<PAGE>


                                   FORM 10-QSB

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


         FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001


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


         FOR THE TRANSITION PERIOD FROM ______________ TO ________________


                        COMMISSION FILE NUMBER: 0-30611


                                ITS NETWORKS INC.
                   (EXACT NAME OF SMALL BUSINESS ISSUER AS
                            SPECIFIED IN ITS CHARTER)


          FLORIDA                            52-2137517
          -------                            ----------
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)






           PARQUE TECNOLOGICO DE ANDALUCIA, CENTRO DE EMPRESAS-P.5,6Y7
           -----------------------------------------------------------
                       29590, CAMPANILLAS (MALAGA), SPAIN
                       ----------------------------------
                     (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                011-3495-277-2057
                         -------------------------------
                           (ISSUER'S TELEPHONE NUMBER)


--------------------------------------------------------------------------------
       (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
                              SINCE LAST  REPORT)



             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 LAST PRACTICABLE DATE: 21,336,667 SHARES.


 TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):  YES      NO  X
                                                                 ---     ---

<PAGE>

                                  ITS NETWORKS INC.


                                        INDEX

<TABLE>

<S>          <C>

PART I.      FINANCIAL INFORMATION

Item 1.        Consolidated Financial Statements:

               Consolidated Balance Sheet as of March 31, 2001.....................

               Consolidated Statements of Operations for the three and
               six months ended March 31, 2001 and 2000............................

               Consolidated Statements of Cash Flows for the three and
               six months ended March 31, 2001 and 2000............................

               Notes to Consolidated Financial Statements..........................

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

PART II.     OTHER INFORMATION

Item 1.        Legal Proceedings...................................................

Item 2.        Changes in Securities...............................................

Item 3.        Defaults on Senior Securities.......................................

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

Item 5.        Other Information...................................................

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

               Signatures..........................................................

</TABLE>





                                        2


<PAGE>

                        ITS NETWORKS INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2001
                                   (UNAUDITED)

<TABLE>
<S>                                                            <C>
                                      ASSETS
CURRENT ASSETS:
Cash                                                           $     4,000
Short-term investments                                             113,000
Accounts receivable                                                 52,000
Prepaid expenses                                                    11,600
Recoverables                                                        28,400
                                                               ------------
CURRENT ASSETS                                                     209,000
                                                               ------------

Long-term investments                                               11,000
Property & equipment                                               203,000
Intangible assets                                                    4,000
                                                               ------------
NON-CURRENT ASSETS                                                 218,000
                                                               ------------
Total Assets                                                   $   427,000
                                                               ============

                      LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable & accrued expenses                            $   467,000
Short-term payables to bank                                         56,000
                                                               ------------
TOTAL CURRENT LIABILITIES                                          523,000
                                                               ------------

Due to related parties                                             447,000
                                                               ------------
TOTAL LIABILITIES                                                  970,000
                                                               ------------

STOCKHOLDERS' DEFICIT
Common stock; par value $0.001, 50,000,000 shares
authorized; 21,336,667 shares outstanding                           21,317
Additional paid in capital                                       1,297,000
Accumulated deficit                                             (2,166,000)
Accumulated other comprehensive income                             304,683
                                                               ------------
STOCKHOLDERS' DEFICIT                                          $  (543,000)
                                                               ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                    $   427,000
                                                               ============
</TABLE>


                                        3

<PAGE>

                        ITS NETWORKS INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                             FOR THE THREE MONTHS ENDED            FOR THE SIX MONTHS ENDED
                                                                      MARCH 31,                            MARCH 31,
                                                              2001               2000               2001              2000
                                                              ----               ----               ----              ----
<S>                                                     <C>                <C>             <C>                <C>

Sales                                                     $   464,000        $   306,000       $   854,000       $   609,000
Cost of goods sold                                            321,000            296,000           638,000           586,000
                                                          -------------------------------      ------------------------------
GROSS PROFIT                                                  143,000             10,000           216,000            23,000
                                                          -------------------------------      ------------------------------

OPERATING EXPENSES:
General & administrative expenses                             320,000            226,000           570,000           445,000
Depreciation and amortization expense                           5,000              6,000            13,000            11,000
Provision for doubtful accounts                                19,000             26,000            27,000            33,000
                                                          -------------------------------      ------------------------------
                                                              344,000            258,000           610,000           489,000
                                                          -------------------------------      ------------------------------
OPERATING LOSS                                               (201,000)          (248,000)         (394,000)         (466,000)
                                                          -------------------------------      ------------------------------

OTHER INCOME (EXPENSES) :
Interest Income                                                     -              1,000             1,000             1,500
Interest Expense                                               (2,000)            (1,000)           (7,000)           (5,250)
Loss on sale of fixed assets                                   (2,000)                 -           (17,000)                -
Other Income                                                        -                  -                 -             1,750
                                                          -------------------------------      ------------------------------
                                                               (4,000)                 -           (23,000)           (2,000)
                                                          -------------------------------      ------------------------------
Net loss                                                  $  (205,000)       $  (248,000)      $  (417,000)      $  (468,000)
                                                          ===============================      ==============================


Basic & diluted earnings per share computation:
  Net loss for the period ended                              (205,000)          (248,000)         (417,000)         (468,000)
  Total outstanding shares                                 21,316,677         21,316,677        21,316,677        21,316,677
  Basic & diluted earnings per share                      $     (0.01)       $     (0.01)      $     (0.02)      $     (0.02)
                                                          ===============================      ==============================
</TABLE>

                                        4

<PAGE>

                        ITS NETWORKS INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       FOR THE SIX MONTHS ENDED MARCH 31,
                                   (UNAUDITED)


<TABLE>
<CAPTION>

<S>                                                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

NET LOSS                                                           $(417,000)
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
  Depreciation and amortization                                       13,000
  Capitalization restructure, net                                      6,000
  Loss on sale of fixed assets                                         2,000
Decrease (Increase) in operating assets:
  Accounts receivable                                                 19,000
  Prepaid expenses                                                   (11,600)
  Decrease in recoverables                                            (5,400)
Increase (Decrease) in operating liabilities:                              -
  Accounts payable and accrued expenses                               50,000
  Related party payables                                                   -
                                                                   ----------
NET CASH USED BY OPERATING ACTIVITIES                               (344,000)
                                                                   ----------


CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of short-term investments                                  (5,000)
  Cash proceeds from the sale of fixed assets                          3,000
  Cash proceeds from the sale of short-term investments                3,000
  Cash payments for the purchase of property and equipment           (33,000)
                                                                   ----------
NET CASH USED BY INVESTING ACTIVITIES                                (32,000)
                                                                   ----------


CASH FLOWS FROM FINANCING ACTIVITIES:
  Cash received from related party                                   447,000
  Cash paid for long-term loan                                      (132,000)
  Cash received from bank                                             56,000
                                                                   ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES                            371,000
                                                                   ----------

EFFECT OF EXCHANGE RATE CHANGES ON CASH, NET                               -
                                                                   ----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  (5,000)


Cash and cash equivalents, beginning of period                         9,000
                                                                   ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD                           $   4,000
                                                                   ==========
</TABLE>

                                        5

<PAGE>

                        ITS NETWORKS INC. AND SUBSIDIARY

Notes to the Consolidated Financial Statements for the Six Months Ended March
31, 2001

1. Basis of Presentation

         The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary in order to make the financial statements not misleading have been
included. Results for the six months ended March 31, 2001, and the three
months March 31, 2001, respectively, are not necessarily indicative of the
results that may be expected for the year ending September 30, 2001. For
further information, refer to the financial statements and footnotes thereto
included in the Technology Systems International, Inc.'s, its former
corporate name (the "Company"), annual report on Form 10- KSB for the year
ended September 30, 2000.

2. Stock Acquisition

         On December 22, 2000, the Company issued 16,886,667 shares of common
stock in exchange for 100% of the outstanding common stock of ITS Europe,
S.L. ("ITS"), a Spanish telecommunications company. For accounting purposes,
the acquisition is being recorded as a recapitalization of ITS, with ITS as
the acquirer. The 16,866,677 shares issued are treated as issued by ITS for
cash, and they are being shown as outstanding for all period presented in the
same manner as a stock split. For the three and six month period ended March
31, 2001, the financial statements of the Company reflect the results of
operations of the Company and ITS through March 31, 2001. The consolidated
financial statements for comparative March 31, 2000 period, reflect the
results of operations and financial position of ITS. Pro forma information
for this transaction is not presented because, as of the date of the
transaction, the Company was considered a public shell.

3. Income Taxes

        The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") NO. 109, "Accounting for Income
Taxes", which requires an asset and liabilities approach to determine
deferred taxes. The deferred assets and liabilities are determined based on
the differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are assumed to reverse.

         The Company files a consolidated return with its subsidiaries that are
eligible to be consolidated. Separate provisions for income taxes are calculated
for subsidiaries that are not eligible for consolidation into the U.S. federal
income tax return.

4. Loss per Share

         Loss per common and common equivalent share is computed based on the
weighted average number of common shares outstanding. There are no common
stock equivalents outstanding at March 31, 2001.

5. Related Party Transaction

         The balance of $447,000 at March 31, 2001, represents a loan from a
former shareholder of ITS. The loan does not have any repayment terms.

6. Foreign Currency Translation/Transactions

         The assets and liabilities of ITS, whose functional currency is
the peseta, are generally translated into US dollars at current exchange
rates. The revenues and expenses are translated at average exchange rates for
the period. Resulting translation adjustments are reflected as a separate
component of stockholders' equity.

         Transaction gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than the
functional currency are included in the results of operations as incurred.

                                       6

<PAGE>

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

RESULTS OF OPERATIONS

The Company's prior full fiscal year ended September 30, 2000, is not
indicative of the Company's current business plan and operations. Prior to
December 2000, the Company was a development stage technology company and had
no revenues. After the Company's acquisition of ITS Europe, S.L., through a
share exchange agreement entered on December 22, 2000, the Company's current
business plan was implemented. Therefore, this Managements Discussion and
Analysis will discuss the results of operations for the Company's
telecommunications operations consisting primarily of its wholly owned
subsidiary ITS Europe, S.L. The Company will discuss its current operations
and its future products and their plans for growth through acquisition. For
information concerning the Company's prior full fiscal years, the Company
refers the reader to the financial statements provided in the previous Annual
Report on Form 10-KSB, filed for the period ended September 30, 2000.

RESULTS OF OPERATIONS FOR ITS EUROPE S.L. FOR THE QUARTER ENDED MARCH 31,
2001 AND FOR THE SIX MONTHS ENDED MARCH 31, 2001

On December 22, 2000, the Company acquired 100% of ITS Europe, S.L. a
telecommunications company based in Malaga, Spain. ITS Europe, S.L. is a
provider of numerous telecommunications services and products within Spain;
all of the operations of ITS Europe, S.L. was founded prior to the
deregulation of the telecommunications industry in Spain in 1998.

REVENUES

Revenues for the quarter ended March 31, 2001, increased 52% to $464,000 from
$306,000 for the quarter ended March 31, 2000. For the six months ended March
31, 2001 revenues increased 40% to $854,000 from $609,000 for the six months
ended March 31, 2000. These increases were due primarily to the growth in
customer base and increased sales of telecommunications services.

COST OF GOODS SOLD/GROSS MARGIN

Cost of goods sold increased to $321,000, or 69% of revenues for the quarter
ended March 31, 2001, from $296,000 or 97% of revenues in the quarter ended
March 31, 2001. This increase of $25,000 was primarily due to the expansion
of business. For the six months ended March 31, 2001, cost of goods sold
increased to $638,000 from $586,000 for the six months ended March 31, 2000
or 74% and 96% of revenues for the respective periods. The improvement in
gross margin is reflective of lower costs related to higher usage and more
efficient pricing in the operations of the Company.

EXPENSES

Expenses consist of sales and marketing, operating, and general and
administrative costs, and depreciation and amortization. Expenses for the
quarter ended March 31, 2001, increased to $344,000 from $258,000 for the
quarter ended March 31, 2000, a 33% increase. However, as a percentage of
revenues, the Company showed an improvement in expenses of 10% with expenses

                                       7

<PAGE>

for the quarter ended March 31, 2001 equaling 74% of revenues while expenses
for the quarter ended March 31, 2000 equaling 84% of revenues. Expenses for
the six months ended March 31, 2001 increased to $610,000 or 71% of revenues,
from $489,000, or 80% of revenues, for the six months ended March 31, 2000,
showing an improvement of 9% for the six months ended March 31, 2001. The
increase of overall expenses was primarily related to the growth in salaries
and administrative costs of business operations.

LOSS FROM OPERATIONS

Loss from operations for the quarter ended March 31, 2001 decreased 19% to
$201,000 from $248,000 for the quarter ended March 31, 2000. For the six
months ended March 31, 2001, the loss from operations decreased 15% to
$394,000 from $489,000 for the six months ended March 31, 2000.  This
decrease was primarily due to a 52% increase in revenues for the three months
period ended March 31, 2001 and a 40% increase in revenues for the six months
ended March 31, 2001.

NET LOSS

Net loss for the quarter ended March 31, 2001 decreased 17% to  $205,000 from
$248,000 for the quarter ended March 31, 2000. The net loss for the six
months ended March 31, 2001 decreased to $417,000 from $468,000 for the six
months ended March 31, 2000. This decrease was primarily due to a 52%
increase in revenues for the three months period ended March 31, 2001 and a
40% increase in revenues for the six months ended March 31, 2001.

PLAN OF OPERATIONS FOR THE COMPANY

The Company's goal for the current fiscal year is to internally grow its
existing customer base through its marketing plan. This marketing plan will
feature combinations of services to build revenues both with existing and new
customers. Combining telecommunication services is an unusual product and
marketing focus within Spain. This campaign is designed to also enhance
customer service to both entice and hold customers' loyalty to the Company.
At present, the Company is in discussions with several other
telecommunications companies in an effort to grow the Company through
acquisition. It is the Company's goal to acquire similar telecommunications
companies, primarily in Spain. However, no specific acquisitions are
presently planned.

The Company has contracted with Alo Communications, S.A. to purchase
telephone time. The contract is variable by the number of minutes used and
the point-to-point destination of the call. The contract was entered into in
May 1999 and has a five-year term. The contract is priced under market at
present.

LIQUIDITY AND CAPITAL RESOURCES

In July 2000, ITS Europe, S.L. raised approximately $900,000 of capital
through a direct investment by their shareholders. The shareholders of ITS
Europe, S.L. loaned $447,000 to the Company. The Company anticipates that its
present capital resources shall be sufficient to fund operations until the
end of May 2001. At present the Company is in talks with financial
institutions to negotiate additional credit facilities for the purposes of
internal growth and to finance the acquisitions of the Company. The Company
has no commitments for additional financing, and there can be no assurances
that any such additional financing would be available in a timely manner or,
if available, would be on terms acceptable to the Company. Furthermore, any
additional equity financing could be dilutive to our then-existing
shareholders and any debt financing could involve restrictive covenants with
respect to future capital raising activities and other financial and
operational matters.

                                       8

<PAGE>


                        PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

         None

ITEM 2. CHANGES IN SECURITIES

         Effective December 22, 2000, ITS Networks Inc. (the "Company") entered
into a Share Exchange Agreement (the "Agreement") with the shareholders of ITS
Europe, S.L., a Spanish telecommunications company. Under the terms of the
Agreement, the Company issued 16,866,677 shares of its Common Stock in exchange
for all of the issued and outstanding common stock of ITS Europe, S.L. which
became a wholly owned subsidiary of the Company.

          During January 2001, the shareholders of the Company approved an
amendment to the Articles of Incorporation of the Company to change its
corporate name to ITS Networks Inc. from Technology Systems International, Inc.,
and to increase its authorized number of shares of Common Stock to 50,000,000
shares from 25,000,000 shares. In addition, the Company changed the trading
symbol for its Common Stock on the NASD electronic bulletin board
over-the-counter market from TYSN to ITSN.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of the security holders of the
Company during the six month period ended March 31, 2001, except as described
in Item 2 above.

ITEM 5. OTHER INFORMATION.

         Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

         (a) EXHIBITS.

         None

         (b) REPORTS ON FORM 8-K.

         No reports on Form 8-K were filed by the Company during the fiscal
quarter ended March 31, 2001.




                                       9


<PAGE>


                                   SIGNATURES

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

                                               ITS NETWORKS INC.

Date: May 23, 2001                             By: /s/ Frederic Cohen
                                                  ------------------------------
                                                   Frederic Cohen, President,
                                                    Chief Financial Officer, and
                                                   Principal Accounting Officer



























                                       10