash Flows (Used) by Investing Activities                             (88,042)               (51,750)
                                                                       -------------------    -------------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
    Proceeds from issuance of long-term debt                                           --                100,200
    Proceeds from short-term loan                                                 600,000                     --
    Principal payment on short-term loan                                         (600,000)                    --
    Issuance of common stock (Notes 10 and 11)                                  1,005,735                100,000
    (Decrease) in note payable to stockholders                                    (47,321)                    --
    Payment of long-term debt                                                          --                (52,879)
                                                                       -------------------    -------------------
        Net Cash Flows Provided by Financing Activities                           958,414                147,321
                                                                       -------------------    -------------------
NET INCREASE (DECREASE) IN CASH                                                   487,213                (39,513)

CASH AT THE BEGINNING OF THE YEAR                                                  28,707                 68,220
                                                                       -------------------    -------------------
CASH AT THE END OF THE YEAR                                             $         515,920      $          28,707
                                                                       ===================    ===================
ADDITIONAL DISCLOSURES:
    Cash paid during the year for:
    Interest                                                            $           1,831      $           2,814
                                                                       ===================    ===================
    Income Taxes                                                        $             800      $             800
                                                                       ===================    ===================
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
    Common stock issued in exchange for subsidiary's common stock
                                                                        $         312,322      $              --
                                                                       ===================    ===================
</TABLE>
   The Accompanying Notes are an Integral Part of the Consolidated Financial
                                   Statements
                                      F - 7
                                       30
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
NOTE 1 - DESCRIPTION OF BUSINESS

     DIGS, Inc. (the Company),  formerly known as Advanced Laser Products, Inc.,
a Delaware  corporation,  was  incorporated  on June 27,  1986 as Skin  Research
Laboratories,  Ltd. On  September  25,  1990,  the  Company  changed its name to
Medipak  Corporation.  On  February  l, 1995,  the  Company  changed its name to
Advanced Laser Products,  Inc. In the late 1980's, the Company was attempting to
enter the medical  receivables  financing  business.  On  November 9, 1998,  the
Company  acquired  Digital  Corporate  Profiles,  Inc.  (DCP)  (see Note 9). DCP
provides complete  multimedia and Internet  communications  solutions for public
companies to proactively tell their story to the worldwide investment community.
DCP produces  investor  relations  CD-ROM (IRCD)  packages for its corporate and
investor relations clients.  DCP also offers the environmental health and safety
CD-ROM (EHSCD) to dynamically tell the environmental, health and safety story to
investors, environmental groups, media and the public.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation
- ----------------------
     The consolidated  financial  statements  include the accounts of DIGS, Inc.
and its wholly owned  subsidiaries,  Digital Corporate  Profiles,  Inc. (DCP), a
California corporation,  and Advanced Laser Products, Inc., a Nevada corporation
(inactive).  All significant  intercompany  accounts and transactions  have been
eliminated in consolidation.

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

Cash and Cash Equivalents
- -------------------------
     The Company and its subsidiaries consider cash on hand and cash in banks as
cash and cash equivalents.

     As of December 31, 1998,  the Company funds held in its operating  checking
account exceeded FDIC limit by $415,920.

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

Revenue Recognition
- -------------------
     Design and  development  contract  revenues  are billed in equal  one-third
installments  as the  contracts  progress.  All payments are  nonrefundable  and
revenue is recognized when earned.  Revenue is deemed to be earned when there is
                                      F-8
                                       31
<PAGE>
                          DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (continued)
- -------------------------------
no future performance obligation.  Future performance obligation ceases when the
product is approved by client and shipped.  The average  length of a contract is
approximately two months.

     Annual service contract revenues are recognized when earned. Annual service
contracts  are billed at the  beginning  of each quarter and  recognized  on the
straight-line  basis over the contract life, which is twelve months. The advance
charges are recorded and presented as deferred revenue until earned.

As of December 31, 1998 and 1997, the Company did not have any open contracts.

Earnings Per Share
- ------------------
     Earnings per share are computed on the basis of the weighted average number
of common  shares  outstanding  during the year.  The  weighted  average  shares
outstanding  for the years ended  December 31, 1998 and 1997 were  4,024,105 and
3,355,274,  respectively  (see Note 9).  Fully  diluted  per  share  data is not
presented, as the effects would be antidilutive.

Property and Equipment
- ----------------------
     Depreciation  of equipment and  amortization  of leasehold  improvements is
calculated by the straight-line  and accelerated  methods based on the following
estimated useful lives:
                                                                    Years
                                                             -----------------
                Computer                                               5
                Furniture and fixtures                                 7
                Organizational costs                                   5
                Computer software                                      5
                Leasehold improvements                                10

Long-Lived Assets
- -----------------
     In 1998, the Company  adopted SFAS 121,  "Accounting  for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to be Disposed of." In accordance
with SFAS 121,  long-lived  assets held and used by the Company are reviewed for
impairment  whenever  events or  changes  in  circumstances  indicated  that the
carrying  amount of an asset  might not be fully  recoverable.  For  purposes of
evaluating the  recoverability of long-lived  assets,  the estimated future cash
flows associated with the asset would be compared to the asset's carrying amount
to determine if a write-down  to market value or  discounted  cash flow value is
required.  The  adoption  of SFAS 121 had no impact on the  Company's  financial
position or on its results of operations.

Program Development Costs
- -------------------------
     In March 1998, the Company adopted Statement of Position 98-1,  "Accounting
for  Costs of  Computer  Software  Developed  or  Obtained  for  Internal  Use."
Capitalized  program  development  costs consist of consulting  and  programming
                                     F - 9
                                       32
<PAGE>
                          DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
costs. The Company  capitalizes  internally  developed software costs based on a
project-by-project  analysis of each project's  significance  to the Company and
its estimated  useful life.  All  capitalized  software costs are amortized on a
straight-line method over a period of five years.

Income Taxes
- ------------
     This Company has adopted SFAS No. 109, "Accounting for Income Taxes", which
requires a liability  approach to financial  accounting and reporting for income
taxes.  The difference  between the financial  statement and tax bases of assets
and  liabilities  is  determined  annually.   Deferred  income  tax  assets  and
liabilities are computed for those differences that have future tax consequences
using the  currently  enacted  tax laws and rates that  apply to the  periods in
which they are  expected to affect  taxable  income.  Valuation  allowances  are
established,  if necessary, to reduce deferred tax asset accounts to the amounts
that will more  likely than not be  realized.  Income tax expense is the current
tax payable or  refundable  for the period,  plus or minus the net change in the
deferred tax asset and liability accounts.

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.

Year 2000 Compliance
- --------------------
     In general,  management  believes its  computerized  systems used to report
financial  information are year 2000 compliant.  Management does not foresee any
material year 2000 problems with the Company's vendors,  service  providers,  or
other third parties which affect the Company's financial information.

Name Change
- -----------
     On March 17,  1998,  Digital  changed its name from  Stocknet-USA,  Inc. to
Digital Corporate Profiles, Inc.

     On  October 8, 1998,  the  Company  changed  its name from  Advanced  Laser
Products, Inc. (a Delaware corporation) to DIGS, Inc.

NOTE 3 - MARKETABLE EQUITY SECURITIES

     Cost and fair value of  marketable  equity  securities at December 31, 1998
are as follows:
                                            Gross           Gross
                                        Unrealized      Unrealized
                               Cost        Gains           Losses   Fair Value
                          -----------  ------------- -------------- -----------
Available for Sale
     Equity securities    $     9,000    $      --     $   (7,850)    $  1,150
                          ===========    =========     ==========     ========

                                     F - 10
                                       33
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
     Gross unrealized losses during the year ended December 31, 1998 amounted to
$7,850.

NOTE 4 - INCOME TAXES

     The  Company has  available  at  December  31,  1998,  net  operating  loss
carryforwards  totaling  $711,466 that may be offset against future taxable.  If
not used, the net operating loss carryforwards will expire as follows:

     Operating Losses
         Year 2011                                            $          81,269
         Year 2012                                                      190,049
         Year 2018                                                      440,148
                                                              -----------------
                                                              $         711,466
                                                              =================

     The net  deferred  tax  assets,  resulting  from  the net  operating  loss,
included in the  accompanying  balance sheet  include the  following  amounts of
deferred tax assets and liabilities at December 31, 1998:

     Deferred Tax Asset - Current                           $              --
     Deferred Tax Asset - Non-Current                                 224,237
                                                            -----------------
                                                                      224,237
     Valuation allowance                                             (224,237)
                                                            -----------------

                                                            $              --
                                                            =================

     For the year ended  December 31,  1998,  valuation  allowance  increased by
$156,530.  Due to the  uncertainty of the  realization of the net operating loss
carryforwards,  the Company has  established a valuation  allowance  against the
carryforward benefits in the amount of $224,237.

The components of the provision for income taxes are as follows:
                                                   1998                1997
                                        -----------------    ----------------
Current
     State                              $             800    $            800
                                        =================    ================

                                     F - 11

                                       34
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
NOTE 5 - PROPERTY AND EQUIPMENT

     Computer                                                 $          47,032
     Furniture and fixtures                                               4,691
     Organizational costs                                                 4,996
     Computer software                                                   21,180
     Leasehold improvements                                              43,524
                                                              -----------------
                                                                        121,423
     Less accumulated amortization and depreciation                    ( 30,871)
                                                              -----------------
                                                              $          90,552
                                                              =================

     Amortization  and  depreciation  expenses for the years ended  December 31,
1998  and  1997  were  $18,356  and  $12,515,  respectively.   Depreciation  and
amortization expense for the year ended December 31, 1997 included an $835 prior
year  adjustment  (see Note 12).  In 1998,  the Company  allocated  amortization
expense to cost of sales in an amount of $3,639.

NOTE 6 - PROGRAM DEVELOPMENT COSTS

     Program development costs                                $          66,257
     Less accumulated amortization                                      (18,502)
                                                             ------------------
                                                              $          47,755
                                                             ==================

     Amortization  expense  for the years ended  December  31, 1998 and 1997 was
$13,251  and  $5,252,  respectively.  Amortization  expense  for the year  ended
December  31, 1997  included a $4,670  prior year  adjustment  (see Note 12). In
1998, the Company allocated  amortization  expense to cost of sales in an amount
of $13,251.

NOTE 7 - COMMITMENTS

     As of September 1, 1997,  the Company  entered into an operating  lease for
its offices  expiring on August 31, 2007. The lease agreement  contains  certain
terms and  conditions,  which include,  but are not limited to,  property taxes,
insurance,  rent increases,  and repairs and maintenance.  As of August 1, 1998,
the above lease  commitment  was  terminated  at the request of the lessor.  The
Company was discharged of any future lease payment obligation.

     In August 1998, the Company  entered in a new two-year  operating  lease on
its current  premises,  expiring July 31, 2000, for the monthly lease payment of
$7,691.  The  lease  agreement  contains  certain  terms and  conditions,  which
include,  but are not limited to,  property  taxes,  insurance,  rent increases,
repairs and  maintenance.  There is an option to renew the lease for  additional
three and five years.

     The  following is a schedule of future  minimum  rental  payments  required
under the above operating leases as of December 31, 1998:

                                     F - 12
                                       35
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
                   Year Ending
                  December 31,                                     Amount
           ------------------------                          ------------------
                       1999                                   $          92,295
                       2000                                              53,837
                                                              -----------------

                                                              $         146,132
                                                              =================

     The above  rental  expenses  will be offset by $21,000 in  sublease  rental
income through July 31, 1999.

     For the years  ended  December  31,  1998 and 1997,  rental  expenses  were
$44,445 and $18,000, respectively. Rentals under the subleases expiring July 31,
2000 amounted to $23,000 in 1998. (See Note 14).

     In 1998, the lessor  compensated  DCP in an amount of $40,000 for moving to
its  current  facility.  As of  December  31,  1998,  the above  amount has been
classified as deferred  rental credit and  amortized on a  straight-line  method
over the term of the lease.  In 1998, the amortized  credit of $8,333 was offset
against rental expense.

     On  March  1,  1998,  DCP  entered  into an  employment  contract  with its
president  that  provides  for an  annual  salary of  $96,000  as well as annual
vacation,  sick pay, bonus,  and  miscellaneous  reimbursement  of out-of-pocket
costs. The contract expires on February 28, 2000.

NOTE 8 - MAJOR CUSTOMERS

     For the years ended  December 31, 1998 and 1997,  sales to three  customers
accounted for  approximately  96% and 87% of total  revenue,  respectively.  The
total revenue received from these customers in 1998 and 1997 was as follows:

                                      For the Years Ended December 31,
                        -------------------------------------------------------
                                     1998                           1997
                        ------------------------        -----------------------

       Customer A        $     29,045     16.9%        $           0       .0%
       Customer B              27,541     16.0                18,325     16.6
       Customer C             107,500     62.6                30,000     27.2
       Customer D                   0        0                47,427     43.0
                         ------------ --------        -------------- --------

                         $    164,086     95.5%        $      95,752     86.8%
                         ============ ========        ============== ========

NOTE 9 - AGREEMENT OF REORGANIZATION

     Effective   November  9,  1998,  in   connection   with  the  agreement  of

                                     F - 13
                                       36
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
reorganization, the Company issued 5,l94,968 shares of its common stock at $.001
par value per share,  in exchange  for all of the  outstanding  common  stock of
Digital  Corporate  Profiles,  Inc.  (DCP),  in which DCP became a wholly  owned
subsidiary  of the  Company  based on a  conversion  ratio  of 3  shares  of the
Company's common stock for each share of DCP's stock. The merger qualified for a
tax-free  reorganization  and has been  accounted for as a  recapitalization  of
Digital  Corporate  Profiles,  Inc.  and the  acquisition  of DIGS at their book
value.

     Prior  to  the  reorganization,  the  Company  was  considered  as a  shell
organization  and was  inactive  with no revenues  and a minimal  administrative
expense  of $300 and  $4,730  for the year  ended  December  31,  1998 and 1997,
respectively. As the result of the recapitalization,  the Company's consolidated
financial  statements  presented are those of Digital Corporate  Profiles,  Inc.
(DCP) whose owners maintained control after the  reorganization.  At the date of
reorganization,  there were 53,663  shares  that were owned by the former  DIGS,
Inc. shareholders. All share and per share amounts have been adjusted to reflect
the 1 for 10  reverse  stock  split  effective  April 20,  1998 and the 1 for 20
reverse stock split effective October 16, 1998.

NOTE 10 - SALE OF DCP'S STOCK

     In 1997, DCP issued  100,000  shares of its common stock,  an equivalent of
300,000 shares of the Company, no par, to two unrelated individuals at the price
of $1 per share.  The net proceeds were $100,000.  These shares were outstanding
at the time of the reorganization with the Company (see Note 9).

     On March 20,  1998,  pursuant to a short-term  loan  agreement of $600,000,
DCP's Board of Directors authorized the issuance of 586,656 shares of its common
stock,  an  equivalent  of 1,759,968  shares of the Company,  no par, to various
unrelated  individuals at the price of $.02 per share. All shares were issued on
September 15, 1998. The net proceeds were $11,735. These shares were outstanding
at the time of the  reorganization  with the Company  (see Note 9). In addition,
the Company  recorded a non-cash  financing  expense of $134,930 in  conjunction
with the  short-term  loan  agreement and the issuance of the above shares.  The
financing  expense is the difference  between the estimated fair market value of
DCP's stock on March 20,  1998,  which is $0.25 per share,  and the net proceeds
received.  Factors  used in  determining  the fair  market  value of DCP's stock
included the price of previously  sold stock and the financial  condition of the
Company on March 20, 1998.

NOTE 11 - SALE OF DIGS' STOCK

     On November 10, 1998, the Company issued  1,400,000  shares of common stock
through a 504 offering,  which is available to non-reporting and  non-investment
companies  for  offerings  of not more  than  $1,000,000  of  securities  in the
12-month  period  under  section  3(b) of the  (1933)  Securities  Act.  The net
proceeds of the offering  were  $994,000.  The Company used  $600,000 of the net
proceeds to repay outstanding short-term debts.

NOTE 12 - PRIOR PERIOD ADJUSTMENT

     Due to the discovery of unrecorded  liabilities and the  miscalculation  of
depreciation  as of December 31, 1997,  the following  adjustments  were made to
F - 14
                                         37
<PAGE>
DIGS, INC. AND SUBSIDIARIES   (FORMERLY KNOWN AS ADVANCED LASER PRODUCTS, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
DCP's beginning retained earnings as of January l, 1998:
     Amortization and depreciation                            $           5,505
     Commission                                                           3,124
     Accounting fees                                                     13,916
                                                              -----------------
                                                              $          22,545
                                                              =================
     The above changes  increased DCP's net loss for the year ended December 31,
1997 from $167,504 to $190,049.

NOTE 13 - LITIGATION
     The  Company is a  defendant  in a suit in which the  plaintiff  is seeking
recovery of approximately  $85,000.  The dispute arose as to the investment made
by the  plaintiff  and  the  non-delivery  of the  shares  by the  Company.  The
Company's  investment  banking  firm agreed to hold the Company and DCP harmless
for any and all damages  including,  but not limited,  to the cost of litigation
resulting  from  this  suit.  Consequently,  no  provision  has been made in the
accounts for any liability  from this suit.  During the calendar year 1999,  the
Company  settled  all  claims  with the  Plaintiff.  There  was no impact on the
Company's financial position.

NOTE 14 - RELATED PARTY TRANSACTIONS
     For the first eight months of 1997, the Company leased its facilities  from
the majority stockholder. The amount of rent paid to the stockholder during 1997
was $18,000.

     For the year ended  December  31,  1998,  the  Company  paid its  Secretary
approximately  $9,000 for  services in  connection  with the  production  of its
products.

     For the year ended  December  31,  1998,  DCP repaid the  president  of the
Company the  short-term  note in an amount of $47,321.  This amount was on DCP's
books since December 31, 1997.

NOTE 15 - SUBSEQUENT EVENTS
     On March 2,  1999,  DCP paid a  commission  in an amount of $3,124 to U. S.
Stock Transfer for referring  customers during the year ended December 31, 1997.
The  president  of DCP  is  also  a  member  of the  Board  of  Directors  and a
shareholder of U.S. Stock Transfer.

     On January 2, 1999,  pursuant to a 1999 Stock  Incentive  Plan, the Company
granted 287,000 options to the following individuals:
                                                    Exercise      Expire From
                                    Options           Price      Date of Grant
                                 -------------  --------------- ---------------
  Peter Dunn, President              100,000   $         5.50          5 yrs.
  Allen Dunn, Vice President          62,000             5.00         10 yrs.
  Various other individuals          127,000             5.00         10 yrs.
                                 -----------
                                     289,000
                                 ===========

                                     F - 15

                                       38
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 1999
                                  (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
     Cash                                                 $         314,918
     Accounts receivable - trade                                    203,011
                                                          ------------------
              Total Current Assets                                  517,929

PROPERTY AND EQUIPTMENT,
  net of accumulated depreciation                                    93,437

PROGRAM DEVELOPMENT COSTS,
  net of accumulated amortization                                    57,943

LONG-TERM ASSETS
     Deferred tax assets                                                 --

                                                          -----------------
              Total Assets                                $         669,309
                                                          =================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable and accrued expense                 $          17,517
     Sub-lease deposits                                               3,000
                                                          -----------------

              Total Current Liabilities                              20,517
                                                          -----------------
OTHER LIABILITIES
Deferred rent credit                                                 26,666
                                                          -----------------

STOCKHOLDERS' EQUITY                                                 47,183
                                                          -----------------
  Preferred  stock,  par value $.01 per share;  20,000,000
    shares authorized, 0 shares issued and outstanding                   --
  Common  stock,  par value  $.001 per  share;  50,000,000
    shares   authorized,   6,648,631   shares  issued  and
    outstanding                                                       6,649
  Additional paid-in capital                                      1,434,604
  Retained (deficit)                                               (846,396)
  Income                                                             27,269
                                                          -----------------

              Total Stockholders' Equity                            622,126
                                                          -----------------

              Total Liabilities and Stockholders' Equity  $         669,309
                                                          =================
      See Accompanying Notes to Unaudited Consolidated Financial Statements
                                      F-16
                                       39
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                FOR THE THREE MONTHS PERIOD ENDED MARCH 31, 1999
                                   (UNAUDITED)
                                                      For the Quarter Ended
                                                            March 31,
                                               -------------------------------
                                                       1999            1998
                                              -------------------------------
REVENUE
    CD-ROM                                      $     291,964   $     33,981
    Stocknet-USA directories                                0          3,612
                                                --------------  ------------
        Total Revenue                                 291,964         37,543
                                               --------------   ------------
COST OF SALES
    IRCD production costs                              18,790         12,800
    Others                                              7,219          4,677
                                               --------------   ------------
        Total Cost of Sales                            26,009         17,477
                                               --------------   ------------
        Gross Profit (Loss)                           265,955         20,066
                                               --------------   ------------
OPERATING EXPENSES
     Marketing                                         64,118            315
    Outside services                                   30,500              0
    Payroll expenses                                   66,150         20,664
     Rent Expense                                      19,123          6,300
    Tax - payroll                                       6,456          3,277
    Others                                            136,730         32,249
                                               --------------   ------------
        Total Operating Expenses                      239,836         56,190
                                               --------------   ------------
        Income (Loss) From Operations                  26,119        (36,184)
OTHER INCOME (EXPENSE)
    Rental income                                       9,800              0
    Interest expense                                        0         (1,203)
    Realized (loss) on sale of securities              (7,850)             0
                                               --------------   ------------
         Income (Loss) Before Taxes                    28,069        (37,387)

(PROVISION) FOR INCOME TAX                               (800)             0
                                               --------------   ------------
         Net Income (Loss)                             27,269         (1,203)
OTHER COMPREHENSIVE INCOME, net of tax:
    Add reclassification adjustment for (loss)
      included in net income                            7,850              0
                                               --------------   ------------
         Comprehensive Income (Loss)            $      35,119        (37,387)
                                               ==============   ============
(Loss) per common share and common share equivalent
                                                $        0.01   $      (0.01)
                                               ==============   ============
Weighted average common shares outstanding          5,272,280      3,435,000
                                               ==============   ============
      See Accompanying Notes to Unaudited Consolidated Financial Statements
                                      F-17
                                       40
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
               FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
<TABLE>
<S>                                                                              <C>                     <C>
                                                                               1999                   1998
                                                                       ---------------------  -------------------
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
  Net income loss                                                       $          27,269      $         (37,327)
  Adjustments to reconcile net (loss) to net cash provided (used)
    by operating activities:
    Amortization and depreciation                                                   7,902                  7,902
    (Increase) in accounts receivable                                            (199,828)               (26,785)
    (Decrease) Increase in current liabilities and accrued expenses               (19,369)                (3,790)
     Realized loss on sale of marketable equity securities                          7,850                     --
     (Decrease) in deferred rent credit                                            (5,001)
                                                                       -------------------    -------------------

        Net Cash Flows (Used) by Operating Activities                            (181,177)               (60,000)
                                                                       -------------------    -------------------

CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
    Acquisition of property and equipment                                          (7,475)                (1,248)
    (Increase) in program development cost                                        (13,500)                    --
    Sale of marketable equity securities                                            1,150                     --
                                                                       -------------------    -------------------

        Net Cash Flows (Used ) by Investing Activities                            (19,825)                (1,248)
                                                                       -------------------    -------------------

CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
    Proceeds from issuance of short-term debts                                         --                 71,085
                                                                       -------------------    -------------------

        Net Cash Flows Provided by Financing Activities                                --                 71,085
                                                                       -------------------    -------------------

NET INCREASE (DECREASE) IN CASH                                                  (201,002)                 9,837

CASH AT THE BEGINNING OF THE YEAR                                                 515,920                 28,707
                                                                       -------------------    -------------------

CASH AT THE END OF THE PERIODS                                          $         314,918      $          38,544
                                                                       ===================    ===================

ADDITIONAL DISCLOSURES:
    Interest paid                                                       $              --      $           1,203
                                                                       ===================    ===================

    Income taxes paid                                                   $             800      $              --
                                                                       ===================    ===================

NON-CASH INVESTING AND FINANCING TRANSACTIONS
     Realized (loss) on sale of marketable equity securities            $          (7,850 )   $              --
                                                                       -------------------    ------------------
</TABLE>
      See Accompanying Notes to Unaudited Consolidated Financial Statements
                                      F-18
                                       41
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION

    Substantially All Disclosures Required By Generally Accepted Accounting
             Principles are Not Included MARCH 31, 1999 (UNAUDITED)





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, 1999, and the results of operations and
the cash flows for the quarter  periods ended March 31, 1999 and 1998. The notes
to the  Consolidated  Financial  Statements  which are incorporated by reference
into the 1998 Form 10-SK should be read in conjunction  with these  Consolidated
Financial Statements.

NOTE 2 - AGREEMENT OF REORGANIZATION

     Effective   November  9,  1998,  in   connection   with  the  agreement  of
reorganization, the Company issued 5,l94,968 shares of its common stock at $.001
par value per share,  in exchange  for all of the  outstanding  common  stock of
Digital  Corporate  Profiles,  Inc.  (DCP),  in which DCP became a wholly  owned
subsidiary  of the  Company  based on a  conversion  ratio  of 3  shares  of the
Company's common stock for each share of DCP's stock. The merger qualified for a
tax-free  reorganization  and has been  accounted for as a  recapitalization  of
Digital Corporate Profiles, Inc. at book value.

     For periods preceding the merger,  there were no intercompany  transactions
that required  elimination from the combined  consolidated results of operations
and there were no adjustments  necessary to conform the accounting  practices of
the two companies.



















    See Accompanying Notes to Unaudited Consolidated Financial Statements
                                      F-19
                                       42
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                          PART 1: FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1999
                                   (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
     Cash                                                   $         217,889
     Accounts receivable - trade                                       63,378
                                                           ------------------
              Total Current Assets                                    281,267

PROPERTY AND EQUIPTMENT,
  net of accumulated depreciation                                      90,971
PROGRAM DEVELOPMENT COSTS,
  net of accumulated amortization                                      56,130

LONG-TERM ASSETS
     Deferred tax assets                                                   --
     Note receivable                                                    4,000
                                                           ------------------
              Total Assets                                  $         432,368
                                                           ==================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable and accrued expenses                  $          19,844
     Sub-lease deposits                                                 3,000
                                                           ------------------
              Total Current Liabilities                                22,844
OTHER LIABILITIES
     Deferred rent credit                                              21,665
                                                           ------------------

              Total Liabilities                                        44,509
                                                           ------------------
STOCKHOLDERS' EQUITY
     Preferred  stock,  par value $.01 per share;  20,000,000
       shares authorized, 0 shares issued and outstanding                  --
     Common  stock,  par value  $.001 per  share;  50,000,000
       shares   authorized,   6,648,631   shares  issued  and
       outstanding                                                      6,649
     Additional paid-in capital                                     1,434,604
     Retained (deficit)                                              (846,396)
     Net (loss)                                                      (206,998)
                                                           ------------------
              Total Stockholders' Equity                              387,859
                                                           ------------------
              Total Liabilities and Stockholders' Equity    $         432,368
                                                           ==================
See Accompanying Notes to Unaudited Consolidated Financial Statements

                                      F-20
                                       43
<PAGE>
                          DIGS, INC. AND SUBSIDIARIES
                          PART 1: FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS
                      CONSOLIDATED STATEMENTS OF OPERATIONS
     FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED JUNE 30, 1999 AND 1998
                                   (UNAUDITED)
<TABLE>
<S>                                                       <C>             <C>              <C>             <C>
                                                            For the Quarter Ended         For The Year-To-Date Periods
                                                                  June 30,                      Ended June 30,
                                                       -------------------------------  -------------------------------
                                                            1999           1998              1999            1998
                                                       -------------------------------  -------------------------------
REVENUE
    IRCD and EHSCD                                     $     22,190    $    121,150     $     314,154   $    155,081
    Stocknet-USA directories                                      0             387                 0          3,999
                                                       -------------   -------------    --------------  -------------
        Total Revenue                                        22,190         121,537           314,154        159,080
                                                       -------------   -------------    --------------  -------------
COST OF SALES
    IRCD and EHSCD production costs                          52,594          14,185            71,385         26,985
    Others                                                    7,431           5,445            14,649         10,123
                                                       -------------   -------------    --------------  -------------
        Total Cost of Sales                                  60,025          19,630            86,034         37,108
                                                       -------------   -------------    --------------  -------------
        Gross Profit (Loss)                                 (37,835)        101,907           228,120        121,972
                                                       -------------   -------------    --------------  -------------
OPERATING EXPENSES
    Outside services                                         28,057              97            58,557             97
    Payroll expenses                                         87,252          69,935           153,402         90,599
    Rent expense                                             19,207           6,510            38,330         12,810
    Taxes                                                    17,941           5,497            24,397          8,773
    Others                                                   51,474          64,534           169,081         90,483
                                                       -------------   -------------    --------------  -------------
        Total Operating Expenses                            203,931         146,573           443,768        202,762
                                                       -------------   -------------    --------------  -------------
        (Loss) Before Other Income (Expense)               (241,766)        (44,666)         (215,648)       (80,790)
OTHER INCOME (EXPENSE)
    Rental income                                             7,500           7,000            17,300          7,000
    Interest expense                                              0            (385)                0         (1,588)
    Realized (loss) on sale of securities                         0               0            (7,850)             0
                                                       -------------    ------------    --------------  -------------
         Income (Loss) Before Taxes                        (234,266)        (38,051)         (206,198)       (75,378)

(PROVISION) FOR INCOME TAX                                        0            (800)             (800)          (800)
                                                       -------------    ------------    --------------  -------------
         Net Income (Loss)                                 (234,266)        (38,851)         (206,998)       (76,178)
OTHER COMPREHENSIVE INCOME, net of tax:
    Add reclassification adjustment for (loss)
      included in net income                                      0               0             7,850              0
                                                       -------------    ------------    --------------  -------------
         Comprehensive Income (Loss)                   $   (234,266)        (38,851)    $   (199,148)   $    (76,178)
                                                       =============    ============    ==============  =============
(Loss) per common share and common share equivalent    $       (.04)   $       (.01)    $       (.04)  $        (.02)
                                                       =============   =============    ==============  =============
Weighted average common shares outstanding                5,272,280       3,435,000        5,272,280       3,435,000
                                                       =============   =============    ==============  =============
</TABLE>
     See Accompanying Notes to Unaudited Consolidated Financial Statements
                                       F-21
                                       44
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                          PART 1: FINANCIAL INFORMATION
                          ITEM 1: FINANCIAL STATEMENTS
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEAR-TO-DATE PERIODS ENDED JUNE 30, 1999 AND 1998
                                   (UNAUDITED)
<TABLE>
<S>                                                                             <C>                    <C>
                                                                                  1999                   1998
                                                                       ---------------------  -------------------
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
 Net loss                                                              $        (199,148)     $         (76,178)
 Adjustments to reconcile net (loss) to net cash provided (used)
  by operating activities:
  Amortization and depreciation                                                   16,254                 10,298
  (Increase) in accounts receivable                                              (60,195)               (97,238)
  (Decrease) Increase in current liabilities and accrued expenses                (17,042)                 5,404
  (Increase) in miscellaneous receivable - employee                               (4,000)                  (300)
  Increase in deferred rent credit                                               (10,002)                40,000
  Realized loss on sale of securities                                             (7,850)                     0
                                                                       -------------------    -------------------
     Net Cash Flows (Used) by Operating Activities                              (281,983)              (118,014)
                                                                       -------------------    -------------------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
  Acquisition of property and equipment                                          (10,049)               (45,371)
  (Increase) in program development cost                                         (15,000)                     0
  (Increase) Decrease of marketable equity securities                              9,000                 (9,000)
                                                                       -------------------    -------------------
     Net Cash Flows (Used ) by Investing Activities                              (16,049)               (54,371)
                                                                       -------------------    -------------------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
  (Decrease) in note payable to stockholders                                           0                (28,321)
  Payment of long-term debt                                                            0                      0
  Proceeds from short-term note payable                                                0                180,000
                                                                       -------------------    -------------------
     Net Cash Flows Provided by Financing Activities                                   0                151,679
                                                                       -------------------    -------------------

NET INCREASE (DECREASE) IN CASH                                                 (298,032)               (20,706)

CASH AT THE BEGINNING OF THE YEAR                                                515,920                 28,707
                                                                       -------------------    -------------------

CASH AT THE END OF THE PERIODS                                          $        217,888      $           8,001
                                                                       ===================    ===================
ADDITIONAL DISCLOSURES:
  Interest paid                                                         $              0      $           1,588
                                                                       ===================    ===================
  Income taxes paid                                                     $            800      $             800
                                                                       ===================    ===================
</TABLE>
     See Accompanying Notes to Unaudited Consolidated financial Statements

                                      F-22

                                       45
<PAGE>
                           DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION
                   Substantially All Disclosures Required By
           Generally Accepted Accounting Principles are Not Included
                                  JUNE 30, 1999
                                   (UNAUDITED)

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 June 30, 1999,  and the results of operations and
the cash flows for the quarters and year-to-date periods ended June 30, 1999 and
1998. The notes to the Consolidated  Financial Statements which are incorporated
by reference into the 1998 Form 10-SK should be read in  conjunction  with these
Consolidated Financial Statements.

NOTE 2 - AGREEMENT OF REORGANIZATION

     Effective   November  9,  1998,  in   connection   with  the  agreement  of
reorganization, the Company issued 5,l94,968 shares of its common stock at $.001
par value per share,  in exchange  for all of the  outstanding  common  stock of
Digital  Corporate  Profiles,  Inc.  (DCP),  in which DCP became a wholly  owned
subsidiary  of the  Company  based on a  conversion  ratio  of 3  shares  of the
Company's common stock for each share of DCP's stock. The merger qualified for a
tax-free  reorganization  and has been  accounted for as a  recapitalization  of
Digital Corporate Profiles, Inc. at book value.

     For periods preceding the merger,  there were no intercompany  transactions
that required  elimination from the combined  consolidated results of operations
and there were no adjustments  necessary to conform the accounting  practices of
the two companies.


NOTE 3 - SUBSEQUENT EVENT

     In August 1999, the company started a newly owned  subsidiary,  DXF Design,
Inc. DXF Design,  Inc. is a fully functional graphic design service that creates
designs for packaging, print and the World Wide Web.

     DXF Design, Inc. has a client base that includes Walt Disney Studios, Buena
Vista  Home  Entertainment,  Universal  Studios,  Paramount  Television,  Turner
Broadcasting and Digital Corporate Profiles, Inc., as well as many others.


NOTE 4 - SUBSEQUENT EVENT

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

     APBO No. 25 requires no recognition of compensation expense for most of the
stock-based  compensation  agreements provided by the Company where the exercise

                                      F-23
                                       46
<PAGE>
price is equal to the market  value at the date of grant.  However,  APBO No. 25
requires  recognition of compensation  expense for variable award plans over the
vesting periods of such plans, based upon the then-current  market values of the
underlying stock. In contrast, SFAS No. 123 requires recognition of compensation
expense for grants of stock,  stock options,  and other equity  instruments over
the vesting  periods of such  grants,  based on the  estimated  grant-date  fair
values of those grants.

     The Company's 1999 stock option plans provide  incentive  stock options and
nonqualified  stock options to purchase  common  stock.  These may be granted to
directors,  officers,  key  employees,  consultants,  and  subsidiaries  with an
exercise  price of up to 110% of market  price at the date of grant.  Generally,
options are exercisable in equal  installments over three years from the date of
grant, and expire five to ten years from the date of grant. As of June 30, 1999,
the maximum of 750,000 shares was approved to be issued under the plan, of which
467,000 shares were available for future grants.

     For the  year-to-date  period  ended June 30,  1999,  the  Company  granted
224,000  shares of qualified  stock  options and 65,000  shares of  nonqualified
stock options to various  individuals at the average exercise price of $5.17 per
share.

     In electing to follow  Accounting  Principles  Board Opinion (APBO) No. 25,
"Accounting  for  Stock  Issued  to  Employees,"   the  Company   recognizes  no
compensation  expense  related to employee  stock  options for the  year-to-date
period  ended June 30,  1999,  as no options  are  granted at a price  below the
market price on the day of grant.

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

                                                                   Weight-
                                                                   Average
                                              Stock Options    Exercise Price
                                          ------------------  ---------------
       Outstanding at December 31, 1998                 --                 --
       Granted                                     289,000               5.17
       Exercised                                        --                 --
       Forfeited                                        --                 --
       Expired                                          --                 --
                                          ----------------    ---------------
       Outstanding at March 31, 1999               289,000               5.17
       Granted                                          --                  0
       Exercised                                        --                 --
       Forfeited                                        --                 --
       Expired                                          --                 --
       Outstanding at June 30, 1999                289,000               5.17
                                          ================    ===============

       Shares exercisable at March 31, 1999             --                 --
                                          ================    ===============

       Shares exercisable at June 30, 1999              --                 --
                                          ================    ===============

     Exercise  prices for  options  outstanding  as of June 30,  1999 range from
$5.00  to  $5.50.  The  following  table  summarizes   information  for  options
outstanding and exercisable at June 30, 1999:
                                      F-24
                                       47
<PAGE>
                          DIGS, INC. AND SUBSIDIARIES
                              SELECTED INFORMATION
                   Substantially All Disclosures Required By
           Generally Accepted Accounting Principles are Not Included
                                  JUNE 30, 1999
                                   (UNAUDITED)

                  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     189,000    $5.00          2.5            --            --
     $5.50     100,000    $5.50          2.5            --            --
             -----------                           ------------
               289,000                                  --

     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 1999. This includes
materially different information from reported results.  Disclosure of pro forma
net income and earnings per share included no compensation  expense  relating to
the  year-to-date  ended  June 30,  1999  grants  measured  under the fair value
recognition provisions of SFAS No. 123.

     The  weighted-average  fair  values  at date of grant for  options  granted
during the year-to-date period ended June 30, 1999 were $5.00 and were estimated
using   the   Black-Scholes   option   valuation   model   with  the   following
weighted-average assumptions:

                                                                June 30,
                                                                  1999
                                                             -------------
       Expected life in years                                           5
       Interest Rate                                                  5.0
       Volatility                                                   33.0%
       Dividend Yield                                                  0%


     The  weighted-average  fair values,  at the date of the grant,  for options
granted were the same as the market  values during the  year-to-date  ended June
30, 1999, therefore, the Company's net income and earnings per share will be the
same as the pro forma net  income  and  earnings  per  share.  As a result,  the
Company's pro forma information has not been presented.






                                      F-25

                                       48
<PAGE>
                           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 company's  financial  condition  remains solid at the end of the second
quarter of 1999, as of June 30, 1999.  The debt to equity ratio was 11.5%.  This
compares to a debt to equity ratio of (709.7%) at the end of the second  quarter
of 1998.

     As of June  30,  1999,  cash  used for  operating  activities  and  capital
expenditures amounted to $281,983 and $16,049, respectively compared to $118,014
and $54,371 as of June 30, 1998. Cash proceeds from financing activities were $0
and $151,679 as of June 30, 1999 and 1998, respectively.



                              RESULTS OF OPERATIONS
                              ---------------------
     The company recorded net loss of $234,266 for the second quarter ended June
30, 1999, while $38,851 was reported for the second quarter ended June 30, 1998.
Net loss for the year-to-date  periods ended June 30, 1999 and 1998 was $199,148
for 1999 and $76,178, respectively.

REVENUES
- --------
     Revenue from IRCD and EHSCD decreased $98,960 in the second quarter of 1999
compared with the second quarter of 1998. Year-to-date revenue increased $59,073
compared with the year-to-date revenue of 1998.

COST OF SALES AND OPERATING EXPENSES
- ------------------------------------
     The company's  operating profit margin decreased in the second quarter 1999
to (170.5%) versus 84.1% for 1998. The  year-to-date  1999 operating  margin was
72.6% versus 76.7% for 1998. The improvement  reflected the extensive  marketing
effort, which began at the end of 1998.

     Operating  expenses  were  increased as a percentage of the revenue for the
year-to-date of 1999.


                                     OUTLOOK
                                     -------
     The company continues to employ its strong marketing effort to increase its
revenue.  The  company  has  opened  a web  site  to  promote  its  new  line of
environmental, health and safety CD-ROM's, at www.ehsreports.com.  The company's
emphasis  continues to be on  effectively  marketing  and  enhancing its current
products,  developing  new  software  to target  new  markets,  and new  product
development to proactively increase the financial strength of the company.



                                      F-26

                                       29


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