<PAGE>

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


                                   FORM 10-QSB


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


                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000


             [ ] 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>
<CAPTION>

                                                                                                              Page No.
                                                                                                              --------
<S>       <C>                                                                                                 <C>
PART I.   FINANCIAL INFORMATION

Item 1.     Condensed Consolidated Financial Statements:

            Condensed Consolidated Balance Sheet as of December 31, 2000.............................................3

            Condensed Consolidated Statements of Operations for the three
            months ended December 31, 2000 and 1999..................................................................4

            Condensed Consolidated Statements of Cash Flows for the three
            months ended December 31, 2000 and 1999..................................................................5

            Notes to Condensed Consolidated Financial Statements.....................................................6

Item 2.     Management's Discussion and Analysis or Plan
            of Operations............................................................................................7

PART II.  OTHER INFORMATION

Item 1.     Legal Proceedings.......................................................................................11

Item 2.     Changes in Securities...................................................................................11

Item 3.     Defaults on Senior Securities...........................................................................11

Item 4.     Submission of Matters to a Vote of Security Holders.....................................................11

Item 5.     Other Information.......................................................................................11

Item 6.     Exhibits and Reports on Form 8-K........................................................................11

            Signatures..............................................................................................12

</TABLE>











                                                           2

<PAGE>

                     ITS NETWORKS INC. AND SUBSIDIARY
                        CONSOLIDATED BALANCE SHEET
                             DECEMBER 31, 2000
                                (UNAUDITED)


<TABLE>
<S>                                              <C>
CURRENT ASSETS:
Cash                                             $           122,000
Short-term investments                                       116,000
Prepaid offering costs                                         6,000
Accounts receivable                                           87,000
Loan receivable                                               23,000
                                                 --------------------
CURRENT ASSETS                                               354,000
                                                 --------------------

Long-term investments                                         11,000
Property and equipment                                       215,000
Intangible assets                                              4,000
                                                 --------------------
NON-CURRENT ASSETS                                           230,000
                                                 --------------------
TOTAL ASSETS                                     $           584,000
                                                 ====================

CURRENT LIABILITIES:
Accounts payable and accrued expenses            $           500,000
Related party payable                                              -
                                                 --------------------
TOTAL CURRENT LIABILITIES                                    500,000
                                                 --------------------

Long-term loans                                              416,000
                                                 --------------------
TOTAL LIABILITIES                                            916,000
                                                 --------------------

STOCKHOLDERS' DEFICIT
Common stock                                                  21,317
Additional paid in capital                                 1,316,683
Accumulated deficit                                       (1,961,000)
Accumulated other comprehensive income                       291,000
                                                 --------------------
STOCKHOLDERS' DEFICIT                            $          (332,000)
                                                 --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT      $           584,000
                                                 ====================

</TABLE>





                                       3

<PAGE>

                        ITS NETWORKS, INC AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                        FOR THE THREE MONTHS ENDED DECEMBER 31,

                                                2000                    1999
                                                ----                    ----
<S>                                   <C>                  <C>
Sales                                  $       390,000      $         303,000
Cost of goods sold                             317,000                290,000
                                      -----------------    -------------------
GROSS PROFIT                                    73,000                 13,000
                                      -----------------    -------------------

OPERATING EXPENSES:
General & administrative expenses              250,000                219,000
Depreciation expense                             8,000                  5,000
Provision for doubtful accounts                  8,000                  7,000
                                      -----------------    -------------------
                                               266,000                231,000
                                      -----------------    -------------------
OPERATING LOSS                                (193,000)              (218,000)
                                      -----------------    -------------------

OTHER INCOME (EXPENSES):
Interest Income                                  1,000                    500
Interest Expense                                (5,000)                (4,250)
Losses on investments sold                     (15,000)                     -
Other Income                                         -                  1,750
                                      -----------------    -------------------
                                               (19,000)                (2,000)
                                      -----------------    -------------------
NET LOSS                               $      (212,000)     $        (220,000)
                                      =================    ===================


Basic & diluted earnings per share
 computation:
   Net loss for the period ended              (212,000)              (220,000)
   Total outstanding shares                 21,316,677             21,316,677
   Basic & diluted earnings per share  $         (0.01)     $           (0.01)
                                      =================    ===================

</TABLE>








                                       4

<PAGE>

                        ITS NETWORKS, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE THREE MONTHS ENDED DECEMBER 31,
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                        FOR THE THREE MONTHS ENDED DECEMBER 31,
                                                             2000                      1999
                                                             ----                      ----
<S>                                                <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

NET LOSS                                            $       (212,000)      $          (220,000)
 Adjustments to reconcile net income to net cash
 provided (used) by operating activities:
  Depreciation                                                 8,000                     5,000
  Capitalization restructure, net                              6,000                         -
 Decrease (increase) in operating assets:
  Accounts receivable                                        (16,000)                   26,000
  Prepaid expenses                                            (6,000)                        -
  Other assets (intangible)                                                             (1,000)
 Increase (decrease) in operating liabilities:
  Accounts payable and accrued expenses                       83,000                   101,000
                                                   ------------------     ---------------------
NET CASH USED BY OPERATING ACTIVITIES                       (137,000)                  (89,000)
                                                   ------------------     ---------------------


CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of short-term investments                           (5,000)                 (126,000)
 Sale of Long-term investments                                                          62,000
 Cash payments for the purchase of property,
 plant & equipment                                           (29,000)                  (35,000)
                                                   ------------------     ---------------------
NET CASH USED BY INVESTING ACTIVITIES                        (34,000)                  (99,000)
                                                   ------------------     ---------------------


CASH FLOWS FROM FINANCING ACTIVITIES:
 Cash received (paid) to/from shareholders                   416,000                         -
 Cash (paid) received for a long-term loan                  (132,000)                  360,000
                                                   ------------------     ---------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                    284,000                   360,000
                                                   ------------------     ---------------------

EFFECT OF EXCHANGE RATE CHANGES ON CASH                                               (227,000)
                                                   ------------------     ---------------------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                             113,000                   (55,000)


Cash and cash equivalents,
beginning of period                                            9,000                    74,000
                                                   ------------------     ---------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD                                       $        122,000       $            19,000
                                                   ==================     =====================

</TABLE>



                                       5

<PAGE>

                        ITS NETWORKS INC. AND SUBSIDIARY

Notes to the Consolidated Financial Statements for the Three Months Ended
December 31, 2000

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 three
months ended December 31, 2000, 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. The consolidated financial statements of the Company
reflect the results of operations of the Company and ITS through December 31,
2000. The consolidated financial statements prior to December 31, 2000, 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
and liabilities. 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 re not eligible for consolidation into the
U.S. federal income tax return.

         For the two quarters presented here, no deferred tax asset is shown as
an asset, which is primarily due to net operating losses, and has been offset
by a full valuation allowance as it is more likely than not that the losses
will not be utilized.


                                        6
<PAGE>

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 December 31, 2000, and December 31, 1999.

5.  Related Party Transaction

         The balance of $416,000 at December 31, 2000, represents a loan from
a former shareholder of ITS. The loan does not have any repayment terms.


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

GENERAL

         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.

         In connection with the change in the principal line of business of the
Company to telecommunications, the Company sold and transferred all rights to
its Smart Shopper technology, in consideration of the payment of all of the
current liabilities of the Company, to Stephen A. Beloyan, the former President
and a former director of the Company. This obligation was satisfied by the
exercise of a warrant to purchase 20,000 share of Common Stock at an exercise
price of $1.00 per share by Mr. Beloyan.

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., the Company's
current business plan was implemented. Therefore, this Management's 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, Form 10-KSB, filed for the period ended September 30, 2000.

RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED DECEMBER 31, 2000

         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.


                                        7

<PAGE>


         The following table sets forth certain operating information regarding
the Company:

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED
                                                       DECEMBER 31
                                        ---------------------------------------
                                                2000                    1999
                                        -------------------    ----------------
                                                       (unaudited)
<S>                                     <C>                    <C>

Revenues.............................     $      390,000          $   303,000

Cost of goods sold...................     $      317,000          $   290,000

General and administrative expenses..     $      250,000          $   219,000

Net income (loss)....................     $     (212,000)         $  (220,000)

Net income (loss)....................     $         (.01)         $      (.01)

</TABLE>

THREE MONTHS ENDED DECEMBER 31, 2000, COMPARED WITH THREE MONTHS ENDED DECEMBER
31, 1999

REVENUES

         Revenues for the quarter ended December 31, 2000, increased 28.7% to
$390,000 from $303,000 for the quarter ended December 31, 1999. This increase
was due primarily to the growth in customers and increased sales of
telecommunications services.

COST OF GOODS SOLD/GROSS MARGIN

         Cost of goods sold increased from $290,000 or 95.7% of the revenues for
the quarter ended December 31, 1999, to $317,000 or 81.3% of revenues in the
quarter ended December 31, 2000. This increase of $27,000 was primarily due to
the expansion of business. This growth showed an improvement in the gross margin
of 14.4%. This improvement in the gross margin and lowered cost of goods sold on
a percentage basis was due to lowered costs related to higher usage and more
efficient pricing.

EXPENSES

         Expenses consist of sales and marketing, operating, and general and
administrative costs, and depreciation and amortization. Expenses for the
quarter ended December 31, 2000, increased to $266,000 from $231,000 for the
quarter ended December 31, 1999, a 15.2% increase. However, as a percentage of
revenues, the Company showed an improvements in expenses of 12% with expenses
for the quarter ended December 31, 2000 equating to 68% of revenues while
expenses for the quarter ended December 31, 1999, equated to 76% of revenues.
The increase of overall expenses was primarily related to the growth in salaries
and administrative costs.

LOSS FROM OPERATIONS

         Loss from operations for the quarter ended December 31, 2000, decreased
11.5% to $193,000


                                        8
<PAGE>


from $218,000 for the quarter ended December 31, 1999. This decrease was
primarily due to an increase in revenues and a decrease in costs.

NET LOSS

         Net loss for the quarter ended December 31, 2000, decreased 3.6% to
$212,000 from $220,000 for the quarter ended December 31, 1999. This decrease
was primarily due to an increase in revenues and a decrease in costs. However,
the net loss increased by $15,000 or 3.8% of revenues due to a one-time write
off of losses on investments sold.

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 through
a direct investment by their shareholders. In December 2000, the shareholders
of ITS Europe, S.L. loaned $416,000 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.

CAPITAL EXPENDITURES

         The Company's anticipated capital expenditures for the year ending
September 30, 2001, is primarily expected to consist of marketing costs for the
Company and costs related to potential


                                        9

<PAGE>


acquisitions.

         At present, the Company is developing its marketing budget related to
its expanded sales and marketing campaign.

CAPITAL EXPENDITURES, CAPITAL RESOURCES AND LIQUIDITY

         The following summary table (unaudited) presents comparative cash flows
of the Company for the periods indicated.

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED
                                                          DECEMBER 31
                                             -----------------------------------
                                                  2000                 1999
                                             --------------       --------------
<S>                                          <C>                  <C>

Net cash used in operating activities         $   (137,000)        $    (89,000)

Net cash used in investing activities         $    (34,000)        $    (99,000)

Net cash provided by financing activities     $   (284,000)        $    360,000

</TABLE>


         CAPITAL EXPENDITURES. The Company did not incur any material capital
expenditures for office equipment, office furniture or other fixed assets
during the three month period ended December 31, or in the three month period
ended December 31, 1999.

         LIQUIDITY AND CAPITAL RESOURCES. The Company's capital resources have
historically been provided primarily by the sale of its Common Stock and by
short term loans.

         The Company intends to raise additional capital through an offering of
its Common Stock or other securities to provide additional working capital to
fund future operations, although no specific plans or commitments presently
exist to pursue an offering of its securities.

         At December 31, 2000, the Company had current assets of $354,000 and
current liabilities of $500,000, resulting in a working capital deficit of
$146,000.

         Net cash used in operating activities increased to $137,000 for the
three months ended December 31, 2000, from $89,000 for the three months ended
December 31, 1999, a difference of $48,000. The increase in net cash used in
operating activities was primarily attributable to the increase in its
marketing and administrative costs.


                                      10
<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 its fiscal quarter ended December 31, 2000.

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 December 31, 2000.


                                      11
<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:    February 19, 2001                  By:  /s/ Frederic Cohen
                                               ---------------------------------
                                                  Frederic Cohen, President,
                                                  Chief Financial Officer, and
                                                  Principal Accounting Officer





















                                       12