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

                                  FORM 10-KSB/A
                                 AMENDMENT NO. 1

(Mark  One)
[X]     Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
        Act  of  1934  for  the  fiscal  year  ended  January  31,  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:  000-30326

                                  VSOURCE, INC.
        (Exact name of small business issuer as specified in its charter)

           DELAWARE                                            77-0557617
 (State or other jurisdiction                           (I.R.S. of incorporation
  Employer Identification No.)                               or organization)

         5740 RALSTON STREET, SUITE 110
             VENTURA, CALIFORNIA                         93003
 (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (805) 677-6720

SECURITIES  REGISTERED  PURSUANT  TO  SECTION  12(B)  OF  THE  ACT:
                                      NONE

SECURITIES  REGISTERED  PURSUANT  TO  SECTION  12(G)  OF  THE  ACT:
                    COMMON SHARES, PAR VALUE $0.01 PER SHARE

Indicate by check mark whether the Registrant (l) 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  [_]

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.  [X]

State  issuer's revenues for the fiscal year ended January 31, 2001. . . $35,000

Aggregate  market  value of the Registrant's Common Stock (based on the price at
which  such  equity  was  sold  on April 30, 2001) held by non-affiliates of the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$5,078,825

Number of shares of common stock outstanding
as of April 30, 2001 . . . . . . . . . . . . . . . . . . . . . . . . .18,685,814
Number of shares of Series 1-A Convertible
Preferred Stock outstanding as of April 30, 2001 . . . . . . . . . . . 1,804,105
Number of shares of Series 2-A Convertible
Preferred Stock outstanding as of April 30, 2001 . . . . . . . . . . . 1,350,176

                              PURPOSE OF AMENDMENT

The registrant has determined to furnish the information required in Part III of
its  Annual  Report  on  Form 10-KSB for the fiscal year ended January 31, 2001,
rather than to incorporate it by reference to information to be contained in the
registrant's  definitive  proxy statement. The registrant hereby amends Part III
of  the  Annual  Report  on  Form  10-KSB  as follows to include the information
required  by  Part  III.


<PAGE>
                                    PART III

ITEM  9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT

       Our directors and executive officers, as of May 11, 2001, are as follows:

     NAME                 AGE  PRINCIPAL POSITION WITH REGISTRANT
     ----                 ---  ----------------------------------

     I. Steven Edelson     39  Acting Chairman of the Board
     Scott T. Behan        39  Director
     Ramin Kamfar          37  Director
     Robert N. Schwartz    61  Director
     Nathaniel Kramer      39  Director
     Sandford T. Waddell   60  Chief Financial Officer, Treasurer and Secretary
     Michael Shirman       38  Chief Technology Officer
     Colin Kruger          39  Vice President, Business Development

I.  STEVEN  EDELSON. Mr. Edelson has served on the Company's board since January
2001  and  was  elected  Acting  Chairman  in  March  2001. Mr. Edelson has been
Managing  Director  of  Mercantile  Companies,  Inc.,  Northbrook,  Illinois,
since1986.  He  is  also a principal of Mercantile Capital Group, LLC, and he is
the  Managing  Partner  of  Mercantile  Capital  Partners  I,  LP.

SCOTT  T.  BEHAN. Mr. Behan has served on the Company's board since August 1998.
For  the  past  five  years,  Mr.  Behan has been employed as the Executive Vice
President of AML Communications, Inc., a manufacturer of wireless amplifiers. He
has  been  a  director  of  AML  since  February  1999.  Mr. Behan has a B.S. in
Electrical  Engineering  from  Worcester  Polytechnic  Institute.

RAMIN KAMFAR. Mr. Kamfar has served on the Company's board since April 2000. Mr.
Kamfar  is a Managing Partner at New World Venture Partners, Inc., an investment
banking  boutique  focusing on technology and new economy companies. Since 1993,
Mr.  Kamfar has also served in various capacities at New World Coffee- Manhattan
Bagel,  Inc.,  a company he founded. Most recently he has served as Chairman and
Chief  Executive  Officer. From 1988 to 1993 Mr. Kamfar worked in the investment
banking  department  of Lehman Brothers, Inc., most recently as a Vice President
in  private  placements. Mr. Kamfar has a B.S. in Finance from the University of
Maryland  and  an M.B.A. in Finance from The Wharton School at the University of
Pennsylvania.

ROBERT  N. SCHWARTZ. Dr. Schwartz has served on the Company's board since August
1998.  From  1979  to the present, Dr. Schwartz has been a visiting professor at
U.C.L.A.  From 1981 to 2000, Dr. Schwartz was a Senior Research Scientist at HRL
Laboratories,  LLC,  Malibu, California. He has a B.A. in Mathematics, Chemistry
and Physics, and an M.S. in Chemical Physics from the University of Connecticut,
and  a  PhD.  in  Chemical  Physics  from  the  University  of  Colorado.

NATHANIEL  C.  A.  KRAMER.  Mr.  Kramer  has served on the Company's Board since
January  2001. Mr. Kramer is a principal of Mercantile Capital Group, LLC and is
Managing  Director  of  its  New  York  office.  From 1999 to 2000 he was a vice
president  with  Allen & Company, Inc., a private equity firm. From 1994 to 1999
he  was  president  and  CEO  of  Greenhouse Film Group Limited and is currently
Chairman.  Mr.  Kramer produced the Emmy nominated documentary "Choices" and the
Tony  Award  winning  1998  revival of Arthur Miller's "A View From the Bridge.

SANDFORD  T.  WADDELL.  Mr.  Waddell has served as the Company's Chief Financial
Officer  and  Secretary  since  March 2000. From October 1999 to March 2000, Mr.
Waddell  served  as  the  Chief  Financial  Officer  for Snyder Diamond, Inc., a
privately  owned  retail  company.  From March 1998 to October 1999, Mr. Waddell
served as Chief Financial Officer for Rampage Clothing Company, a privately held
clothing  manufacturer  which  was  in  bankruptcy,  and  for which he helped to
restore  to profitability and effected a successful reorganization. From October
1966  to March 1988, Mr. Waddell served initially as Chief Financial Officer and
later also as Interim Chief Executive Officer at Reddi Brake Supply Corporation,
a  wholesale  auto  parts distributor, where he directed a reorganization of the


                                      -2-
<PAGE>
company's  operating subsidiary. From February 1992 to October 1996, Mr. Waddell
served  as  Interim  Chief  Financial  Officer  or  Financial  Consultant  for
approximately  twelve  privately  held  companies.  Mr.  Waddell holds a B.S. in
Engineering from Michigan Technological University and an M.B.A. from University
of  Minnesota.

MICHAEL  SHIRMAN.  Mr. Shirman joined the Company in January 2001 as a result of
the  merger  with Online Transaction Technologies, Inc. ("OTT"). As a co-founder
of  OTT,  he  has  over  15  years  of  experience in the Information Technology
industry.  Prior  to  the  formation  of  OTT  in  1999, Mr. Shirman was CEO and
co-founder  of  CODA Software, a developer of custom e-Commerce software, served
as  President  of InterSoft Consulting, a firm specializing in vertical business
applications,  and  held  senior  development  and  managerial  positions in the
banking,  manufacturing,  publishing,  finance,  distribution,  and
telecommunications  industries. Mr. Shirman holds a Masters Degree in Electrical
Engineering  (Telecommunications)  from  the  Institute  of  Telecommunication
Technology  in  Leningrad  (St.  Petersburg)  and  a  Masters Degree in Computer
Science  from  the  Leningrad  (St.  Petersburg)  Polytechnic  Institute.

COLIN  KRUGER.  Mr. Kruger joined the Company in January 2001 as a result of the
merger  with  Online  Transaction Technologies, Inc. ("OTT"). As a co-founder of
OTT,  he  was responsible for business development, strategic relationships, and
finance.  Prior  to  OTT, Mr. Kruger was President of ZAUCTION, America Online's
first  auction and a top 100 web site he founded in 1995. Previously, Mr. Kruger
was Vice President for the Glasser Group, Inc. and served as general manager for
Recycled Computer Outlets, Inc., a Glasser Group subsidiary he founded. Earlier,
Mr.  Kruger  held  management  roles  with  Equitable  Real  Estate  Investment
Management,  Inc.  Mr.  Kruger  holds  a  GSE in Economics from Christs College,
London,  and  a  BS in Business Administration from San Diego State University.

            SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section  16(a)  of the Securities Exchange Act of 1934 (the "Exchange Act")
requires  the Company's directors and officers, and persons who beneficially own
more  than  ten  percent  of  our  common stock, to file with the Securities and
Exchange  Commission  ("SEC")  reports  of  beneficial  ownership and changes in
beneficial ownership of common stock and other equity securities of the Company.
Officers,  directors  and  greater than ten-percent stockholders are required by
SEC  regulations  to  furnish the Company with copies of all Section 16(a) forms
they  file.

     Based  solely  on the review of the copies of such reports furnished to the
Company  or  written  representations  that  no other reports were required, the
Company  believes  that  all Section 16(a) filing requirements applicable to its
officers,  directors and ten-percent stockholders were complied with in a timely
fashion.


ITEM  10.  EXECUTIVE  COMPENSATION

     The  following  summary compensation table sets forth information regarding
the compensation for the last three completed fiscal years of (a) the person who
served  as Chief Executive Officer of the Company during the most recent fiscal,
(b)  the  mostly  highly  compensated  executive  officers  other than the Chief
Executive Officer who were serving as executive officers as of January 31, 2001,
and  (c)  another  executive  officer who would have been among the highest paid
executive  officers  if  he had been an executive officer as of January 31, 2001
(the  "Named  Executive  Officers").


<TABLE>
<CAPTION>
                                       SUMMARY COMPENSATION TABLE

                                              Annual Compensation  Long-Term Compensation
                                       Fiscal -------------------  ----------------------
                                        Year                      Restricted   Securities
Name and                               Ended                        Stock      Underlying      All Other
Principal Position                    Jan. 31,   Salary   Bonus     Awards    Options/SARs    Compensation
------------------------------------  --------  --------  ------  ----------  -------------  --------------
<S>                                   <C>       <C>       <C>     <C>         <C>            <C>

+Robert C. McShirley                      2001  $147,115  $    0           0             0   $   115,000(1)
   Former Chief Executive Officer         2000   114,000       0           0     200,000(2)              0
                                          1999    63,750       0           0      80,000(3)              0


                                      -3-
<PAGE>
+Richard McShirley                        2001  $147,115  $    0           0             0   $    48,000(4)
   Former Vice President                  2000   110,250       0           0      85,000(5)              0
                                          1999    90,000       0           0      35,000(6)              0

Sandford T. Waddell(7)                    2001  $105,629  $    0           0       125,000               0
   Chief Financial Officer                2000         0       0           0             0               0
                                          1999         0       0           0             0               0

+Ronald Sanderson(8)                      2001  $104,500  $    0           0             0               0
   Former Vice President of               2000    33,312       0           0       125,000               0
   Marketing                              1999         0       0           0             0               0

__________________
<FN>
+    No  longer  employed  by  the  Company
(1)  Represents  the  forgiveness  of  amounts  that had been advanced to Robert
     McShirley  by  the Company and related payments to compensate Mr. McShirley
     for  the  tax  consequences  of  such  advances.
(2)  Options  to  purchase  100,000  shares of common stock were granted May 15,
     1999,  with  an  exercise price of $0.75 per share. In addition, options to
     purchase  100,000  shares  of  common stock granted on August 4, 1998, were
     repriced  on  May  15,  1999.
(3)  Options granted August 4, 1998, and exercised May 25, 1999. The options had
     an  exercise price of $1.25 per share and were repriced to $0.625 per share
     on  May  15,  1999.
(4)  Represents  the  forgiveness  of  amounts that had been advanced to Richard
     McShirley  by  the Company and related payments to compensate Mr. McShirley
     for  the  tax  consequences  of  such  advances.
(5)  Options  to  purchase  50,000  shares  of common stock were granted May 15,
     1999,  with  an  exercise price of $0.75 per share. In addition, options to
     purchase  35,000  shares  of  common  stock granted on August 4, 1998, were
     repriced  on  May  15,  1999.
(6)  Options granted August 4, 1998, and exercised May 25, 1999. The options had
     an  exercise price of $1.25 per share and were repriced to $0.625 per share
     on  May  15,  1999.
(7)  Mr.  Waddell  joined  the  Company  in  March  2000.
(8)  Mr.  Sanderson  was employed by the Company from September 1999 to December
     2000.
</TABLE>

                                    OPTIONS

     The  following  table  sets  forth certain information with respect to each
Named  Executive  Officer  concerning  individual  grants of options to purchase
common  stock  made  during  the  year  ended  January  31,  2001:

<TABLE>
<CAPTION>
                        OPTION GRANTS IN LAST FISCAL YEAR
                              (INDIVIDUAL GRANTS)

                                                        % of Total
                                                          Options
                                     Number of Shares   Granted to    Exercise of
              Name and                  Underlying     Employees in    Base Price   Expiration
         Principal Position          Options Granted    Fiscal Year    Per Share       Date
-----------------------------------  ----------------  -------------  ------------  ----------
<S>                                  <C>               <C>            <C>           <C>

+Robert C. McShirley                                0             0              -           -
     Former Chief Executive Officer

+Richard McShirley                                  0             0              -           -
     Former Vice President

Sandford T. Waddell                           125,000            12%  $       2.50      3/1/10
     Chief Financial Officer

+Ronald Sanderson                                   0             0              -           -
     Former Vice President

_______________
<FN>
+    No  longer  employed  by  the  Company.
</TABLE>


                                      -4-
<PAGE>
     The  following  table  sets  forth certain information with respect to each
Named  Executive Officer concerning unexercised options to purchase common stock
held  as  of  end  of the fiscal year ended January 31, 2001.  None of the Named
Executive  Officers  exercised  any options to purchase common stock during such
fiscal  year.

<TABLE>
<CAPTION>
                          FISCAL YEAR-END OPTION/SAR VALUES

                                             Number of Securities
                                                  Underlying             Value of Unexercised
                                            Unexercised Options at       In-the-Money Options
Name                                          January  31,  2001         January  31,  2001(1)
----                                     --------------------------  ----------------------------
                                         Exercisable  Unexercisable  Exercisable   Unexercisable
                                         -----------  -------------  ------------  --------------
<S>                                      <C>          <C>            <C>           <C>

+Robert C. McShirley                          50,000         50,000  $     75,000  $       75,000
     Former Chief Executive Officer

+Richard McShirley                            25,000         25,000  $     37,500  $       37,500
     Former Vice President

Sandford T. Waddell                           46,875         78,125             -               -
     Chief Financial Officer

+Ronald Sanderson                             93,750         31,250  $     36,875  $      110,625
     Former Vice President of Marketing

________________
<FN>
+    No  longer  employed  by  the  Company.
(1)  Value  is calculated in accordance with the rules of the SEC by subtracting
     the  exercise price per share for each option from the fair market value of
     the  underlying  common  stock  as of January 31, 2001 and multiplying that
     difference  by  the number of shares of common stock subject to the option.
     The  fair  market value of one share of common stock as of January 31, 2001
     was  $2.25  per  share.
</TABLE>

                            DIRECTORS' COMPENSATION

     Upon  election  to  the  Board of Directors in April 2000, Ramin Kamfar was
granted  2,500  shares  of  the  Company's  common  stock.  The Company does not
currently  offer  any  other  compensation  to  the  directors.


ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT

                                  COMMON STOCK

     The  following  table  sets  forth certain information as of April 30, 2001
regarding  the  beneficial  ownership of the common stock by (i) all individuals
known  to beneficially own 5% or more of the outstanding common stock, (ii) each
of  the Named Executive Officers (as defined above under Executive Compensation)
and directors and (iii) all of the Company's executive officers and directors as
a  group,  in  each  case,  to  the  best of the Company's knowledge.  Except as
otherwise  indicated,  the  Company  believes  that the beneficial owners of the
securities  listed  below  have sole investment and voting power with respect to
such shares.  As of April 30, 2001, there were 18,685,814 shares of common stock
outstanding.

<TABLE>
<CAPTION>
                                                              Number of Shares
                                                                Beneficially     Percent of
Name of Beneficial Owner                                            Owned           Class
------------------------                                      -----------------  -----------
<S>                                                           <C>                <C>
Trusthouse 86 Ltd                                                  1,030,069(1)        5.50%
4660 La Jolla Village Drive
Suite 480
San Diego, CA 92122


                                      -5-
<PAGE>
I. Steven Edelson                                                    773,336(2)        3.97%
1372 Shermer Road
Northbrook, IL 60062

Nathaniel C. A. Kramer                                               678,337(3)        3.50%
641 Lexington Avenue
Suite 1450
New York, NY 10022

Ramin Kamfar                                                             2,500            *
666 Greenwich St., #710
New York, NY 10014

Scott Behan                                                             10,240            *
P.O. Box 1244
Somis, CA 91384

Robert  N. Schwartz                                                     19,647            *
4660 La Jolla Village Dr.
San Diego, CA 92122

+Robert C. McShirley                                                 867,442(4)        4.63%
4536 Falkirk Bay
Oxnard, CA 93035

+Richard S. McShirley                                                380,918(5)        2.04%
794 Hot Springs Road
Santa Barbara, CA 93108

Sandford T. Waddell                                                   88,906(6)           *
5740 Ralston St., Suite 110
Ventura, CA 93003

+Ronald J. Sanderson                                                  93,750(7)           *
1425 London Lane
Glenview, IL 60025

Executive Officers and Directors as a group (11 individuals)       2,751,505          13.80%

<FN>
_______________
*    Less  than  1%.
+    No  longer  employed  by  the  Company.
(1)  Includes  38,374  shares of common stock issuable upon conversion of 38,374
     shares  of  Series  1-A  Preferred  Stock.
(2)  Solely  in  his  capacity  as  (a)  a  managing member of Mercantile Equity
     Partners  III,  LLC ("MEP, LLC"), and a trustee of the Edelson Family Trust
     dated  September 17, 1997, which is also a managing member of MEP, LLC, (b)
     a  member of Mercantile Capital Group, LLC ("MCG"), and (c) a member of the
     Investment Committee of Mercantile Capital Management Corp. ("MCM"). MCG is
     the general partner of Mercantile Capital Partners I, L.P ("MCP"). MEP, LLC
     is the general partner of Mercantile Equity Partners III, L.P. ("MEP, LP").
     MEP,  LP  directly  holds 91,161 shares of Series 1-A Preferred Stock which
     are  convertible  into  91,161  shares  of common stock. MCP directly holds
     624,025  shares  of  Series  2-A Preferred Stock which are convertible into
     624,025  shares of common stock and has a Warrant to purchase 54,312 shares
     of  common stock. In addition, Mr. Edelson is the trustee of the Mercantile
     Companies  Inc.  Money Purchase Plan which holds 3,838 shares of Series 1-A
     Preferred  Stock  which  are convertible into 3,838 shares of common stock.
(3)  Solely  in  his  capacity  as  (a)  a member of MCG and (b) a member of the
     Investment  Committee  of  MCM.  MCG  is  the  general  partner of MCP. MCP
     directly  holds  624,025  shares  of  Series  2-A Preferred Stock which are
     convertible  into  624,025  shares  of  common  stock  and has a Warrant to
     purchase  54,312  shares  of  common  stock.
(4)  Includes  50,000  shares  of  common  stock  subject to options exercisable
     within  60  days  of  April  30,  2001.
(5)  Includes  25,000  shares  of  common  stock  subject to options exercisable
     within  60  days  of  April  30,  2001.


                                      -6-
<PAGE>
(6)  Includes  (i) 19,501 shares of common stock issuable upon the conversion of
     19,501  shares  of  Series 2-A Preferred Stock, (ii) 1,697 shares of common
     stock  issuable  upon  the exercise of Warrants, and (iii) 67,708 shares of
     common  stock  subject  to  options exercisable within 60 days of April 30,
     2001.
(7)  Includes  93,750  shares  of  common  stock  subject to options exercisable
     within  60  days  of  April  30,  2001.
(8)  Includes  a  total  of (i) 738,525 shares of common stock issuable upon the
     conversion  of  Series 1-A and Series 2-A Preferred Stock, and (ii) 292,467
     shares of common stock subject to options or warrants exercisable within 60
     days  of  April  30,  2001.
</TABLE>

                                 PREFERRED STOCK

Series  1-A  Convertible  Preferred  Stock

     The  Series  1-A  Preferred  Stock  votes as a single class with the common
stock,  with  each share entitled to the number of votes equal to that number of
shares  of  common  stock  into which it would then be converted. The Series 1-A
Preferred  Stock  is  currently  convertible  on  a 1:1 basis into common stock.

     The  following  table  sets  forth certain information as of April 30, 2001
regarding  the  beneficial  ownership  of  Series 1-A Preferred Stock by (i) all
individuals  known  to  beneficially own 5% or more of the outstanding shares of
such  class  of  security, (ii) each of the Named Executive Officers (as defined
above  under  Executive Compensation) and directors who own any shares of Series
1-A  Preferred  Stock  and  (iii)  all  of  the Company's executive officers and
directors as a group, in each case to the best of the Company's knowledge. As of
April  30,  2001,  there  were  1,804,105  shares  of Series 1-A Preferred Stock
outstanding.

<TABLE>
<CAPTION>
                                                              Number of Shares
                                                                Beneficially     Percent of
Name of Beneficial Owner                                            Owned           Class
------------------------                                      -----------------  -----------
<S>                                                           <C>                <C>
787, LLC                                                               191,918        10.64%
c/o James F. Voelker
9919 S.E. Fifth Street
Bellvue, WA 98004

Jefferies Employees Merchant                                           136,318         7.56%
Banking Fund LLD
11100 Santa Monica Blvd.
Los Angeles, CA 90025

Denmore Investments Ltd                                                115,151         6.38%
C/o Refco Securities
One World Financial Center
200 Liberty St., Tower A
New York, NY 10281

Qwest Investment Company                                               115,151         6.38%
1801 California St., Ste. 5100
Denver, CO 80202

Fidelity National Title Insurance                                       95,959         5.32%
Company of New York
3916 State Street, Suite 28
Santa Barbara, CA 93105

The R S Orphan Fund LP                                                  95,383         5.29%
C/o RS Investment Mgmt.
388 Market Street Nbr 200
San Francisco, CA 94111


                                      -7-
<PAGE>
Mercantile Equity Partners III LP                                     91,161(1)        5.05%
1372 Shermer Road
Northbrook, IL 60062

I. Steven Edelson                                                     94,999(2)        5.27%
1372 Shermer Road
Northbrook, IL 60062

Executive officers and directors as a group (11 individuals)            94,999         5.27%

<FN>
----------------------
(1)  These  shares are also beneficially owned by MEP, LLC, its general partner,
     and  Michael  A.  Reinsdorf,  as  a  managing  member  of  MEP,  LLC.
(2)  Solely  in  his capacity as (i) a managing member of MEP, LLC and a trustee
     of  the  Edelson  Family  Trust  dated  September 17, 1997, which is also a
     managing  member  of  MEP,  LLC,  and  (ii)  the  trustee of the Mercantile
     Companies  Inc.  Money Purchase Plan which holds 3,838 shares of Series 1-A
     Preferred  Stock.
</TABLE>

Series  2-A  Convertible  Preferred  Stock

     The  Series  2-A  Preferred  Stock  votes as a single class with the common
stock,  with  each share entitled to the number of votes equal to that number of
shares  of  common  stock  into which it would then be converted. The Series 2-A
Preferred  Stock  is  currently  convertible  on  a 1:1 basis into common stock.

     The  following  table  sets  forth certain information as of April 30, 2001
regarding  the  beneficial  ownership  of  Series 2-A Preferred Stock by (i) all
individuals  known  to  beneficially own 5% or more of the outstanding shares of
such  class  of  security, (ii) each of the Named Executive Officers (as defined
above  under  Executive Compensation) and directors who own any shares of Series
2-A  Preferred  Stock  and  (iii)  all  of  the Company's executive officers and
directors as a group, in each case to the best of the Company's knowledge. As of
April  30,  2001,  there  were  1,350,176  shares  of Series 2-A Preferred Stock
outstanding.

<TABLE>
<CAPTION>
                                                              Number of Shares
                                                                Beneficially     Percent of
Name of Beneficial Owner                                            Owned           Class
------------------------                                      -----------------  -----------
<S>                                                           <C>                <C>
Mercantile Capital Partners I LP                                     624,025(1)       46.21%
1372 Shermer Road
Northbrook, IL 60062

Stonehill Partners LP                                                  156,006        11.55%
C/o WHX Corporation
110 East 59th Street
New York, NY 10022

Crestview Capital Fund LP                                              132,605         9.82%
C/o Dillion Capital
3000 Dundee Road, Suite 105
Northbrook, IL 60062

I. Steven Edelson                                                    624,025(2)       46.21%
1372 Shermer Road
Northbrook, IL 60062

Nathaniel C. A. Kramer                                               624,025(3)       46.21%
641 Lexington Avenue
Suite 1450
New York, NY 10022

Sandford T. Waddell                                                     19,501         1.44%
5740 Ralston St., Suite 110
Ventura, CA 93003


                                      -8-
<PAGE>
Executive officers and directors as a group (11 individuals)           643,526        47.66%

<FN>
_____________________
(1)  These shares are also beneficially owned by (i) MCG, the general partner of
     MCP,  (ii)  MCM, a manager of MCG, and (iii) Michael A. Reinsdorf, a member
     of  MCP  and  a  member  of  the  Investment  Committee  of  MCM.
(2)  Solely  in  his  capacity  as  a  member MCG and a member of the Investment
     Committee  of  MCM.
(3)  Solely  in  his  capacity as a member of MCG and a member of the Investment
     Committee  of  MCM.
</TABLE>

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

NETCEL360  ACQUISITION

     On  May  24,  2001,  the Company entered into an Acquisition Agreement with
NetCel360  Holdings  Limited,  a Cayman Islands company ("NetCel360"), providing
for  the  acquisition by the Company of substantially all assets of NetCel360 in
exchange  for  approximately  19.9%  of  the  Company's  common  shares  and the
assumption  by  the  Company of approximately $3.45 million of bridge financing.
The  acquisition  is  expected  to  close in June 2001. Asia Internet Investment
Group  I,  L.P.  owns  approximately  2.8%  of  NetCel360  and  has  provided
approximately  8.5%  of the bridge financing that the Company will assume in the
proposed  transaction.  I.  Stephen Edelson, the Acting Chairman of the Board of
the  Company,  and  Nathaniel  Kramer, a director of the Company, are two of the
managers  of  the  general  partner  of  AIIG.

NOTES  RECEIVABLE

     The Company has unsecured notes receivables from several former and current
officers and directors which totaled $426,798 as of January 31, 2001. Certain of
these  notes, totaling $178,798, were granted in connection with the exercise of
636,100  stock  options  in  May  1999  by  the following executive officers and
directors  of the Company, each of whom resigned from the Company in March 2001:
Robert  McShirley,  the  Company's  former  Chief  Executive  Officer,  Richard
McShirley,  the  Company's  former  Vice  President,  and Samuel Bradt, a former
director  of the Company.  The aggregate outstanding principal balance of Robert
McShirley's  notes  at January 31, 2001, was $68,164;  the aggregate outstanding
principal  balance  of  Richard  McShirley's  notes  at  January  31,  2001, was
$101,259;  and  the aggregate outstanding principal balance of Mr. Bradt's notes
at  January  31,  2001,  was  $9,375.  These notes, as of January 31, 2000, were
unsecured,  due  on  demand  and  bear  interest  at  an  annual  rate  of  6%.

     The  remainder  of  the  notes, in aggregate principal amount of  $248,000,
were  granted in September 2000 in connection with the issuance of 19,501 shares
of  Series  2-A Preferred Stock to each of Sandford Waddell, the Company's Chief
Financial Officer, and Mr. Turner, the Company's former Chief Operating Officer.
The notes are secured by the shares of related stock, bear interest at an annual
rate  of  8% and are due on September 15, 2003.  The total outstanding principal
balance  of  Mr. Waddell's note at January 31, 2001, was $124,000, and the total
outstanding  principal  balance  of  Mr.  Turner's note at January 31, 2001, was
$124,000.  On  March  8,  2001, in connection with Mr. Turner's resignation, the
terms  of  Mr.  Turner's  note  were  revised to provide that (a) the note shall
become  payable  on  demand  90 days from the last day of employment and (b) all
notes  would  be  collateralized  by 19,501 shares of Series 2-A Preferred Stock
held  by  Mr.  Turner  as  the  Company's  sole  recourse.

     In  October  2000,  Robert  McShirley borrowed $400,000 from the Company in
exchange for a secured ninety-day promissory note which bears interest at a rate
of  8% per annum and was due on January 9, 2001. The note receivable from Robert
C.  McShirley  is  collateralized by 300,000 shares of the Company stock as sole
recourse.  In  late  October  2000, Mr. McShirley repaid the Company $250,000 of
the  original  balance,  leaving a balance of $150,000. On January 30, 2001, the
Company's board of directors approved an extension of this note for 90 days.  On
March  8, 2001, in connection with Mr. McShirley's resignation, the terms of the
notes  were extended to August 27, 2001, and were collectively collateralized by
300,000  shares  of  common  stock  held  by Mr. McShirley as the Company's sole
recourse.

     Also  in  October  2000,  Mr.  Turner  borrowed $50,000 from the Company in
exchange  for a two-year promissory note which bears interest at a rate of 8%per
annum  and is due on October 12, 2002.  On March 8, 2001, in connection with Mr.
Turner's resignation, the terms of the note were revised to provide that (a) the
note shall become payable on demand 60 days from the last day of employment, and
(b)  all  notes would be collateralized by 19,501 shares of Series 2-A Preferred
Stock  held  by  Mr.  Turner  as  the  Company's  sole  recourse.


                                      -9-
<PAGE>
CONVERTIBLE  NOTES

     The Company has issued convertible demand notes, from time to time, each in
a  private  transaction. In July 1999, Robert McShirley received an aggregate of
245,317  shares  of common stock upon the conversion of notes held by him in the
principal  amount  of $95,600.  Also in July 1999, Richard McShirley received an
aggregate of 188,116 shares of Common Stock upon the conversion of notes held by
him  in  the  principal  amount  of  $33,100.

OTHER  TRANSACTIONS

     In  connection with the issuance of Series 1-A Preferred Stock, the Company
issued  to  New World Investment Partners a warrant to purchase 60,000 shares of
the  Company's common stock.  Subsequently to the issuance of the warrant, Ramin
Kamfar,  a  principal  of  New  World  Investment  Partners,  was elected to the
Company's  Board  of Directors.  In December 2000, New World Investment Partners
received  43,957  shares of common stock, pursuant to a cashless exercise of the
warrant.  These  shares  were  subsequently  transferred by New World Investment
Partners  to  a  third  party.


                                      -10-
<PAGE>
                                   SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to its
Annual  Report  on  Form  10-KSB  to be signed on its behalf by the undersigned,
thereunto  duly  authorized.

                              Vsource,  Inc.



Date:  May  31,  2001         /s/  Sandford  T.  Waddell
            --                --------------------------
                              Sandford  T.  Waddell
                              Chief  Financial  Officer  and  Secretary
                              (Principal  Executive  Officer)
                              (Principal  Accounting  Officer)

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  dates  indicated.

SIGNATURE                           TITLE                              DATE
---------                           -----                              ----

/s/ Sandford T. Waddell             Chief Financial Officer
----------------------------------  Secretary                      May 31, 2001
Sandford T. Waddell                 (Principal Executive Officer)
                                    (Principal Accounting Officer)

/s/ Scott T. Behan                  Director                       May 31, 2001
----------------------------------
Scott T. Behan


/s/ I. Steven Edelson               Director                       May 31, 2001
----------------------------------
I. Steven Edelson


__________________________________  Director                       May 31, 2001
Ramin Kamfar


/s/ Nathaniel C. A. Kramer          Director                       May 31, 2001
----------------------------------
Nathaniel C. A. Kramer


__________________________________  Director                       May 31, 2001
Robert N. Schwartz



<PAGE>