Digital Youth Network (DYOUF) 10QSB 2005 Q1 Quarterly report (small business)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedNovember 30, 2004

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period

Commission file number0-32715

DIGITAL YOUTH NETWORK CORP.
(formerly Ocean Ventures Inc.)
(Exact name of small business issuer as specified in its charter)

Alberta, Canada
(State or other jurisdiction of incorporation or organization) 98-0343194
(I.R.S. Employer Identification No.)

#302 - 1040 Hamilton Street
Vancouver, BC, Canada V6B 2R9
(Address of principal executive offices)

(604) 682-6203

(Issuer's telephone number)

not applicable
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes [X]     No [ ]

2

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.     Yes [ ]     No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:

8,854,966 common shares outstanding as at January 25, 2005

Transitional Small Business Disclosure Format (Check one):      Yes [ ]     No [X ]

PART 1 - FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited financial statements for the three month period ended November 30, 2004 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

3

DIGITAL YOUTH NETWORK CORP.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

November 30, 2004

(Stated in US Dollars)

(Unaudited)

4

DIGITAL YOUTH NETWORK CORP.
INTERIM CONSOLIDATED BALANCE SHEETS
November 30, 2004 and August 31, 2004
(Stated in US Dollars)
(Unaudited)

ASSETS
	November 30, 2004	August 31, 2004
Current
Cash	$        1,662	$     1,004
Goods and services taxes receivable	21,085	17,690
Inventory	337	3,494
Prepaid expenses	6,043	5,459
	29,127	27,647
Capital assets - Note 3	39,668	38,743
	$     68,795	$      66,390
LIABILITIES
Current
Bank indebtedness	$       3,031	$       9,401
Accounts payable and accrued liabilities - Note 7	708,106	534,342
Advance payable	15,000	15,000
Convertible debentures - Note 4	233,090	157,270
Note payable - Note 5	-	19,040
	959,227	735,053
STOCKHOLDERS' DEFICIENCY
Capital stock - Notes 4, 6 and 10
Authorized:
Unlimited common shares without par value
Unlimited preferred shares without par value
Issued:
8,600,254 common shares (August 31, 2004: 8,472,254)	1,220,169	1,194,569
Additional paid-in capital	58,229	39,700
Contributed surplus	18,700	18,700
Accumulated other comprehensive loss	(125,029)	(48,164)
Accumulated deficit	(2,062,501)	(1,873,468)
	(890,432)	(668,663)
	$      68,795	$      66,390

Nature and Continuance of Operations - Note 1
Commitments - Notes 4, 5 and 6
Subsequent Events - Note 10

SEE ACCOMPANYING NOTES

5

DIGITAL YOUTH NETWORK CORP.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
for the three month periods ended November 30, 2004 and 2003
(Stated in US Dollars)
(Unaudited)

	2004	2003
Revenue	$      233	$     51,809
Direct costs
Cellular phones and accessories	3,369	2,643
Text messaging	578	70,564
Amortization - cellular phones	-	75,538
	3,947	148,745
General and Administrative Expenses
Accounting and audit	17,338	6,678
Advertising and promotion	8,204	63,941
Amortization of equipment	3,070	3,382
Bank changes and interest	3,018	2,658
Consulting fees - Note 6	5,742	54,944
Foreign exchange	130	-
Interest on convertible debenture - Note 4	19,482	1,125
Licenses and dues	2,894	-
Legal fees	14,233	2,412
Management fees - Note 8	52,520	22,423
Office	12,598	21,285
Rent	12,349	32,425
Transfer agent	4,172	1,092
Travel	7,783	29,693
Wages and benefits	21,786	67,574
	185,319	309,632
Net loss for the period	(189,033)	(406,568)
Comprehensive loss
Foreign currency translation adjustment	(76,865)	(4,369)
Comprehensive loss for the period	$    (265,898)	$    (410,937)
Basic and diluted loss per share	$      (0.02)	$      (0.09)
Weighted average number of common shares outstanding	8,545,375	4,333,128

SEE ACCOMPANYING NOTES

6

DIGITAL YOUTH NETWORK CORP.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three month periods ended November 30, 2004 and 2003
(Stated in US Dollars)
(Unaudited)

	2004	2003
Operating Activities
Net loss for the period	$     (189,033)	$    (406,568)
Items not affecting cash:
Amortization	3,070	78,920
Consulting fees	-	18,700
Convertible debenture beneficial conversion option interest  expense - Note 4	18,529	- -
Changes in non-cash working capital balances related to  operations:
Goods and services taxes receivable	(1,435)	(15,272)
Share subscriptions receivable	-	(34,414)
Inventory	3,370	2,617
Prepaid expenses	-	41,470
Accounts payable and accrued liabilities	111,909	217,411
	(53,590)	(97,136)
Investing Activities
Capital assets acquired	-	(114,893)
Advances to Digital Youth Network Inc. prior to acquisition	-	(84,034)
Net cash acquired on the acquisition of Digital Youth  Network Inc.	-	3,498
	-	(195,429)
Financing Activities
Bank indebtedness	(6,370)	9,243
Convertible debentures	36,204	(19,883)
Common share issuances	25,600	260,775
Stock subscriptions received	-	19,181
	55,434	269,316
Effect of foreign currency translation on cash	(1,186)	13,573
Net Increase (decrease) increase in cash during the period	658	(9,676)
Cash, beginning of period	1,004	13,955
Cash, end of period	$      1,662	$     4,279

Supplemental disclosure with respect to cash flows - Note 8
Non-cash transaction - Note 9

SEE ACCOMPANYING NOTES

7

DIGITAL YOUTH NETWORK CORP.
INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period October 4, 2001 (Date of Inception) to November 30, 2004
(Stated in US Dollars)
(Unaudited)

	Common Shares		Additional Paid-in	Contributed	Accumulated Other Comprehensive	Accumulated	Stockholders' Equity
	Number	Amount	Capital	Surplus	Income (Loss)	Deficit	(Deficiency)
Shares issued on incorporation	5,000,000	$     32	$       -	$      -	$       -	$      -	$       32
Issued for cash:
Private placement  &nsp;       - at $0.16 per share	100,000	15,911	-	-	-	-	15,911
Share purchase agreement	2,170,285	82,205	-	-	-	-	82,205
Less: finders fee	-	(6,364)	-	-	-	-	(6,364)
Net loss for the period	-	-	-	-	-	(89,289)	(89,289)
Foreign currency translation adjustment	-	-	-	-	508	-	508
Balance, August 31, 2002	7,270,285	91,784	-	-	508	(89,289)	3,003
Issued for cash:
Share purchase agreement	1,318,863	47,541	-	-	-	-	47,541
Private placement          - at $0.06 per share	407,860	27,281	-	-	-	-	27,281
Private placement          - at $0.03 per share	1,000,000	34,882	-	-	-	-	34,882
Less: finders fee	-	(1,125)	-	-	-	-	(1,125)
Shares issued in exchange for services rendered	700,000	48,325	-	-	-	-	48,325
Net loss for the year	-	-	-	-	-	(453,930)	(453,930)
Foreign currency translation adjustment	-	-	-	-	(31,291)	-	(31,291)
Balance, August 31, 2003	10,697,008	248,688	-	-	(30,783)	(543,219)	(325,314)

SEE ACCOMPANYING NOTES

.../Cont'd.

Continued

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DIGITAL YOUTH NETWORK CORP.
INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period October 4, 2001 (Date of Inception) to November 30, 2004
(Stated in US Dollars)
(Unaudited)

	Common Shares		Additional Paid-in	Contributed	Accumulated Other	Accumulated	Stockholders' Equity
	Number	Amount	Capital	Surplus	Income (Loss)	Deficit	(Deficiency)
Balance forward, August 31, 2003	10,697,008	$ 248,688	$       -	$       -	$    (30,783)	$   (543,219)	$   (325,314)
Stock consolidated pursuant to business  acquisition  - Note 8	(5,715,294)	239,353	- -	- -	- -	- -	239,353
Private placements for cash:               - at $0.20 per share	573,474	114,695	-	-	-	-	114,695
- at $0.22 per share	2,453,735	539,822	-	-	-	-	539,822
- at $0.25 per share	148,357	37,089	-	-	-	-	37,089
- at $0.30 per share	63,936	19,181	-	-	-	-	19,181
Less: finders' fees                        - for cash	-	(35,564)	-	-	-	-	(35,564)
- for shares	66,625	-	-	-	-	-	-
Shares for debt settlement agreements:     - at $0.1325 per share	143,356	18,988	-	-		-	18,988
- at $0.30 per share	41,057	12,317	-	-	-	-	12,317
Stock-based compensation expense	-	-	-	18,700	-	-	18,700
Convertible debenture beneficial conversion  option - Note 5	- -	- -	39,700	- -	- -	- -	39,700
Net loss for the year	-	-	-	-	-	(1,330,249)	(1,330,249)
Foreign currency translation adjustment	-	-	-	-	(17,381)	-	(17,381)
Balance, August 31, 2004	8,472,254	1,194,569	39,700	18,700	(48,164)	(1,873,468)	(668,663)
Private placements for cash                 - at $0.20 per share	128,000	25,600	-	-	-	-	25,600
Convertible debenture beneficial conversion  option	- -	- -	18,529	- -	- -	- -	18,529
Net loss for the period	-	-	-	-	-	(189,033)	(189,033)
Foreign currency translation adjustment	-	-	-	-	(76,865)	-	(76,865)
Balance November 30, 2004	8,600,254	$1,220,169	$    58,229	$    18,700	$   (125,029)	$  (2,062,501)	$   (890,432)

SEE ACCOMPANYING NOTES

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DIGITAL YOUTH NETWORK CORP.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2004
(Stated in US Dollars)
(Unaudited)

Note 1Nature and Continuance of Operations

The Company was incorporated on November 22, 1996, under the Business Corporations Act of the Province of Alberta. In January 2000, the Company changed its name to Ocean Ventures Inc and in May, 2004, the Company changed it name to Digital Youth Network Corp. At November 30, 2004, substantially all of the Company's assets and operations are located and conducted in Canada.

The Company's shares are quoted for trading on the Over-The-Counter Bulletin Board in the United States of America (the "OTCBB"). The Company ceased its prior business on November 30, 1999 and began investigating new business ventures on September 1, 1999. This process ended on October 7, 2003, when the Company completed the acquisition of Digital Youth Network Inc. ("DYNI"), a private company which was incorporated in British Columbia, Canada on October 4, 2001 and continued under the Canada Business Corporations Act on November 12, 2002. DYNI's operations, at present, focus on providing access to cellular phones and selling accessories to the 13 to 18 years of age group so as to be able to communicate with and generate advertising revenue via text messaging to this group.

These financial statements have been prepared on a going concern basis. The Company has accumulated a deficit of $2,062,501 since inception and has yet to achieve profitable operations. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. There remains substantial doubt as to the ability of the Company to continue as a going concern. As at November 30, 2004, the Company has a working capital deficiency of $930,100. Management plans to continue to provide for its capital needs by issuing debt and equity securities as has been the case historically. These financial statements do not include any adjustments to the recoverability and classification of assets, or the amount and classification of liabilities that may be necessary should the Company be unable t o continue as a going concern.

Note 2Summary of Significant Accounting Policies

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America which conform with Canadian generally accepted accounting principles except as disclosed in Note 11. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement. Actual results could differ from those estimates.

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Digital Youth Network Corp.
Notes to the Interim Consolidated Financial Statements
November 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 4

Note 2Summary of Significant Accounting Policies - (cont'd)

The financial statements have, in management's opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Interim Reporting

The accompanying unaudited consolidated interim financial statements have been prepared by the Company in accordance with the rules and regulations of Regulation S-B as promulgated by the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited consolidated interim financial statements contain all adjustments necessary (consisting of normal recurring accruals) to present fairly the financial information contained therein. The accompanying unaudited interim consolidated financial statements may not include all disclosures required by generally accepted accounting principles in the United States of America. The results of operations for the three-month period ended November 30, 2004, are not necessarily indicative of the results to be expected for the year ending August 31, 2005.

These unaudited financial statements should be read in conjunction with the audited financial statements of the Company as at August 31, 2004.

New Accounting Standards

Management does not believe that any recently issued, but not yet effective accounting standards if currently adopted could have a material effect on the accompanying financial statements.

Note 3Capital Assets

	November 30, 2004
	Cost	Accumulated Amortization	Net
Computer and office equipment	$     62,910	$      23,242	$     39,668

	August 31, 2004
	Cost	Accumulated Amortization	Net
Computer and office equipment	$     56,836	$      18,093	$     38,743

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Digital Youth Network Corp.
Notes to the Interim Consolidated Financial Statements
November 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 3

Note 4Convertible Debentures

	November 30, 2004	August 31, 2004
a) Principal amounts of CDN$231,500 (August 31, 2004: CDN$206,500) bearing interest at 6% per annum and due on December 31, 2004. The principal and accrued interest is convertible in whole or in part, at any time prior to December 31, 2004, upon the mutual agreement of the holder and the Company, or at any time on or after December 31, 2004 at the option of the holder, into common shares of the Company at a price of CDN$0.25 per share. These debentures are secured by a general security agreement.	$      195,155	$    157,270
b) Principal amount of CDN$45,000 bearing interest at 6% per annum and due on February 17, 2005. The principal and accrued interest is convertible in whole or in part, at any time prior to February 17, 2005, upon the mutual agreement of the holder and the Company, or at any time on or after February 17, 2005 at the option of the holder, into common shares of the Company at a price of CDN$0.17 per share. These debentures are secured by a general security agreement. The Company has recorded a beneficial conversion option interest expense of $18,529 during the period ended November 30, 2004 with respect to these debentures.	37,935	-
	$      233,090	$    157,270

Note 5Note payable

The Company issued a note payable for $21,075 (CDN$25,000) which is unsecured and was due August 31, 2004. The note paid interest of 5,000 shares of the Company at August 31, 2004, which was valued at $1,500 and charged to interest expense.

On September 1, 2004, this note payable was exchanged for a convertible debenture with face value of CDN$25,000 having the terms and characteristics disclosed in Note 4a).

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Digital Youth Network Corp.
Notes to the Interim Consolidated Financial Statements
November 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 4

Note 6Capital Stock - Notes 4, 5 and 10

Commitments:

Share Purchase Warrants

At November 30, 2004, a total of 3,460,858 share purchase warrants were outstanding as follows:

i) 2,215,902 share purchases warrants were outstanding entitling the holder to purchase one common share for each warrant held:

Number	Exercise Price	Expiry Date
2,072,546	$0.40	December 31, 2005 (*)
143,356	$0.30	June 22, 2009
2,215,902

ii) 1,244,956 share purchase warrants were outstanding entitling the holder to purchase one common share for two warrants and $0.20 each. These warrants have no expiry date (*).

*      The Company has the right to call these warrants to be exercised at any time after the bid price and the ask price (at the close) for the Company's shares is equal to or greater than $0.60 for a period of seven consecutive days on the OTCBB.

Stock-based Compensation Plan

The Company has granted directors and a former director 250,000 common share purchase options. These options were granted with an exercise price equal to the market price of the Company's stock on the date of the grant. A stock-based compensation charge of $18,700, associated with the granting of these options has been recognized in the financial statements and was included as consulting fees for the period ended November 30, 2003. As at November 30, 2004, all 250,000 options remain outstanding. They expire on October 7, 2008.

The fair value for these options was estimated at the date of the grant using the following weighted-average assumptions:

Volatility factor of expected market price of company's shares	5%
Dividend yield	0%
Weighted-average expected life of stock options	5 years
Risk-free interest rate	3%

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Digital Youth Network Corp.
Notes to the Interim Consolidated Financial Statements
November 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 5

Note 6Capital Stock - Notes 4, 5 and 10 (cont'd)

Commitments: - (cont'd)

Stock-based Compensation Plan - (cont'd)

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including share price volatility. The Company's employee stock options have characteristics significantly different from those of traded options, and changes in the subjective input assumptions can materially affect fair value estimates.

Note 7Related Party Transactions

The Company was charged the following expenses by directors and a former director of the Company and by a company with a common director:

	Three months ended November 30,
	2004	2003
Management fees	$      52,520	$     22,423

These charges were measured by the exchange amount, which is the amount agreed upon by the transacting parties.

At November 30, 2004, accounts payable and accrued liabilities include $206,338 (August 31, 2004:  $143,055) due to directors and a former director of the Company.

At November 30, 2004, a director holds Convertible Debentures (Note 4) of $182,510 (CDN$216,500) (August 31, 2004:  $130,614 (CDN$171,500)).

Note 8Supplemental Disclosures With Respect to Cash Flows

Other Supplemental Disclosures	2004	2003
Cash paid during the period for interest	$      -	$      -
Cash paid during the period for income taxes	$      -	$      -

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Digital Youth Network Corp.
Notes to the Interim Consolidated Financial Statements
November 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 6

Note 9Non-cash Transaction

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statement of cash flows. On September 1, 2004, the note payable disclosed in Note 5 was exchanged for a convertible debenture disclosed in Note 4. This transaction was excluded from the statement of cash flows for the three months ended November 30, 2004.

Note 10Subsequent Events

Subsequent to November 30, 2004:

a) the Company received subscriptions to issue 567,712 units at varying amounts between $0.13 and $0.17 per unit for proceeds of $80,511. Each unit consists of one common share and one warrant entitling the holder to purchase one additional common share at $0.40 until December 31, 2005.

b) the Company agreed to issue 134,003 common shares at varying amounts between $0.20 and $0.22 per share as settlement of debt totalling $30,681, which debt was included in accounts payable at November 30, 2004.

Note 11Differences Between Canadian and United States Accounting Principles

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") which differ in certain respects with those principles and practices that the Company would have followed had its financial statements been prepared in accordance with accounting principles and practices generally accepted in Canada ("Canadian GAAP").

The Company's accounting principles generally accepted in the United States differ from accounting principles generally accepted in Canada as follows:

Comprehensive Income

Under US GAAP, the statement of operations is separated into net loss and other comprehensive loss, when applicable.

Under Canadian GAAP, comprehensive loss is not separately disclosed as such.

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Digital Youth Network Corp.
Notes to the Interim Consolidated Financial Statements
November 30, 2004
(Stated in US Dollars)
(Unaudited) - Page 7

Note 11Differences Between Canadian and United States Accounting Principles - (cont'd)

The effect of this difference is as follows:

i) Balance Sheet:

Under Canadian GAAP the amount shown as Accumulated other comprehensive loss on the balance sheet would be restated as Accumulated translation adjustment.

	November 30, 2004	August 31, 2004
US GAAP as reported:
Accumulated other comprehensive loss	$     (125,029)	$      (48,164)
Canadian GAAP:
Accumulated translation adjustment	$     (125,029)	$      (48,164)

ii) Statement of Operations:

	Three months ended November 30,
	2004	2003
Comprehensive loss for the period as reported under US GAAP	$     (265,898)	$     (410,937)
Foreign currency translation adjustment	76,865	4,369
Net loss for the period under Canadian GAAP	$     (189,033)	$     (406,568)
Basic and diluted loss per share under US GAAP	$         (0.03)	$         (0.09)
Basic and diluted loss per share under Canadian GAAP	$        (0.02)	$         (0.09)

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Item 2. Management's Discussion and Analysis or Plan of Operation.

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks enumerated in the section entitled "Risk Factors", that may cause our actual results or the actual results in our industry, of our levels of activity, performance or achievement to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this quarterly report, the terms "we", "us", "our" and "Digital Youth" mean our company, Digital Youth Network Corp., and our majority-owned subsidiary Digital Youth Network Inc., unless otherwise indicated. All dollar amounts refer to US dollars unless otherwise indicated. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

General

Our company was incorporated under the laws of the Province of Alberta on November 22, 1996 under the name "CallDirect Capital Corp.". We changed our name to "Ocean Ventures Inc." on January 31, 2000, and at the same time completed a consolidation of our then issued and outstanding common shares on a five for one basis, effective January 27, 2001. On July 20, 2004 we changed our name to "Digital Youth Network Corp." We are also registered as an extra-provincial company in the Province of British Columbia, and are a reporting issuer under the securities laws of both the province of Alberta and the province of British Columbia.

On July 21, 2003, we entered into a Share Purchase Agreement (amended on October 1, 2003) with all of the shareholders of Digital Youth Network Inc., pursuant to which we agreed to acquire from them all of the 10,697,008 issued and outstanding shares of Digital Youth Network Inc. in exchange for 100,000 non-transferable share purchase warrants (to be issued to Jon Peters) and 2,674,252 shares of the common stock of our company to be issued, pro-rata according to their interest in Digital Youth Network Inc., among all of the Digital Youth Network Inc. shareholders other than Jon Peters. We also agreed to pay finder's fees, payable in common shares of our company, to two persons that assisted us in the transaction, for an aggregate finder's fee of 500,000 common shares of our company.

The acquisition of the shares of Digital Youth Network Inc. closed on October 7, 2003, at which time we acquired all but 400 shares of Digital Youth Network Inc. and we issued an aggregate of 2,674,252 common shares of our company to the shareholders of Digital Youth Network Inc. except Mr. Jon Peters. We also issued an aggregate of 500,000 shares to finders that assisted our company in the structuring and closing of the transaction. As a result, we now own 10,696,608, or approximately 99.99626%, of the issued and outstanding common shares of Digital Youth Network Inc., and Mr. Peters continues to own 400 shares, or approximately 0.00374%, of the issued and outstanding common shares of Digital Youth Network Inc. Digital Youth Network Inc. is now a subsidiary of our company.

Our subsidiary is a federally incorporated Canadian corporation with its principal place of business located at Suite 302, 1040 Hamilton Street, Vancouver, B.C., Canada V6B 2R9. It was formed as a British Columbia corporation on

17

October 4, 2001, under the name PCS Media Inc. and, on November 12, 2002, it was continued under the federal laws of Canada under its current name, Digital Youth Network Inc.

Business of Digital Youth Network

We are an interactive marketing company with a focus on the integration of wireless and Internet technologies and print media to provide short messaging service (also known as "SMS") text messaging and promotional services and advertising to our clients. Our technology allows wireless subscribers to interact with television, radio and print media to participate in contests and wireless promotions and to request additional information about products or promotions. We generate revenue both from advertisers and consumers.

We implement our marketing campaigns and market research through community building, strategic relationships with existing media companies and direct sales to advertising clients. Over the past two years we have built a community of Canadian teenagers between 13 and 18 years of age (this group is often referred to as "digital youth", or generation "DY"). Although our business has recently expanded to include other subscriber communities, we continue to provide free membership in our Digital Youth network to generation DY subscribers entitling them to free incoming SMS text messaging if sent through our server, the opportunity to participate in market research surveys and promotional events, and free prizes to new members when they subscribe. These free prizes are provided to us by our strategic partners, usually in exchange for our services in promoting these strategic partners to our DY membership.

Short messaging service messages are short text messages transmitted through a short message service center from and to a mobile phone, fax machine and/or IP (internet protocol) address. SMS messages must be no longer than 160 alpha-numeric characters and cannot contain images or graphics. Common short codes, or "CSC"s, are five or six digit numbers that can receive short messaging service messages, just like normal seven and ten digit telephone numbers. Common short codes attached to print ads and TV spots are a popular way for marketers to enable consumers to request additional information about an advertisement -- ideally, consumers respond to an ad by "texting" a message to a CSC. Television producers also rely on short codes to enable viewers to cast votes in reality shows. In our case, we and our subscribers use our common short code "TEXTDY" to communicate with each other through our server, which serves as a short message service center (a device that receives an SMS message from the sender device and sends it on to the recipient device).

In our pilot programs, we relied on a network of retail store locations to distribute telephone handsets and prepaid air-time to our generation DY subscribers. Using these cellular telephones, our subscribers could send and receive SMS messages to each other through our server. As we gained experience we realized that although it was important that our subscribers continue to be provided with cellular telephone handsets, it was too costly for our company to sell or distribute them. At the end of calendar year 2003, we discontinued the sale of cellular telephone handsets and accessories and we stopped offering them as part of a membership package in our Digital Youth network. Instead, we refer new members that do not already own a cellular telephone to our strategic partner Microcell, Inc., the Canadian wireless telecommunication service provider that operates the Fido cellular telephone network. Microcell, Inc. provides our referrals with new cellular telephone handsets and service at a discounted price and gives them free access to a 24 hour crisis line. In addition, Microcell, Inc. pays our company a referral fee calculated based on the number of new member-subscribers that we refer. These new members are still able to send SMS text messages to other DY members through our server.

Historically, all of our members were required to use the Fido network because our short message service center software could only send SMS text messages to members who were using the Fido cellular telephone network. On June 17, 2004,we entered into an agreement with Impact Mobile Inc. which expanded our ability to send SMS text messages to users of any of the ten cellular telephone service providers in Canada. Then, on August 1, 2004, the Canadian Wireless Telecommunications Association and all of the Canadian wireless carriers approved our use of the common short code "TEXTDY" (the numbers 839839 on a telephone handset) to communicate via SMS text messaging with all Canadian subscribers for wireless telephone service regardless of the wireless network that they use. As a result, we can now offer SMS text messaging capability to any of our members with cellular telephone service regardless of which Canadian cellular telephone service provider such member uses.

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Historically, we charged new members of our Digital Youth Network a one time non-refundable membership fee of $36 ($50 Canadian). We have since ceased charging membership fees to our subscribers. We believe that our primary source of revenue will be from advertisers, including those desiring access to our more than 25,000 DY member students, using various combinations of text messaging, email, direct mail to students' homes and via the Internet on one of our web-pages, or to use our members as a market research tool. We also believe that we can increase the size of our membership more easily if we do not charge a membership fee.

We continue to work with Universal Music to promote new artists and their album releases to our subscriber community, and we continue to explore ways to provide our subscribers with access to legally downloadable music through our website while simultaneously providing Universal Music with a new channel for distribution of its products. In return, Universal Music provides us with merchandise for distribution to our members both as incentives for their participation in our market research and as incentives to young people signing up for new memberships in our Digital Youth community. Universal Music, a division of Universal Studios Canada Ltd., produces, manufactures, markets, sells and distributes recorded music and represents artists from Canada and around the world. Our company continues to explore how best to integrate legally downloadable music with our other current products.

We are also continuing to expand our ability to integrate our SMS messaging capability with video advertising in shopping malls across Canada. We recently entered into an arms-length agreement with Digital Advertising Network Inc., an unrelated Canadian company that operates large video screens in shopping malls across Canada, whereby our companies will offer promotions through interactive programs that will enable patrons to interact with the advertisers using SMS messaging in order to receive prizes, coupons and special offers. Our agreement with Digital Advertising Network Inc. anticipates that we will share revenues derived from these interactive campaigns between us.

The following discussion of our financial condition, changes in financial condition and results of operations for the three months ended November 30, 2004 and November 30, 2003 should be read in conjunction with our most recent audited annual financial statements, which form part of our annual report on Form 10-KSB filed on January 13, 2005, the unaudited interim financial statements forming part of this quarterly report, and, in each case, the notes thereto.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this registration statement. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this registration statement, particularly in the section entitled "Risk Factors" beginning on page 15 of this quarterly report.

Our consolidated audited financial statements and the pre-acquisition financial statements of our subsidiary (the predecessor) are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Overview

We are still in our infancy as a viable commercial entity, and consequently our focus has been on the identification of market needs, the development of products and services to meet these needs, and the branding of our company and our services. We anticipate that the expected growth in revenues will assist us in attracting additional financing to allow us to add the needed resources in order to further support the growth of our operations. Despite our expectations, there are no assurances that an increase in our revenues can be achieved, or that we will be able to attract additional financing on acceptable terms, if at all. Should we be unable to achieve the anticipated revenue growth or to attract additional financing on acceptable terms, our ongoing business and future success may be adversely affected.

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RESULTS OF OPERATIONS

Three month periods ended November 30, 2004 and November 30, 2003

We have reported a net loss for the three months ended November 30, 2004 of $189,033 or $0.02 per share based on a weighted average number of common shares outstanding of 8,545,375, compared to a net loss of $406,568 or $0.09 per share for the three months ended November 30, 2003, based on a weighted average number of common shares outstanding of 4,333,128.

During the three months ended November 30, 2004, we had revenue of $233, compared to revenue of $51,809 for the three months ended November 30, 2003. This decrease in revenue is due primarily to our decisions to discontinue charging (a) membership fees; and (b) sales of cellular telephones and accessories.

We generate our revenues through the sale of market research and advertising and, to a lesser extent, from subscriber referrals to our strategic partner Microcell, Inc. Our advertising services include wireless text messaging, electronic mail, direct mail and internet advertising. The revenues that we derive from the sale of these services vary depending on the nature and scope of the advertising campaign.

Our general and administrative expenses for the three months ended November 30, 2004 were $185,319 compared to $309,632 for the three months ended November 30, 2003. Overall, this decrease is due primarily to our decision to discontinue our retail sales operations. The cost of advertising and promotion for the three months ended November 30, 2004 was $8,204, compared to $63,941 for the three months ended November 30, 2003. Similarly, the cost of travel for the three months ended November, 2003 was $29,693, while the cost of travel for the three months ended November 30, 2004 was $7,783. The higher costs of advertising, promotion and travel during the quarter ended November 30, 2003 were due primarily to our conduct of a promotional campaign to offer Digital Youth memberships to students in the Greater Toronto Area and our discussions with Universal Music and Microcell Inc., whose offices are located in Toronto and Montreal, respectively.

Wages and benefits for the three months ended November 30, 2004 were $21,786 compared to $67,574 in the three months ended November 30, 2003, while consulting fees for the three months ended November 30, 2004 were $5,742 compared to $36,244 during the three months ending November 30, 2003. These decreases are due primarily to our decision to discontinue our retail sales operations and the corresponding decrease in customer service requirements.

We incurred rental expenses of $32,425 during the three months ending November, 2003, compared to rental expenses of $12,349 during the three months ending November 30, 2004. This decrease is due to our decision to discontinue our retail sales operations, and the consolidation of our operations into one administrative and operations office in Vancouver. Our telecommunications service provider Microcell Inc. now ships handsets directly to each member's address upon order and we no longer require retail distribution facilities.

Liquidity and Capital Resources

As at November 30, 2004

As at November 30, 2004, we had a cash position of $1,662 and a net working capital deficiency of $930,100.

We do not have sufficient cash resources to fund our normal operating expenses, which total approximately Cdn $40,000 (US $30,000) per month, for the balance of the fiscal year.

Plan of Operation - Cash Requirements

Over the twelve month period ending November 30, 2005, we anticipate that we will require additional operating capital of approximately $400,000. We plan to raise approximately $150,000 of this operating capital from operations and we plan to raise the balance of approximately $250,000 through private placements of our equity securities and/or debt financing. We plan to use this money to attract and sign-up additional member-subscribers,

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and to pursue and grow our relationships with Digital Advertising Network Inc., Universal Music and other industry partners and sponsors, and to implement our plan to sell downloadable music through the Digital Youth Network, including the implementation of a working plan whereby our subscribers can easily pay for the music that they download.

Product Research and Development

We do not anticipate that we will expend any significant funds on research and development over the twelve months ending November 30, 2005.

Purchase of Significant Equipment

We anticipate that we will need to purchase additional software to expand our existing text messaging capabilities at a cost of approximately $25,000.

Employees

Prior to the date of our acquisition of our subsidiary company Digital Youth Network Inc. on October 7, 2003, we had no employees. As at November 30, 2004, we still had no employees but our subsidiary company Digital Youth Network Inc. employed 5 people on a full time basis and a varying number of consultants and casual labour on an as-needed basis. These employees and consultants perform all of the necessary management and accounting functions for our company, in addition to customer service, website design and development, advertising and sales. As at November 30, 2004, we were spending an aggregate of approximately $40,000 per month on consulting fees, wages, benefits, withholdings for all of our employees, rent and general overhead. We do not anticipate an increase in the number of our employees or consultants, other than fluctuations in the normal course of scheduled promotional events for our subscribers, over the next 12 months.

Offices

We currently share office space with our subsidiary. Our principal place of business is located at Suite 302, 1040 Hamilton Street, Vancouver, B.C., Canada V6B 2R9, where we rent approximately 2,300 square feet of office space, together with parking, for a monthly rent of $3,312 (Cdn $4,600).

Factors That May Affect Our Future Results

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this quarterly report in evaluating Digital Youth Network Corp. and its business before purchasing shares of common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. The trading price of the shares of our common stock could decline due to any of these risks, and you could lose all or part of your investment.

New Accounting Pronouncements

Our management does not believe that any recently issued but not yet effective accounting standards, if currently adopted, could have a material effect on our company or our operations.

Application of Critical Accounting Policies

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.

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Going Concern

Our financial statements have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, our financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, our company requires additional financing to fund its operations. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are unable to continue as a going concern, we would likely be unable to realize the carrying value of our assets.

RISK FACTORS

GENERAL RISKS

We have not generated any significant revenues since May 1999 and our ability to generate revenues and operate at a profit is uncertain.

We have an accumulated deficit of $2,062,501 as at November 30, 2004. We had revenue for the three month period ended November 30, 2004 of $233 and expenses, including direct costs, for the same period of $189,266. At November 30, 2004, we had cash in the bank of $1,662. Our monthly operating expenses are approximately $40,000. We do not currently have the money necessary to continue our operations and our ability to generate any further revenues is uncertain. If we do not begin to generate significant revenues that enable us to operate profitably, our business will fail.

If we are unable to obtain additional capital to finance the development of our business, we may be required to delay, scale back or eliminate the development of our business.

Because we cannot fund the cost of our operations from our revenues, we anticipate that we will require additional financing in order to continue to operate, grow our subscriber base and begin to generate significant revenues. We intend to secure any additional financing necessary through private placements of our common shares, but there can be no assurance that any such financing will be available upon terms and conditions acceptable to us, if at all. Our inability to obtain additional financing in a sufficient amount when needed and upon terms and conditions acceptable to us could have a materially adverse effect upon our company. In addition, if funds are raised by issuing equity securities, further dilution to existing or future shareholders will likely result. If adequate funds are not available on acceptable terms when needed, we may be required to delay, scale back or eliminate the development of our business. Inadequate funding could also impair our ability to compete in the marketplace, which may result in the dissolution of our company.

We require additional financing in order to continue in business as a going concern, the availability of which is uncertain.

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the year ending August 31, 2004, our independent auditors included additional comments in their Auditors' report indicating concerns about our ability to continue as a going concern. Our consolidated financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We have a limited operating history which makes it difficult to evaluate whether we will operate profitably.

We have a limited operating history on which to base an evaluation of our business and prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies

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seeking to establish a new business opportunity. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse affect on our financial condition. In addition, our operating results are dependent to a large degree upon factors outside of our control. There are no assurances that we will be successful in addressing these risks, and failure to do so may adversely affect our business.

The loss of some of our present directors and officers could harm our business.

Some of our present officers and directors, who are also officers of our new subsidiary Digital Youth Network, are key to our continuing operations and we rely upon the continued service and performance of these officers and directors and their knowledge and ability to maintain our current level of business and to expand our business, which is key to our future success. Although these officers or directors are parties to written employment agreements with our company, any of them could leave with little or no prior notice. We cannot be assured that we can persuade these people to continue their employment with our company, or that we can do so on terms that are satisfactory to our company. The failure to retain these key persons could harm our business.

We are subject to economic fluctuations within the telecommunications and advertising businesses.

Our current business activities are limited to the business engaged in by our subsidiary, Digital Youth Network. Our lack of diversification may subject us to economic fluctuations within the telecommunications and the advertising businesses, which may increase the risks associated with our operations.

We may fail to use our database and our expertise in marketing to our members successfully, and we may not be able to maintain the quality and size of our database.

The effective use of our Digital Youth database and our expertise in marketing to our generation DY members will be important to our business. If we fail to capitalize on these assets, our business may not be successful.

We rely on third parties for some essential business operations, and disruptions or failures in the services provided by these parties may adversely affect our ability to deliver goods and services to our participating students.

We depend on all of the cellular telephone service providers in Canada for service to the cellular telephones used by our subscribers, and we depend on Impact Mobile for the ability to communicate across the various networks. This is an essential aspect of our business. We have no control over any of these telecommunications carriers or over Impact Mobile. We may not be able to maintain satisfactory relationships with any one or more of them on acceptable commercial terms. Further, we cannot be certain that the quality of products and services that they provide will remain at the levels needed to enable us to conduct our subsidiary's business effectively.

Rapid changes to the technology used in our Digital Youth Network business may make our technology obsolete or require us to make large capital expenditures.

The wireless telecommunications industry is experiencing significant technological change, as evidenced by evolving industry standards, ongoing improvements in the capacity and quality of digital technology, shorter development cycles for new products and enhancements and changes in end-user requirements and preferences. These continuing technological advances make it difficult to predict the extent of future competition with cellular and other services. As a result, there can be no assurance that existing, proposed or as yet undeveloped technologies will not become dominant in the future and render the use of cellular telephones less profitable or even obsolete.

The actual or perceived health risks of wireless communications devices could have a material adverse effect on our business.

Reports have suggested that certain radio frequency emissions from wireless communications transmission equipment and handsets may be linked to certain medical conditions, such as cancer. Scientific investigations are ongoing to review whether radio emissions from wireless handsets and radio transmitters used in connection with wireless technologies pose health concerns, including interference with hearing aids, pacemakers and other medical

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equipment and devices. There can be no assurance that the findings from such studies will not have a material adverse effect on our Digital Youth Network business or will not lead to changes in government regulation. The actual or perceived health risks of wireless communications devices could adversely affect wireless communications service providers through reduced subscriber growth, reduced network usage per subscriber, the threat of product liability lawsuits or reduced availability of financing to the wireless communications industry.

Telecommunications service providers are subject to governmental regulation and licensing requirements, which may increase their operating costs and affect their ownership structure

The use of radio spectrum is regulated by Industry Canada pursuant to the Radiocommunication Act (Canada). Radio and spectrum licenses are issued for a term and may be renewed at Industry Canada's discretion. They may be suspended or revoked for cause, including failure to comply with the conditions of license, although revocation is rare, and licenses are usually renewed upon expiration. Industry Canada regulation can materially affect the costs and the operations of the cellular telephone service providers through whom we route all of our text messages.

Canadian carriers are also subject to the Telecommunications Act (Canada), and therefore subject to regulation by the Canadian Radio-television and Telecommunications Commission ("CRTC"). CRTC regulation can materially affect the services and activities of these carriers.

If any telecommunications carrier fails to continue to comply with the applicable provisions of these Canadian statutes, it could lose its license to provide the services that it currently provides to our company. Although the possibility is remote, if this were to occur to some material number of these carriers, it could have a material adverse affect on our ability to operate our business.

We are not currently subject to any direct federal, state or local regulation in the United States, other than regulations applicable to businesses generally.

To the best of our knowledge, we are not currently subject to any direct federal, state or local regulation in the United States, other than regulations applicable to businesses generally. Upon our acquisition of Digital Youth Network, we became engaged in the business of providing advertising products in Canada through various media including telecommunications, though we do not directly provide any telecommunications service.. The telecommunications industry is highly regulated in Canada and we do not have any direct experience operating in this industry. Our lack of expertise and knowledge concerning this regulatory framework could have an adverse impact on the future development of our business.

We voluntary delisted from the TSX Venture Exchange (formerly the Canadian Venture Exchange) and trading in our common shares on the National Association of Securities Dealers Inc.'s OTC Bulletin Board is limited and sporadic, making it difficult for our shareholders to sell their shares or liquidate their investments.

On June 21, 2002, we voluntarily delisted our common shares from the TSX Venture Exchange (formerly the Canadian Venture Exchange). Although our common shares were approved for trading on the National Association of Securities Dealers Inc.'s OTC Bulletin Board on January 29, 2002, under the symbol "OVNIF" and on August 24, 2004 under the new symbol "DYOUF", trading has been very limited and sporadic, making it difficult for our shareholders to sell any of their common shares and liquidate their investment.

Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation. There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance.

In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted. Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.

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Trading of our stock may be restricted by the SEC's "Penny Stock" regulations which may limit a stockholder's ability to buy and sell our stock.

The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and t he nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading a ctivity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.

Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.

Our constating documents authorize the issuance of an unlimited number of common shares and an unlimited number of preferred shares. In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change in our control.

Our by-laws do not contain anti-takeover provisions which could result in a change of our management and directors if there is a take-over of our company.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our by-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors.

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As a result of all of our assets being located outside the United States and a majority of our directors and officers residing outside of the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our company or our directors and officers.

All of our assets are located outside the United States and we do not currently maintain a permanent place of business within the United States. In addition, a majority of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons' assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our company or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

Item 3. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by the quarterly report, being November 30, 2004, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's principal executive officer, principal financial officer and principal operating officer. Based upon that evaluation, our management and our board of directors have concluded that our company's disclosure controls and procedures, especially with regard to our internal controls over financial reporting, are inadequate. We believe that this is because we lack the qualified accounting personnel necessary to timely compile and provide to management the financial information that we are required by law to disclose on the forms promulgated by the Securities and Exchange Commission, and we currently lack the funds to hire these accounting personnel. Although we have identified a consultant who is both qualified and prepared to assist us in correcting the deficiencies in our disclosure controls and procedures that we have identified, we do not currently have the financial resources to retain him or to hire the additional personnel that we require.

Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, but these processes are not being completed within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management including our president and secretary as appropriate, to allow timely decisions regarding required disclosure.

As our company is relatively small, our audit committee does not have a member that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, or "independent" as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended. We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding our internal controls and procedures, including those pertaining to financial reporting. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in light of the current size of our company.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We know of no material, active or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

We have received correspondence putting our company on notice of a claim by Bay Management Ltd. that it believes that it is entitled to receive a finders' fee from our subsidiary company, Digital Youth Network Inc., as compensation for finders' services allegedly rendered Digital Youth Network Inc. prior to the date of our acquisition of its shares on October 7, 2003. We do not believe that this claim has any merit and if it is pursued we intend to contest it.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Pursuant to a debt settlement agreement and subscription agreement dated as of January 6, 2005, we agreed to issue 100,000 shares of common stock to a consultant to our company. These shares were issued in an offshore transaction to non-US Persons relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

Pursuant to a subscription agreement dated June 27, 2004 we agreed to issue 50,000 units to one accredited investor. Each unit is comprised of one common share and one share purchase warrant entitling the holder to acquire one common share at $0.40 per share for each warrant until December 31, 2005. These units were sold as at June 27, 2004 in an offshore transaction to non-US Persons relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

None.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit Number and Exhibit Title

(3) Articles of Incorporation and Bylaws

3.1 Articles of Incorporation, effective November 22, 1996⁽¹⁾

3.2 Certificate of Incorporation, effective November 22, 1996⁽¹⁾

3.3 By-Laws, effective November 30, 1996⁽¹⁾

3.4 Articles of Amendment, dated February 22, 1997⁽¹⁾

3.5 Certificate of Amendment of Articles of Incorporation, effective February 27, 1997⁽¹⁾

3.6 Certificate of Amendment and Registration of Restated Articles, effective January 31, 2000⁽¹⁾

3.7 Certificate of Change of Name (British Columbia), dated January 16, 2001⁽¹⁾

3.8 Certificate of Amendment, effective July 20, 2004⁽⁶⁾

(10) Material Contracts

10.1 Convertible Debenture with Sourcexport, Inc., dated December 5, 2000⁽¹⁾

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10.2 Convertible Debenture Subscription Agreement with Sourcexport, Inc., dated December 1, 2000⁽¹⁾

10.3 Escrow Agreement with Sourcexport, Inc. and Clark, Wilson, dated December 1, 2000⁽¹⁾

10.4 Share Purchase Agreement dated as of July 21, 2003, with all of the shareholders of Digital Youth Network, Inc. ⁽²⁾

10.5 Convertible Debenture dated April 28, 2003, with Digital Youth Network, Inc.⁽²⁾

10.6 Amendment to Share Purchase Agreement dated October 1, 2003, with all of the shareholders of Digital Youth Network Inc⁽³⁾

10.7 Employment Agreement dated October 1, 2003 between Digital Youth Network Inc. and Daniel Reitzik⁽³⁾

10.8 Employment Agreement dated October 1, 2003 between Digital Youth Network Inc. and Robert Skoko⁽³⁾

10.9 Employment Agreement dated October 7, 2003 between Digital Youth Network Inc. and Jason Jaspar⁽³⁾

10.10 Form of Subscription Agreement entered into with the following subscribers⁽⁵⁾

Andrew Macdonald

Salus Systems Ltd.

Eddi Sponza

Monty Reitzik

Scipio Consulting Ltd.

684634 B.C. Ltd.

684628 B.C. Ltd.

684631 B.C. Ltd.

Ghouse Productions (2004) Inc.

Vern Powers

Darryl Flash

Wendy Fuller

10.11 Form of Subscription Agreement entered into with the following subscribers⁽⁶⁾

Synergy Sales & Service Inc.

Medium M Industries Ltd.

Robert Allaire

Steve Skoko Inc.

Robert Balbirnie

10.12 Debt Settlement Agreement and Subscription Agreement dated June 22, 2004 with 310047 B.C. Ltd. ⁽⁶⁾

10.13 Assignment of Debt dated June 22, 2004 with Clark, Wilson⁽⁶⁾

10.14 Finder's Fee Agreement dated August 1, 2003 with Austin Rand⁽⁶⁾

10.15 Connectivity Agreement dated June 17, 2004 with Impact Mobile Inc.⁽⁶⁾

10.16 Letter of Agreement dated August 30, 2004 with Microcell Solutions Inc.⁽⁶⁾

10.17 Debt Settlement Agreement and Subscription Agreement dated July 20, 2004 with Wireless With You Corp.⁽⁷⁾

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10.18 Form of Subscription Agreement entered into with the following subscribers⁽⁷⁾

Troy Peart

Wendy Fuller

Vice D'Arpino

Antonio Zanetti

Aldo Trinetti

Dario Sponza

10.19* Debt Settlement Agreement and Subscription Agreement dated as of January 6, 2005 with Redwood Enterprises Ltd.⁽⁷⁾

10.20* Subscription Agreement dated June 27, 2004 entered into with Robert Beiser.

10.21* Agreement dated December 2, 2004 with Digital Advertising Network Inc.

(14) Code of Ethics

14.1 Code of Business Conduct and Ethics⁽⁴⁾

(21) Subsidiaries of our Company

21.1 Digital Youth Network, Inc.

(31) Section 302 Certifications

31.1* Certification by Raymond Mol pursuant to Section 302 under theSarbanes-Oxley Act of 2002

(32) Section 906 Certifications

32.1* Certification by Raymond Mol pursuant to Section 906 under theSarbanes-OxleyAct of 2002

(1) Incorporated by reference from our Form 10-SB Registration Statement (as amended), originally filed with the Securities and Exchange Commission on May 11, 2000.

(2) Incorporated by reference from our Form 10-QSB filed with the Securities and Exchange Commission on August 14, 2003.

(3) Incorporated by reference from our Form 8-K filed with the Securities and Exchange Commission on October 22, 2003.

(4)Incorporated by reference from our Form 10-KSB filed with the Securities and Exchange Commission on January 12, 2004.

(5)Incorporate by reference from our Form 10-QSB filed with the Securities and Exchange Commission on February 20, 2004.

(6)Incorporated by reference from our Form 10-QSB filed with the Securities and Exchange Commission on August 20, 2004.

(7)Incorporated by reference from our Form 10-KSB filed with the Securities and Exchange Commission on January 13, 2005.

* Filed herewith

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SIGNATURES

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

DIGITAL YOUTH NETWORK CORP.

By: /s/ Raymond Mol
Raymond Mol, President, Chief Executive Officer and Director
February 18, 2005

By: /s/ Daniel Reitzik
Daniel Reitzik, Director
February 18, 2005

By: /s/ Jerry McKenzie
Jerry McKenzie, Director
February 18, 2005

By: /s/ William McGinty
William McGinty, Director
February 18, 2005