<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

[MARK ONE]
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

   For the transition period from ____________ to ____________

                       COMMISSION FILE NUMBER: 000-27803

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

                                 SCIQUEST, INC.
             (Exact name of registrant as specified in its charter)


           DELAWARE                                           56-2127592
(State or other Jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)

   5151 McCrimmon Parkway, Suite 216                             27560
      Morrisville, North Carolina                             (Zip Code)
(Address of principal executive offices)

                                 (919) 659-2100
              (Registrant's telephone number, including area code)

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

  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]

   As of August 10, 2001, 29,092,919 shares of Common Stock, $.001 par value,
were outstanding.
<PAGE>

                                 SCIQUEST, INC.

                               TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION:

<TABLE>
<S>     <C>                                                                                             <C>
ITEM 1: FINANCIAL STATEMENTS
        Consolidated Balance Sheets at June 30, 2001 (unaudited) and December 31, 2000..............        3

        Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2001
         and 2000 (unaudited).......................................................................        4

        Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2001
         and 2000 (unaudited).......................................................................        5

        Notes to Consolidated Financial Statements (unaudited)......................................        6

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS.......................................................................       18

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..................................       39


PART II - OTHER INFORMATION:

ITEM 1: LEGAL PROCEEDINGS...........................................................................       40

ITEM 2: CHANGES IN SECURITIES.......................................................................       40

ITEM 3: DEFAULTS IN SECURITIES......................................................................       40

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........................................       40

ITEM 5: OTHER INFORMATION...........................................................................       41

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K............................................................       41

SIGNATURES..........................................................................................       44
</TABLE>
<PAGE>

                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                                 SCIQUEST, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                           June 30,                 December 31,
                                                                                             2001                       2000
                                                                                    -----------------       ---------------------
                                                                                       (unaudited)
<S>                                                                                 <C>                        <C>
                                  Assets
Current assets:
 Cash and cash equivalents  ...................................................         $  46,095,314               $  20,162,831
 Short-term investments  ......................................................             4,723,750                  29,414,789
 Accounts receivable, net  ....................................................             8,180,117                  16,163,830
 Prepaid expenses and other current assets  ...................................             4,306,323                   4,274,742
                                                                                    -----------------       ---------------------
  Total current assets  .......................................................            63,305,504                  70,016,192

Long-term investments  ........................................................             2,046,152                  19,289,276
Property and equipment, net  ..................................................             5,015,737                   9,901,220
Capitalized software and web site development costs, net  .....................            11,124,579                   9,808,625
Goodwill and other long-term assets, net.......................................            68,594,782                  94,177,385
                                                                                    -----------------       ---------------------
  Total assets  ...............................................................         $ 150,086,754               $ 203,192,698
                                                                                    =================       =====================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable  ............................................................         $   3,280,039               $   6,010,197
 Accrued liabilities  .........................................................             6,807,340                   6,403,036
 Deferred revenues.............................................................             1,058,221                   1,033,238
 Current maturities of capital lease obligations  .............................             1,090,814                   1,096,921
                                                                                    -----------------       ---------------------
  Total current liabilities  ..................................................            12,236,414                  14,543,392
                                                                                    -----------------       ---------------------
Capital lease obligations, less current maturities  ...........................             1,227,318                   1,524,457
Commitments and contingencies..................................................                    --                          --

Stockholders' equity:
 Common stock, $0.001 par value; 90,000,000 shares authorized; 29,092,036
  and 28,696,097 shares issued and outstanding as of June 30, 2001 and
  December 31, 2000, respectively..............................................                29,092                      28,696
 Additional paid-in capital  ..................................................           317,787,940                 319,475,952
 Deferred compensation  .......................................................            (2,828,358)                 (4,543,903)
 Deferred customer acquisition costs  .........................................            (3,488,644)                 (4,849,235)
 Accumulated other comprehensive loss..........................................               (38,887)                     (5,369)
 Accumulated deficit  .........................................................          (174,838,121)               (122,981,292)
                                                                                    -----------------       ---------------------

  Total stockholders' equity  .................................................           136,623,022                 187,124,849
                                                                                    -----------------       ---------------------
  Total liabilities and stockholders' equity...................................         $ 150,086,754               $ 203,192,698
                                                                                    =================       =====================
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>

                                 SCIQUEST, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Three Months Ended June 30,        SIX MONTHS ENDED JUNE 30,
                                                         -------------------------------   -------------------------------
                                                              2001             2000             2001             2000
                                                         -------------     -------------   -------------     -------------
<S>                                                      <C>               <C>             <C>               <C>
Revenues:
 E-commerce (net of $3,165, $0, $58,061, and $0,
  respectively, of non-cash buyer
   incentive warrants)................................    $  4,063,105     $ 10,623,776     $ 15,749,906     $ 15,591,376
 License fees and other professional services.........       2,047,170        2,200,001        2,947,564        2,336,195
                                                          ------------     ------------     ------------     ------------
  Total revenues......................................       6,110,275       12,823,777       18,697,470       17,927,571
                                                          ------------     ------------     ------------     ------------
Cost of revenues:
 Cost of e-commerce...................................       3,821,202       10,491,377       15,103,227       15,243,309
 Cost of license fees and other professional services
  (includes $634,315, $500,000, $1,227,786, and
  $500,000, respectively, of amortization of
  capitalized software costs).........................       1,367,474        1,405,723        2,374,283        1,455,723
                                                          ------------     ------------     ------------     ------------
  Total cost of revenues..............................       5,188,676       11,897,100       17,477,510       16,699,032
                                                          ------------     ------------     ------------     ------------
  Gross profit........................................         921,599          926,677        1,219,960        1,228,539
                                                          ------------     ------------     ------------     ------------
Operating expenses:
 Development (includes $121,176, $206,392,
  $244,023, and $741,859, respectively, of stock-
  based employee compensation)........................       3,058,254        4,560,042        7,271,421        8,140,727
 Sales and marketing (includes $130,562, $202,858
  $265,418, and $607,229, respectively, of stock-
  based employee compensation and $586,373,
  ($2,262,191), $362,930, and ($1,566,163),
  respectively, of stock-based customer acquisition
  (benefits) expenses)................................       2,675,870        3,964,376        7,008,674       10,431,283
 General and administrative (includes $239,788,
  $687,910, $494,386, and $1,869,535, respectively,
  of stock-based employee compensation and
  $10,176,728, $10,152,549, $20,406,275, and
  $11,445,140, respectively, of goodwill
  amortization).......................................      14,774,425       16,274,348       30,105,499       22,197,907
 Purchased in-process research and development........              --               --               --          700,000
 Restructuring........................................      10,650,000               --       10,650,000               --
                                                          ------------     ------------     ------------     ------------
  Total operating expenses............................      31,158,549       24,798,766       55,035,594       41,469,917
                                                          ------------     ------------     ------------     ------------
Operating loss........................................     (30,236,950)     (23,872,089)     (53,815,634)     (40,241,378)
                                                          ------------     ------------     ------------     ------------
Interest income (expense):
 Interest income......................................         889,884        1,966,964        2,061,981        4,112,694
 Interest expense.....................................         (53,709)         (25,679)        (103,176)         (62,484)
                                                          ------------     ------------     ------------     ------------
  Net interest income.................................         836,175        1,941,285        1,958,805        4,050,210
                                                          ------------     ------------     ------------     ------------
Loss before income taxes..............................     (29,400,775)     (21,930,804)     (51,856,829)     (36,191,168)
Income tax benefit....................................              --           11,530               --           66,225
                                                          ------------     ------------     ------------     ------------
Net loss..............................................    $(29,400,775)    $(21,919,274)    $(51,856,829)    $(36,124,943)
                                                          ============     ============     ============     ============
Net loss per common share--basic and diluted..........         $(1.02)           $(0.77)         $(1.80)           $(1.31)
                                                          ============     ============     ============     ============
Weighted average common shares outstanding--basic
 and diluted..........................................      28,952,871       28,580,689       28,875,831       27,611,004
</TABLE>



   The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>

                                 SCIQUEST, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                       Six Months Ended June 30,
                                                                              -------------------------------------------
                                                                                      2001                      2000
                                                                              -----------------      --------------------
<S>                                                                           <C>                       <C>
Cash flows from operating activities
 Net loss...................................................................       $(51,856,829)             $(36,124,943)
 Adjustments to reconcile net loss to net cash used in operating
 activities:
  Depreciation and amortization  ...........................................         25,860,465                13,853,549
  Bad debt expense  ........................................................                 --                   118,080
  Non-cash buyer incentive warrants  .......................................             22,094                        --
  Purchased in-process research and development  ...........................                 --                   700,000
  Deferred tax benefit  ....................................................                 --                   (66,225)
  Amortization of deferred compensation  ...................................          1,003,827                 3,218,623
  Amortization of deferred customer acquisition costs  .....................            398,896                (1,566,163)
  Amortization of discount on investments  .................................            (40,527)                 (315,454)
  Loss from disposal of fixed assets  ......................................             11,896                        --
  Write-down of long-lived assets related to restructuring  ................          7,108,102                        --
  Changes in operating assets and liabilities:
   Accounts receivable  ....................................................          7,983,713               (10,151,864)
   Prepaid expenses and other assets  ......................................            (31,581)               (5,900,400)
   Other long-term assets  .................................................          1,397,908                        --
   Accounts payable  .......................................................         (2,730,158)               10,377,379
   Accrued liabilities  ....................................................            404,304                   998,703
   Deferred revenue  .......................................................             24,983                  (646,249)
                                                                             ------------------      --------------------
    Net cash used in operating activities  .................................        (10,442,907)              (25,504,964)
                                                                             ------------------      --------------------
Cash flows from investing activities
 Purchase of property and equipment and capitalized software  ..............         (5,341,570)               (6,827,175)
 Proceeds from sale of equipment  ..........................................             28,480                        --
 Cash received from acquisitions  ..........................................                 --                   529,865
 Cash paid for acquisitions  ...............................................                 --                (2,935,268)
 Maturity of investments  ..................................................         43,416,738                22,493,867
 Purchase of investments, including restricted cash  .......................         (1,442,048)              (41,434,353)
                                                                             ------------------      --------------------
    Net cash provided by (used in) investing activities  ...................         36,661,600               (28,173,064)
                                                                             ------------------      --------------------
Cash flows from financing activities
 Repayment of capital lease obligations  ...................................           (416,393)                 (485,110)
 Proceeds from exercise of common stock warrants and options  ..............             36,118                   857,311
 Proceeds from issuance of common stock under employee stock
   purchase plan ...........................................................            127,583                        --
 Proceeds from sale of restricted common stock  ............................                 --                   339,750
                                                                             ------------------      --------------------

    Net cash provided by (used in) financing activities  ...................           (252,692)                  711,951
                                                                             ------------------      --------------------
Effect of exchange rate changes on cash and cash equivalents................            (33,518)                       --
                                                                             ------------------      --------------------
Net increase (decrease) in cash and cash equivalents  ......................         25,932,483               (52,966,077)
Cash and cash equivalents at beginning of period  ..........................         20,162,831                98,126,414
                                                                             ------------------      --------------------
Cash and cash equivalents at end of period  ................................       $ 46,095,314              $ 45,160,337
                                                                             ==================      ====================
</TABLE>
   The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>

                                SCIQUEST, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  THE COMPANY

  SciQuest, Inc. ("SciQuest" or the "Company"), which began operations in 1995,
is a technology and solutions company that provides integrated e-commerce and
research asset management solutions for research enterprises and their supply
chain partners worldwide. The Company earns revenues from e-commerce
transactions generated by purchases made through the SciQuest web sites. In
addition, SciQuest, Inc. has historically earned revenue for advertising on its
web sites and advertising in the printed catalogue of scientific products (the
"Source Book"), which is prepared and distributed by the Company's subsidiary,
BioSupplyNet, Inc. ("BioSupplyNet") and on commissions received for the auction
of used scientific equipment by the Company's subsidiary, Internet Auctioneers
International, Inc. ("IAI"). In October 2000, it was determined that the
BioSupplyNet and IAI operations would be eliminated. The Company also recognizes
revenues from its subsidiary, EMAX Solution Partners, Inc. ("EMAX"), which
provides customized electronic research solutions designed to integrate chemical
information systems to improve productivity and compliance for pharmaceutical,
scientific and research companies.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

UNAUDITED INTERIM FINANCIAL INFORMATION

  The unaudited interim consolidated financial statements as of and for the
three and six months ended June 30, 2001 and June 30, 2000 have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC") for interim financial reporting.  These consolidated
financial statements are unaudited and, in the opinion of management, include
all adjustments necessary to present fairly the consolidated balance sheets,
statements of operations and statements of cash flows for the periods presented
in accordance with generally accepted accounting principles.  The consolidated
balance sheet at December 31, 2000 has been derived from the audited
consolidated financial statements at that date. Certain information and footnote
disclosures have been omitted in accordance with the rules and regulations of
the SEC.  These interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended December 31, 2000 included in the Company's Form 10-K, filed with the
SEC on April 2, 2001. The results of operations for the three months and six
months ended June 30, 2001 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2001.

USE OF ESTIMATES

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

  The consolidated financial statements include the accounts of SciQuest and its
wholly-owned subsidiaries, BioSupplyNet, Inc., Internet Auctioneers
International, Inc., Intralogix, Inc. ("Intralogix"), SciCentral, Inc.
("SciCentral"), EMAX Solution Partners, Inc., and SciQuest Europe Limited. All
significant intercompany accounts and transactions have been eliminated.

CASH AND CASH EQUIVALENTS

  The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents.

                                       6
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

INVESTMENTS

  The Company considers all investments that are not considered cash equivalents
and with a maturity of less than one year from the balance sheet date to be
short-term investments. The Company considers all investments with a maturity of
greater than one year to be long-term investments. All investments are
considered as held-to-maturity and are carried at amortized cost, as the Company
has both the positive intent and ability to hold them to maturity. Interest
income includes interest, amortization of investment purchases premiums and
discounts, and realized gains and losses on sales of securities. Realized gains
and losses on sales of investment securities are determined based on the
specific identification method.

RESTRICTED CASH

  At June 30, 2001 and December 31, 2000, restricted cash of $500,000 and
$780,000 included in cash and cash equivalents and long-term investments,
respectively, is comprised of certificates of deposit which serve as collateral
for the Company's lease commitments and officer loans guaranteed by the Company.

ACCOUNTS RECEIVABLE

  The Company bears all risk of loss on credit sales of scientific products in
e-commerce transactions. Accounts receivable are presented net of an allowance
for doubtful accounts.

PROPERTY AND EQUIPMENT

  Property and equipment is primarily comprised of furniture and computer
equipment which are recorded at cost and depreciated using the straight-line
method over their estimated useful lives which are usually seven years and three
to five years for furniture and computer software and equipment, respectively.
Property and equipment includes certain equipment under capital leases. These
items are depreciated over the shorter of the lease period or the estimated
useful life of the equipment.

DEVELOPMENT COSTS

  Development costs include expenses incurred by the Company to develop,
enhance, manage, monitor and operate the Company's web sites and costs of
managing and integrating data on the Company's web sites and developing software
to be licensed. The Company capitalizes certain development costs of internal
use software associated with the development of the Company's web sites and
internal applications and amortizes these costs to development expense over the
useful life of the related applications, which generally ranges from three
months to one year.

CAPITALIZED SOFTWARE COSTS

  Software development costs related to software products sold to customers are
required to be capitalized beginning when a product's technological feasibility
has been established and ending when a product is available for general release
to customers. Capitalized software costs result from the acquisitions of EMAX
and BioSupplyNet as determined by valuations prepared by management and from
developing standardized versions of software products for sale. Capitalized
software costs are typically amortized over a period of three years.

INTANGIBLE ASSETS

  Intangible assets consist of goodwill and certain other intangible assets
acquired in the Company's various acquisitions.  Goodwill is amortized over
three to five years.  All other intangible assets are amortized over a period of
three years.

                                       7
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT

  The acquisition cost of in-process technology that at the date of purchase has
not achieved technological feasibility and has no alternative future use is
charged to operations in the period such technology is acquired. Purchased in-
process research and development costs relate to the acquisition of EMAX, (see
Note 3) and was determined by a valuation prepared by management.

FAIR VALUE OF FINANCIAL INSTRUMENTS

  The carrying value of cash and cash equivalents, accounts payable and accounts
receivable at June 30, 2001 and December 31, 2000 approximated their fair value
due to the short-term nature of these items. The Company considers its short-
term and long-term investments to be held-to-maturity, and therefore these
investments are carried at amortized cost.

IMPAIRMENT OF LONG-LIVED ASSETS

  The Company evaluates the recoverability of its property and equipment and
intangible assets in accordance with Statement of Financial Accounting Standards
No. 121, ''Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of'' (''SFAS No. 121''). SFAS No. 121 requires long-lived
assets to be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.  An
impairment is recognized in the event that the net book value of an asset
exceeds the future undiscounted cash flows attributable to such asset or the
business to which such asset relates. No impairments were required to be
recognized during the three month and six month periods ended June 30, 2000.  As
part of the restructuring plan during the three months ended June 30, 2001, an
impairment of approximately $7 million of long-lived assets was recognized
related to the elimination of unprofitable business lines.  In addition, as part
of the restructuring plan during the year ended December 31, 2000, an impairment
of approximately $768,000 of long-lived assets was recognized related to the
elimination of unprofitable business lines. (See Note 5.)

  If the Company's market capitalization is consistently lower than the carrying
value of recorded net assets, an impairment analysis may be required.

REVENUE RECOGNITION

  In April 1999, the Company began earning almost all of its revenues from the
sale of scientific products through its e-commerce web sites. In addition, in
June 2000, the Company began selling scientific equipment. Prior to April 1999,
the Company's revenues were primarily derived from advertising on its web sites.
With the acquisition of EMAX in March 2000, the Company began deriving revenues
from custom software development and implementation services, from sales of
software licenses, and from support and maintenance contracts.

  Prior to May 1, 2001, we took legal title to the products that we purchased
from our suppliers and that, in turn, were sold to our customers in e-commerce
transactions. Therefore, through April 2001, revenues received from the sale of
scientific products in e-commerce transactions and from the sale of scientific
equipment were recorded as product revenues on a gross basis and were recognized
by the Company upon delivery to the customer. Beginning May 1, 2001, we no
longer take legal title to these products. Instead, we are acting as an agent on
behalf of the customer, and title will pass directly from the supplier to the
customer.

  Since we are acting as an agent for the customer and not as the primary
obligor in the transaction for orders after May 1, 2001, we will no longer
record sales of scientific products and scientific equipment in e-commerce
transactions on a gross basis.  For each sale, we recognize revenue in the
amount of the net commission that we earn for processing the transaction and/or
payment for services.  As a result of this change in our method of reporting
revenue, much lower revenues from e-commerce transactions are being

                                       8
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

recorded; however, the gross profit from e-commerce transactions are the same
although our gross margin as a percentage of related net revenue increases.

  As a result, revenues for the second quarter of 2001 were composed of sales
prior to May 1, 2001, totaling $3.9 million, which were recorded on a gross
basis and $150,000 representing the commissions earned on transactions processed
after May 1, 2001.  The total value of scientific product transactions processed
during the second quarter of 2001 was $8.7 million.  This is compared to $8.0
million of sales of scientific products and $2.6 million of scientific equipment
during the three months ended June 30, 2000.  There were no sales of scientific
equipment in 2001.

  Advertising revenues are recognized ratably over the period in which the
advertisement is displayed, provided that the Company has no significant
remaining obligations to the advertiser and that collection of the resulting
receivable is probable. Revenues from advertising included in the Source Book
are recognized at the date the Source Book is published and distributed to the
purchasers of scientific products as the Company has met all of its obligations
to the advertisers at that date.

  Revenues received from the auction of used scientific products by the
Company's subsidiary, IAI, represent commissions which are determined based on a
percentage of the value of the scientific products sold. The Company recognizes
these commissions in revenue at the date the related piece of scientific
equipment is accepted by the buyer.

  With the acquisition of EMAX in March 2000, revenues from the sale of software
licenses and custom development and implementation services under fixed-fee
contracts are recognized using the percentage-of-completion method over the term
of the development and implementation services. Revenues from the sale of
standardized versions of the EMAX software are recognized upon customer
acceptance in accordance with Statement of Position 97-2, "Software Revenue
Recognition." Revenues from implementation services are recognized concurrently
with the effort and costs incurred by the Company, at billable rates specified
in the terms of the contract.  Losses expected to be incurred on custom
development and implementation services contracts in process, for which the fee
is fixed, are charged to income in the period in which the estimated losses are
initially identified. The Company sells maintenance contracts to provide updates
and standard enhancements to its software products. Maintenance fee revenue is
recognized ratably over the term of the arrangements, generally one year.

COST OF REVENUES

  Through April 2001, cost of e-commerce revenues represents the purchase price
to the Company of the scientific products sold through its e-commerce web sites
and of scientific equipment, shipping and handling fees and the cost of
maintaining such web sites. Historically, the Company has generally taken legal
title to the scientific products and equipment purchased at the date of shipment
and relinquished title to its customers upon delivery. Effective May 1, 2001,
the Company discontinued taking legal title to these products and began
recording revenue on a net commission basis resulting in negligible costs being
recorded for e-commerce revenues.

  In addition, the Company bears all credit risk for its sales of scientific
products to its customers.

  The cost of software licensing, implementation and maintenance revenues
consists primarily of personnel costs for employees who work directly on the
development and implementation of customized electronic research solutions and
who provide maintenance to customers, and also consists of the amortization of
capitalized software development costs. Cost of advertising and subscription
revenue includes the cost of preparing the advertisements for display on the
Company's web sites and the cost of publishing and distributing the Source Book.
Advertising production costs are recorded as cost of revenues the first time an
advertisement appears on the Company's web sites.

                                       9
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

SALES AND MARKETING EXPENSES

  Sales and marketing expenses consist primarily of costs, including salaries
and sales commissions, of all personnel involved in the sales process. Sales and
marketing expenses also include costs of advertising, trade shows and certain
indirect costs and amortization of deferred customer acquisition costs. All
costs of advertising the services and products offered by the Company are
expensed as incurred.

DEFERRED CUSTOMER ACQUISITION COSTS

  Deferred customer acquisition costs relate to common stock warrants given to
several key suppliers and buyers of scientific products. The amount of deferred
customer acquisition costs is adjusted each reporting period based on changes in
the fair value of the warrants until such date as the warrants are fully vested
and non-forfeitable. Deferred customer acquisition costs will be amortized as a
non-cash charge to sales and marketing expense over the term of the related
contractual relationship using a cumulative catch-up method. The terms of the
contractual relationships range from three to five years.  Deferred customer
acquisition costs are presented net of accumulated amortization.

SALES INCENTIVES

  The Company has agreed to issue to certain major enterprise buyers additional
incentive warrants, the number of which is based on each buyer's volume of
purchases during the years 2000, 2001 and 2002. The value of these warrants is
determined using the Black Scholes Model at the issuance date, adjusted
periodically using the cumulative catch-up approach (see Note 6). The value of
incentive warrants is presented as a reduction to revenues in the Consolidated
Statements of Operations.

INCOME TAXES

  The Company accounts for income taxes using the liability method which
requires the recognition of deferred tax assets or liabilities for the temporary
differences between financial reporting and tax bases of the Company's assets
and liabilities and for tax carryforwards at enacted statutory tax rates in
effect for the years in which the differences are expected to reverse.

  The effect on deferred taxes of a change in tax rates is recognized in income
in the period that includes the enactment date. In addition, valuation
allowances are established when necessary to reduce deferred tax assets to the
amounts expected to be realized.

STOCK BASED COMPENSATION

  The Company accounts for non-cash stock based compensation in accordance with
the provisions of Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees", and its related interpretations, which states that
no compensation expense is recognized for stock options or other stock-based
awards to employees that are granted with an exercise price equal to or above
the estimated fair value per share of the Company's common stock on the grant
date. In the event that stock options are granted with an exercise price below
the estimated fair market value of the Company's common stock at the grant date,
the difference between the fair market value of the Company's common stock and
the exercise price of the stock option is recorded as deferred compensation.
Deferred compensation is amortized to compensation expense over the vesting
period of the related stock option.

  The Company has adopted the disclosure requirements of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", which
requires certain pro forma disclosures as if compensation expense was determined
based on the fair value of the options granted at the date of the grant.

                                       10
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

CREDIT RISK, SIGNIFICANT CUSTOMERS AND CONCENTRATIONS

  Financial instruments that potentially subject the Company to a concentration
of credit risk consist of cash and cash equivalents, accounts receivable and
investments. Cash and cash equivalents are deposited with high credit quality
financial institutions which invest primarily in U.S. Government securities,
highly rated commercial paper and certificates of deposit guaranteed by banks
which are members of the FDIC. The counterparties to the agreements relating to
the Company's investments consist primarily of the U.S. Government and various
major corporations with high credit standings.  Substantially all of the
Company's revenues are from sales transactions originating in the United States.

  The Company relies on a number of third party suppliers for various services,
including e-commerce fulfillment services. While the Company believes it could
obtain these services from other qualified suppliers on similar terms and
conditions, a disruption in supply of these services by the current suppliers
could materially harm the business.

COMPREHENSIVE INCOME (LOSS)

  The Company's only item of other comprehensive income during the three and six
months ended June 30, 2001 was the foreign currency translation adjustment.  The
Company had no items of other comprehensive income for the three and six months
ended June 30, 2000.

SEGMENT REPORTING

  As a result of the acquisition of EMAX (see Note 3), the Company has
determined that it has separately reportable operating segments, as defined by
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise", replacing the "industry segment" approach with the "management"
approach. The management approach designates the internal organization that is
used by management for making operating decisions and assessing performance as
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas, and major customers.
The adoption of SFAS No. 131 did not affect results of operations or financial
position but did affect the disclosure of segment information (see Note 4).

NET INCOME (LOSS) PER COMMON SHARE

  Basic net income (loss) per common share is computed by dividing net income
(loss) available to common stockholders by the weighted average number of common
shares outstanding. Diluted net income (loss) per common share is computed by
dividing net income (loss) available to common stockholders by the weighted
average number of common shares and dilutive potential common share equivalents
then outstanding. Potential common shares consist of shares issuable upon the
exercise of stock options and warrants and shares issuable upon conversion of
Class B common stock and convertible preferred stock. The calculation of the net
loss per share available to common stockholders for the three months and six
months ended June 30, 2001 and 2000 does not include any potential shares of
common stock equivalents, as their impact would be anti-dilutive.

RECLASSIFICATIONS

  Certain prior period amounts have been reclassified to conform with the
current period presentation.

                                       11
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

RECENT ACCOUNTING PRONOUNCEMENTS

  In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141, "Business Combinations," ("SFAS No.
141").  SFAS No. 141 supersedes APB Opinion No. 16, "Business Combinations," and
FASB Statement No. 38, "Accounting for Preacquisition Contingencies of Purchased
Enterprises."  SFAS No. 141 requires:  1) that all business combinations be
accounted for by the purchase method, thereby eliminating the pooling method, 2)
that assets (including intangible assets) be recognized and valued apart from
goodwill, and 3) that additional disclosures be made regarding business
combinations and the resulting allocation of purchase price.  The provisions of
SFAS No. 141 apply to all business combinations initiated after June 30, 2001
and to all purchase method acquisitions dated on or after July 1, 2001. The
Company's adoption of SFAS No. 141 will not have a material impact on the
consolidated financial position or results of operations.

  In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets,"
("SFAS No. 142").  SFAS No. 142 supersedes APB Opinion No. 17, "Intangible
Assets" and primarily addresses accounting for goodwill and other intangible
assets subsequent to their acquisition.  The major provisions include:  1) the
ceasing of amortization of goodwill and indefinite lived intangible assets, 2)
the testing for impairment of goodwill and indefinite lived intangible assets at
least annually, and 3) the removal of the restriction that the maximum
amortization period of intangible assets with finite lives be limited to 40
years.  The provisions of SFAS No. 142 will be effective for fiscal years
beginning after December 15, 2001 (with the exception that any goodwill or
intangible assets acquired after June 30, 2001 will be subject immediately to
the statement's provisions) with application being required at the beginning of
an entity's fiscal year.  Any impairment losses from the initial application are
to be reported as a cumulative effect of a change in accounting principle in
accordance with APB 20, "Accounting Changes." The impact of the initial adoption
of SFAS No. 142 on the consolidated financial position of the Company is neither
currently known nor reasonably estimable.  Due to the Company's historically
significant amounts of amortization expense related to goodwill and intangible
assets (approximately $10 million per quarter), the adoption of SFAS No. 142 may
have a material impact on the subsequently reported (after January 1, 2002)
consolidated results of operations.

EMPLOYEE STOCK PURCHASE PLAN

  During 2000, the Board of Directors reserved 1,100,000 shares of the Company's
common stock for issuance under the Employee Stock Purchase Plan (the "ESPP").
The ESPP has two six-month offering periods (each an "Offering Period")
annually, beginning May 1 and November 1, respectively. The first Offering
Period under the ESPP ended on November 1, 2000. Eligible employees can elect to
make deductions from 1% to 20% of their compensation during each payroll period
of an Offering Period. Special limitations apply to eligible employees who own
5% or more of the outstanding common stock of the Company. None of the
contributions made by eligible employees to purchase the Company's common stock
under the ESPP are tax deductible to the employees. At the end of an Offering
Period, the total payroll deductions by an eligible employee for that Offering
Period will be used to purchase common stock of the Company at a price equal to
85% of the lesser of (a) the reported closing price of the Company's common
stock for the first day of the Offering Period, or (b) the reported closing
price of the common stock for the last day of the Offering Period.

3.  ACQUISITIONS

 Intralogix

  On January 14, 2000, the Company purchased all of the outstanding stock of
Intralogix, Inc. in exchange for the issuance of 26,930 shares of the Company's
common stock with a value of approximately

                                       12
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

$1,828,000 at the closing date of the acquisition, cash payments in the amount
of $295,000 (including $61,000 for acquisition-related expenses) and the
assumption of $71,500 in net liabilities of Intralogix. This acquisition was
accounted for using the purchase method of accounting.

  Of the total purchase price of Intralogix, $600,000 was allocated to the web
site developed and operated by Intralogix and approximately $1,589,000 was
allocated to goodwill, which represents the excess of the purchase price over
the fair value of assets acquired less liabilities assumed. Prior to June 30,
2001, goodwill related to this acquisition is being amortized over a period of
three years. An immaterial amount of purchase price was allocated to the
tangible assets of Intralogix.  In June 2001, as a result of an announced
restructuring plan to eliminate certain unprofitable business lines, the assets
of Intralogix were considered impaired and accordingly included in the
restructuring charge.  (See Note 5.)

 SciCentral

  On February 2, 2000, the Company purchased all of the outstanding stock of
SciCentral, Inc. in exchange for the issuance of 40,000 shares of the Company's
common stock with a value of $2,534,000 at the closing date of the acquisition,
cash payments of $112,000 for acquisition-related expenses and the assumption of
approximately $15,000 in net liabilities of SciCentral. This acquisition was
accounted for using the purchase method of accounting.

  Of the total purchase price of SciCentral, approximately $2,372,000 was
allocated to goodwill, which represents the excess of purchase price over the
fair value of the assets acquired less the liabilities assumed. Prior to June
30, 2001, goodwill related to this acquisition is being amortized over a period
of three years. In June 2001, as a result of an announced restructuring plan to
eliminate certain unprofitable business lines, the assets of SciCentral were
considered impaired and accordingly included in the restructuring charge.  (See
Note 5.)

  In connection with the purchase of SciCentral, a former shareholder and
employee of SciCentral entered into a two-year employment agreement with the
Company. In the event that this individual voluntarily terminates his employment
prior to the end of the two year period, this individual would be required to
pay to the Company an amount equal to $286,000, reduced by approximately $36,000
upon completion of each 90 day period of continuous employment. The Company also
entered into a three-year non-compete agreement with this individual. The
$286,000 has been recorded as deferred compensation and is being amortized to
stock-based compensation expense over a period of two years. An immaterial
amount of purchase price was allocated to the tangible assets of SciCentral.

 EMAX

  On March 22, 2000, the Company purchased all of the outstanding common and
preferred stock of EMAX Solution Partners, Inc. in exchange for the issuance of
1,584,010 shares of the Company's common stock with a total fair value of
$96,910,000, which is based on the average closing price of the common stock of
$61.175 for the two-day period immediately preceding and following the date of
the announcement of the acquisition of EMAX. In addition, the Company assumed
approximately $3,539,000 in net liabilities and incurred costs of approximately
$2,441,000 related to this acquisition. The Company also assumed EMAX's
obligations under its qualified employee incentive stock option plan for EMAX
employees. As a result of this, 374,152 shares of common stock have been
reserved by the Company as replacement options with an average exercise price of
$15.73 per share. The fair value of these options, which was estimated to be
$20,392,000 using the Black-Scholes option pricing model, is included as a
component of the total purchase price related to this acquisition. The
acquisition has been accounted for using the purchase method of accounting and,
accordingly, the total purchase price of approximately $123.3 million was
allocated to the assets acquired and liabilities assumed based on estimated fair
values. The fair value assigned to intangible assets acquired was based on a
valuation prepared by management of the Company.

                                       13
<PAGE>

  Of the total purchase price, $2,398,000 was allocated to the tangible assets
of EMAX, which were comprised of cash, accounts receivable, property and
equipment and prepaid and other assets. In addition, $6,000,000 was allocated to
developed software costs, $22,000,000 was allocated to the EMAX registered
trademark and $700,000 was allocated to purchased in-process research and
development ("IPR&D"). The remaining purchase price of approximately $94,119,000
has been allocated to goodwill. The trademark, goodwill and developed software
costs are all being amortized over a period of three years.

  The $700,000 of IPR&D was based on a valuation prepared by management and
relates to software development projects that had not yet reached technological
feasibility and had no alternative future use at the date of the acquisition of
EMAX.

  In addition, the Company granted to EMAX employees a total of 113,980
SciQuest, Inc. stock options, pursuant to the SciQuest, Inc. 1999 Stock
Incentive Plan. These options were granted at an exercise price that was less
than the fair value of the Company's stock on the date of grant. In connection
with the grant of these options, the Company recorded $5,180,000 of deferred
compensation which is being amortized in accordance with the vesting schedule of
the related options.

4.  BUSINESS SEGMENT DATA

  As a result of the acquisition of EMAX, the Company operates in two business
segments - e-commerce transactions and license fees and other professional
services.  Substantially all operations are in the United States.

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED JUNE 30, 2001
                                            ----------------------------------------------------------
                                                                   LICENSE FEES AND
                                                                        OTHER
                                                                     PROFESSIONAL
                                               E-COMMERCE              SERVICES           CONSOLIDATED
                                            ---------------        ---------------       --------------
<S>                                         <C>                    <C>                   <C>
Total assets                                $    69,597,841        $    80,488,913       $  150,086,754
                                            ===============        ===============       ==============
Revenues - external customers               $     4,063,105        $     2,047,170       $    6,110,275
Operating loss                              $   (18,401,001)       $  (11,835,949)       $  (30,236,950)
Interest income, net                                                                            836,175
                                                                                         --------------
Loss before income taxes                                                                 $ (29,400,775)
                                                                                         =============

                                                            THREE MONTHS ENDED JUNE  30, 2000
                                               -------------------------------------------------------
                                                                   LICENSE FEES AND
                                                                        OTHER
                                                                     PROFESSIONAL
                                               E-COMMERCE              SERVICES          CONSOLIDATED
                                            --------------        ---------------       --------------
Total assets                                 $ 147,533,515        $   115,124,661       $262,658,176
                                             =============        ===============       ============
Revenues - external customers                $  10,623,776        $     2,200,001       $ 12,823,777
Operating loss                               $ (12,107,772)       $  (11,764,317)       $(23,872,089)
Interest income, net                                                                       1,941,285
                                                                                        ------------
Loss before income taxes                                                                $(21,930,804)
                                                                                        =============
</TABLE>

                                       14
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

<TABLE>
<CAPTION>
                                                                     SIX MONTHS ENDED JUNE 30, 2001
                                            ----------------------------------------------------------------------------
                                                                           LICENSE FEES AND
                                                                                 OTHER
                                                                             PROFESSIONAL
                                                   E-COMMERCE                  SERVICES                  CONSOLIDATED
                                            --------------------        --------------------       ---------------------
<S>                                         <C>                         <C>                        <C>
Total assets                                $         69,597,841        $         80,488,913       $         150,086,754
                                            ====================        ====================       =====================
Revenues - external customers               $         15,749,906        $          2,947,564       $          18,697,470
Operating loss                              $        (29,393,360)       $       (24,422,274)       $         (53,815,634)
Interest income, net                                                                                           1,958,805
                                                                                                   ---------------------
Loss before income taxes                                                                           $         (51,856,829)
                                                                                                   =====================

                                                                        SIX MONTHS ENDED JUNE 30, 2000
                                               ----------------------------------------------------------------------------
                                                                              LICENSE FEES AND
                                                                                    OTHER
                                                                                PROFESSIONAL
                                                      E-COMMERCE                  SERVICES                 CONSOLIDATED
                                               --------------------        --------------------       ---------------------
Total assets                                   $        147,533,515        $        115,124,661       $         262,658,176
                                               ====================        ====================       =====================
Revenues - external customers                  $         15,591,376        $          2,336,195       $          17,927,571
Operating loss                                 $        (25,328,516)       $        (14,912,862)      $         (40,241,378)
Interest income, net                                                                                              4,050,210
                                                                                                      ---------------------
Loss before income taxes                                                                              $         (36,191,168)
                                                                                                      =====================
</TABLE>

5.  RESTRUCTURING

  In June 2001, the Company announced a restructuring of the business to
essentially eliminate outsourced procurement services.  The restructuring
includes the elimination of certain unprofitable business lines and a resultant
reduction in workforce of approximately one-half of the employees located in
the United States.  The total restructuring charge was $10.7 million and
included approximately $1.6 million for employee separation benefits, $7.1
million of assets and approximately $2.0 million of other costs and lease
obligations relating to the unprofitable business lines to be eliminated.


  Per SEC Staff Accounting Bulletin 100 and Emerging Issues Task Force Issue No.
94-3, the following table summarizes information about the Company's
restructuring plan:

<TABLE>
<CAPTION>
                                                          IMPAIRMENT
                                                         EXPENSES AND       REMAINING
                                         RESTRUCTURING    CHARGES TO       LIABILITY AT
                                              PLAN        LIABILITY       JUNE 30, 2001
                                         -------------   ------------     -------------
<S>                                      <C>             <C>              <C>
Number of employees ...............              108               0              108
Involuntary termination benefits...      $ 1,630,293      $        0       $1,630,293
Other costs and lease obligations..        1,917,393               0        1,917,393
Write-down of net assets of
  business lines to be eliminated..        7,102,314       7,102,314                0
                                         -----------      ----------       ----------
Total                                    $10,650,000      $7,102,314       $3,547,686
                                         ===========      ==========       ==========

</TABLE>

                                       15
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

6. STRATEGIC RELATIONSHIPS

  In October, November, and December 1999, the Company entered into strategic
relationships with a number of key suppliers and buyers of scientific products.
As a part of these arrangements, the Company issued to these companies 5,035,180
warrants to purchase the Company's common stock at an exercise price of $0.01
per share of which 3,807,112 warrants are issued and outstanding at June 30,
2001. At June 30, 2001 and December 31, 2000, the Company has deferred customer
acquisition costs of $5,421,593 and $6,583,286, respectively, related to these
warrants. In the event that the Company commits to issue additional warrants to
purchase its common stock as more strategic relationships are formed, the
Company will be required to record additional deferred customer acquisition
costs equal to the fair value of the warrants on the date of issuance. The
amount of deferred customer acquisition costs will be adjusted in future
reporting periods based on changes in the fair value of the warrants until such
date as the warrants are fully vested and non-forfeitable. Deferred customer
acquisition costs will be amortized to operating expense over the term of the
related contractual relationship, which in the case of the buyer agreements is
three years and in the case of the supplier agreements is four or five years,
using a cumulative catch-up method. The Company recognized $583,472 and $398,896
in stock based non-cash customer acquisition  expense during the three and six
months ended June 30, 2001, respectively, related to the amortization of these
deferred customer acquisition costs. These amounts include $100,000 and $200,000
of amortization of prepaid customer acquisition fees for the three and six
months ended June 30, 2001, respectively.  The Company recognized $2,262,191 and
$1,566,163 in stock based non-cash customer acquisition net benefit during the
three and six months ended June 30, 2000, respectively, related to the
amortization of these deferred customer acquisition costs.  These amounts
include $100,000 and $200,000 of amortization of prepaid customer acquisition
fees for the three and six months ended June 30, 2000, respectively.

  These strategic relationships include agreements to be the exclusive third
party provider of electronic marketplace services in the United States for a
period of five years for eight key suppliers. Under the terms of these
agreements, these suppliers are not required to sell a minimum amount of
products through the Company's electronic marketplace. The warrants to purchase
the Company's common stock that were issued in connection with these agreements
will vest over a four or five year period regardless of the level of sales by
the suppliers through the Company's electronic marketplace.

  These strategic relationships also include agreements with several major
enterprise buyers to be their third party electronic aggregator for purchases of
scientific products in North America for a period of three years. Although these
enterprise buyers have agreed to use reasonable efforts to purchase at least $5
million of scientific products annually through the Company's marketplace, there
are no minimum purchase commitments. The warrants issued in connection with
these relationships vest over a period of three years regardless of their level
of purchases through the Company's electronic marketplace.

  In addition, the Company agreed to issue to certain major enterprise buyers
additional incentive warrants, the number of which is based on each buyer's
volume of purchases through the Company's marketplace during the years 2000,
2001 and 2002.  These incentive warrants are issuable on February 15, 2001, 2002
and 2003, at an exercise price equal to the price per share of common stock in
the Company's initial public offering of $16 per share, and will be exercisable
upon issuance.

  Based on the purchasing volume during the year ended December 31, 2000,
incentive warrants to purchase approximately 58,000 shares of common stock were
issued on February 15, 2001, resulting in a non-cash charge to revenue and the
recognition of additional paid-in capital of approximately $52,000 representing
the estimated fair value of the warrants determined by using the Black Scholes
valuation model at the issuance date.  Until such date as they are non-
forfeitable, the value of these incentive warrants will be adjusted to their
estimated fair value at each balance sheet date with the adjustment being
charged to

                                       16
<PAGE>

                                SCIQUEST, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

operating expense. For the three and six months ending June 30, 2001, this
adjustment resulted in an expense (benefit) of approximately $3,000 and
$(36,000), respectively.

  Beginning January 1, 2001, the Company began accounting for incentive warrants
pursuant to EITF Issue 00-22,"Accounting for "Points" and Other Time- or Volume-
Based Sales Incentive Offers, and Offers for Free Products or Services to be
Delivered in the Future."  Under the consensus in Issue 00-22, the Company
estimates the number of incentive warrants that customers will ultimately earn,
factoring in returns, if it can be reasonably estimated.  Each revenue
transaction with customers that earn incentive warrants is reduced by an
applicable non-cash incentive cost rate. Changes to estimates of the ultimate
incentive cost will be recognized by using a cumulative catch-up adjustment at
each balance sheet date and by reducing future revenues, based on a revised non-
cash incentive cost rate.  For the three and six months ended June 31, 2001, the
non-cash charge for estimated incentive warrants related to 2001 volume was
approximately $3,000 and $6,000, respectively.

                                       17
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

  The following discussion should be read in conjunction with the consolidated
financial statements and accompanying notes, which appear elsewhere in this
report.

  Some of the statements contained in this Management's Discussion and Analysis
of Financial Condition and Results of Operations and elsewhere in this report
contain forward-looking information. You can identify these statements by
forward-looking words such as "expect," "anticipate," "believe," "goal," "plan,"
"intend," "estimate," "predict," "potential," "continue," "may," "will," and
"should" or similar words.  They include statements concerning:

 . future revenues from e-commerce transactions;

 . future revenues from sales of software licenses and fees from implementations;

 . expansion of our product and service offerings;

 . future sources of revenues;

 . future gross profit;

 . future development expenses;

 . future sales and marketing expenses;

 . future general and administrative expenses;

 . future stock-based customer acquisition costs;

 . future interest income;

 . future cash flows;

 . the effect of changes in our revenue recognition policies;

 . the timing of loading data into our e-commerce marketplace;

 . our international expansion;

 . the effects of our restructuring program; and

 . the adequacy of our existing liquidity and capital resources.

  You should be aware that these statements are subject to known and unknown
risks, uncertainties and other factors, including those discussed in the section
entitled "Factors That May Affect Future Results," that could cause the actual
results to differ materially from those suggested by the forward-looking
statements.

OVERVIEW

   SciQuest is a technology and solutions company that provides integrated e-
commerce and research asset management solutions for research enterprises and
their supply chain partners worldwide.  Our unbiased position, domain expertise
and proven technology enable SciQuest to make e-solutions work for science
through advanced technologies, content management, supply chain solutions and
professional services. Our platform and solutions can be utilized independently
or integrated with leading software vendors and supplier systems to unite
science, information and technology. We believe that our solutions enhance
innovation, reduce costs, and improve operational effectiveness for scientific
organizations worldwide.

  We were incorporated in November 1995 and commenced operations in January
1996. During 1996, we focused on developing our business model and the required
technology. We did not begin to recognize any revenues until 1997.

  In October, November and December 1999, we entered into strategic
relationships with a number of key suppliers and buyers of scientific products,
whereby we issued to these suppliers and buyers warrants to purchase the
Company's common stock at an exercise price of $0.01 per share. These warrants
will vest over a period of three to five years and will be exercisable until
2004. At June 30, 2001, warrants to acquire 3,807,112 shares of common stock
were outstanding.

                                       18
<PAGE>

  These strategic relationships include agreements to be the exclusive third-
party provider of electronic marketplace services in the United States for a
period of five years for ten key suppliers. Under the terms of these agreements,
these suppliers are not required to sell a minimum amount of products through
our electronic marketplace. The warrants to purchase our common stock that were
issued in connection with these agreements vest over a four or five year period
regardless of the level of sales by the suppliers through our electronic
marketplace.

  These strategic relationships also include agreements with major enterprise
buyers for SciQuest to be their third-party electronic aggregator for purchases
of scientific products in North America for a period of three years. Although
these buyers have agreed to use reasonable efforts to purchase at least $5.0
million of scientific products annually through our marketplace, there are no
minimum purchase commitments. The warrants issued in connection with these
relationships vest over a period of three years, regardless of their level of
purchases through our electronic marketplace.

  We have recorded net deferred customer acquisition costs of approximately $3.5
million at June 30, 2001, related to these outstanding warrants, which is
included as a separate component of stockholders' equity. Deferred customer
acquisition costs are determined based on the difference between the closing
trading price of our common stock and the $0.01 exercise price of the stock
warrants, which approximates the value as determined by the Black Scholes option
pricing model. The amount of deferred customer acquisition costs recognized for
all of the warrants issued to our key suppliers and buyers is adjusted each
reporting period based on changes in the fair value of the warrants until such
date as the warrants are fully vested and non-forfeitable. Deferred customer
acquisition costs will be amortized to operating expense, using a cumulative
catch-up method, over the term of the related contractual relationship. We
recorded net (benefit) expense from stock-based customer acquisition costs of
$583,472 and $398,896 for the three and six months ended June 30, 2001,
respectively, and ($2,262,191) and ($1,566,163) for the three and six months
ended June 30, 2000, respectively.  For both years, these amounts include
$100,000 and $200,000 of amortization of prepaid customer acquisition fees for
the three and six months ended June 30, 2001, respectively.

  We have also agreed to issue to these major enterprise buyers additional
incentive warrants to purchase shares of our common stock with an exercise price
of $16.00 per share, the number of which are based on each purchaser's volume of
purchases through our marketplace during the years 2000, 2001 and 2002. These
incentive warrants are issuable on February 15, 2001, 2002 and 2003, will be
fully vested and exercisable upon issuance and will continue to be exercisable
for a period of five years after the date of issuance. Based on the purchasing
volume during the year ended December 31, 2000, incentive warrants to purchase
approximately 58,000 shares of common stock were issued on February 15, 2001,
resulting in a non-cash charge to revenue and the recognition of additional paid
in capital of approximately $52,000 representing the estimated fair value of the
warrants determined by using the Black Scholes valuation model at issuance date.
Until such date as they are non-forfeitable, the value of these incentive
warrants will be adjusted to their estimated fair value at each balance sheet
date with the adjustment being charged to operating expense.

  Beginning January 1, 2001, we began accounting for incentive warrants pursuant
to EITF Issue 00-22,"Accounting for "Points" and Other Time- or Volume-Based
Sales Incentive Offers, and Offers for Free Products or Services to be Delivered
in the Future."  Under the consensus in Issue 00-22, we estimate the number of
incentive warrants that customers will ultimately earn, factoring in returns, if
it can be reasonably estimated.  Each revenue transaction with customers that
earn incentive warrants will be reduced by an applicable non-cash incentive cost
rate. Changes to estimates of the ultimate incentive cost will be recognized by
using a cumulative catch-up adjustment at each balance sheet date and by
reducing future revenues, based on a revised non-cash incentive cost rate.

  As part of a restructuring program announced in November 2000, we reduced our
workforce by approximately 10%. In connection with this reduction, we recorded a
charge of approximately $2.2 million in the fourth quarter of 2000 related to
separation benefits paid to those affected employees and the write-down of
assets related to unprofitable business lines. In the first and second quarters
of 2001, we further reduced the number of full-time employees by approximately
100 and 130 people, respectively.  The

                                       19
<PAGE>

second quarter reduction was part of a restructuring program announced in June
2001, which included charges of approximately $1.6 million for separation
benefits to those affected employees, $7.1 million of assets and approximately
$2.0 million of other costs and lease obligations relating to the unprofitable
business lines to be eliminated. As a result, we expect to reduce our operating
expenses and improve our cash flow from operations in the second half of 2001.

  On March 22, 2000, we acquired all of the outstanding capital stock of EMAX
Solution Partners, Inc., a provider of electronic research solutions designed to
optimize pharmaceutical drug research operations and expedite drug discovery,
for the issuance of 1,584,010 shares of our common stock and the assumption of
374,152 outstanding stock options. In addition, we granted to EMAX employees a
total of 113,980 SciQuest, Inc. stock options (the "Additional Options"),
pursuant to the SciQuest, Inc. 1999 Stock Incentive Plan. These Additional
Options were granted at an exercise price that was less than the fair value of
our common stock on the date of grant. In connection with the grant of these
options, we recorded approximately $5.2 million of deferred compensation, which
is being amortized in accordance with the vesting schedule of the related
options. The acquisition of EMAX was accounted for using the purchase method of
accounting. The acquisition of EMAX enables us to provide electronic and
Internet-based solutions that are designed to streamline the drug discovery
processes of our customers, including large pharmaceutical, biotechnology and
life science companies, by integrating their supply chains with critical
research processes.

  EMAX incurs development costs in the customization of its software products
sold to customers. These costs are primarily comprised of salaries and related
benefits for EMAX's employees. EMAX typically retains the intellectual property
rights to modifications made to its software products for individual customers
and is then able to offer these modifications to future customers. EMAX
capitalizes its software development costs upon the achievement of technological
feasibility and ceases capitalization when the software product is available for
general release. Losses expected to be incurred on custom development and
implementation services contracts in process, for which the fee is fixed, are
charged to income in the period in which the estimated losses are initially
identified.

  On February 2, 2000, we acquired all of the outstanding capital stock of
SciCentral, Inc. for a total purchase price of $2.5 million, which included the
issuance of 40,000 shares of our common stock and the assumption of
approximately $32,000 in net liabilities. SciCentral, Inc. provides users with a
gateway to online science and technology resources, news and information.

  On January 14, 2000, we acquired all of the outstanding capital stock of
Intralogix, Inc. for a total purchase price of $2.1 million, which included the
issuance of 26,930 shares of our common stock, $192,000 in cash and the
assumption of $73,000 in liabilities. Intralogix provides tools that enable
scientists to search, compare and purchase chromatography products for their
research needs.

  The Intralogix and SciCentral acquisitions were not financially significant as
they related to the purchase price or past results of operations of the acquired
entities. Therefore, pro forma financial information has not been presented for
these acquisitions. These acquisitions were accounted for using the purchase
method of accounting.

  Revenues consist of (1) sales of scientific products in e-commerce
transactions originating on our web sites, (2) sales of scientific equipment,
(3) sales of software licenses and fees for implementation, customization and
maintenance services related to these software licenses, (4) advertising
revenues from our web sites, (5) advertising revenues from the Source Book, and
(6) commissions received from the auction of used scientific equipment (in
1999).  Prior to the launch of our e-commerce marketplace in April 1999,
substantially all of our revenues were derived from advertising on our web
sites. Revenues from e-commerce transactions became a significant source of our
revenues in the third quarter of 1999. Sales of scientific equipment were a
significant source of revenues in the second and third quarters of 2000 as we
sought to introduce new pharmaceutical, clinical, biotechnology, chemical,
industrial and educational organizations to our marketplace. Transactions
involving the sale of scientific equipment typically have significantly higher
gross sales prices, on a per-transaction basis, and lower gross margins than do
transactions for scientific products in e-commerce transactions originating on
our web sites.

                                       20
<PAGE>

As a result of the restructuring, we expect that sales of software licenses and
fees for implementation, customization and maintenance services related to these
software licenses will be the primary source of revenues in future periods.

  We offer various web-based solutions where potential buyers can cross-search
content from multiple suppliers and build a multiple line item order for
products from various suppliers. Historically, when a purchaser placed an order
through our marketplace, we have purchased that item from the supplier at either
a pre-negotiated price or at a discount from the supplier's list price and have
arranged for shipment to the purchaser. We have historically taken legal title
to the products purchased at the date of shipment and relinquished title to our
customers upon delivery. After the customer receives the product, we begin the
collection process by presenting a consolidated invoice to the customer for the
products represented in the order. Payment by the customer to us is then made
through a traditional account setup and payment system or, in some cases, by
credit card/procurement card. We have offered extended payment terms to our
customers who purchased scientific equipment as these transactions have higher
dollar values. We bear all credit risk on sales that we make, and we are
obligated to pay the supplier of the products that we purchase regardless of
whether we receive payment from the customer for the products. For each
transaction through April 2001, we recognized revenue in the amount of the sales
price of the item to the customer and recognized the amount paid to the supplier
plus shipping costs as cost of goods sold. The difference between revenues and
cost of goods sold represented our gross profit.

  Through April 2001, revenues from sales of scientific products in e-commerce
transactions and from sales of scientific equipment were recorded as product
revenues on a gross basis and were recognized upon receipt by our customers.
Product shipments were generally made on our designated carriers and we were
responsible for shipping costs which are recorded as cost of revenues. We
invoice the customer for the shipping costs.

  Advertising revenues are recognized ratably over the period in which the
advertisement is displayed. Revenues from advertising included in the Source
Book are recognized at the date the Source Book is published and distributed.
Advertising on our Web sites is sold by Cahners Business Information. Cahners
pays us a percentage of the total advertising revenues that it receives.

  EMAX recognizes revenue from the sale of licenses to its software products,
the implementation and customization of its software products and the sale of
maintenance and support contracts. EMAX recognizes revenues from the sale of
licenses to its software products and implementation and customization of these
software products on a percentage-of-completion basis over the period of the
customization and implementation services, which generally ranges from three to
nine months. EMAX recognizes revenues from the sale of maintenance and support
contracts ratably over the period of the maintenance and support agreements,
which is typically twelve months. Revenues from the sale of standardized
versions of the EMAX software are recognized upon customer acceptance in
accordance with Statement of Position 97-2, "Software Revenue Recognition."

CHANGE IN BUSINESS PROCEDURE AFFECTING REVENUE REPORTING

  Prior to May 1, 2001, we took legal title to the products that we purchased
from our suppliers and that, in turn, were sold to our customers in e-commerce
transactions. Beginning May 1, 2001, we no longer take legal title to these
products. Instead, we will act as an agent on behalf of the customer, and title
will pass directly from the supplier to the customer.  We expect this change
will allow us to reduce or eliminate some of our overhead costs, such as product
insurance, regulatory compliance, sales tax filings and other related order
processing costs. We will continue to be responsible for the collection of the
receivable and to bear the resulting credit risk.

  Since we will be acting as an agent for the customer and not as the primary
obligor in the transaction for orders after May 1, 2001, we will no longer
record sales of scientific products and scientific equipment in e-commerce
transactions on a gross basis.  For each sale, we will recognize revenue in the
amount of the net commission that we earn for processing the transaction and/or
payment for services.  As a result of this

                                       21
<PAGE>

change in our method of reporting revenue, we expect to record much lower gross
revenues from e-commerce transactions in the future; however, we do not expect
our gross profit from e-commerce transactions to be materially affected although
our gross margin as a percentage of related net revenue will increase.

THREE MONTHS ENDED JUNE 30, 2001 AND 2000

 Revenues

  Revenues for the quarter ended June 30, 2001 and 2000 have been derived
primarily from the sale of scientific products in e-commerce transactions and
from the sale of licenses to our software products and the implementation and
customization of our software products.

  E-commerce revenues decreased to $4.1 million for the three months ended June
30, 2001 from $10.6 million for the three months ended June 30, 2000. As we
previously discussed, effective May 1, 2001, we discontinued taking legal title
to products we purchase from our suppliers and, in turn, sell to our customers.
As a result, for products sold after May 1, 2001, we will record revenue as the
net commission that we earn for processing the transaction.  Therefore, revenues
for the second quarter of 2001 were composed of sales prior to May 1, 2001,
totaling $3.9 million, which were recorded on a gross basis and $150,000
representing the commissions earned on transactions processed after May 1, 2001.
The total value of scientific product transactions processed during the second
quarter of 2001 was $8.7 million.  This is compared to $8.0 million of sales of
scientific products and $2.6 million of scientific equipment during the three
months ended June 30, 2000.  There have been no sales of scientific equipment in
2001.

  This decrease in overall e-commerce revenue is primarily the result of our
efforts to migrate from providing customers with outsourced purchasing services
to purchasing our software solutions.

  During the three months ended June 30, 2001 and 2000, we recognized $2.0
million and $2.2 million, respectively, of revenue from fees from licenses and
other professional services.  This amount includes revenue related to
advertising sold in the BioSupplyNet Source Book of $600,000 and $750,000,
respectively.  Such revenue is recorded annually when the Source Book is
published.

  During the three months ended June 30, 2001, three customers accounted for
31%, 23%, and 14%, respectively, of gross transactions.  There can be no
assurance that these customers will continue to purchase at these levels.

 Cost of Revenues

  Cost of revenues for transactions processed prior to May 1, 2001, primarily
consists of the purchase price of scientific products sold in e-commerce
transactions and related shipping costs for these products.  Cost of license
fees and other professional services primarily consist of personnel costs for
employees who work directly on the development and implementation of customized
electronic research solutions and who provide maintenance to customers, and also
consists of the amortization of capitalized software development costs.  Cost of
revenues relating to the BioSupplyNet Source Book consist primarily of printing,
publishing and distribution of the Source Book.

  Cost of e-commerce revenues decreased to $3.8 million for the three months
ended June 30, 2001 from $10.5 million for the three months ended June 30, 2000.
This decrease resulted, in part, because we stopped taking legal title to
products sold as of May 1, 2001.  The cost of products related to sales for
which we did not take title was $4.6 million.  Therefore, the cost of scientific
products sold would have been $8.4 million (had we continued to take legal title
to products sold) and $8.0 million for the three months ended June 30, 2001 and
2000, respectively.  Cost of scientific equipment for the three months ended
June 30, 2000 was $2.5 million.  There have been no sales of scientific
equipment in 2001.

                                       22










<PAGE>

  In addition, cost of revenues for license fees and other professional services
for the three months ended June 30, 2001 and 2000 was $1.4 million and $1.4
million, respectively, of which $0.6 million and $0.5 million, respectively,
related to the amortization of capitalized software development costs. Also
included in the cost of revenue for license fees and other professional services
are the costs related to the BioSupplyNet Source Book of $290,000 and $340,000,
during the three months ending June 30, 2001 and 2000, respectively.

 Gross Profit

  Gross profit was approximately $900,000 for the three months ended June 30,
2001 and 2000.  Gross profit on the sale of scientific products was $240,000 and
$130,000, which represented approximately 6.0% and 1.2%, for the three months
ended June 30, 2001 and 2000, respectively.  This increase in the gross margin
percentage resulted, in part, because we stopped taking legal title to products
sold after May 1, 2001.  This had the effect of increasing the gross profit
percentage for the period, without any effect on the gross profit dollars.  The
gross profit percentage on all products sold would have been 2.8% and 1.2% for
the three months ended June 30, 2001 and 2000, had we continued taking legal
title to products sold.

  Gross profit from licenses and professional fees was $680,000 and $790,000, of
which $320,000 and $370,000, respectively, related to license fees, and $360,000
and $420,000, respectively, were derived from the Source Book.

 Operating Expenses

  Development Expenses.   Development expenses consist primarily of personnel
and related costs to develop, operate and maintain our web sites, aggregate data
and the amortization of capitalized development costs. Development costs
decreased to $3.1 million for the three months ended June 30, 2001 from $4.6
million for the three months ended June 30, 2000.  This decrease resulted from
decreased expenses required to develop our e-commerce fulfillment system and
list suppliers' products on our web sites.  During the second quarter of 2001,
we reduced our development costs related to our e-commerce business as we
focused on selling software and services. During the three months ended June 30,
2001 and 2000, we capitalized approximately $1.7 million and $1.6 million,
respectively, of certain costs related to software and web site development
projects. We expect our development expenses to decrease in the second half of
2001.

  Included in development cost is the amortization of non-cash stock-based
employee compensation expense, which totaled $0.1 million and $0.2 million for
the three months ending June 30, 2001 and 2000, respectively.  This is primarily
due to stock options that had been issued to employees with exercise prices less
than fair value on the date of grant since December 31, 1999.  In addition, in
July 1999 and in February 2000, we entered into two employment agreements with
personnel from acquired subsidiaries that required the recognition of deferred
compensation. Deferred compensation recorded due to the issuance of such stock
options and employment agreements is charged to stock-based employee
compensation expense over the vesting term of the options and the term of the
employment agreements, respectively.

  Sales and Marketing Expenses.   Sales and marketing expenses consist primarily
of salaries and other related costs for sales and marketing personnel, travel
expenses, public relations expenses and marketing materials. Sales and marketing
expenses decreased to $2.7 million for the three months ended June 30, 2001 from
$4.0 million for the three months ended June 30, 2000. This decrease resulted
primarily from reducing the number of sales and marketing personnel to market
our products and services and from reducing advertising and promotion expenses
for our e-commerce marketplace.  Sales and marketing expenses for the three
months ended June 30, 2001 and 2000 include $0.1 million and $0.2 million,
respectively, of amortization of non-cash stock based employee compensation.
Also included in sales and marketing expenses for the three months ended June
30, 2001 and 2000 is amortization expense (benefit) of non-cash stock based
customer acquisition costs of $0.6 million and ($2.3) million, respectively.

                                       23
<PAGE>

  Stock-based customer acquisition costs represent the amortization of deferred
customer acquisition costs that were initially recorded in November 1999 upon
the issuance of common stock warrants to key suppliers and customers. The value
of these warrants is adjusted each reporting period based upon the closing
trading price of our common stock at each balance sheet date. Decreases in the
Company's closing trading price from one reporting period to the next will
likely result in a benefit to the Company, and increases in the Company's
closing trading price will likely result in charges to expense. Because the
amortization of these costs is dependent upon the trading price of our common
stock, we cannot predict the future impact of this on our results from
operations.

  We expect our sales and marketing expenses, apart from the amortization of
stock-based customer acquisition costs, to decrease over the second half of 2001
due to a reduction in the number of personnel in our sales and marketing
departments.

  General and Administrative Expenses. General and administrative expenses
consist primarily of personnel and related costs for our customer care
department and general corporate functions, including finance, accounting,
legal, human resources, investor relations, facilities, amortization of goodwill
and non-cash stock based employee compensation. General and administrative
expenses decreased to $14.8 million for the three months ended June 30, 2001
from $16.3 million for the three months ended June 30, 2000. The decrease in
general and administrative expenses is primarily the result of reduced personnel
in these functional areas.  Amortization of goodwill resulting primarily from
the acquisition of EMAX in March, 2000 and other intangibles was $10.2 million
in 2001 and in 2000. General and administrative expenses also include a charge
of $0.2 million and $0.7 million relating to non-cash stock based employee
charges in the three months ended June 30, 2001 and 2000, respectively. General
and administrative expenses before these non-cash charges decreased by $1.1
million primarily due to reduced personnel.  We expect general and
administrative expenses to decrease during the second half of 2001, as we reduce
our overhead costs and realize the savings impact of the first and second
quarter reductions in personnel.

  Restructuring.  In June 2001, the Company announced a restructuring of its
business to essentially eliminate outsourced procurement services. The
restructuring includes the elimination of certain unprofitable business lines
and a resultant reduction in workforce of approximately half of the employees
located in the United States. The total restructuring charge was $10.7 million
and included approximately $1.6 million for employee separation benefits, $7.1
million of assets and approximately $2.0 million of other costs and lease
obligations relating to the unprofitable business lines to be eliminated.

 Interest Income (Expense)

  Interest income (expense) consists of interest income earned on cash deposited
in money market accounts and invested in short and long term U.S. Government
obligations partially reduced by interest expense incurred on capital lease
obligations. Net interest income decreased to $0.8 million for the three months
ended June 30, 2001 from net interest income of $2.0 million for the three
months ended June 30, 2000. This decrease resulted from our use of cash and
investments to fund operations during 2000 and the first half of 2001.  We
expect interest income to decrease throughout 2001.

                                       24
<PAGE>

SIX MONTHS ENDED JUNE 30, 2001 AND 2000

 Revenues

  Revenues for the six months ended June 30, 2001 and 2000 have been derived
primarily from the sale of scientific products in e-commerce transactions and
from the sale of licenses to our software products and the implementation and
customization of our software products.

  E-commerce revenues increased to $15.7 million for the six months ended June
30, 2001 from $15.6 million for the six months ended June 30, 2000.  As we
previously discussed, effective May 1, 2001, we discontinued taking legal title
to products we purchase from our suppliers and, in turn, sell to our customers.
As a result, for products sold after May 1, 2001, we will record revenue as the
net commission that we earn for processing the transaction.  Therefore, revenues
for the six months ended June 30, 2001 were composed of sales prior to May 1,
2001, totaling $15.6 million, which were recorded on a gross basis and $150,000
representing the commissions earned on transactions processed after May 1, 2001.
The total value of scientific product transactions processed during the six
months ended June 30, 2001 was $20.4 million.  This is compared to $13.0 million
of sales of scientific products and $2.6 million of scientific equipment during
the six months ended June 30, 2000.  There have been no sales of scientific
equipment in 2001.

  This increase is the result of $6.7 million of greater volume during the first
three months of 2001 than the same period in 2000, which is offset by $1.9
million less volume during the second quarter of 2001 than the second quarter of
2000.

  During the six months ended June 30, 2001 and 2000, we recognized $2.9 million
and $2.3 million, respectively, of revenue from fees from licenses and other
professional services.  This amount includes revenue related to advertising sold
on BioSupplyNet Source Book of $660,000 and $760,000, respectively.  Such
revenue is recorded annually when the Source Book is published.

  During the six months ended June 30, 2001, three customers accounted for 29%,
19%, and 12%, respectively, of gross transactions.  There can be no assurance
that these customers will continue to purchase at these levels.

 Cost of Revenues

  Cost of revenues for transactions processed prior to May 1, 2001, primarily
consists of the purchase price of scientific products sold in e-commerce
transactions and related shipping costs for these products.  Cost of license
fees and other professional services primarily consist of personnel costs for
employees who work directly on the development and implementation of customized
electronic research solutions and who provide maintenance to customers, and also
consists of the amortization of capitalized software development costs.  Cost of
revenues relating to the BioSupplyNet Source Book consist primarily of printing,
publishing and distribution of the Source Book.

  Cost of e-commerce revenues decreased to $15.1 million for the six months
ended June 30, 2001 from $15.2 million for the six months ended June 30, 2000.
This decrease resulted, in part, because we stopped taking legal title to
products sold as of May 1, 2001.  The cost of products related to sales for
which we did not take title was $4.6 million.  Therefore, the cost of scientific
products sold would have been $19.7 million (had we continued to take legal
title to products sold) and $12.7 million for the six months ended June 30, 2001
and 2000, respectively. Cost of scientific equipment for the six months ended
June 30, 2000 was $2.5 million. There were no sales of scientific equipment in
2001.

  In addition, cost of revenues for license fees and other professional services
for the six months ended June 30, 2001 and 2000 was $2.4 million and $1.5
million, respectively, of which $1.2 million and $0.5 million, respectively,
related to the amortization of capitalized software development costs. Also
included

                                       25
<PAGE>

in the cost of revenue for license fees and other professional services are the
costs related to the BioSupplyNet Source Book of $290,000 and $340,000, during
the six months ending June 30, 2001 and 2000, respectively.

 Gross Profit

   Gross profit was approximately $1.2 million for the six months ended June 30,
2001 and 2000.  Gross profit on the sale of scientific products was $650,000 and
$350,000, which represented approximately 4.1% and 2.2%, for the three months
ended June 30, 2001 and 2000, respectively.  This increase in the gross margin
percentage resulted, in part, because we stopped taking legal title to products
sold after May 1, 2001.  This had the effect of increasing the gross profit
percentage for the period, without any effect on the gross profit dollars.  The
gross profit percentage on all products sold would have been 3.2% and 2.2% for
the six months ended June 30, 2001 and 2000, had we continued to take legal
title to products sold.

  Gross profit from licenses and professional fees was $570,000 and $880,000,
for the six months ended June 30, 2001 and 2000, respectively, of which $210,000
and $460,000, respectively, related to license fees and $360,000 and $420,000,
respectively, were derived from the Source Book.

 Operating Expenses

  Development Expenses.   Development expenses consist primarily of personnel
and related costs to develop, operate and maintain our web sites, aggregate data
and the amortization of capitalized development costs. Development costs
decreased to $7.3 million for the six months ended June 30, 2001 from $8.1
million for the six months ended June 30, 2000.  This decrease resulted from
decreased expenses required to develop our e-commerce fulfillment system, and
list suppliers' products on our web sites.  During the second quarter of 2001,
we reduced our development costs related to our e-commerce business as we
focused on selling software and services. During the six months ended June 30,
2001 and 2000, we capitalized approximately $4.6 million and $2.4 million,
respectively, of certain costs related to software and web site development
projects. We expect our development expenses to decrease in the second half of
2001.

  Included in development cost is the amortization of non-cash stock-based
employee compensation expense, which totaled $0.2 million and $0.7 million for
the six months ending June 30, 2001 and 2000, respectively.  This is primarily
due to stock options that had been issued to employees with exercise prices less
than fair value on the date of grant since December 31, 1999.  In addition, in
July 1999 and in February 2000, we entered into two employment agreements with
personnel from acquired subsidiaries that required the recognition of deferred
compensation. Deferred compensation recorded due to the issuance of such stock
options and employment agreements is charged to stock-based employee
compensation expense over the vesting term of the options and the term of the
employment agreements, respectively.

  Sales and Marketing Expenses.   Sales and marketing expenses consist primarily
of salaries and other related costs for sales and marketing personnel, travel
expenses, public relations expenses and marketing materials. Sales and marketing
expenses decreased to $7.0 million for the six months ended June 30, 2001 from
$10.4 million for the six months ended June 30, 2000. This decrease resulted
primarily from reducing the number of sales and marketing personnel to market
our products and services and from reducing advertising and promotion expenses
for our e-commerce marketplace.  Sales and marketing expenses for six months
ended June 30, 2001 and 2000 include $0.3 million and $0.6 million,
respectively, of amortization of non-cash stock based employee compensation.
Also included in sales and marketing expenses for the six months ended June 30,
2001 and 2000 is amortization expense (benefit) of non-cash stock based customer
acquisition costs of $0.4 million and ($1.6) million, respectively.

  Stock-based customer acquisition costs represent the amortization of deferred
customer acquisition costs that were initially recorded in November 1999 upon
the issuance of common stock warrants to key suppliers and customers. The value
of these warrants is adjusted each reporting period based upon the

                                       26
<PAGE>

closing trading price of our common stock at each balance sheet date. Decreases
in the Company's closing trading price from one reporting period to the next
will likely result in a benefit to the Company, and increases in the Company's
closing trading price will likely result in charges to expense. Because the
amortization of these costs is dependent upon the trading price of our common
stock, we cannot predict the future impact of this on our results from
operations.

  We expect our sales and marketing expenses, apart from the amortization of
stock-based customer acquisition costs, to decrease over the second half of 2001
due to a reduction in the number of personnel in our sales and marketing
departments.

  General and Administrative Expenses. General and administrative expenses
consist primarily of personnel and related costs for our customer care
department and general corporate functions, including finance, accounting,
legal, human resources, investor relations, facilities, amortization of goodwill
and non-cash stock based employee compensation. General and administrative
expenses increased to $30.1 million for the six months ended June 30, 2001 from
$22.2 million for the six months ended June 30, 2000. The increase in general
and administrative expenses is primarily the result of $10.3 million of
amortization of goodwill relating primarily to our acquisition in March of 2000
of EMAX Solutions.  There was no amortization during the first three months of
2000.  This increase is offset by reduced personnel in these functional areas.
Amortization of goodwill resulting primarily from the acquisition of EMAX in
March, 2000 and other intangibles was $20.4 million and $11.4 million during the
six months ended June 30, 2001 and 2000, respectively. General and
administrative expenses also include a charge of $0.5 million and $1.9 million
relating to non-cash stock based employee charges in the six months ended June
30, 2001 and 2000, respectively. We expect general and administrative expenses
to decrease during the second half of 2001, as we reduce our overhead costs and
realize the savings impact of the first and second quarter reductions in
personnel.

  Purchased In-process Research and Development.   For the six months ended June
30, 2000, we recognized an in-process research and development charge of $0.7
million as a result of the acquisition of EMAX. Based on management's valuation
of EMAX and its assets, we allocated $0.7 million of the EMAX purchase price of
$126 million to software products being developed by EMAX that had not reached
technological feasibility and had no alternative use at the date of the
acquisition of EMAX. At the date of the acquisition, these software products
being developed by EMAX were approximately 15% complete.

  Restructuring.  In June 2001, the Company announced a restructuring of its
business to essentially eliminate outsourced procurement services. The
restructuring includes the elimination of certain unprofitable business lines
and a resultant reduction in workforce of approximately half of the employees
located in the United States. The total restructuring charge was $10.7 million
and included approximately $1.6 million for employee separation benefits, $7.1
million of assets and approximately $2.0 million of other costs and lease
obligations relating to the unprofitable business lines to be eliminated.

 Interest Income (Expense)

  Interest income (expense) consists of interest income earned on cash deposited
in money market accounts and invested in short and long term U.S. Government
obligations partially reduced by interest expense incurred on capital lease
obligations. Net interest income decreased to $2.0 million for the six months
ended June 30, 2001 from net interest income of $4.1 million for the six months
ended June 30, 2000. This decrease resulted from our use of cash and investments
to fund operations during 2000 and the first half of 2001.  We expect interest
income to decrease throughout 2001.

                                       27
<PAGE>

 Income Tax Benefit

  Income tax benefit decreased to zero for the six months ended June 30, 2001
from $0.1 million for the six months ended June 30, 2000. The decrease in income
tax benefit was the result of the reduction in net deferred tax liabilities to
zero during the year ended December 31, 2000.

 Liquidity and Capital Resources

  We have primarily funded our operations through private placements of our
preferred stock during 1998 and 1999 and our initial public offering, which
closed in November 1999. As of June 30, 2001, we had total cash and investments
of $52.9 million, which is comprised of cash and cash equivalents of $46.1
million, short-term investments of $4.7 million and long-term investments of
$2.1 million.

  Cash used in operating activities was $10.4 million and $25.5 million during
the six months ended June 30, 2001 and 2000, respectively. Cash used in
operating activities was principally for payments to our suppliers for purchases
of scientific products, the development of our web sites, the development of our
e-commerce marketplace, our sales and marketing efforts, and administrative and
operations to support our growth.

  Cash (provided) used by investing activities during the six months ended June
30, 2001 and 2000 was ($36.7) million and $28.2 million, respectively. Cash used
in investing activities has primarily been comprised of purchases of investments
in US government obligations, commercial paper and corporate bonds, net of
maturities, purchases of computer equipment and the capitalization of certain
costs associated with the development of our web sites and with the development
of EMAX's electronic research software systems.  Cash was primarily provided
from the maturity of investments.

  Cash (provided) used by financing activities during the six months ended June
30, 2001 and 2000 was $0.3 million and ($0.7) million, respectively. During the
six months ended June 30, 2001, the Company repaid loan obligations of $0.4
million.  During the six months ended June 30, 2000, the Company received
approximately $1.2 million in proceeds from exercises of stock options and
warrants and by the direct sale of restricted stock to an officer of the
Company.

  We believe that our existing liquidity and capital resources, including the
proceeds resulting from the sale of our common stock in our initial public
offering, will be sufficient to satisfy our cash requirements for the next two
years. To the extent that such amounts are insufficient, we will be required to
raise additional funds through equity or debt financing. There can be no
assurance that we will be able to raise such funds on favorable terms, or at
all.

New Accounting Pronouncements

  In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141, "Business Combinations," ("SFAS No.
141").  SFAS No. 141 supersedes APB Opinion No. 16, "Business Combinations," and
FASB Statement No. 38, "Accounting for Preacquisition Contingencies of Purchased
Enterprises."  SFAS No. 141 requires:  1) that all business combinations be
accounted for by the purchase method, thereby eliminating the pooling method, 2)
that assets (including intangible assets) be recognized and valued apart from
goodwill, and 3) that additional disclosures be made regarding business
combinations and the resulting allocation of purchase price.  The provisions of
SFAS No. 141 apply to all business combinations initiated after June 30, 2001
and to all purchase method acquisitions dated on or after July 1, 2001. The
Company's adoption of SFAS No. 141 will not have a material impact on the
consolidated financial position or results of operations.

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<PAGE>

  In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets,"
("SFAS No. 142").  SFAS No. 142 supersedes APB Opinion No. 17, "Intangible
Assets" and primarily addresses accounting for goodwill and other intangible
assets subsequent to their acquisition.  The major provisions include:  1) the
ceasing of amortization of goodwill and indefinite lived intangible assets, 2)
the testing for impairment of goodwill and indefinite lived intangible assets at
least annually, and 3) the removal of the restriction that the maximum
amortization period of intangible assets with finite lives be limited to 40
years.  The provisions of SFAS No. 142 will be effective for fiscal years
beginning after December 15, 2001 (with the exception that any goodwill or
intangible assets acquired after June 30, 2001 will be subject immediately to
the statement's provisions) with application being required at the beginning of
an entity's fiscal year.  Any impairment losses from the initial application are
to be reported as a cumulative effect of a change in accounting principle in
accordance with APB 20, "Accounting Changes." The impact of the initial adoption
of SFAS No. 142 on the consolidated financial position of the Company is neither
currently known nor reasonably estimable.  Due to the Company's historically
significant amounts of amortization expense related to goodwill and intangible
assets (approximately $10 million per quarter), the adoption of SFAS No. 142 may
have a material impact on the subsequently reported consolidated results of
operations.



FACTORS THAT MAY AFFECT FUTURE RESULTS

SINCE WE HAVE A LIMITED OPERATING HISTORY AND AN EVOLVING BUSINESS MODEL,
FORECASTING FUTURE PERFORMANCE MAY BE DIFFICULT.

  Our business model has evolved considerably since our company's inception. For
instance, we launched our public e-commerce marketplace in April 1999.  Since
that time, we have increasingly focused our efforts on providing integrated
e-commerce and asset management solutions to our customers. As part of this
strategy, we acquired EMAX in March 2000 and formed our Global Professional
Services division in February 2001. Accordingly, we have only a limited
operating history on which to evaluate our current business. As a result of our
limited operating history, the emerging nature of the scientific products market
and the evolving nature of our business model, we may be unable to accurately
forecast our revenues. We incur expenses based predominantly on operating plans
and estimates of future revenues. Revenues to be generated from newly developed
and evolving activities will be particularly difficult to forecast accurately.
Our expenses are to a large extent fixed. We may be unable to adjust our
spending in a timely manner to compensate for any unexpected revenue shortfalls.
Accordingly, a failure to meet our revenue projections will have an immediate
and negative impact on profitability. In addition, if our restructuring program
adversely affects our revenues and/or fails to adequately reduce our expenses,
our future earnings will be negatively impacted. Finally, we cannot be certain
that our evolving business model will be successful, particularly in light of
our limited operating history.

WE HAVE A HISTORY OF LOSSES AND ANTICIPATE INCURRING LOSSES IN THE FUTURE. WE
MAY NOT ACHIEVE PROFITABILITY.

  We incurred net losses of $84.3 million for the year ended December 31, 2000
and $29.4 million for the three months ended June 30, 2001.  As of June 30,
2001, we had an accumulated deficit of $174.8 million. We expect to incur
substantial operating losses and continued negative cash flow from operations
for the foreseeable future. In fact, we expect to continue generating losses
through at least 2002.  We may not be able to increase revenues sufficiently to
achieve profitability.

OUR FUTURE PROFITABILITY AND CASH FLOWS ARE DEPENDENT UPON OUR ABILITY TO
CONTROL EXPENSES.

  Our operating plan to achieve profitability is based upon estimates of our
future expenses. For instance, we have estimated that our development expenses
will decrease during the second half of 2001, and that our general and
administrative expenses will decrease during the last half of 2001. If our
future expenses are greater than anticipated, our ability to achieve
profitability when expected may be negatively impacted. In addition, greater
than anticipated expenses may negatively impact our cash flows, which could
cause us to expend our capital faster than anticipated. While we expect our
existing capital to be sufficient

                                       29
<PAGE>

for the next two years, if our cash flows are negatively impacted, we may be
required to raise additional capital sooner than expected.

WE ARE INVESTING SIGNIFICANTLY IN DEVELOPING NEW PRODUCT AND SERVICE OFFERINGS
WITH NO GUARANTEE OF SUCCESS.

  Expanding our product and service offerings is an important component of our
business strategy. As such, we are expending a significant amount of our
resources in this development effort. For instance, we recently introduced
SciQuest SmartStore(TM), SelectSite SRA(TM) (Source and Requisition
Application), and SelectSite APA(TM) (Advanced Procurement Application). Any new
offerings that are not favorably received by buyers or suppliers could damage
our reputation or brand name. Expansion of our services will require us to
devote a significant amount of time and money and may strain our management,
financial and operating resources. We cannot assure you that our development
efforts will result in commercially viable products or services. In addition, we
may bear development costs in current periods that do not generate revenues
until future periods or at all. To the extent that we incur expenses that do not
result in increased current or future revenues, our earnings may be materially
and adversely affected.

SALES TO LARGER CUSTOMERS MAY INCREASE THE LENGTH OF OUR SALES CYCLE AND
DECREASE OUR PROFIT MARGINS.

  Increasing sales to larger enterprise buyers is an important element of our
business strategy. As we sell more sophisticated solutions to larger
organizations, we expect the average time from initial contact to final approval
to increase. During this sales cycle, we may expend substantial funds and
management resources without any corresponding revenue. If approval is delayed
or does not occur, our financial condition and operating results for a
particular period may be adversely affected. Approvals are subject to delays
over which we have little or no control, including the following:

 .  potential customers' internal approval processes;

 .  implementation of systems integration solutions;

 .  customers' concerns about implementing a new strategy and method of doing
   business; and

 .  seasonal and other timing effects.

  Increased sales to larger accounts may result in lower or negative profit
margins as larger customers typically have greater leverage in negotiating the
price and other terms of business relationships. We also typically incur costs
associated with customization of our systems with a sale to a large account. If
we do not generate sufficient transaction volume to offset any lower margins or
these increased costs, our operating results may be materially and adversely
affected. Also, the time between billing and receipt of revenues is often longer
when dealing with larger accounts due to increased administrative overhead.

WE HAVE RELIED, AND CONTINUE TO RELY, ON A LIMITED NUMBER OF LARGE CUSTOMERS FOR
A SIGNIFICANT PORTION OF OUR REVENUES. LOSING ONE OR MORE OF THESE CUSTOMERS MAY
ADVERSELY AFFECT OUR REVENUES.

  We expect that for the foreseeable future we will generate a significant
portion of our revenues from a limited number of large customers. For the six
months ended June 30, 2001, three customers accounted for 29% and 19%, and 12%,
respectively, of our total revenues. In addition, large individual transactions
with these customers may represent an increasing percentage of our revenues.
These large transactions are often non-recurring, making it difficult to predict
future transactions. The failure of one or more large transactions to occur in
any given period may materially and adversely affect our revenues for such
period. If we lose any of our large customers or if we are unable to add new
large customers, our revenues will not increase as expected. In addition, our
reputation and brand name would be harmed.

REVENUES FROM E-COMMERCE TRANSACTIONS HAVE HISTORICALLY COMPRISED A SIGNIFICANT
PORTION OF OUR REVENUES.  THE FAILURE TO REPLACE THESE REVENUES WITH LICENSE FEE
REVENUES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR REVENUES AND EARNINGS.

                                       30
<PAGE>

  As we increasingly shift our focus to providing technology solutions and away
from processing e-commerce transactions, we expect our revenues from e-commerce
transactions to decrease over the long-term.  Consequently, we will become
increasingly dependent on sales of software licenses in order to achieve revenue
growth.  We cannot assure you that we will be successful in growing software
license revenue. If we are not able to replace revenues from e-commerce
transactions with software license revenues, our revenues and earnings will be
materially and adversely affected.

UNLESS A BROAD RANGE OF PURCHASERS AND SUPPLIERS OF SCIENTIFIC PRODUCTS ADOPT
OUR PRODUCTS AND SERVICES, WE WILL NOT BE SUCCESSFUL.

  Our success will require, among other things, that our solutions gain broad
market acceptance by our customers, suppliers, users and strategic partners. For
example, purchasers may continue managing assets and purchasing products through
their existing methods and may not adopt a web-based supply-chain solution
because of:

 .  their comfort with current purchasing habits and direct supplier
   relationships;

 .  the costs and resources required to switch purchasing methods;

 .  the need for products not offered through our web site;

 .  security and privacy concerns; or

 .  general reticence about technology or the Internet.

IF WE DO NOT SUCCESSFULLY MARKET THE SCIQUEST BRAND, OUR BUSINESS MAY SUFFER.

  We believe that establishing, maintaining and enhancing the SciQuest brand is
critical in expanding our customer base. Some of our competitors already have
well-established brands in either online or supply chain services or the
scientific products industry. Promotion of our brand will depend largely on
continuing our sales and marketing efforts and providing high-quality products
and services to our enterprise customers. We reduced our spending on sales and
marketing significantly in the fourth quarter of 2000 and expect to continue
this reduction from prior levels throughout 2001. This reduction in spending
could materially and adversely affect our sales and marketing efforts. We cannot
be certain that we will be successful in marketing the SciQuest brand. If we are
unable to successfully promote our brand, or if we incur substantial expenses in
attempting to do so, our revenues and earnings could be materially and adversely
affected.

IF WE ARE NOT ABLE TO SUCCESSFULLY INTEGRATE OUR SYSTEMS WITH THE INTERNAL
SYSTEMS OF OUR KEY SUPPLIERS AND BUYERS, OUR OPERATING COSTS AND RELATIONSHIPS
WITH OUR SUPPLIERS AND BUYERS WILL BE ADVERSELY AFFECTED.

  A key component of all services is the efficiencies created for suppliers and
buyers through our products and services. In order to create these efficiencies,
it will often be necessary that our systems integrate with each major supplier's
and buyer's internal systems, such as inventory, customer service, technical
service, freight programs and financial systems. In addition, there is little
uniformity in the systems used by our customers. If these systems are not
successfully integrated, our operating costs and relationships with our
suppliers and buyers would be adversely affected, which could have a material
adverse effect on our financial condition and results of operations.

IF WE ARE UNABLE TO ADAPT OUR PRODUCTS AND SERVICES TO RAPID TECHNOLOGICAL
CHANGE, OUR REVENUES AND PROFITS COULD BE MATERIALLY AND ADVERSELY AFFECTED.

  Rapid changes in technology, products and services, user profiles and
operating standards occur frequently. These changes could render our proprietary
technology and systems obsolete. We must

                                       31
<PAGE>

continually improve the performance, features and reliability of our products
and services, particularly in response to our competition.

  Our success will depend, in part, on our ability to:

 .  enhance our existing products and services;

 .  develop new services and technology that address the increasingly
   sophisticated and varied needs of our target markets; and

 .  respond to technological advances and emerging industry standards and
   practices on a cost-effective and timely basis.

  We cannot be certain of our success in accomplishing the foregoing. If we are
unable, for technical, legal, financial or other reasons, to adapt to changing
market conditions or buyer requirements, our market share could be materially
adversely affected.

IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR BUSINESS COULD
BE MATERIALLY AND ADVERSELY AFFECTED.

  Our software technology is not patented and existing copyright laws offer only
limited practical protection. We cannot guarantee that the legal protections
that we rely on will be adequate to prevent misappropriation of our technology.
Also, these protections do not prevent independent third-party development of
competitive products or services. Failure to protect against the
misappropriation of our intellectual property could have a material adverse
effect on our business operations.

THE MARKET FOR TECHNOLOGY SOLUTIONS IN THE SCIENTIFIC PRODUCTS INDUSTRY IS
HIGHLY COMPETITIVE, WHICH MAKES ACHIEVING MARKET SHARE AND PROFITABILITY MORE
DIFFICULT.

  The market for technology solutions in the scientific products industry is
new, rapidly evolving and intensely competitive. Competition is likely to
intensify as this market matures.

  As competitive conditions intensify, competitors may:

 .   enter into strategic or commercial relationships with larger, more
    established and well-financed companies;

 .   secure services and products from suppliers on more favorable terms;

 .   devote greater resources to marketing and promotional campaigns;

 .   secure exclusive deals with buyers that impede our sales; and

 .   devote substantially more resources to web site and systems development.

  In addition, new technologies and the expansion of existing technologies may
increase competitive pressures. As a result of increased competition, we may
experience reduced operating margins, as well as loss of market share and brand
recognition. We may not be able to compete successfully against current and
future competitors. These competitive pressures could have a material adverse
effect on our revenue growth and earnings.

OUR FUTURE REVENUE GROWTH WOULD BE ADVERSELY AFFECTED BY A REDUCTION IN SPENDING
IN THE SCIENTIFIC PRODUCTS INDUSTRY.

                                       32
<PAGE>

  We derive substantially all of our revenue from the scientific products
industry. We expect our future growth to depend on spending levels in this
industry. Any reduction in spending in the scientific products industry would
have a material adverse effect on our revenues.

OUR COMPUTER AND TELECOMMUNICATIONS SYSTEMS ARE IN A SINGLE LOCATION, WHICH
MAKES THEM MORE VULNERABLE TO DAMAGE OR INTERRUPTION.

  Substantially all of our computer and telecommunications systems are located
in the same geographic area. These systems are vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure, break-ins
and similar events. While we have business interruption insurance, this coverage
may not adequately compensate us for lost business. Although we have implemented
network security measures, our systems, like all systems, are vulnerable to
computer viruses, physical or electronic break-ins and similar disruptions.
These disruptions could lead to interruptions, delays, loss of data or the
inability to accept and confirm buyer purchases. Any of these occurrences could
have a material adverse effect on our revenues.

WE BEAR THE RISK OF CREDIT SALES ON OUR WEB SITES, WHICH COULD PUT A SIGNIFICANT
STRAIN ON OUR LIQUIDITY AND CAPITAL RESOURCES.

  Our supplier agreements generally require us to pay the supplier for any
orders processed through our web sites. Accordingly, if a buyer fails to pay for
the products it purchased, we would be obligated to pay the supplier. Thus, we
bear the risk of collection. We also may be required to refund payments to
buyers for products returned to the supplier. Slow payment by buyers for
products purchased would negatively impact our cash flows. As our transaction
volume and average transaction size grow, these risks will increase. In isolated
instances, we have agreed to extend payment terms with our customers for large
purchases, which increases our credit risk and may negatively impact our cash
flows. We generally do not process an order from a buyer without a credit card
or other payment confirmation although we do extend credit terms to certain
qualified buyers. However, we cannot be certain that our credit confirmation
practices will be effective to protect us against these payment obligations. If
a significant number of buyers default on their payment obligations, or
suppliers fail to refund payments to us for products returned by our buyers, or
buyers do not pay their obligations to us on time, we could incur significant
and immediate cash payment obligations or suffer significant cash flow
constraints. These obligations could put a significant strain on our liquidity
and capital resources, which could prevent us from using our working capital to
further expand our business or require us to obtain additional financing.

IF WE ARE NOT ABLE TO EFFECTIVELY MANAGE REVENUE GROWTH WITH FEWER PERSONNEL,
OUR BUSINESS MAY SUFFER.

  We rapidly expanded our operations in 2000, which placed a significant strain
on our management, operational and financial resources as well as our ability to
achieve profitability. In November 2000, we commenced a restructuring program
that resulted in a significant reduction of our workforce. We further reduced
our workforce in the first half of 2001. This staff reduction could adversely
affect our ability to manage and continue the growth of our operations. If we
are unable to manage the growth of our business effectively, our earnings could
be materially and adversely affected.

  Many of our employees have only recently joined us. Additionally, several of
our key executives have been employed by us for two years or less. If our
employees do not work well together or some of our employees do not succeed in
their designated roles, our financial condition and results of operations could
be materially adversely affected. We cannot be certain that our management,
operational and financial resources will be adequate to support our future
operations.

IF WE FAIL TO ATTRACT AND RETAIN KEY EMPLOYEES, OUR BUSINESS MAY SUFFER.

  A key factor of our success will be the continued services and performance of
our executive officers and other key personnel. If we lose the services of any
of our executive officers, our financial condition and results of operations
could be materially and adversely affected. We do not have long-term employment

                                       33
<PAGE>

agreements with any of our key personnel. Our success also depends upon our
ability to identify, hire and retain other highly skilled technical, managerial,
editorial, marketing and customer service professionals. Competition for such
personnel is intense. We cannot be certain of our ability to identify, hire and
retain sufficiently qualified personnel. For example, we may encounter
difficulties in attracting a sufficient number of qualified software developers
and operations personnel for our online services and transaction-processing
systems. Failure to identify, hire and retain necessary technical, managerial,
editorial, merchandising, marketing and buyer service personnel could have a
material adverse effect on our financial condition and results of operations.

WE WILL BE LIABLE FOR ANY THIRD PARTY CLAIMS THAT MAY RISE AGAINST EMAX
INCLUDING CLAIMS RELATED TO IMPORTANT PROPRIETARY RIGHTS REGARDING EMAX'S
TECHNOLOGY. THESE CLAIMS COULD ADVERSELY AFFECT OUR BUSINESS.

  In our acquisition of EMAX, we acquired important proprietary rights that are
embodied in its software technology. This software technology is not patented
and existing copyright laws offer only limited practical protection. By virtue
of this acquisition, we will be liable for any valid third-party claims that may
arise against EMAX in relation to their proprietary rights or contracts with
suppliers and customers. While we have investigated EMAX's proprietary rights
and business practices, we cannot be certain that ownership, infringement or
other claims will not arise against EMAX. A successful claim by a third party
could result in significant liability on our part and could materially and
adversely affect the value of the technology that we are acquiring. As a
precaution, a portion of the purchase price for EMAX has been deposited into an
escrow fund. If we become liable for any claims against EMAX, we may be entitled
to compensation from this escrow fund. However, this escrow fund will terminate
in March 2002 and may not be sufficient to adequately compensate us for any
claims that do arise.

WE ARE DEPENDENT ON PROPRIETARY TECHNOLOGY LICENSED FROM THIRD PARTIES, THE LOSS
OF WHICH COULD BE COSTLY.

  We license a portion of the content for our products and services from third
parties. These third-party content licenses may not be available to us on
favorable terms, or at all, in the future. In addition, we must be able to
successfully integrate this content in a timely and cost-effective manner to
create an effective finished product. If we fail to obtain necessary content on
favorable terms or are unable to successfully integrate this content or if we
are unable to continue to license our order fulfillment transaction systems on
favorable terms, it could have a material adverse effect on our business
operations.

OUR PRODUCTS, TRADEMARKS AND OTHER PROPRIETARY RIGHTS MAY INFRINGE ON THE
PROPRIETARY RIGHTS OF THIRD PARTIES, WHICH MAY EXPOSE US TO LITIGATION.

  While we believe that our products, trademarks and other proprietary rights do
not infringe upon the proprietary rights of third parties, we cannot provide any
guarantees about the third-party products that are sold on our Web sites or
guarantee that third parties will not assert infringement claims against us in
the future or that any such assertion will not require us to enter into a
license agreement or royalty agreement with the party asserting a claim. If the
third-party products sold on our Web sites infringe the proprietary rights of
third parties, we may be deemed to infringe those rights by selling such
products. Even the successful defense of an infringement claim could result in
substantial costs and diversion of our management's efforts.

THE FAILURE TO INTEGRATE SUCCESSFULLY BUSINESSES THAT WE HAVE ACQUIRED OR MAY
ACQUIRE COULD ADVERSELY AFFECT OUR BUSINESS.

  We have acquired and intend to continue to acquire complementary businesses.
In particular, we acquired BioSupplyNet, Inc. in 1998, and SciCentral, Inc.,
Intralogix, Inc. and EMAX in 2000. An element of our strategy is to broaden the
scope and content of our products and services through the acquisition of
existing products, technologies, services and businesses. Acquisitions entail
numerous risks, including:

 .  the integration of new operations, products, services and personnel;

                                       34
<PAGE>

 .  the diversion of resources from our existing businesses, sites and
   technologies;

 .  the inability to generate revenues from new products and services sufficient
   to offset associated acquisition costs;

 .  the maintenance of uniform standards, controls, procedures and policies;

 .  accounting effects that may adversely affect our financial results;

 .  the impairment of employee and customer relations as a result of any
   integration of new management personnel;

 .  dilution to existing stockholders from the issuance of equity securities; and

 .  liabilities or other problems associated with an acquired business.

  We may have difficulty in effectively assimilating and integrating these, or
any future joint ventures, acquisitions or alliances, into our operations. Any
difficulties in the process could disrupt our ongoing business, distract our
management and employees, increase our expenses and otherwise adversely effect
our business. Any problems we encounter in connection with our acquisitions
could have a material adverse effect on our business.

UNLESS WE NEGOTIATE FAVORABLE PRICING TERMS WITH OUR SUPPLIERS, OUR PROFIT
MARGINS WILL BE ADVERSELY AFFECTED.

  Our profits from e-commerce transactions depend upon the prices we are able to
negotiate with our suppliers. We anticipate that the prices we negotiate with
our suppliers will vary based on a number of factors such as:

 .  size of supplier;

 .  product portfolio;

 .  relationship with key customers;

 .  degree to which products are critical to our customers;

 .  extent to which transactions are conducted electronically; and

 .  extent that costs are shared with us.

  Our profit margins may decline in the future, particularly as competition in
the scientific products industry increases. A significant decline in profit
margins without a corresponding increase in transaction volume would adversely
affect our earnings.

IF WE CANNOT TIMELY AND ACCURATELY ADD SUPPLIER PRODUCT DATA TO OUR E-COMMERCE
DATABASE, WE MAY LOSE SALES AND CUSTOMERS, WHICH WOULD ADVERSELY AFFECT OUR
REVENUES.

  Currently, we are responsible for loading supplier product information into
our database and categorizing the information for search purposes. We currently
have a backlog of product data from various companies to be loaded in our e-
commerce marketplaces. We anticipate that by the end of the quarter a majority
of these products will be loaded into these marketplaces. However, we
continuously receive new product data to load. We generally will not derive
profit from these products until this data is loaded into our system. Timely
loading of these products into our database depends upon a number of factors,
including the file formats of the data provided to us by suppliers and our
ability to further automate and
                                       35
<PAGE>

expand our operations to accurately load this data into our product database,
any of which could delay the actual loading of these products beyond the dates
we estimate.

  In addition, we are generally obligated under our supplier agreements to load
updated product data into our database for access through our marketplaces
within a reasonable period of time following their delivery from the supplier.
Our current supplier data backlog could make it difficult for us to meet these
data update obligations to our suppliers. While we intend to further automate
the loading and updating of supplier data on our system, we cannot assure you
that we will be able to do so in a timely manner.

IF SUPPLIERS TERMINATE THEIR AGREEMENTS WITH US, OUR PRODUCT OFFERINGS MAY
SUFFER.

  Following an initial one-year term, many of our standard supplier agreements
may be terminated by either party on 90 days' notice. After expiration of the
initial term, such suppliers may terminate or seek to renegotiate their
agreements. If a significant number of suppliers terminate their agreements with
us, the range of products we can offer would be adversely affected. The ability
of suppliers to terminate their agreements may result in negotiating new
agreement terms that are less favorable to us, which could have a material
adverse effect on our earnings.

IF OUR EXCLUSIVE SUPPLIERS ELECT TO TERMINATE THE EXCLUSIVE NATURE OF THEIR
AGREEMENTS WITH US, OUR BUSINESS COULD BE ADVERSELY AFFECTED.

  Our exclusive supplier agreements have a five-year term, but the exclusive
nature of such agreements may be terminated after 18 months following execution
of the agreement. This termination right will arise in most cases during 2001.
If a significant number of the exclusive suppliers terminate the exclusive
nature of such agreements, the volume of our order flow will be reduced
significantly. We may also be forced to negotiate new agreements with terms that
are less favorable to us.

SINCE WE RELY ON THIRD-PARTY SUPPLIERS AND CARRIERS TO FULFILL ORDERS FOR OUR
CUSTOMERS, WE HAVE LIMITED CONTROL OVER THE TIMING AND ACCURACY OF ORDER
FULFILLMENT. AS A RESULT, WE MAY NOT BE ABLE TO GUARANTEE CUSTOMER SATISFACTION.

  We do not carry inventory or directly supply products. As a result, we rely on
our suppliers and carriers for rapid order fulfillment and other customer
service functions to ensure buyer satisfaction. If our suppliers do not provide
high quality customer service, our business reputation and customer satisfaction
could be materially and adversely affected. Most of our supplier arrangements do
not guarantee the availability of merchandise, establish guaranteed prices or
require continuity of pricing practices. As a result, we have little or no
control over the fulfillment of buyers' orders. In order to be successful, we
must maintain relationships with suppliers that will produce, stock and deliver
high quality products to buyers through our web sites.

  We rely on third-party carriers to ensure accurate and timely delivery of
products to buyers. Although suppliers are responsible for product shipment, we
designate the carrier and are responsible for carrier charges. We cannot be
certain that our carriers will consistently provide high quality performance. If
our carriers fail to deliver products accurately and on a timely basis, our
reputation and business could be materially and adversely affected.

IF OUR WEB SITES AND TRANSACTION PROCESSING SYSTEMS ARE NOT ABLE TO ADEQUATELY
SERVICE TRAFFIC LEVELS, OUR ABILITY TO SATISFY OUR CUSTOMERS AND MAINTAIN
REVENUE GROWTH MAY SUFFER.

  Our revenues depend in part on the number of buyers who use our web sites to
purchase scientific supplies and products. Accordingly, our web sites,
transaction-processing systems and network infrastructure must be able to
service significant traffic levels while maintaining adequate buyer service
levels. Any system interruptions or delays in our transaction system would
reduce the volume of sales and the attractiveness of our service offerings,
which could have a material adverse effect on our customer satisfaction and our
ability to maintain revenue growth. We have experienced infrequent system
interruptions in the past during implementation of system upgrades. These
interruptions could continue to

                                       36
<PAGE>

occur from time to time and could have a material adverse effect on our service
offerings. Substantial increases in the volume of traffic on our web sites or
the number of purchases made by buyers will require expansion and upgrades of
our technology, transaction-processing systems and network infrastructure. We
cannot be certain that our transaction-processing systems and network
infrastructure will be able to accommodate traffic in the future.

WE MAY BECOME EXPOSED TO PRODUCT LIABILITY CLAIMS, WHICH COULD RESULT IN
SUBSTANTIAL COSTS AND LIABILITY.

  The sale of scientific products involves the risk of product liability claims.
We face potential liability for claims based on the type and adequacy of the
information and data that suppliers publish on our Web sites as well as the
nature of the products that are sold through our web sites, including claims for
breach of warranty, product liability, misrepresentation, violation of
governmental regulations and other commercial claims. Although we maintain
general liability insurance and product liability insurance, our insurance may
not cover some claims and may not be adequate to fully indemnify us for
liabilities that may be imposed. A product liability claim against us, if
successful, could result in a significant liability that would have a material
adverse effect on our liquidity and capital resources. In addition, even the
successful defense of a product liability claim could result in substantial
costs and diversion of our management's efforts.

THE CONTENT OF OUR WEB SITES MAY EXPOSE US TO VARIOUS CLAIMS, WHICH COULD RESULT
IN SUBSTANTIAL COSTS AND LIABILITIES.

  Our web sites contain information concerning the products offered by
suppliers, including product descriptions, specifications and pricing. This
information is provided by suppliers and we generally do not independently
verify this information. As a result, we could potentially face liability for
fraud, negligence, copyright, patent or trademark infringement and other claims
based on the information contained on our web sites. A successful claim could
subject us to significant liability that would have a material adverse effect on
our liquidity and capital resources. In addition, even the successful defense of
a claim could result in substantial costs and division of our management's
efforts and damage to our brand perception by our customers.

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<PAGE>

OUR PLANNED INTERNATIONAL EXPANSION WILL REQUIRE SIGNIFICANT FINANCIAL RESOURCES
AND MANAGEMENT ATTENTION AND COULD HAVE A NEGATIVE EFFECT ON OUR EARNINGS.

  We intend to invest resources and capital to expand internationally,
particularly in Europe. This expansion will require significant financial
resources and management attention and could have a negative effect on our
earnings. We cannot assure you that we will be successful in creating
international demand for our e-commerce and research solutions and services. In
addition, our international business may be subject to a variety of risks,
including, among other things, increased costs associated with maintaining
international marketing efforts, applicable government regulation, fluctuations
in foreign currency, difficulties in collecting international accounts
receivable and the enforcement of intellectual property rights. We cannot assure
you that these factors will not have an adverse effect on future international
sales and earnings. In addition, the business customs and regulations in foreign
countries may require changes in our business model. In addition, we are
currently contemplating registering our trademarks in other countries. We cannot
assure you that we will be able to do so.

WE RELY ON OUR SUPPLIERS AND CARRIERS IN COMPLYING WITH GOVERNMENT REGULATIONS
REGARDING THE SALE AND DISTRIBUTION OF REGULATED PRODUCTS, AND THEIR FAILURE TO
SO COMPLY COULD RESULT IN SUBSTANTIAL CIVIL AND CRIMINAL LIABILITY.

  Many of the products offered through our web sites are subject to direct
regulation by governmental agencies, which includes numerous laws and
regulations generally applicable to the chemical, pharmaceutical, controlled
substances, human and biological reagents, nuclear chemical businesses, and
environmental spills. Because of our presence in the distribution chain, we may
be subject to significant liability for violations of these regulations
regardless of our actual involvement in a violation. We could be fined or
exposed to civil or criminal liability, including monetary fines and injunctions
for any violations. We have historically relied, and will in the future rely,
upon our suppliers to meet all packaging, distribution, labeling, hazard and
health information notices to purchasers, record keeping and licensing
requirements applicable to transactions conducted through our system. In
addition, we rely upon our carriers to comply with regulations regarding the
shipment of hazardous materials sold through our system. We cannot assure you
that our suppliers and carriers will comply with all applicable government
regulations.

ONLINE COMMERCE AND DATABASE SECURITY CONCERNS COULD ADVERSELY AFFECT TRAFFIC ON
OUR WEB SITES AND OUR REVENUES.

  The secure transmission of confidential information over public networks is a
fundamental requirement for online commerce. Concerns over the security of
transactions and commercial online services and other privacy issues may also
inhibit the growth of the Internet and the online commerce industry. We license
encryption and authentication technology for the transmission of confidential
information, such as buyer credit card numbers, through our online system. In
addition, we maintain an extensive confidential database of buyer profiles and
transaction information. Technological advances, including new discoveries in
the field of cryptography, could result in a compromise or breach of our
security systems. Security breaches could have a material adverse effect on our
reputation, financial condition and results of operations. An intruder who
breaches our security measures could misappropriate proprietary information or
cause interruptions in our operations. We could be required to spend a
significant amount of time and money to protect against security breaches or to
alleviate problems caused by such breaches. Security breaches could also expose
us to a risk of loss or litigation and possible liability. We cannot be certain
that our security measures will prevent security breaches.

THE APPLICATION OF SALES AND OTHER TAXES TO ONLINE COMMERCE COULD ADVERSELY
AFFECT DEMAND FOR OUR PRODUCTS AND SERVICES AND ARE ADMINISTRATIVELY BURDENSOME.

  The application of sales and other taxes by state and local governments to
online commerce is uncertain and may take years to resolve. In particular, the
federal government and a number of states are currently reviewing the
appropriate tax treatment of online commerce, and new federal laws or state tax

                                       38
<PAGE>

regulations may subject us and/or the suppliers and buyers that use our web
sites to additional state sales and income taxes. The imposition of additional
sales taxes on transactions conducted through our web sites could make this
service less valuable to buyers and adversely impact transaction volume. The
imposition of any such taxes or other regulations could have a material adverse
effect on our revenues and earnings. In addition, the collection and payment of
such taxes may cause us to incur significant administrative effort and expense.
Our failure to properly collect and pay such taxes in any jurisdiction could
subject us to penalties that could adversely affect our earnings.

SIGNIFICANT FLUCTUATION IN THE MARKET PRICE OF OUR COMMON STOCK COULD RESULT IN
SECURITIES CLASS ACTION CLAIMS AGAINST US.

  Significant price and value fluctuations have occurred with respect to the
securities of technology companies. Our common stock price has been volatile and
is likely to be volatile in the future. In the past, following periods of
downward volatility in the market price of a company's securities, class action
litigation has often been pursued against such companies. If similar litigation
were pursued against us, it could result in substantial costs and a diversion of
our management's attention and resources.

Unless web-based purchasing achieves widespread acceptance, we will have
difficulty achieving revenue growth.

  Use of the Internet to purchase products, particularly in the scientific
products market, remains at an early stage of development. Convincing buyers to
purchase scientific products online may be particularly difficult as such buyers
have traditionally relied on distributors of scientific products and mail order
catalogs to purchase their scientific products. If the use of e-commerce
services does not grow in the future, our web site traffic and resulting revenue
could be materially and adversely affected.

  The continued growth of e-commerce services is dependent upon a number of
factors that are beyond our control, including the following:

  .  continued growth in the number of buyers who use e-commerce services;

  .  continued development of transaction security technology;

  .  continued development of e-commerce technology;

  .  continued development and successful implementation of enterprise software
     solutions;

  .  emergence of standard and common nomenclature and methodology for e-
     commerce; and

  .  development of complementary services and products.


Additional regulation of online commerce could adversely affect demand for our
products and services.

  There are currently few laws and regulations directly applicable to the
Internet and e-commerce services. However, we expect that additional regulation
may be adopted covering issues such as user privacy, pricing, content,
copyrights, distribution, antitrust and characteristics and quality of products
and services. In addition, the growth and development of e-commerce may prompt
calls for more stringent buyer protection laws that may impose additional
burdens on those companies conducting business online. The adoption of any
additional laws or regulations may decrease the growth of the Internet or
commercial online services, which could, in turn, decrease the demand for our
products and services. Additional regulation could also increase our cost of
doing business.

NEW ACCOUNTING RULES COULD BE PROPOSED THAT COULD ADVERSELY AFFECT OUR REPORTED
FINANCIAL RESULTS.

  Our financial statements are prepared based on generally accepted accounting
principles and SEC accounting rules. These principles and rules are subject to
change from time to time for various reasons. While we believe we meet all
current financial reporting requirements, we cannot predict at this time whether
any initiatives will be proposed or adopted that would require us to change our
accounting policies. Any change to generally accepted accounting principles or
SEC rules could adversely affect our reported financial results.

ITEM 3:   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  Most of our cash equivalents, short-term and long-term investments and capital
lease obligations are at fixed interest rates, therefore the fair value of these
investments is affected by changes in market interest rates. However, because
our investment portfolio is primarily comprised of investments in U.S.
Government obligations and high-grade commercial paper, an immediate 10% change
in market interest rates would not have a material effect on the fair market
value of our portfolio. Therefore, we would not expect our operating results or
cash flows to be affected to any significant degree by the effect of a sudden
change in market interest rates on our investment portfolio.

                                       39
<PAGE>

                                    PART II

OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

We are not a party to any material legal proceedings.

ITEM 2.  CHANGES IN SECURITIES.

Not applicable.

ITEM 3.  DEFAULTS IN SECURITIES.

Not applicable.

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

(a) Our Annual Meeting of Stockholders was held on May 15, 2001. There were
present at the annual meeting, in person or by proxy, holders of 28,843,099
shares of the Common Stock entitled to vote.

(b) The following directors were elected to hold office until the 2004 annual
meeting of stockholders or until their successors are elected and qualified,
with the vote for each director being reflected below:

Name                               Votes For          Votes Withheld
----                               ----------         --------------
Stephen J. Wiehe...............    21,775,436             81,364
Noel J. Fenton.................    21,775,436             81,364

The affirmative vote of the holders of a plurality of the outstanding shares of
Common Stock represented at the Annual Meeting was required to elect each
director.  M. Scott Andrews will continue as a director until the election and
qualification of a successor director at the 2002 annual meeting of
stockholders.  Bruce J. Boehm, Gautam A. Prakash and Lloyd Segal will continue
as directors until the election and qualification of successor directors at the
2003 annual meeting of stockholders.

(c)  An amendment to our Certificate of Incorporation to change the corporate
name to "SciQuest, Inc." was approved with 21,800,128 affirmative votes cast,
47,675 negative votes cast and 8,997 abstentions.  The approval of the amendment
required the affirmative vote of a majority of the issued and outstanding shares
of Common Stock entitled to vote at the Annual Meeting for purposes of such
proposal.

(d)  The adoption of our Employee Stock Purchase Plan was ratified with
8,663,330 affirmative votes cast, 530,581 negative votes cast, 42,264
abstentions and 12,620,625 broker non-votes.  The approval and ratification of
the Employee Stock Purchase Plan required the affirmative vote of a majority of
the shares represented at the Annual Meeting for purposes of such proposal.

(e)  An amendment to our 1999 Stock Incentive Plan was ratified with 7,865,162
affirmative votes cast, 1,320,337 negative votes cast 50,676 abstentions and
12,620,625 broker non-votes.  The approval and ratification of the amendment to
the 1999 Stock Incentive Plan required the affirmative vote of a majority of the
shares represented at the Annual Meeting for purposes of such proposal.

(f) The appointment of PricewaterhouseCoopers LLP as independent auditor for the
year ending December 31, 2001, was ratified with 21,817,714 affirmative votes
cast, 24,994 negative votes cast and 14,092

                                       40
<PAGE>

abstentions. The appointment of PricewaterhouseCoopers LLP required the
affirmative vote of a majority of the shares represented at the Annual Meeting
for purposes of such proposal.

ITEM 5.  OTHER INFORMATION.

None.

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

       (a) The following exhibits are filed as a part of, or are incorporated by
       reference into, this report on Form 10-Q:

Exhibit
Number                       Description
------                       -----------

 3.1*   Amended and Restated Certificate of Incorporation of SciQuest.com.

 3.2*   Amended and Restated Bylaws of SciQuest.com.

 4.1*   See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
        Certificate of Incorporation and Amended and Restated Bylaws of
        SciQuest.com defining rights of the holders of Common Stock of
        SciQuest.com.

 4.2*   Specimen Stock Certificate.

 10.1*  SciQuest.com, Inc. Stock Option Plan dated as of September 4, 1997.

 10.2*  Amendment No. 1 to SciQuest.com, Inc. Stock Option Plan dated as of
        September 11, 1998.

 10.3*  Amendment No. 2 to SciQuest.com, Inc. Stock Option Plan dated as of
        February 26, 1999.

 10.4*  Amendment No. 3 to SciQuest.com, Inc. Stock Option Plan dated as of
        March 1, 1999.

 10.5*  Amendment No. 4 to SciQuest.com, Inc. Stock Option Plan dated as of
        August 27, 1999.

 10.6*  Sublease Agreement by and between Applied Innovation, Inc. and
        SciQuest.com dated March 11, 1999.

 10.7*  Master Lease Agreement by and between Comdisco, Inc. and SciQuest.com
        dated May 21, 1999, as amended.

 10.8*  Stock Restriction Agreement by and between SciQuest.com and Antony
        Francis dated March 1, 1999.

 10.9*  Registration Rights Agreement by and among SciQuest.com and the
        purchasers of Class B Common Stock and the purchasers of Series A
        Preferred Stock dated October 17, 1997, as amended.

 10.10* Registration Rights Agreement by and among SciQuest.com and the
        purchasers of Series C Preferred Stock dated September 29, 1998.

 10.11* Registration Rights Agreement by and among SciQuest.com and Antony
        Francis dated March 1, 1999.

                                       41
<PAGE>

 10.12*    Registration Rights Agreement by and among SciQuest.com, the holders
           of Series B Preferred Stock and the purchasers of Series D Preferred
           Stock dated May 18, 1999, as amended.

 10.13*    Registration Rights Agreement by and among SciQuest.com and the
           holders of Series E Preferred Stock dated July 27, 1999.

 10.14*    Merger Agreement by and among SciQuest.com, SciQuest Merger
           Subsidiary, Inc., Internet Auctioneers International, Inc. and Mark
           Atlas dated July 27, 1999.

 10.15*    Merger Agreement by and among SciQuest.com, SciQuest Acquisition,
           Inc. and BioSupplyNet, Inc., dated September 29, 1998.

 10.16*    Lease Agreement by and between Duke-Weeks Realty Limited Partnership
           and SciQuest.com dated as of October 19, 1999.

 10.17*    Content Conversion Services Agreement by and between SciQuest.com and
           Requisite Technology, Inc. dated December 18, 1998.

 10.18**   Form of Strategic Alliance Plus Agreement.

 10.19**   Form of Strategic Purchasing Agreement.

 10.20**   Registration Rights Agreement by and among SciQuest.com and the
           former holders of Intralogix, Inc. stock dated January 14, 2000.

 10.21*    Amendment No. 5 to SciQuest.com, Inc. Stock Option Plan.

 10.22*    SciQuest.com, Inc. 1999 Stock Incentive Plan dated as of October 12,
           1999.

 10.23**   First Amendment to 1999 Stock Incentive Plan.

 10.24**   Merger Agreement by and among SciQuest.com, Lujack Subsidiary, Inc.,
           Intralogix, Inc., Mary T. Romac, Timothy M. Brady and Dale L. Young
           dated January 14, 2000.

 10.25**   Merger Agreement by and among SciQuest.com, SciCentral Acquisition
           Subsidiary, Inc., SciCentral.com, Inc. and the shareholders of
           SciCentral.com, Inc. dated February 2, 2000.

 10.26**   Registration Rights Agreement by and among SciQuest.com and the
           former holders of SciCentral, Inc. stock dated February 2, 2000.

 10.27**   Agreement and Plan of Merger and Reorganization between SciQuest.com,
           SciQuest Acquisition, Inc. and EMAX Solution Partners, Inc. dated
           March 13, 2000.

 10.28**   Registration Rights Agreement by and among SciQuest.com and the
           former holders of EMAX Solution Partners, Inc. dated March 13, 2000.

 10.29***  SciQuest.com, Inc. 2000 Employee Stock Purchase Plan.

 10.30**** Second Amendment to 1999 Stock Incentive Plan.

 10.31     Form of Services Agreement.
---------------
*      Incorporated by reference to SciQuest.com's Registration Statement on
       Form S-1 (Reg. No. 333-87433).
**     Incorporated by reference to SciQuest.com's Registration Statement on
       Form S-1 (Reg. No. 333-32582).

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<PAGE>

***    Incorporated by reference to SciQuest.com's Quarterly Report on Form 10-Q
       for the quarter ended September 30, 2000.
****   Incorporated by reference to SciQuest.com's Annual Report on Form 10-K
       for the year ended December 31, 2000.

       (b) Reports on Form 8-K.

       None.

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<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                 SCIQUEST.COM, INC.



Date    August 10, 2001          /s/ Stephen J. Wiehe
        ---------------          --------------------
                                    Stephen J. Wiehe
                                    Chief Executive Officer
                                    (Principal Executive Officer)


Date    August 10, 2001          /s/ James J. Scheuer
        ---------------          --------------------
                                    James J. Scheuer
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

                                       44