<PAGE>

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                      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 March 31, 2000

                                      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 No. 000-27803

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

                              SCIQUEST.COM, INC.
            (Exact Name of Registrant as Specified in Its Charter)

               Delaware                              56-2127592
     (State or Other Jurisdiction                 (I.R.S. Employer
   of Incorporation or Organization)             Identification No.)

   5151 McCrimmon Parkway, Suite 208                    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 May 11, 2000, 28,378,600 shares of Common Stock, $.001 par value, were
outstanding.

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<PAGE>

                               SCIQUEST.COM, INC.

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                         <C>
PART I -- FINANCIAL INFORMATION:

ITEM 1: FINANCIAL STATEMENTS

  Consolidated Balance Sheets at March 31, 2000 (unaudited) and December
   31, 1999................................................................   1

  Consolidated Statements of Operations for the Three Months Ended March
   31, 2000 (unaudited) and March 31, 1999 (unaudited).....................   2

  Consolidated Statements of Stockholders' Equity for the Year Ended
   December 31, 1999 and for the Three Months Ended March 31, 2000
   (unaudited).............................................................   3

  Consolidated Statements of Cash Flows for the Three Months Ended March
   31, 2000 and March 31, 1999 (unaudited).................................   4

  Notes to Consolidated Financial Statements...............................   5

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

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........  35

PART II -- OTHER INFORMATION:

ITEM 1: LEGAL PROCEEDINGS..................................................  36

ITEM 2: CHANGES IN SECURITIES..............................................  36

ITEM 3: DEFAULTS IN SECURITIES.............................................  36

ITEM 4: SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS..................  36

ITEM 5: OTHER INFORMATION..................................................  36

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K...................................  36
</TABLE>
<PAGE>

                                     PART I

Item 1. Financial Statements

                               SciQuest.com, Inc.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                    March 31,    December 31,
                                                      2000           1999
                                                  -------------  -------------
                                                   (unaudited)
<S>                                               <C>            <C>
                     Assets
Current assets:
 Cash and cash equivalents....................... $  69,023,653  $  98,126,414
 Short-term investments..........................    39,858,651     24,285,293
 Accounts receivable.............................     4,729,667      1,771,634
 Interest receivable.............................     1,446,471        925,329
 Prepaid expenses and other current assets.......     2,064,903        700,026
                                                  -------------  -------------
  Total current assets...........................   117,123,345    125,808,696
                                                  -------------  -------------
Long-term investments............................    24,852,113     23,592,483
Property and equipment, net......................     5,763,384      2,869,423
Capitalized development costs, net...............     2,051,950      1,392,085
Goodwill, net....................................    99,172,519      1,386,169
Other assets, net................................    30,176,578      1,852,828
                                                  -------------  -------------
  Total assets................................... $ 279,139,889  $ 156,901,684
                                                  -------------  -------------
      Liabilities and Stockholders' Equity
Current liabilities:
 Accounts payable................................ $   4,527,713  $   4,250,978
 Accrued liabilities.............................     6,453,063      1,066,120
 Deferred revenues...............................     1,640,192         45,275
 Current maturities of capital lease
  obligations....................................       820,962        463,141
 Other short-term liabilities....................       340,452            --
                                                  -------------  -------------
  Total current liabilities......................    13,782,382      5,825,514
                                                  -------------  -------------
Deferred income taxes............................        11,530         66,225
Capital lease obligations, less current maturi-
 ties............................................     2,016,294      1,190,786
Commitments and contingencies (Note 13)..........           --             --
Stockholders' Equity:
 Common stock, $0.001 par value; 90,000,000
  shares authorized; 28,338,922 and 26,353,652
  shares issued and outstanding as of March 31,
  2000 and December 31, 1999, respectively.......        28,339         26,354
 Additional paid-in capital......................   434,088,336    591,841,571
 Deferred employee compensation..................   (15,960,601)   (12,276,151)
 Deferred customer acquisition costs, net........  (101,986,812)  (391,138,705)
 Accumulated deficit.............................   (52,839,579)   (38,633,910)
                                                  -------------  -------------
 Total stockholders' equity......................   263,329,683    149,819,159
                                                  -------------  -------------
  Total liabilities and stockholders' equity..... $ 279,139,889  $ 156,901,684
                                                  =============  =============
</TABLE>


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

                                       1
<PAGE>

                               SciQuest.com, Inc.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended March
                                                               31,
                                                     -------------------------
                                                         2000         1999
                                                     ------------  -----------
<S>                                                  <C>           <C>
Revenues............................................ $  5,103,794  $    63,425
Cost of revenues....................................    4,801,932          --
                                                     ------------  -----------
  Gross profit......................................      301,862       63,425
                                                     ------------  -----------
Operating expenses:
 Development (excludes $535,467 and $0,
  respectively, of stock-based employee
  compensation).....................................    3,045,218    1,234,822
 Sales and marketing (excludes $404,371 and $0,
  respectively, of stock-based employee
  compensation).....................................    5,366,508    1,231,751
 General and administrative (excludes $1,181,625 and
  $3,065, respectively, of stock-based employee
  compensation).....................................    3,449,343      616,961
 Stock-based employee compensation..................    2,121,463        3,065
 Stock-based customer acquisition costs.............      696,028          --
 Purchased in-process research and development......      700,000          --
 Amortization of goodwill...........................    1,292,591       31,690
                                                     ------------  -----------
  Total operating expenses..........................   16,671,151    3,118,289
                                                     ------------  -----------
Operating loss......................................  (16,369,289)  (3,054,864)
Net interest income.................................    2,108,925       37,303
                                                     ------------  -----------
Loss before income taxes............................  (14,260,364)  (3,017,561)
Income tax benefit..................................       54,695       54,695
                                                     ------------  -----------
Net loss............................................ $(14,205,669) $(2,962,866)
                                                     ============  ===========
Net loss per common share--basic and diluted........ $       (.53) $      (.87)
                                                     ============  ===========
Weighted average common shares outstanding--basic
 and diluted........................................   26,645,896    3,413,102
                                                     ============  ===========
</TABLE>



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

                                       2
<PAGE>

                               SciQuest.com, Inc.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                      Series A             Series C              Series E                                 Class B
                   Preferred Stock      Preferred Stock       Preferred Stock        Common Stock      Common Stock
                  ------------------  --------------------  --------------------  ------------------ ------------------
                   Shares    Amount    Shares     Amount     Shares     Amount      Shares   Amount   Shares    Amount
                  --------  --------  --------  ----------  --------  ----------  ---------- ------- --------  --------
<S>               <C>       <C>       <C>       <C>         <C>       <C>         <C>        <C>     <C>       <C>
Balance at
December 31,
1998.............  769,221   683,135   546,405   1,524,470       --          --    3,412,447   3,412  250,020   100,000
 Issuance of
 Series C
 convertible
 preferred stock
 at $2.80 per
 share in
 exchange for
 cash............      --        --     89,408     250,000       --          --          --      --       --        --
 Issuance of
 Series E
 convertible
 preferred stock
 at $11.32 per
 share in
 exchange for
 shares of IAI,
 Inc.............      --        --        --          --    114,995   1,255,616         --      --       --        --
 Issuance of
 Common Stock
 warrants in
 connection with
 Series D
 preferred
 stock...........      --        --        --          --        --          --          --      --       --        --
 Realized loss on
 sale of
 investments.....      --        --        --          --        --          --          --      --       --        --
 Accretion of
 mandatorily
 redeemable
 preferred
 stock...........      --        --        --          --        --          --          --      --       --        --
 Deferred
 compensation
 related to
 acquisition of
 IAI, Inc........      --        --        --          --        --          --          --      --       --        --
 Deferred
 compensation
 related to
 issuance of
 stock options...      --        --        --          --        --          --          --      --       --        --
 Deferred partner
 acquisition
 costs related to
 issuance stock
 warrants........      --        --        --          --        --          --          --      --       --        --
 Conversion of
 preferred stock
 into common
 stock........... (769,221) (683,135) (635,813) (1,774,470) (114,995) (1,255,616) 13,438,185  13,438 (250,020) (100,000)
 Proceeds from
 sale of common
 stock in initial
 public
 offering........      --        --        --          --        --          --    8,625,000   8,625      --        --
 Exercise of
 common stock
 options.........      --        --        --          --        --          --      436,874     437      --        --
 Exercise of
 common stock
 warrants........      --        --        --          --        --          --      441,146     442      --        --
 Amortization of
 deferred
 compensation
 related to stock
 options.........      --        --        --          --        --          --          --      --       --        --
 Amortization of
 deferred
 compensation
 related to
 acquisition of
 IAI, Inc........      --        --        --          --        --          --          --      --       --        --
 Amortization of
 deferred partner
 acquisition
 costs...........      --        --        --          --        --          --          --      --       --        --
 Net loss........      --        --        --          --        --          --          --      --       --        --
                  --------  --------  --------  ----------  --------  ----------  ---------- ------- --------  --------
Balance at
December 31,
1999.............      --        --        --          --        --          --   26,353,652  26,354      --        --
 Issuance of
 common stock in
 exchange for all
 outstanding
 shares of
 Intralogix,
 Inc.............      --        --        --          --        --          --       26,930      27      --        --
 Issuance of
 common stock in
 exchange for all
 outstanding
 shares of
 SciCentral Inc.
 ................      --        --        --          --        --          --       40,000      40      --        --
 Issuance of
 common stock in
 exchange for all
 outstanding
 capital stock of
 EMAX Solutions
 Partners, Inc...      --        --        --          --        --          --    1,625,680   1,626
 Sale of
 restricted stock
 to Company
 officer.........      --        --        --          --        --          --       12,000      12      --        --
 Deferred
 compensation
 related to
 acquisition of
 SciCentral
 Inc.............      --        --        --          --        --          --          --      --       --        --
 Deferred
 compensation
 related to
 acquisition of
 EMAX Solutions
 Partners, Inc...      --        --        --          --        --          --          --      --       --        --
 Assumption of
 outstanding
 stock options
 related to
 acquisition of
 EMAX Solutions
 Partners, Inc...      --        --        --          --        --          --          --      --       --        --
 Adjust deferred
 partner
 acquisition
 costs to fair
 value...........      --        --        --          --        --          --          --      --       --        --
 Amortization of
 deferred partner
 acquisition
 costs...........      --        --        --          --        --          --          --      --       --        --
 Amortization of
 deferred
 compensation....      --        --        --          --        --          --          --      --       --        --
 Exercise of
 stock options...      --        --        --          --        --          --      140,922     141      --        --
 Exercise of
 common stock
 warrants........      --        --        --          --        --          --      139,738     139      --        --
 Net loss........      --        --        --          --        --          --          --      --       --        --
                  --------  --------  --------  ----------  --------  ----------  ---------- ------- --------  --------
Balance at March
31, 2000.........      --        --        --          --        --          --   28,338,922 $28,339      --        --
                  ========  ========  ========  ==========  ========  ==========  ========== ======= ========  ========
<CAPTION>
                                                              Accumulated
                                                Deferred         Other                       Total
                   Additional                   Customer     Comprehensive               Stockholders'
                      Paid        Deferred     Acquisition      Income     Accumulated      Equity
                   in Capital   Compensation      Costs         (Loss)         Loss        (Deficit)
                  ------------- ------------- -------------- ------------- ------------- --------------
<S>               <C>           <C>           <C>            <C>           <C>           <C>
Balance at
December 31,
1998.............       49,949           --             --      (6,673)      (5,455,833)   (3,101,540)
 Issuance of
 Series C
 convertible
 preferred stock
 at $2.80 per
 share in
 exchange for
 cash............          --            --             --         --               --        250,000
 Issuance of
 Series E
 convertible
 preferred stock
 at $11.32 per
 share in
 exchange for
 shares of IAI,
 Inc.............          --            --             --         --               --      1,255,616
 Issuance of
 Common Stock
 warrants in
 connection with
 Series D
 preferred
 stock...........      726,137           --             --         --               --        726,137
 Realized loss on
 sale of
 investments.....          --            --             --       6,673              --          6,673
 Accretion of
 mandatorily
 redeemable
 preferred
 stock...........  (79,289,022)          --             --         --               --    (79,289,022)
 Deferred
 compensation
 related to
 acquisition of
 IAI, Inc........          --       (400,000)           --         --               --       (400,000)
 Deferred
 compensation
 related to
 issuance of
 stock options...   12,199,827   (12,199,827)           --         --               --            --
 Deferred partner
 acquisition
 costs related to
 issuance stock
 warrants........  400,246,458           --    (400,246,458)       --               --            --
 Conversion of
 preferred stock
 into common
 stock...........  129,106,344                          --         --               --    125,306,561
 Proceeds from
 sale of common
 stock in initial
 public
 offering........  126,916,635           --             --         --               --    126,925,260
 Exercise of
 common stock
 options.........       60,351           --             --         --               --         60,788
 Exercise of
 common stock
 warrants........    1,824,892           --             --         --               --      1,825,334
 Amortization of
 deferred
 compensation
 related to stock
 options.........          --        240,341            --         --               --        240,341
 Amortization of
 deferred
 compensation
 related to
 acquisition of
 IAI, Inc........          --         83,335            --         --               --         83,335
 Amortization of
 deferred partner
 acquisition
 costs...........          --            --       9,107,753        --               --      9,107,753
 Net loss........          --            --             --         --       (33,178,077)  (33,178,077)
                  ------------- ------------- -------------- ------------- ------------- --------------
Balance at
December 31,
1999.............  591,841,571   (12,276,151)  (391,138,705)       --       (38,633,910)  149,819,159
 Issuance of
 common stock in
 exchange for all
 outstanding
 shares of
 Intralogix,
 Inc.............    1,827,847           --             --         --               --      1,827,874
 Issuance of
 common stock in
 exchange for all
 outstanding
 shares of
 SciCentral Inc.
 ................    2,533,960           --             --         --               --      2,534,000
 Issuance of
 common stock in
 exchange for all
 outstanding
 capital stock of
 EMAX Solutions
 Partners, Inc...   99,449,348           --                                                99,450,974
 Sale of
 restricted stock
 to Company
 officer.........      679,488      (339,750)           --         --               --        339,750
 Deferred
 compensation
 related to
 acquisition of
 SciCentral
 Inc.............          --       (286,000)           --         --               --       (286,000)
 Deferred
 compensation
 related to
 acquisition of
 EMAX Solutions
 Partners, Inc...    5,180,163    (5,180,163)           --         --               --            --
 Assumption of
 outstanding
 stock options
 related to
 acquisition of
 EMAX Solutions
 Partners, Inc...   20,391,829           --             --         --               --     20,391,829
 Adjust deferred
 partner
 acquisition
 costs to fair
 value........... (288,555,775)          --     288,555,775        --               --            --
 Amortization of
 deferred partner
 acquisition
 costs...........          --            --         596,118        --               --        596,118
 Amortization of
 deferred
 compensation....          --      2,121,463            --         --               --      2,121,463
 Exercise of
 stock options...       30,221           --             --         --               --         30,362
 Exercise of
 common stock
 warrants........      709,684           --             --         --               --        709,823
 Net loss........          --            --             --         --       (14,205,669)  (14,205,669)
                  ------------- ------------- -------------- ------------- ------------- --------------
Balance at March
31, 2000......... $434,088,336  $(15,960,601) $(101,986,812)       --      $(52,839,579) $263,329,683
                  ============= ============= ============== ============= ============= ==============
</TABLE>

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

                                       3
<PAGE>

                               SciQuest.com, Inc.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended March
                                                               31,
                                                     -------------------------
                                                         2000         1999
                                                     ------------  -----------
<S>                                                  <C>           <C>
Cash flows from operating activities
 Net loss........................................... $(14,205,669) $(2,962,866)
 Adjustments to reconcile net loss to net cash used
  in operating activities:
  Depreciation and amortization.....................    1,856,527      216,561
  Bad debt expense..................................       41,413          --
  Purchased in-process research and development.....      700,000          --
  Deferred tax benefit..............................      (54,695)     (54,695)
  Amortization of deferred compensation.............    2,121,463        3,065
  Amortization of deferred customer acquisition
   costs............................................      696,028          --
  Amortization of discount on investments...........     (179,690)         --
  Changes in operating assets and liabilities
   Accounts receivable..............................   (3,943,816)      59,521
   Prepaid expenses and other assets................       68,125     (125,790)
   Accounts payable.................................      276,735      (13,407)
   Accrued liabilities..............................    3,186,907      123,802
                                                     ------------  -----------
    Net cash used in operating activities...........   (9,436,672)  (2,753,809)
                                                     ------------  -----------
Cash flows from investing activities
 Purchase of property and equipment.................   (2,551,121)    (414,728)
 Proceeds from sale of equipment....................          --       385,000
 Cash received from acquisitions....................      529,865          --
 Cash paid for acquisitions.........................   (1,955,787)         --
 Maturity of investments............................    4,500,000          --
 Purchase of investments, including restricted
  cash..............................................  (21,153,298)    (134,048)
                                                     ------------  -----------
    Net cash used in investing activities...........  (20,630,341)    (163,776)
                                                     ------------  -----------
Cash flows from financing activities
 Repayment of notes payable.........................          --        (3,408)
 Repayment of capital lease obligations.............     (115,683)      (3,591)
 Proceeds from exercise of common stock warrants....      709,823          --
 Proceeds from sale of restricted common stock......      339,750          --
 Proceeds from exercise of common stock options.....       30,362          --
 Proceeds from issuance of Series C convertible
  preferred stock, net..............................          --       250,000
                                                     ------------  -----------
    Net cash provided by financing activities.......      964,252      243,001
                                                     ------------  -----------
Net decrease in cash and cash equivalents...........  (29,102,761)  (2,674,584)
Cash and cash equivalents at beginning of period....   98,126,414    5,391,462
                                                     ------------  -----------
Cash and cash equivalents at end of period.......... $ 69,023,653  $ 2,716,878
                                                     ============  ===========
</TABLE>

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

                                       4
<PAGE>

                              SciQuest.com, Inc.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company

  SciQuest.com, Inc. ("SciQuest.com" or the "Company"), which began operations
in 1995, is a web-based, interactive marketplace for scientific and laboratory
products used by pharmaceutical, clinical, biotechnology, chemical, industrial
and educational organizations worldwide. The Company earns revenues from e-
commerce transactions generated by purchases made through the SciQuest.com Web
sites. In addition, SciQuest.com earns revenue for banner 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. The Company's recently acquired subsidiary,
EMAX Solutions Partners, Inc., 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 months ended March 31, 2000 and March 31, 1999 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, statements of stockholders' equity and cash flows
for the periods presented in accordance with generally accepted accounting
principles. The consolidated balance sheet at December 31, 1999 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, 1999
included in the Company's Form 10-K, filed with the SEC on March 30, 2000. The
results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000.

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.com,
Inc. and its wholly-owned subsidiaries, BioSupplyNet, Inc., Internal
Auctioneers International, Inc., Intralogix, Inc., SciCentral Inc. and EMAX
Solutions Partners, Inc. 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.

                                       5
<PAGE>

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.

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 uncollectable accounts of $89,000 and $39,000 at March 31, 2000 and
December 31, 1999, respectively.

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 range from three to five years.
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 this Company's web sites. In March 1998, the
Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants ("AICPA") issued Statements of Position No. 98-1
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use," ("SOP No. 98-1") which provides guidance regarding when
software developed or obtained for internal use should be capitalized. SOP No.
98-1 is effective for financial standards for fiscal years beginning after
December 15, 1998. The Company adopted SOP No. 98-1 effective January 1, 1999.
With the adoption of SOP No. 98-1, the Company began accounting for the
software development component of web site development costs in accordance
with SOP No. 98-1 which requires certain costs associated with the development
of the Company's web sites to be capitalized and amortized to development
expense over the useful life of the related applications, which generally
range from three months to one year. The Company capitalized $922,400 in web
site development costs during the three months ended March 31, 2000.
Capitalized development costs are amortized over the estimated life of the
related application.

Capitalized Software Costs

  Software development costs 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, which are included in other assets, result from the acquisitions of
EMAX and BioSupplyNet (see Note 3) and were determined by valuations prepared
by management.

  The capitalized software costs resulting from the acquisition of
BioSupplyNet are primarily associated with a search engine with e-commerce
capabilities and high level electronic taxonomy and ontological conventions
under development by BioSupplyNet at the date of acquisition. These costs are
being amortized over a period of 27 months. Capitalized software costs
resulting from the acquisition of EMAX are primarily associated with
customized electronic research systems being sold by EMAX at the date of the
acquisition. These costs are being amortized to cost of sales over a period of
36 months.

                                       6
<PAGE>

Intangible Assets

  Intangible assets, which resulted primarily from the acquisitions of
BioSupplyNet and EMAX, were determined by valuations prepared by management.

  Intangible assets recognized from the acquisition of BioSupplyNet are
primarily associated with the Source Book and contracts with certain web sites
(the "Web Site Agreements") to provide a link to the SciQuest.com Web site.
Because the Source Book is a printed publication, which must be updated on an
annual basis, capitalized costs related to the Source Book were amortized over
a period of 15 months which began in September 1998 and ended in December
1999. Capitalized costs related to the Web Site Agreements were amortized over
a 12 month period which began in October 1998 and ended in September 1999.

  Intangible assets recognized from the acquisition of EMAX are primarily
associated with a registered trademark that is being amortized over a period
of three years.

  Goodwill represents the excess of the purchase price of BioSupplyNet, IAI,
SciCentral, Intralogix and EMAX over the fair value of the assets acquired.
Goodwill is being amortized over a period of three to five years.

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 for the three months ended March 31,
2000 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 March 31, 2000 and at December 31, 1999 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. The fair value of
the Company's short-term and long-term investments at March 31, 2000 and
December 31, 1999, based on market quotes, is presented in Note 4.

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
recognition of impairment of long-lived assets in the event the net book value
of such assets exceeds the future undiscounted cash flows attributable to such
assets or the business to which such assets relate. No impairments were
required to be recognized during the three months ended March 31, 2000 or
during the three months ended March 31, 1999.

Revenue Recognition

  Beginning in April 1999, the Company began earning almost all of its
revenues from the buying and selling of scientific products through its e-
commerce web sites. Prior to April 1999, the Company's revenues have primarily
been derived from banner 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.

  Revenues received from the sale of scientific products in e-commerce
transactions are recorded as product revenues and are recognized by the
Company upon delivery to the customer. A reserve for returns is recognized for
estimated product returns.

                                       7
<PAGE>

  Banner 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, represents 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
time and materials contracts are recognized concurrently with the effort and
material costs incurred by the Company, at billable rates specified in the
terms of the contract. Hardware sales revenue is recognized upon delivery to
the customer. 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 it is estimated that such losses will occur.
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

  Cost of product revenues represents the purchase price to the Company of the
scientific products sold through its e-commerce web sites, shipping and
handling fees and the cost of maintaining such web sites. The Company
generally takes legal title to the scientific products purchased at the date
of shipment and relinquishes title to its customers upon delivery.

  In addition, the Company bears all credit risk for its sales of scientific
products in e-commerce transactions.

  Cost of advertising and subscription revenue includes the cost of preparing
the banner ads 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.

Sales and Marketing Expenses

  Sales and marketing expenses consist primarily of costs, including salaries
and sales commissions, of all personnel involved in the sales and marketing
process. Sales and marketing expenses also include costs of advertising, trade
shows and certain indirect costs. All costs of advertising the services and
products offered by the Company are expensed as incurred. Advertising expense
totaled approximately $850,000 and $261,000 for the three months ended March
31, 2000 and 1999, respectively.

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 and will be adjusted in each reporting
period based on changes in the fair value of the warrants until such date as
the warrants are fully vested. Deferred customer acquisition costs will be
amortized to operating 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 (see Note 11).

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

                                       8
<PAGE>

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" ("APB No. 25") 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" ("SFAS No. 123"), which requires compensation expense to be
disclosed based on the fair value of the options granted at the date of the
grant.

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 Federal Depository
Insurance Company. 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.

  During the three months ended March 31, 2000, three customers comprised 25%,
20% and 16%, respectively, of the Company's revenue. During the three months
ended March 31, 1999, no single customer comprised more than 10% of the
Company's revenue. Concentrations of credit risk with respect to accounts
receivable are limited due to the large number of customers comprising the
Company's customer base and because all customers are located in the United
States. At March 31, 2000, two customers comprised 34% and 22% of the accounts
receivable balance. At December 31, 1999, two customers comprised 21% and 27%,
respectively, of the accounts receivable balance. 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.

Cash Flows

  The Company made cash payments for interest of approximately $37,000 and
$2,000 during the three-month periods ended March 31, 2000 and March 31, 1999,
respectively.

  The Company acquired property and equipment through the assumption of
capital lease obligations amounting to $811,000 and zero during the three-
month periods ended March 31, 2000 and March 31, 1999, respectively.

Comprehensive Income (Loss)

  Comprehensive income, as defined, includes all changes in equity during a
period from non-owner sources. The Company had no items of other comprehensive
income during the three-month periods ended March 31, 2000 and March 31, 1999,
respectively.

                                       9
<PAGE>

Segment Reporting

  The Company has determined that it does not have any separately reportable
operating segments as of March 31, 2000 and December, 31, 1999.

Net Income (Loss) Per Common Share

  Basic net income (loss) per common share ("Basic EPS") 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 ("Diluted EPS") 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-month periods ended March
31, 2000 and March 31, 1999 does not include 6,829,374 and 3,083,638,
respectively, potential shares of common stock equivalents, as their impact
would be anti-dilutive.

Reclassifications

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

Recent Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Investments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes a new model
for accounting for derivatives and hedging activities and supercedes several
existing standards. SFAS No. 133, as amended by SFAS No. 137, is effective for
all fiscal quarters of fiscal years beginning after June 15, 2000. The Company
currently does not and does not presently intend in the future to invest in
derivative financial instruments and therefore does not expect that the
adoption of SFAS No. 133 will have a material impact on the consolidated
financial statements.

  In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"), which addresses certain criteria for revenue recognition. SAB 101
is required to be adopted for reporting periods beginning after January 15,
2000. The adoption of SAB 101 is not expected to have a material impact on the
Company's consolidated financial position or results of operations.

3. Acquisitions

Internet Auctioneers International

  On July 30, 1999, the Company purchased all of the outstanding common stock
of Internet Auctioneers International, Inc. ("IAI") in exchange for the
issuance of 114,995 shares of the Company's Series E convertible preferred
stock. In connection with the purchase of IAI, a former shareholder and
officer of IAI 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 an
amount equal to $400,000, reduced by $50,000 upon completion of each 90 day
period of continuous employment, payable either in cash or by surrendering a
number of Series E preferred shares of an equivalent value, as determined in
the individual's employment agreement. The Company also entered into a three
year non-compete agreement with this individual.

  The purchase price of $1,416,000 consisted of the 114,995 shares of the
Company's Series E preferred, with an estimated fair value of $11.32 per
share, based on the per share price of the Company's Series D preferred that
was sold in May and June 1999, and the assumption of $160,000 of net
liabilities of IAI. The excess of the purchase price over the fair value of
assets acquired less liabilities assumed was allocated to goodwill. Of the
total purchase price, $22,000 was allocated to the tangible assets of IAI,
which were comprised of cash and

                                      10
<PAGE>

accounts receivable. In addition, $400,000 was allocated to the employment
agreement with the former shareholder and recorded as deferred compensation to
be amortized to stock-based employee compensation expense over a period of
three years, and $994,000 was allocated to goodwill.

Intralogix

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

SciCentral

  On February 2, 2000, the Company purchased all of the outstanding stock of
SciCentral, Inc. ("SciCentral") 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. Goodwill
related to this acquisition is being amortized over a period of three years.
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 Solutions Partners, Inc. ("EMAX") in exchange for the
issuance of 1,625,680 shares of the Company's common stock with a total fair
value of $99,451,000, 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 $2,609,000 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
$126,000,000 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.

                                      11
<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
$94,892,000 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 have not yet reached
technological feasibility and had no alternative future use at the date of the
acquisition of EMAX. The Company intends to use this software in the
development of the e-commerce and scientific products search capabilities on
our Web sites. At the date of the acquisition, these software products being
developed by EMAX were approximately 15% complete. The Company estimated at
the acquisition date that it would incur a total of approximately $3.0 million
to complete the development of these software products and that the
development would be completed by December 2000.

  In addition, the Company granted to EMAX employees a total of 113,980
SciQuest.com stock options, pursuant to the SciQuest.com 1999 Stock Incentive
Plan (see Note 12). 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. The Company recorded $1,295,000 of stock-
based employee compensation expense related to these options in March 2000
(see Note 12).

  The Company's consolidated results of operations for the three-month period
ended March 31, 2000 include the results of EMAX's operations for the period
from the closing date of the acquisition, March 22, 2000, to March 31, 2000.
During the nine-day period ended March 31, 2000, the Company recognized
approximately $124,000 of revenues, $3,285,000 of expenses and a net loss of
$3,161,000 related to the operations of EMAX. These amounts include non-cash
charges for the amortization of goodwill, trademark and capitalized software
development costs, the write-off of IPR&D and stock-based employee
compensation expense, which totaled $3,000,000. Excluding the impact of these
non-cash charges, EMAX incurred a net loss of approximately $175,000 during
the period from March 23, 2000 to March 31, 2000.

  The following unaudited pro forma consolidated financial information
reflects the results of operations of the Company for the three-month periods
ended March 31, 2000 and 1999 as if the acquisition of EMAX has occurred on
January 1, 2000 and 1999, respectively, and after giving effect to certain
purchase accounting adjustments. These pro forma results are not necessarily
indicative of what the Company's operating results would have been had the
acquisition actually taken place on January 1, 2000 or 1999, and may not be
indicative of future operating results.

<TABLE>
<CAPTION>
                                                    Three Months  Three Months
                                                       Ended         Ended
                                                     March 31,     March 31,
                                                        2000          1999
                                                    ------------  ------------
                                                    (unaudited)   (unaudited)
   <S>                                              <C>           <C>
   Revenues.......................................  $  5,870,000  $  2,472,000
   Operating Expenses.............................    17,150,000     5,309,000
   Amortization of goodwill, purchased intangibles
    and stock-based employee compensation
    expense.......................................    11,536,000    11,536,000
   Operating loss.................................   (27,617,000)  (14,373,000)
                                                    ------------  ------------
   Net loss.......................................   (25,385,000)  (14,294,000)
                                                    ============  ============
   Net loss before amortization of goodwill,
    purchased intangibles and stock-based employee
    compensation expense..........................  $(13,849,000)   (2,758,000)
                                                    ============  ============
   Net loss per common share......................  $       (.90) $      (2.84)
                                                    ============  ============
</TABLE>

                                      12
<PAGE>

4. Investments

  The aggregate fair values of investment securities at March 31, 2000
(unaudited) and December 31, 1999, along with unrealized gains and losses
determined on an individual investment security basis are as follows:

March 31, 2000 (unaudited)

<TABLE>
<CAPTION>
                                                          Gross
                                                        Unrealized
                                            Amortized      Gain       Market
               Description                     Cost       (Loss)       Value
               -----------                 ------------ ----------  -----------
<S>                                        <C>          <C>         <C>
Short-Term Investments:
  Commercial paper........................ $ 15,902,502 $  69,962   $15,972,464
  Corporate bonds.........................   18,961,362   (12,512)   18,948,850
  U.S. Government obligations.............    4,994,787    (6,462)    4,988,325
                                           ------------ ---------   -----------
                                           $ 39,858,651 $  50,988   $39,909,639
                                           ============ =========   ===========
Long-Term Investments:
  Corporate bonds......................... $  7,536,163 $ (18,933)  $ 7,517,230
  U.S. Government obligations.............   17,315,950  (311,044)   17,004,906
                                           ------------ ---------   -----------
                                           $ 24,852,113 $(329,977)  $24,522,136
                                           ============ =========   ===========
</TABLE>

December 31, 1999

<TABLE>
<CAPTION>
                                                          Gross
                                                        Unrealized
                                             Amortized     Gain       Market
                Description                    Cost       (Loss)       Value
                -----------                 ----------- ----------  -----------
<S>                                         <C>         <C>         <C>
Short-Term Investments:
  Commercial paper......................... $ 6,866,942 $    (442)  $ 6,866,500
  Corporate bonds..........................   9,977,792     4,408     9,982,200
  U.S. Government obligations..............   7,440,559    (9,464)    7,431,095
                                            ----------- ---------   -----------
                                            $24,285,293 $  (5,498)  $24,279,795
                                            =========== =========   ===========
Long-Term Investments:
  Corporate bonds.......................... $ 9,510,225 $ (12,647)  $ 9,497,578
  U.S. Government obligations..............  14,082,258  (259,492)   13,822,766
                                            ----------- ---------   -----------
                                            $23,592,483 $(272,139)  $23,320,344
                                            =========== =========   ===========
</TABLE>

5. Property and Equipment

  Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                        March 31,   December 31,
                                                          2000          1999
                                                       -----------  ------------
                                                       (unaudited)
<S>                                                    <C>          <C>
Furniture and equipment............................... $   578,055   $  304,928
Computer software and equipment.......................   6,675,189    3,005,479
Leasehold improvements................................     178,383       46,675
                                                       -----------   ----------
  Total costs.........................................   7,431,627    3,357,082
Less accumulated depreciation.........................  (1,668,243)    (487,659)
                                                       -----------   ----------
  Net book value...................................... $ 5,763,384   $2,869,423
                                                       ===========   ==========
</TABLE>

  The Company leases certain equipment under capital lease agreements. The
cost of equipment under capital leases at March 31, 2000 and December 31, 1999
was approximately $2,552,000 and $1,700,000, respectively.

                                      13
<PAGE>

6. Capitalized Development Costs

  Development costs represent the cost of the applications developed for the
Company's e-commerce web sites. The Company had capitalized development costs
of approximately $2,421,000 and $1,498,000 at March 31, 2000 and December 31,
1999, respectively, and had accumulated amortization of approximately $369,000
and $106,000 at March 31, 2000 and December 31, 1999, respectively, related to
capitalized development costs. The Company capitalized $923,000 in web site
development costs during the three months ended March 31, 2000.

7. Other Assets

  Other assets consist of the following:

<TABLE>
<CAPTION>
                                                        March 31,   December 31,
                                                          2000          1999
                                                       -----------  ------------
                                                       (unaudited)
   <S>                                                 <C>          <C>
   Prepaid customer acquisition costs................. $ 1,600,000   $1,600,000
   EMAX trademark.....................................  22,000,000          --
   Capitalized software costs.........................   6,964,148      364,148
   Deposits...........................................     228,706      111,642
   Other..............................................         --       467,407
                                                       -----------   ----------
                                                        30,792,854    2,543,197
   Less accumulated amortization......................    (616,276)    (690,369)
                                                       -----------   ----------
                                                       $30,176,578   $1,852,828
                                                       ===========   ==========
</TABLE>

8. Accrued Liabilities

  Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
                                                         March 31,  December 31,
                                                           2000         1999
                                                        ----------- ------------
                                                        (unaudited)
   <S>                                                  <C>         <C>
   Accrued compensation................................ $ 1,432,733 $   399,822
   Accrued expenses....................................   2,679,826     591,582
   Accrued acquisition costs...........................   1,023,525         --
   Other...............................................   1,316,979      74,716
                                                        ----------- -----------
                                                        $ 6,453,063 $ 1,066,120
                                                        =========== ===========
</TABLE>

9. Income Taxes

  The components of the Company's income tax benefit for the three months
ended March 31, 2000 and 1999 consist of the following:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                           ----------- --------
                                                           (unaudited)
   <S>                                                     <C>         <C>
   Current:
    Federal...............................................  $    --    $    --
    State.................................................       --         --
                                                            --------   --------
                                                                 --         --
                                                            --------   --------
   Deferred:
    Federal...............................................   (44,158)   (44,158)
    State.................................................   (10,537)   (10,537)
                                                            --------   --------
                                                             (54,695)   (54,695)
                                                            --------   --------
     Total................................................  $(54,695)  $(54,695)
                                                            ========   ========
</TABLE>

                                      14
<PAGE>

  The Company recognized a deferred tax benefit of $54,695 in each of the
three-month periods ended March 31, 2000 and 1999, resulting primarily from
the reduction of the difference between the book and tax basis of the assets
and liabilities recorded in conjunction with the acquisition of BioSupplyNet.

  Significant components of the Company's deferred tax assets and liabilities
are as follows:

<TABLE>
<CAPTION>
                                                       March 31,    December
                                                         2000       31, 1999
                                                      -----------  -----------
                                                      (unaudited)
   <S>                                                <C>          <C>
   Net operating loss carryforwards.................. $17,718,711  $11,206,025
   Accrual to cash adjustment........................     221,545      221,545
   Research and development..........................     149,303      102,122
   Allowance for doubtful accounts...................      38,502       19,057
   Compensation accruals.............................     147,337      147,337
   Stock and warrant based compensation..............   4,653,578    3,556,165
   Other.............................................      47,253       26,790
                                                      -----------  -----------
     Total deferred tax assets.......................  22,976,229   15,279,041
     Valuation allowance for deferred................ (10,469,231) (14,776,590)
                                                      -----------  -----------
     Deferred tax assets.............................  12,506,998      502,451
                                                      -----------  -----------
   Acquired intangibles..............................  12,123,635      (66,225)
   Capital development costs.........................     394,893     (502,451)
                                                      -----------  -----------
     Total deferred tax liabilities..................  12,518,528     (568,676)
                                                      -----------  -----------
     Net deferred tax liability...................... $   (11,530) $   (66,225)
                                                      ===========  ===========
</TABLE>

  During the three months ended March 31, 2000, the company recorded net
deferred tax liabilities of approximately $9,666,000 related to the
acquisitions of Intralogix, SciCentral and EMAX. The Company has provided a
valuation allowance against the balance of its deferred tax assets since
realization of these benefits cannot be reasonably assured. The change in
valuation allowance was a decrease of approximately $4,307,000 during the
three months ended March 31, 2000 and an increase of approximately $12,713,000
in 1999. The decrease in the valuation allowance during the three months ended
March 31, 2000 is primarily due to the offset of deferred tax liabilities
related to the acquisitions of Intralogix, SciCentral and EMAX against
deferred tax assets of the Company. The increase in the valuation allowance
during 1999 primarily relates to additional operating losses in 1999.

  As of December 31, 1999, the Company had federal and state net operating
loss carryforwards of approximately $28,771,000. These net operating loss
carryforwards begin to expire in 2012. The utilization of the federal net
operating loss carryforwards may be subject to limitation under the rules
regarding a change in stock ownership as determined by the Internal Revenue
Code.

10. Capital Stock

  On November 19, 1999, the Company completed its initial public offering,
selling 8,625,000 shares of its $.001 par value common stock. Upon the
effectiveness of its initial public offering, all outstanding shares of Series
A, Series C and Series E preferred stock, and all outstanding shares of Class
B common stock were converted into a total of 13,438,185 common shares. The
Company's Class A common stock was also reclassified as common stock with a
par value of $0.001 per share.

  On October 22, 1999, the Board of Directors of the Company approved a
1.516643-for-1 Class A common stock split which was declared effective on
November 12, 1999. All share and per share information in the accompanying
financial statements has been retroactively restated to reflect the effect of
this stock split and the reclassification of the Company's Class A common
stock to common stock.

  Also upon the effectiveness of the Company's initial public offering, the
number of authorized shares of the Company's common stock was increased to
90,000,000 shares and 10,000,000 shares of preferred stock were authorized. At
all times, the Company shall reserve a number of shares of unissued common
stock for the purpose of effecting the conversion of its issued and
outstanding shares of all outstanding warrants and options to purchase the
Company's common stock.

                                      15
<PAGE>

11. Strategic Partnerships

  In October, November, and December 1999, the Company entered into strategic
relationships with a number of key suppliers and buyers of scientific
products. As part of these arrangements, the Company issued to these companies
warrants to purchase the Company's common stock at an exercise price of $0.01
per share. At March 31, 2000 and December 31, 1999 there were 4,414,180 and
5,035,180 strategic warrants outstanding, respectively, and the Company has
recorded deferred customer acquisition costs of approximately $101,987,000 and
$391,139,000 at March 31, 2000 and December 31, 1999, respectively. These
amounts are presented net of accumulated amortization of approximately
$9,704,000 and $9,108,000 at March 31, 2000 and December 31, 1999,
respectively. The Company recognized $696,000 in stock-based customer
acquisition costs during the three months ended March 31, 2000 related to the
amortization of deferred customer acquisition costs. This amount includes
$100,000 of amortization of prepaid customer acquisition fees. No such
amortization was required for the three months ended March 31, 1999.

  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 has agreed to issue to certain major enterprise
buyers additional incentive warrants, the number of which will be based on
each purchaser's volume of purchases through the Company's market place during
the years 2000, 2001 and 2002. These incentive warrants will be issued 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, or $16.00 per
share, and will be exercisable upon issuance. Deferred customer acquisition
costs will be recognized at the date of issuance of these incentive warrants
in an amount equal to the estimated fair value of the warrants at the date of
issuance determined using the Black Scholes valuation model and will be
amortized to operating expense over the remaining term of the strategic
relationship with these key buyers.

12. Stock Options and Warrants

 Stock Options

  In September 1997, the Company adopted the SciQuest, Inc. Stock Option Plan
(the " 1997 Plan") which provided for the grant of up to 341,245 employee
stock options. In September 1998, February 1999 and August 1999, the 1997 Plan
was amended to increase the number of shares available for issuance
thereunder. Subsequent to the Company's initial public offering (see Note 10),
the Company determined not to grant any additional options under the 1997 Plan
and amended the 1997 Plan in November 1999 to decrease the number of shares
authorized under the 1997 Plan to 2,056,060. Stock options granted under the
1997 Plan are for periods not to exceed ten years.

  In November 1999, the Company adopted the Sciquest.com, Inc. 1999 Stock
Option Plan (the "1999 Plan") which provides for the grant of up to 2,854,998
employee stock options. Options granted under both plans during the years
ended December 31, 1997, 1998 and 1999 generally vest in periods between three
and five years as determined by the board of directors, although certain
grants have been vested immediately upon the grant of the option.

                                      16
<PAGE>

  A summary of the status of the Plans as of March 31, 2000 and December 31,
1999 and changes during the periods then ended is presented below:

<TABLE>
<CAPTION>
                                      Three months ended       Year ended
                                        March 31, 2000      December 31, 1999
                                      -------------------- --------------------
                                                  Weighted             Weighted
                                        Shares    Average    Shares    Average
                                      Underlying  Exercise Underlying  Exercise
                                       Options     Price    Options     Price
                                      ----------  -------- ----------  --------
                                          (unaudited)
<S>                                   <C>         <C>      <C>         <C>
Outstanding at beginning of year..... 2,193,724    $11.74  1,004,310   $  0.13
Granted..............................   708,632     25.96  1,733,970     14.82
Exercised............................  (140,922)      .21   (436,874)      .14
Forfeited............................   (14,408)     3.30   (107,682)      .12
                                      ---------    ------  ---------   -------
Outstanding at end of period......... 2,747,026    $16.04  2,193,724   $ 11.74
                                      =========    ======  =========   =======
</TABLE>

  Stock options granted during the three-month period ended March 31, 2000
include 374,152 and 113,980 options (the "Replacement Options") and additional
options (the "Additional Options"), respectively, which were granted in
connection with the acquisition of EMAX on March 23, 2000 (see Note 3).

  The Company recorded $5,180,000 and $62,000 of deferred compensation as a
charge to stockholders equity during the three-month periods ended March 31,
2000 and 1999, respectively, to reflect the difference between the aggregate
fair market value and exercise price of all stock options granted during this
period with an exercise price below the fair market value of the Company's
common stock at the date of the grant. The entire $5,180,000 of deferred
compensation recorded during the three-month period ended March 31, 2000
relates to the Additional Options granted to EMAX employees (see Note 3).
Stock-based employee compensation expense of $2,121,000 (which includes
$74,000 of amortization of deferred compensation related to employment
agreements) and $3,000 were recorded for the periods ended March 31, 2000 and
March 31, 1999, respectively.

  The following table summarizes information about the Company's outstanding
stock options at March 31, 2000 (unaudited):

<TABLE>
<CAPTION>
                                               Weighted   Weighted
                                   Number of    Average   Average   Number of
                                    Options   Contractual Exercise   Options
   Range of Exercise Prices       Outstanding    Life      Price   Exercisable
   ------------------------       ----------- ----------- -------- -----------
   <S>                            <C>         <C>         <C>      <C>
   $ 0.18- 1.03..................    703,996      7.9      $ 0.20    183,385
   $ 2.08- 3.30..................    458,199      9.2        3.07     30,197
   $ 6.16-16.00..................    710,848      7.2       10.82    285,891
   $23.75........................    400,000      9.7       23.75        --
   $43.50-50.49..................    337,483      9.7       46.54      1,644
   $63.25-75.00..................    136,500      9.8       70.45        --
                                   ---------      ---      ------    -------
                                   2,747,026      8.5      $16.04    501,117
                                   =========      ===      ======    =======
</TABLE>

 Warrants

  At March 31, 2000 and December 31, 1999, the Company had 5,128,565, and
5,889,303, respectively, warrants outstanding and exercisable to purchase the
Company's common stock at prices ranging from $0.01 to $9.33, which includes
the warrants issued to strategic partners discussed in Note 11. These warrants
expire at various dates between 2000 and 2004.


                                      17
<PAGE>

13. Commitments and Contingencies

  The Company leases certain equipment under various noncancellable capital
leases and leases its office space and certain equipment under operating
leases. Rent expense under operating leases totaled $96,000 and $36,000 for
the three months ended March 31, 2000 and 1999, respectively.

  During the year ended December 31, 1999, the Company entered into a leasing
agreement with a leasing company, which expires in August 2000. The Company
obtained a total commitment amount of $2.5 million, all of which has been
completely used by the Company as of March 31, 2000. The Company may purchase
furniture and equipment and lease the items over 42 months. Payments are due
monthly. Prior to the end of the lease term, the Company has the option to
either purchase the equipment or renew the lease at a price not to exceed
fifteen percent of the equipment cost.

  The Company is involved in certain legal proceedings as a part of its normal
course of business. Management does not believe that the ultimate resolution
of these matters will have a material impact on the Company's results of
operations or financial position in any quarterly or annual period.

14. Related Party Transactions

  In January 2000, the Company sold, pursuant to an agreement, 12,000 shares
of restricted common stock to an officer of the Company at a per-share price
of $28.31 that was equal to one-half of the fair value of the Company's common
stock on the date of the transaction. The restrictions related to these shares
expire over a period of two years. As a result, the fair value of the
discount, $340,000, has been recorded as deferred compensation and is being
amortized to stock-based employee compensation expense over the vesting
period. In the three-month period ended March 31, 2000, the Company recorded
$28,000 of stock-based employee compensation expense related to this
restricted sale.

  In March 1999, the Company sold 89,408 shares of series C convertible
preferred stock to an executive officer for $250,000, or $2.80 per share.
These shares were converted to common stock upon the effectiveness of our
initial public offering on November 19, 1999.

ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

  Some of the statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations 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. 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.com is a web-based, interactive marketplace for scientific and
laboratory products used by pharmaceutical, clinical, biotechnology, chemical,
industrial and educational organizations worldwide. We have used our extensive
industry expertise to design a marketplace that streamlines the traditionally
inefficient scientific products supply chain. Our marketplace solutions allow
buyers of scientific products to cross-search content and purchase products
from multiple suppliers with a single order. Our approach does not give
priority to any particular scientific products distributor, which allows us to
create an open and scalable marketplace that we believe is more attractive to
both buyers and sellers.

  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.

                                      18
<PAGE>

  On September 29, 1998, we acquired BioSupplyNet, Inc. This acquisition was
accounted for using the purchase method of accounting with a total purchase
price of approximately $2.0 million. BioSupplyNet publishes the Source Book,
an annual printed catalogue of vendors of biomedical research supplies and
equipment and scientific products for the biomedical research industry. In
addition, at the time of acquisition, BioSupplyNet was in the process of
developing e-commerce technology to allow research scientists, lab technicians
and purchasing agents to quickly identify suppliers of specific scientific
products. We intend to continue to enhance and develop this technology. Since
the acquisition of BioSupplyNet, we have derived revenues from the sale of
advertising in the Source Book.

  On July 30, 1999, we acquired all of the outstanding common stock of
Internet Auctioneers International, Inc. for a total purchase price of $1.4
million. This acquisition was accounted for using the purchase method of
accounting. Internet Auctioneers International provides auction services to
laboratories for the sale of used equipment. We will receive a commission for
performing these services, which will be recognized as revenues at the time
the sale is finalized.

  On January 14, 2000, we acquired all of the outstanding capital stock of
Intralogix, Inc. for a total purchase price of approximately $2.2 million.
Intralogix provides tools that enable scientists to search, compare and
purchase chromatography products for their research needs.

  On February 2, 2000, we acquired all of the outstanding capital stock of
SciCentral, Inc. for a total purchase price of approximately $2.6 million.
SciCentral, Inc. provides users with a gateway to online science and
technology resources, news and information.

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

  On March 22, 2000, we acquired all of the outstanding capital stock of EMAX
Solution Providers, Inc., a provider of electronic research solutions designed
to optimize pharmaceutical drug research operations and expedite drug
discovery, for the issuance of 1,625,680 shares of our common stock and the
assumption of 374,152 outstanding stock options (the "Replacement Options").
In addition, the Company granted to EMAX employees a total of 113,980
SciQuest.com stock options (the "Additional Options"), pursuant to the
SciQuest.com 1999 Stock Incentive Plan. These Additional 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 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.

  As the acquisition of EMAX closed on March 22, 2000, our results of
operations include only nine days of the results of operations of EMAX. The
amount of EMAX revenues, operating expenses and net loss included in our
unaudited consolidated statement of operations for the three months ended
March 31, 2000 are $.1 million, $3.3 million and $3.2 million, respectively.
These amounts include non-cash charges for the amortization of goodwill,
trademark and capitalized software development costs, the write-off of
purchased in-process research and development and stock-based employee
compensation expense, which totaled $3.0 million. Excluding the impact of
these non-cash charges, EMAX incurred a net loss of approximately $175,000
during the period from March 23, 2000 to March 31, 2000.

  Assuming the acquisition of EMAX had occurred on January 1, 2000, our pro
forma revenues, operating loss and net loss for the quarter ended March 31,
2000 would have been $5.9 million, $27.6 million and $25.4 million,
respectively. This represents an increase of $.8 million in revenues, $11.2
million in operating loss and $11.2 million in net loss, respectively.
Excluding $11.5 million of amortization of goodwill, purchased

                                      19
<PAGE>

intangibles and stock-based employee compensation expense, pro forma net loss
would have been $13.8 million. Assuming the acquisition of EMAX had occurred
on January 1, 1999, our pro forma revenues, operating loss and net loss for
the quarter ended March 31, 1999 would have been $2.5 million, $14.4 million
and $14.3 million, respectively. This represents an increase of $2.4 million
in revenues, $11.3 million in operating loss and $11.3 million in net loss,
respectively. Excluding $11.5 million of amortization of goodwill, purchased
intangibles and stock-based employee compensation expense, pro forma net loss
would have been $2.8 million. The pro forma results for the three months ended
March 31, 2000 and 1999 do not include the write-off of purchased in-process
research and development. These pro forma operating results are not
necessarily indicative of what our results would have been had the acquisition
of EMAX occurred on January 1, 2000 or January 1, 1999, nor can our future
operating results be predicted from these amounts.

  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. We have issued these warrants in connection with these
agreements, as we believe that these relationships are an integral component
of our business plan. At March 31, 2000, 4,414,180 warrants issued to key
suppliers and buyers were outstanding.

  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.

  We have recorded net deferred customer acquisition costs of approximately
$102 million at March 31, 2000, 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. 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. Deferred customer acquisition costs
will be amortized to operating expense, using a cumulative catch-up method,
over the term of the related contractual relationship. The Company recorded
stock-based customer acquisition costs of $696,000 for the quarter ended March
31, 2000.

  These strategic relationships also include agreements with certain 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 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 also agreed to issue to these certain 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 will be based on each
purchaser's volume of purchases through our marketplace during the years 2000,
2001 and 2002. These incentive warrants will be issued 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. Deferred customer acquisition costs will be recognized at the date
of issuance of these incentive warrants in an amount equal to the estimated
fair value of the warrants at the date of issuance determined using the Black
Scholes valuation model and will be amortized to operating expense over the
remaining term of the strategic relationship with these key buyers.


                                      20
<PAGE>

  Revenues consist of (1) sales of scientific products in e-commerce
transactions originating on our web sites, (2) sales of software licenses and
fees for implementation, customization and maintenance services related to
these software licenses, (3) banner advertising revenues from our web sites,
(4) advertising revenues from the Source Book, and (5) commissions received
from the auction of used scientific equipment. 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 and are expected to continue to increase. For the quarter ended March
31, 2000, three customers accounted for 25%, 20% and 16% of our revenues,
respectively.

  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. When a purchaser places an order through our
marketplace, we purchase that item from the supplier at either a pre-
negotiated price or at a discount from the supplier's list price and arrange
for shipment to the purchaser. We take legal title to the products purchased
at the date of shipment and relinquish title to our customers upon delivery.
After the customer receives the product, we begin the collection process by
presenting a consolidated invoice to the buyer for the products represented in
the order. Payment by the buyer to us is then made by credit card/procurement
card or through a more traditional account setup and payment system. 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, we recognize revenue in
the amount of the sales price of the item to the purchaser and recognize the
amount paid to the supplier plus shipping costs as cost of goods sold. The
difference between revenues and cost of goods sold is our gross profit.

  Revenues from sales of scientific products in e-commerce transactions are
recorded as product revenues and are recognized upon receipt by our customers.
Product shipments are made on our designated carriers and we are responsible
for shipping costs which are recorded as cost of revenues.

  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 six months. EMAX also 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.

  Advertising revenues on banner contracts 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 will pay us a percentage of the total
advertising revenues, which it receives.

Three Months Ended March 31, 2000 And 1999

 Revenues

  Revenues for the quarter ended March 31, 2000 have been derived primarily
from the sale of scientific products in e-commerce transactions.

  Revenues increased to $5.1 million for the quarter ended March 31, 2000 from
$63,000 for the quarter ended March 31, 1999. This increase was primarily due
to $5 million in revenues from the sale of scientific products in e-commerce
transactions for the quarter ended March 31, 2000, as compared to zero for the
quarter ended March 31, 1999 as our e-commerce marketplace was not implemented
until April 1999.


                                      21
<PAGE>

 Cost of Revenues

  Cost of revenues primarily consists of the purchase price of scientific
products sold in e-commerce transactions and related shipping costs for these
products.

  Total cost of revenues increased to $4.8 million for the quarter ended March
31, 2000 from zero for the quarter ended March 31, 1999. Cost of revenues
increased primarily due to $4.7 million in costs related to the sale of
scientific products in e-commerce transactions during the quarter ended March
31, 2000 as compared to zero for the quarter ended March 31, 1999 as our e-
commerce marketplace was not implemented until April 1999.

 Gross Profit

  Gross profit increased to $302,000 for the quarter ended March 31, 2000 from
$63,000 for the quarter ended March 31, 1999. Gross profit increased as
product sales began with the launch of the SciQuest.com marketplace in April
1999.

 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
increased to $3.0 million for the quarter ended March 31, 2000 from $1.2
million for the quarter ended March 31, 1999. This increase resulted from
expenses incurred to develop our e-commerce fulfillment system, list
suppliers' products on our web sites and from increased amortization of
capitalized development costs. This increase also includes $138,000 of
development expenses incurred by EMAX, which was acquired in March 2000. We
expect that our development expenses will continue to increase as we add
products from additional suppliers to our e-commerce marketplace, as we
develop customized private Web sites for major customers and as we continue to
experience rapid increases in the volume of transactions through our e-
commerce marketplace. In addition, our development expenses will continue to
increase as we amortize development costs related to the development of
additional functionality for our web sites and complete the development of the
technology acquired with EMAX.

  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 increased to $5.4 million for the quarter ended March 31,
2000 from $1.2 million for the quarter ended March 31, 1999. This increase
resulted primarily from the hiring of additional sales and marketing personnel
to market our products and services and increased expenses to advertise and
promote our e-commerce marketplace, and to a lesser extent, sales and
marketing expenses related to BioSupplyNet, Internet Auctioneers International
and EMAX. We expect that our sales and marketing expenses will continue to
increase in the next nine months as we continue to add sales and marketing
personnel and as we continue to incur expenses to promote the services
provided by our e-commerce marketplace.

  General and Administrative Expenses. General and administrative expenses
consist primarily of personnel and related costs for general corporate
functions, including finance, accounting, legal, human resources, investor
relations and facilities. General and administrative expenses increased to
$3.4 million for the quarter ended March 31, 2000 from $617,000 for the
quarter ended March 31, 1999. General and administrative expenses increased
primarily as a result of increased payroll costs due to the increase in the
number of general and administrative personnel and an increase in professional
fees and facilities costs incurred to support the growth of our business. In
addition, we have experienced an increase in general and administrative costs
as a result of becoming a public company in November 1999, such as investor
relations costs, directors and officers' insurance costs and increased legal
and audit costs. We expect general and administrative expenses to continue to
increase in the next nine months as we add administrative personnel to
continue to support the growth of our business.


                                      22
<PAGE>

 Purchased In-process Research and Development

  For the quarter ended March 31, 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. We intend to use this
software in the development of the e-commerce and scientific products search
capabilities on our Web sites. At the date of the acquisition, these software
products being developed by EMAX were approximately 15% complete. We estimated
at the acquisition date that we would incur a total of approximately $3.0
million to complete the development of these software products and that the
development would be completed by December 2000. The remaining $125.3 million
of the purchase price of EMAX was allocated to the tangible and intangible
assets of EMAX and to goodwill.

 Stock-based Employee Compensation Expense

  Stock-based non-cash compensation expense increased to $2.1 million in the
quarter ended March 31, 2000 from $3,000 in the quarter ended March 31, 1999
due to an increase in the number of stock options that had been issued to
employees with exercise prices less than fair value on the date of grant since
March 31, 1999. In addition, in July of 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.

 Amortization of Goodwill

  Amortization of goodwill increased to $1.3 million for the quarter ended
March 31, 2000 from $32,000 in the quarter ended March 31, 1999. This increase
is the result of amortization of goodwill resulting from the acquisitions of
IAI, Intralogix, SciCentral and EMAX, all of which occurred after March 31,
1999.

 Interest Income

  Net interest income consists of interest income earned on cash deposited in
money market accounts and invested in short and long term U.S. Government
obligations reduced by interest expense incurred on capital lease obligations.
Net interest income increased to $2.1 million for the quarter ended March 31,
2000 from net interest income of $37,000 for the quarter ended March 31, 1999.
The increase in net interest income was primarily the result of interest
earned on funds received from our sale of preferred stock in May and June of
1999 and on proceeds received from our initial public offering in November
1999.

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 March 31, 2000, we had total cash and
investments of $133.7 million, which is comprised of cash and cash equivalents
of $69.0 million, short term investments of $39.9 million and long term
investments of $24.8 million.

  Cash used in operating activities was $9.4 million and $2.8 million during
the quarters ended March 31, 2000 and 1999, respectively. Cash used in
operating activities was principally for the development of our web sites, the
development of our e-commerce marketplace, the expansion of our sales and
marketing force, increased advertising costs and the expansion of the
administrative and operations staff to support our growth.

  Cash used in investing activities during the quarter ended March 31, 2000
was $20.6 million and $164,000 during the quarter ended March 31, 1999. Cash
used in investing activities has primarily been comprised of purchases of
investments in US government obligations, commercial paper and corporate
bonds, net of

                                      23
<PAGE>

maturities, and purchases of computer equipment. In addition, we used nearly
$2 million to acquire EMAX, Intralogix and SciCentral during the quarter ended
March 31, 2000. This was offset by $.5 million of cash received from these
acquired companies

  Cash provided by financing activities during the quarters ended March 31,
2000 and 1999 was $964,000 and $243,000, respectively. During the quarter
ended March 31, 2000, the Company received approximately $1.1 million in
proceeds from exercises of stock options, common stock warrants and by the
direct sale of restricted stock to an officer of the Company. In March 1999,
we sold 89,408 shares of series C convertible preferred stock to an executive
officer for $250,000, or $2.80 per share.

  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 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Investments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes a new model
for accounting for derivatives and hedging activities and supercedes a number
of existing standards. SFAS No. 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133, as
amended, is not expected to have a material impact on our consolidated
financial position or results of operations.

  In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101") which addresses certain criteria for revenue recognition. SAB 101
is required to be adopted for reporting periods beginning after January 15,
2000. The adoption of SAB 101 is not expected to have a material impact on our
consolidated financial position or results of operations.

Factors That May Affect Future Results

Since we have a limited operating history, forecasting future performance may
be difficult.

  We commenced operations in 1995, first recognized revenues in 1997 and
launched our interactive e-commerce Web site in April 1999. Accordingly, we
have only a limited operating history on which to evaluate our business. As a
result of our limited operating history, the emerging nature of the online
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. 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, 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 $33.2 million for the year ended December 31, 1999
and $14.2 million for the quarter ended March 31, 2000. As of March 31, 2000,
we had an accumulated deficit of $52.8 million. If our acquisition of EMAX had
taken place on January 1, 1999, our pro forma net losses for the year ended
December 31, 1999 would have been $75.8 million. We expect to incur
substantial operating losses and continued negative cash flow from operations
for the foreseeable future. In fact, we expect these losses to

                                      24
<PAGE>

increase significantly through at least December 31, 2000 because, as part of
our strategy to achieve profitability, we intend to significantly increase our
spending on items such as sales and marketing, content development, technology
and operating infrastructure. If these expenses do not generate increased
revenues, our earnings may be materially and adversely affected and
anticipated net losses may be greater than expected. We may not be able to
increase revenues sufficiently to achieve profitability.

Unless a broad range of purchasers and suppliers of scientific products adopt
our e-commerce solution, 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 purchasing products through their
existing methods and may not adopt a Web-based 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.com brand, our business may
suffer.

  We believe that establishing, maintaining and enhancing the SciQuest.com
brand is critical in attracting and expanding traffic to our Web sites. There
are a number of Web sites that offer competing services. Some of these sites
already have well-established brands in either online services or the
scientific products industry. As a result, it is critical that we maintain and
enhance our brand. We believe that increased competition may make establishing
and maintaining our brand significantly more expensive. Promotion of our brand
will depend largely on expanding our sales and marketing capabilities and
providing a high-quality online experience. We intend to use a portion of the
proceeds from our initial public offering, completed in November 1999, to
expand our sales and marketing activities and further develop our online
services. We cannot be certain that we will be successful in marketing the
SciQuest.com 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 unable to increase our transaction volume, our future revenues may
suffer.

  We expect that a substantial portion of our future revenues will be
generated by the products offered by us for sale through our e-commerce
marketplace. Accordingly, our revenues will be highly dependent on the dollar
volume of transactions conducted through our Web sites. Our profits depend
upon the discount levels we are able to negotiate with our suppliers. To
maintain revenue growth, we will need to increase the total dollar value of
transactions conducted through our Web sites. In order to increase our
transaction volume, we will need to:

  .  generate higher and continuously increasing levels of traffic, from both
     new and repeat visitors, to our Web sites;

  .  increase the percentage of visitors to our Web sites who purchase
     scientific products; and

  .  increase the average transaction size and/or number of repeat purchases.

Failure to do one or more of the foregoing could have a material adverse
effect on our revenues.

Unless we negotiate favorable pricing terms with our suppliers, our profit
margins will be adversely affected.

  Our profits 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;

                                      25
<PAGE>

  .  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 varying amounts of product data from approximately
200 companies to be loaded in our e-commerce marketplace. We anticipate that a
majority of these products will be loaded into the e-commerce marketplace by
the end of the second quarter of 2000. However, we continuously receive new
product data to load. We will not derive revenue 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
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
estimated by us.

  In addition, we are generally obligated under our supplier agreements to
load updated product data into our database for access through our marketplace
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. Although we screen our
suppliers' information before we make it available to our customers and users,
we cannot guarantee that the product information available in our e-commerce
marketplace will always be accurate, complete and current, or comply with
governmental regulations. This could expose us to liability or result in
decreased adoption and use of our Internet-based purchasing solution, which
could reduce our revenues and therefore have a negative effect on our results
of operations and financial condition.

Sales to larger customers may increase the length of our sales cycle and
decrease our profit margins.

  Increasing sales to larger buyers is an important element of our business
strategy. As we sell more sophisticated solutions to larger organizations, we
expect the 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

                                      26
<PAGE>

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.

  If we are unable to list a broad range of products on commercially favorable
terms, our marketplace will be less attractive to potential buyers.

  A number of factors could significantly reduce the number of products and
product sources listed on our Web sites, including the following:

  .  consolidation among suppliers; and

  .  exclusive arrangements signed by suppliers with our competitors.

  If the number of products and product sources that are available for listing
is reduced, the effectiveness of our Web sites and their attractiveness to
potential buyers could be materially and adversely affected.

If we are unable to retain a critical mass of suppliers and customers, our
ability to grow our business will be adversely affected.

  Our business model depends in large part on our ability to build a critical
mass of products and suppliers. To attract and maintain suppliers we must
build a critical mass of customers. However, customers must perceive value in
our purchasing solution which, in large part, depends upon the breadth of the
product offerings from our suppliers. Creating a network effect, where the
value to buyers and suppliers alike increases as the number of participants
increases, is a key component of our strategy. If we are unable to increase
the number of suppliers and draw more customers to our Web sites, we will not
be able to benefit from this network effect. As a result, the overall value of
our purchasing solution would be harmed, which would negatively affect our
revenues and earnings.

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. 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.

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. Further, our
large customers are not obligated to use our purchasing solution exclusively
or for any minimum number of transactions or dollar amounts. In addition, our
contracts with our customers are for limited terms and our customers may
discontinue use of our system at any time upon short

                                      27
<PAGE>

notice and without penalty. 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.

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 increasing traffic levels, our ability to satisfy our customers and
maintain revenue growth may suffer.

  Our success depends in large 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 increasing 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 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.

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 online systems. 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 suppliers and buyers. The
integration with our suppliers' systems also involves the downloading of a
significant amount of data, which increases the resources needed to execute
the integration. 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.

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,

                                      28
<PAGE>

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.

If our exclusive sales representative does not perform adequately, our
advertising revenues could be adversely affected.

  To date, a significant portion of our revenues has come from the sale of
print and online advertising to our suppliers, although we expect advertising
revenue as a percentage of total revenue to decrease significantly in the
future. Cahners Business Information is the exclusive sales representative for
online advertising on our Web sites and for print advertising in our Source
Book. Accordingly, our advertising revenues are highly dependent on the
success of Cahners' efforts. We cannot assure you that Cahners will be
successful in selling advertising for us.

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 as we usually take title to these
products at the time of shipment. 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. 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 our growth, our business may suffer.

  We are rapidly expanding our operations. In particular, we have
significantly expanded our operations and sales, marketing and technology
staffs. We have also expanded our management and administration to support
this growth. We expect this expansion to continue at an accelerated rate. This
expansion has placed, and is expected to continue to place, a significant
strain on our management, operational and financial resources. For example, we
may be unable to increase the scale of our operations (including order
fulfillment, customer service, transaction processing and other "back office"
operations) to account for the increase in transaction volume that our
supplier and buyer growth creates. If we are unable to manage the growth of
our business effectively, our earnings could be materially and adversely
affected.

  We have also recently acquired EMAX. We could have difficulty in effectively
assimilating and integrating EMAX into our operations. Any difficulties in
this process could disrupt our ongoing business, distract our management,
increase our expenses and otherwise adversely affect our business.

  Many of our employees have only recently joined us. Additionally, several of
our key executives have been employed by us for one year 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

                                      29
<PAGE>

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 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 this personnel is intense. In particular, it is
important that we hire additional customer service personnel in order to
maintain high quality service and maintain buyer and supplier loyalty. 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.

If we are unable to adapt our services to rapid technological change in online
commerce, our revenues and profits could be materially and adversely affected.

  The Internet and the online commerce industry undergo rapid changes in
technology, products and services, user profiles and operating standards.
These changes could render our Web sites and proprietary technology and
systems obsolete. We must continually improve the performance, features and
reliability of our online services, particularly in response to our
competition. Our success will depend, in part, on our ability to:

  .  enhance our existing 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.

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.

                                      30
<PAGE>

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 have 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 after two years and may not be
sufficient to adequately compensate us for any claims that do arise.

If we are not able to offer new services, we may not be able to maintain
revenue growth.

  We plan to introduce new and expanded services and to expand our third-party
relationships in order to attract more buyers and suppliers to our Web sites
and increase transaction volume. We cannot be certain that we will be able to
offer these services in a cost-effective or timely manner. Any new services
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. The failure to generate profits from our
expanded services could have a material adverse effect on our earnings.

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.

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.

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 online services from third
parties. Additionally, we intend to license a significant portion of our
transaction fulfillment systems 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

                                      31
<PAGE>

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, Internet Auctioneers
International, Inc. in 1999, SciCentral.com, 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;

  .  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.

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. As a
result, we may need to establish international operations, hire additional
personnel and establish relationships with additional suppliers and customers.
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 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, we are

                                      32
<PAGE>

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.

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 Internet-related companies. Our common stock price 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.

Our future revenue growth would be adversely affected by a reduction in
spending in the scientific products industry.

  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.

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, is 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.

                                      33
<PAGE>

The online scientific products market is highly competitive, which makes
achieving market share and profitability more difficult.

  The online scientific products market is new, rapidly evolving and intensely
competitive. Our primary competition includes e-commerce providers, online
scientific communities and suppliers' e-commerce initiatives. 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.

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.

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.

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

                                      34
<PAGE>

reviewing the appropriate tax treatment of online commerce, and new federal
laws or state tax 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.

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.

                                      35
<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 Upon Senior Securities.

  Not applicable.

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

  No matters were submitted to a vote of security holders during the period
covered by this report.

Item 5. Other Information.

  Not applicable.

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:

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
  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*   Agreement of Sublease by and between Inspire Pharmaceuticals, Inc. and
         SciQuest.com dated July 31, 1998.

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

</TABLE>

                                      36
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
 10.8*   Sublease Agreement by and between Vascular Therapeutics, Inc. and
         SciQuest.com dated August 19, 1999.

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

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

 10.11*  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.

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

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

 10.14*  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.

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

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

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

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

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

 10.20** Form of Strategic Alliance Plus Agreement.

 10.21** Form of Strategic Purchasing Agreement.

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

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

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

 10.25** First Amendment to 1999 Stock Incentive Plan.

 10.26** 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.

</TABLE>

                                       37
<PAGE>

<TABLE>
<CAPTION>
 Exhibit
 Number                                Description
 -------                               -----------
 <C>     <S>
 10.27** 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.

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

 10.29** Restricted Stock Agreement between SciQuest.com and W. Andrew McKenna
         dated January 31, 2000.

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

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

 27.1    Financial Data Schedule.
</TABLE>
--------
 * 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).

  (b) Reports on Form 8-K.

  A current report on Form 8-K was filed on April 6, 2000, in connection with
SciQuest.com's acquisition of EMAX Solution Partners, Inc.

                                      38
<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: May 15, 2000
                                          _____________________________________
                                                     M. Scott Andrews
                                                 Chairman of the Board and
                                                  Chief Executive Officer


Date: May 15, 2000
                                          _____________________________________
                                                     James J. Scheuer
                                                  Chief Financial Officer
                                                 (Principal Financial and
                                                    Accounting Officer)


                                      39