================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]  Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934

                  For the quarterly period ended June 30, 2001

[ ]  Transition report under Section 13 or 15(d) of the Exchange Act

              For the transition period from ________ to _________

                         Commission File Number 0-027073

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

              Nevada                                              87-0381511
              ------                                              ----------
  (State or other jurisdiction                                  (IRS Employer
of incorporation or organization)                            Identification No.)

                          3998 FAU Boulevard, Suite 210
                              Boca Raton, FL 33431
                              --------------------
                    (Address of principal executive offices)

         Issuer's telephone number, including area code: (561) 367-0600
                                 --------------

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practical date: At April 26, 2001, there were
outstanding 18,195,218 shares of Common Stock, $.001 par value per share.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]


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<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

                                     PART I

Item 1.  Financial Statements:

         Condensed Balance Sheet as of June 30, 2001(Unaudited)...............1

         Condensed Statements of Operations for the Three and six
            Months ended June 30, 2001 and 2000 (Unaudited)...................2

         Condensed Statements of Cash Flows for the Six Months ended
            June 30, 2001 and 2000 (Unaudited)................................3

         Notes to Condensed Financial Statements..............................4

Item 2.  Management's Discussion and Analysis or Plan of Operation...........5-9

                                     PART II

Item 1.  Legal Proceedings...................................................10

Item 2.  Changes in Securities...............................................10

Item 3.  Defaults Upon Senior Securities.....................................10

Item 4.  Submission of Matters to a Vote of Security Holders.................10

Item 5.  Other Information...................................................10

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

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

                                       i
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

<TABLE>
<CAPTION>
         Intraco Systems, Inc.
         Condensed Balance Sheet
         June 30, 2001
         (Unaudited)

                                     ASSETS
                                     ------

<S>                                                                    <C>
         Current assets:
            Cash                                                       $     9,040
            Accounts receivable, net                                       128,515
            Prepaid expenses                                               172,028
                                                                       -----------
               Total current assets                                        309,583
                                                                       -----------

         Property and equipment, net                                       923,540

         Other assets:
            Goodwill, net                                                   72,722
            Deposits                                                        13,736
                                                                       -----------
               Total other assets                                           86,458
                                                                       -----------

               Total assets                                            $ 1,319,581
                                                                       ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

         Current Liabilities:
            Accounts payable                                           $   839,836
            Deferred revenue                                                44,907
            Accrued expenses                                               670,895
            Customer deposits                                               19,711
            Capital lease payable                                           10,375
            Dividends payable                                               59,884
            Stock issuance cost payable                                    254,840
                                                                       -----------
               Total current liabilities                                 1,900,448
                                                                       -----------

         Capital lease payable                                              16,034
                                                                       -----------

         Stockholders' equity:
            Series A convertible redeemable preferred stock,
               $0.001 par value, 2,500,000 shares authorized and
               391,500 shares issued and outstanding                           392
            Series B convertible redeemable preferred stock,
               $0.001 par value, 1,700,000 shares authorized and
               872,100 shares issued and outstanding                           872
            Common stock, $.001 par value, 100,000,000 shares
               authorized, 25,210,090 shares issued and outstanding         25,210
            Additional paid-in capital                                   7,789,638
            Outstanding stock warrents                                      27,000
            Accumulated deficit                                         (8,440,013)
                                                                       -----------
               Total stockholders' equity                                 (596,901)
                                                                       -----------
               Total liabilities and stockholders' equity              $ 1,319,581
                                                                       ===========
</TABLE>


            See accompanying notes to condensed financial statements

                                       1
<PAGE>

Intraco Systems, Inc.
Condensed Statement of Operations
(Unaudited)

<TABLE>
<CAPTION>

                                              For the six months             For the three months
                                                ended June 30,                  ended June 30,
                                         ----------------------------    ----------------------------
                                             2001            2000            2001            2000
                                         ------------    ------------    ------------    ------------

<S>                                      <C>             <C>             <C>             <C>
Revenues                                 $    185,219    $  3,092,349    $     18,727    $  1,604,485

Cost of Revenues                              100,650       2,384,410           7,887       1,209,252

Gross profit                                   84,569         707,939          10,840         395,233

General and administrative                  1,964,870       2,163,454         756,609       1,365,204
                                         ------------    ------------    ------------    ------------

Loss from operations                       (1,880,301)     (1,455,515)       (745,769)       (969,971)
                                         ------------    ------------    ------------    ------------

Interest income                                 4,028          28,631              57          20,055

Interest expense                               (1,201)        (13,676)           (552)         (5,439)

Other income                                    1,122           4,334               3           1,546
                                         ------------    ------------    ------------    ------------

Loss before income taxes                   (1,876,352)     (1,436,226)       (746,261)       (953,809)

Provision (benefit) for income taxes               --              --              --              --
                                         ------------    ------------    ------------    ------------

Net loss                                 $ (1,876,352)   $ (1,436,226)   $   (746,261)   $   (953,809)
                                         ============    ============    ============    ============

Net loss per share (basic and diluted)          (0.10)          (0.08)          (0.04)          (0.06)
                                         ============    ============    ============    ============

Weighted average number of shares
outstanding and to be issued               18,619,589      17,162,855      19,080,171      17,162,855
                                         ============    ============    ============    ============
</TABLE>


            See accompanying notes to condensed financial statements

                                       2
<PAGE>

Intraco Systems, Inc.
Condensed Statements of Cash Flow
(Unaudited)

                                                         For the six months
                                                           ended June 30,
                                                     --------------------------
                                                         2001           2000
                                                     -----------    -----------
Cash flows from operating activities:
   Net loss                                          $(1,876,352)   $(1,436,226)
   Adjustments to reconcile net loss to net cash
     provided (used) by operating activities:
       Depreciation and amortization                     168,744         62,537
       Issuance of common stock for services             274,000        159,535
       Changes in assets and liabilities
       (Increase) decrease in:
         Inventory                                      (103,817)
         Accounts receivable                             387,539       (333,942)
         Prepaid expenses                                (92,216)       (46,464)
         Due from related party                          (29,227)
         Security deposits                                 2,906         (3,120)
       Increase (decrease) in:
         Accounts payable                                (17,934)      (819,639)
         Deferred revenue                                (62,499)        48,438
         Customer deposits                                 8,584          7,455
         Accrued expenses                                398,960        208,028
                                                     -----------    -----------

Net cash (used) by operating activities              $  (808,268)   $(2,286,442)
                                                     -----------    -----------

Cash flows from investing activities:
   Purchase of property and equipment                    (87,117)      (548,868)
   Investment in intangibles                                            (50,000)
                                                                    -----------

Net cash (used) by investing activities                  (87,117)      (598,868)
                                                     -----------    -----------

Cash flows from financing activities:
   Proceeds from issuance of stock, net                  289,999      5,075,452
   Dividends paid                                                       (35,390)
   Repayment of long-term debt                            (4,914)      (127,838)
                                                     -----------    -----------

Net cash provided by financing activities                285,085      4,912,224
                                                     -----------    -----------

Net  (decrease) increase in cash                        (610,300)     2,026,914

Cash at beginning of period                              619,340        151,725
                                                     -----------    -----------

Cash at end of period                                $     9,040    $ 2,178,639
                                                     ===========    ===========


            See accompanying notes to condensed financial statements

                                       3
<PAGE>

                              INTRACO SYSTEMS, INC.

                     Notes to Condensed Financial Statements


NOTE 1 - BASIS OF PRESENTATION
------------------------------

The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and Article 310 of Regulation S-B. Accordingly, they do not include
all of the information and footnotes required for complete financial statements.
In the opinion of management, all adjustments necessary for a fair presentation
of the results for the interim periods presented have been included. Such
adjustments consist of normal recurring accruals and other adjustments.

These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statements for the year ended December 31,
2000 on Form 10-KSB. Operating results for the six months ended June 30, 2001
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2001.

It is recommended that the accompanying condensed financial statements be read
in conjunction with the financial statements and notes thereto included
elsewhere in this filing.

NOTE 2 - PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consist of the following at June 30, 2001:

Leasehold improvements               $    57,908
Equipment                              1,312,538
Furniture and fixtures                    22,260
                                     -----------
      Total property and equipment     1,392,706

Less: accumulated depreciation          (469,166)
                                     -----------
      Property and equipment, net    $   923,540
                                     ===========


Depreciation expense for the six months ended June 30, 2001 was $153,447

NOTE 3 - STOCKHOLDERS' EQUITY
-----------------------------

In January 2001, preferred stock holders converted 5,000 shares of preferred
stock to common stock.

In March 2001, Intraco issued 612,000 shares of restricted common stock to two
investors in connection with the exercise of warrants and issued 13,688 shares
of restricted common stock to a former employee in connection with the exercise
of stock options.

                                       4
<PAGE>

In April 2001, Intraco issued 68,000 shares of common stock to three investors
in connection with the exercise of warrants and issued 3,000,000 shares of
common stock to two companies in connection with consulting services provided to
Intraco.

From April 2001 to June 2001, Intraco issued 3,000,000 shares of common stock to
three investors in connection with the Dubois Investment Management commitment
and 220,000 shares of common stock to three other investors.

In June 2001, Intraco issued 794,872 shares of common stock to its legal counsel
in connection with legal services provided to Intraco.

NOTE 4- RECLASSIFICATIONS
-------------------------

Certain amounts previsouly reported for 2000 have been reclassified to conform
with the classifications used in 2001. Such reclassifications had no effect on
the reported net loss.


                                       5
<PAGE>

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

     You should read the following discussion and analysis in conjunction with
the consolidated financial statements and the notes included elsewhere in this
report.

OVERVIEW

     Intraco is an information technology service provider. Its products and
services include speech recognition and voice-activated solutions. Intraco has
shifted its business focus from direct sales of computer hardware and computer
networks to be installed on customer premises to providing speech recognition
and voice command products delivered from Intraco's data center for recurring
monthly fees. This manner of providing products and services from a remote
location for a recurring service charge is referred to as being an "application
service provider."

     At present, Intraco has established a data center in Boca Raton, Florida.
Intraco's data center is equipped to deliver Intraco's new services. Intraco's
current speech and voice services include a speech recognition telephone
"operator" that answers incoming telephone calls and directs them to the
appropriate extension by responding to the caller's voice request, a
voice-activated telephone dialing system that places outgoing calls, and
customer queries systems based on voice recognition. Intraco has begun signing
contracts with customers for the sale of some of these new services and for the
testing of others.

     Management believes Intraco's competitive advantage lies in its ability to
combine its in-house expertise with leading speech recognition technologies
available from third parties, including voice browsers and natural language
engines, to create comprehensive packages of technology and voice services for a
variety of businesses. Management believes the major market for these services
is small- to medium-sized businesses and branch offices of larger companies.
Intraco's primary sales channel for these new products will be through
telecommunications companies. At present, Intraco has a fully operational
installation of one of its voice-enabled products.

     Since management believes it will continue to incur net losses and have
negative cash flow for the immediate future, Intraco will require additional
funding to pay its current operating expenses as well as to continue selling,
marketing, testing and installation of its new products. Intraco's operating
expenses total approximately $110,000 per month. The total funds it will need
will depend on both the length of time it takes to raise the funds as well as
the rate at which its new products gain acceptance in the marketplace.
Management believes that the faster it can generate revenues from its new
products, the more operating profit will become available to offset some of its
cash requirements for its operations. Intraco has only recently started to
generate limited revenues from these new products, however, and there can be no
assurance it will be able to generate sufficient revenues from these new
products in order to fund all or a part of its operating expenses. Intraco is
also unable to estimate when sufficient revenues may be generated by sales of
its new products. Therefore, it is actively seeking a capital infusion of
approximately $3-5 million, which it believes will provide substantially all of
the funding needed to meet its operating expenses and its product development
and testing cash needs, while it develops additional sales channels so as to
increase its sales to profitable levels. There can be no assurances that Intraco
will be able to increase sales to profitable levels.

     Management is in the process of identifying potential private investors for
private equity investment and a private debt offering. The specific terms of any
investment have not yet been negotiated with the potential investors. There can
be no assurances, however, that it will be able to complete any offerings. If
Intraco is not able to raise the required capital, then it will reduce
operations, seek a potential acquirer and/or discontinue operations.

                                       6
<PAGE>

     Intraco was incorporated in Florida in March 1990. In April 1999, it
completed a share exchange with Custom Touch Electronics, Inc., a Nevada
corporation with no material operations whose common stock traded on the OTC
Bulletin Board. Pursuant to the share exchange, all of the outstanding shares of
Intraco capital stock were exchanged for 10,531,500 Custom Touch shares.
Thereafter, Custom Touch changed its name to Intraco Systems, Inc.

RESULTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

     REVENUES. Revenues decreased $2,907,130, or 94%, to $185,219 for the six
months ended June 30, 2001, from $3,092,349 for the six months ended June 30,
2000. Of the dollar decrease, $2,983,786 was due to the impact of the
discontinued business lines. In the first quarter of 2001, Intraco eliminated
its systems/networks and service contract units. Intraco has shifted its sales
and marketing efforts to the development of a new generation of voice and speech
recognition products and services, which resulted in revenue of $76,656 for the
six months ended June 30, 2001.

     COST OF REVENUES. Cost of revenues decreased $2,283,760 or 96% to $100,650
for the six months ended June 30, 2001, from $2,384,410 for the six months ended
June 30, 2000. Of the dollar decrease, $2,285,958 was due to the impact of the
discontinued business lines offset by an increase in the cost of revenue for the
new products and services.

     The overall gross profit margins for the six months ended June 30, 2001 and
2000 were 46% and 23%, respectively. In the first six months of 2001, management
eliminated its systems/networks and service contract units, reduced Intraco's
staff by eighteen people, and directed more resources toward developing products
and services with higher profit margins. The higher profit margins for the six
months ended June 30, 2001 primarily reflected the development of a speech
recognition system in March 2001. Management currently believes its
voice-activated products, such as the voice-activated auto attendant and
telephone dialer, can be sold at higher profit margins. There can be no
assurances that this strategy will prove successful.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the six months ended June 30, 2001 were $1,964,870,
compared to $2,163,454 for the six months ended June 30, 2000, a decrease of
$198,584, or 9%. Of the dollar decrease, $310,964 represented decreased salaries
and commission costs and $48,999 represented decreased travel and entertainment
expenses primarily due to the reduction of the number of employees; $96,734
represented decreased marketing expenses; $47,401 represented increased legal
and printing costs in connection with the filing of a registration statement on
a Form SB-2 with the Securities and Exchange Commission; $106,208 reflects
increased levels of depreciation and amortization due to capital investments;
and $121,450 represented increased network service charges connected with the
operations of the data centers from which Intraco delivers its new products and
services. The network service charges are expected to decrease due to the
consolidation of the two data centers into one data center in April 2001. The
remaining decrease was attributable to other additional selling, general and
administrative expenses.

     INTEREST INCOME. Interest income, net of interest expense, decreased by
$12,128 to $2,827 for the six months ended June 30, 2001 from $14,955 for the
six months ended June 30, 2000.

     NET LOSS. As a result of the foregoing, Intraco reported a net loss of
$1,876,352 for the six months ended June 30, 2001, compared to a net loss of
$1,436,226 for the six months ended June 30, 2000, an increase of $440,126. As

                                       7
<PAGE>

described more fully below under the caption "Liquidity and Capital Resources,"
Intraco anticipates that it will continue to incur net losses and have negative
cash flows. Management has sought to reduce its expenses by, among other things,
reducing personnel and restructuring operations, and is actively seeking
additional funding. Management cannot at this time, however, estimate when, if
ever, it will be able to eliminate its net losses and achieve positive cash
flow.

     ACCOUNTS RECEIVABLE. Accounts receivable decreased $740,849, or 85%, to
$128,515 for the six months ended June 30, 2001 from $869,364 for the six months
ended June 30, 2000. This decrease resulted from the reduction in revenue due to
the discontinuing of systems/networks and service contracts products.

     ACCOUNTS PAYABLE. Accounts payable increased $633,523, or 307%, to $839,836
for the six months ended June 30, 2001, from $206,313 for the six months ended
June 30, 2000. The increase was due primarily to the delays Intraco has
experienced in obtaining the additional financing required to cover current
operations.

     PROPERTY AND EQUIPMENT. Property and equipment increased $467,557, or 51%,
to $1,392,706 for the six months ended June 30, 2001 from $925,149 for the six
months ended June 30, 2000. The increase was due to the investment in additional
equipment to support the new speech and telecommunication services product
lines.

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000

     REVENUES. Revenues decreased $1,585,758, or 99%, to $18,727 for the three
months ended June 30, 2001, from $1,604485 for the three months ended June 30,
2000. Of the dollar decrease, $1,596,214 was due to the impact of the
discontinued business lines. In the first quarter of 2001, Intraco eliminated
its systems/networks and service contract units. Intraco has shifted its sales
and marketing efforts to the development of a new generation of voice and speech
recognition products and services, which resulted in revenue of $10,456 for the
three months ended June 30, 2001.

     COST OF REVENUES. Cost of revenues decreased $1,201,365 or 99% to $7,887
for the three months ended June 30, 2001, from $1,209,252 for the three months
ended June 30, 2000. The dollar decrease was mainly due to the impact of the
discontinued business lines.

     The overall gross profit margins for the three months ended June 30, 2001
and 2000 were 58% and 25%, respectively. Management eliminated its
systems/networks and service contract units and directed more resources toward
developing products and services with higher profit margins. The higher profit
margins for the three months ended June 30, 2001 primarily reflected the
development of a speech recognition system in March 2001. Management currently
believes its voice-activated products, such as the voice-activated auto
attendant and telephone dialer, can be sold at higher profit margins. There can
be no assurances that this strategy will prove successful.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses for the three months ended June 30, 2001 were $756,609,
compared to $1,365,204 for the three months ended June 30, 2000, a decrease of
$608,595, or 45%. Of the dollar decrease, $497,695 represented decreased
salaries and commission costs and $49,100 represented decreased travel and
entertainment expenses primarily due to the reduction of the number of
employees; $100,042 represented decreased marketing expenses; $39,888 reflects
increased levels of depreciation and amortization due to capital investments;
and $38,952 represented increased network service charges connected with the
operations of the data centers from which Intraco delivers its new products and
services. The remaining decrease was attributable to other additional selling,
general and administrative expenses.

                                       8
<PAGE>

     INTEREST EXPENSE. Interest expense, net of interest income decreased by
$15,111 to $552 for the three months ended June 30, 2001 as compared to net
interest income of $14,616 for the three months ended June 30, 2000.

     NET LOSS. As a result of the foregoing, Intraco reported a net loss of
$746,261 for the three months ended June 30, 2001, compared to a net loss of
$953,809 for the three months ended June 30, 2000, a decrease of $207,548. As
described more fully below under the caption "Liquidity and Capital Resources,"
Intraco anticipates that it will continue to incur net losses and have negative
cash flows. Management has sought to reduce its expenses by, among other things,
reducing personnel and restructuring operations, and is actively seeking
additional funding. Management cannot at this time, however, estimate when, if
ever, it will be able to eliminate its net losses and achieve positive cash
flow.

LIQUIDITY AND CAPITAL RESOURCES

     Intraco has historically incurred significant losses and has substantial
negative cash flow from operations. Intraco has included a footnote in its
annual financial statements for the year ended December 31, 2000, which
expresses concern about Intraco's ability to continue as a going concern unless
it can secure additional financing, reduce its operating expenses, and sell its
new products at higher profit margins. Intraco expects significant operating
losses to continue at least during 2001. In April 2001, Intraco received a $3
million private placement equity financing commitment from Dubois Investment
Management. As of August 17, 2001 Intraco has received $225,000 under this
commitment. There can be no assurances that any additional funds will be
received from Dubois Investment Management. Management is in negotiations with
other potential investors. There can be no assurances that any additional
financing will be raised or, if raised, on favorable terms.

     At June 30, 2001, Intraco's current assets totaled $309,583 and current
liabilities totaled $1,900,448, resulting in a negative working capital ratio.
Intraco had long-term liabilities of $16,034 at June 30, 2001. Intraco had
$9,040 in cash on hand at June 30, 2001 compared to $619,340 at December 31,
2000. Operating activities for the six months ended June 30, 2001 used cash of
$808,268 primarily due to the net loss of $1,876,352. Net cash used in investing
activities was $87,117, reflecting the purchase of fixed assets. Financing
activities provided cash in the amount of $285,085, primarily due to the
commitment from Dubois Investment Management.

     Since management believes it will continue to incur net losses and have
negative cash flow in the immediate future, Intraco requires additional funding
to cover current operations and the implementation of its business plan.
Management is actively seeking to raise additional investment capital, which is
likely to be both convertible debt and equity financing. Intraco has no material
commitments for capital expenditures at the present time. Management is in
negotiations with various potential investors other than Dubois Investment
Management. No assurance can be made that such funding will be available and, if
available, that such funding will be available on terms acceptable to Intraco.

FACTORS THAT MAY AFFECT FUTURE RESULTS

Certain important factors may affect Intraco's actual results and could cause
those results to differ materially from any forward-looking statements made in
this Quarterly Report on Form 10-QSB or that are otherwise made by Intraco or on
its behalf. "Forward-looking statements" are not based on historical facts and
are typically phrased using words such as "may," "will," "expect," "believe,"
"anticipate," "intend," "could," "estimate" or "continue" and similar
expressions or variations.

                                       9
<PAGE>

     Differences in actual results may be caused by factors such as those
discussed below, as well as those discussed elsewhere in this report and in
Intraco's filings with the SEC.

     Although Intraco believes that the expectations reflected in the
forward-looking statements are reasonable, Intraco cannot guarantee that they
will be achieved. Except as applicable law requires, Intraco does not intend to
update any of the forward-looking statements to conform these statements to
actual results.

     Any or all forward-looking statements in this document and in any other
public statements made may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and uncertainties. In
addition to general economic conditions, many factors mentioned in the
discussion below will be important in determining future results.

     Neither Intraco nor its management undertake any obligation to publicly
update any forward-looking statements, whether as a result of new information,
future events or otherwise. The reader is advised, however, to consult any
further disclosures made on related subjects in Intraco's future filings with
the SEC.

Intraco has experienced significant losses and these losses are expected to
continue in the future.

     For the six months ended June 30, 2001, Intraco reported net losses of
$1,876,352. As of June 30, 2001, Intraco had an accumulated deficit of
$8,440,013, and negative stockholders' equity of $596,901. There can be no
assurance that Intraco will operate profitably in the future and that Intraco
will not continue to sustain losses. Continued losses could materially and
adversely affect its business.

Intraco will need substantial additional capital in order to continue its
operations.

     Intraco requires substantial working capital to build its application
service provider systems, for marketing and promotion, and to fund its general
business operations. In addition, Intraco anticipates that it will regularly
need to make capital expenditures to upgrade and modify its management
information system, including software and hardware, as it grows and the needs
of its business change. Intraco needs to raise additional funds to meet its
current needs for working capital. Intraco is actively seeking additional
financing, which may be either debt or equity financing. Intraco cannot be
certain that any additional financing will be available to them when needed and
if available, whether it will be on favorable terms. In addition, if Intraco
raises additional funds through the issuance of equity, equity-related or debt
securities, the securities may have rights, preferences or privileges senior to
those of the rights of its current shareholders and its shareholders may
experience additional dilution.

Intraco has shifted its business focus away from network installations to
providing information technology and voice services, including speech
recognition products and services.

     Intraco shifted its business focus towards providing speech recognition
products and services. As a result of this shift in focus, Intraco's business
plan is unproven. There can be no assurance that its new business plan will be
successful. Although Intraco is in discussions with several prospective clients,
Intraco has only just begun to sell its newly developed speech recognition
products and services and demand for these products and services is uncertain.
Additionally, Intraco's previous financial history is not a good indication of
how the business is doing or how it is evolving.

                                       10
<PAGE>

Intraco's services are based on software obtained from third parties. Intraco
may have to discontinue or significantly change its products or services if
these third parties cancel licensing agreements or discontinue production of the
software.

     Intraco obtains software products pursuant to agreements with Motorola and
Nuance. Intraco intends to enter into additional agreements as may be necessary
in the future. Obtaining this software, as well as any additional software
offerings, is critical to Intraco's expansion strategy because it offers
services based on the integration of these software packages to clients. If one
or more of Intraco's existing relationships with its key software companies were
to be terminated or not renewed, it could be faced with discontinuing products
or services or delaying or reducing introduction of services unless it could
find, license and offer equivalent software packages.

     All of Intraco's third-party agreements are non-exclusive. Intraco's
competitors could also license and offer software products that Intraco offers
as part of its services. Intraco cannot be sure that its current vendors will
continue to offer or support the software it currently licenses from them in
current form, nor can it be sure that it will be able to adapt its systems to
changes in such software.

Intraco's services include information, data and voice services, such as e-mail
and voice mail, that are often essential to a business. Intraco could be subject
to liability if it does not provide its services to their clients in accordance
with the terms of the agreements.

     Many of the engagements Intraco has begun or plans to undertake involve
projects involving information, data and voice services that are critical to the
operations of its clients' businesses and provide benefits to its clients that
may be difficult to quantify. If Intraco fails or is unable to meet a client's
expectations in the performance of its services, its client's operations could
be adversely affected. This could give rise to claims against Intraco or damage
its reputation, adversely affecting its business, operating results and
financial condition.

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<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     On October 29, 1999, Banker's Leasing Association ("Banker's") filed a suit
against Intraco and Jack Berger in the Circuit Court of the Fifteenth Judicial
Circuit in and for Palm Beach County, Florida for breach of a master lease
agreement and personal guaranty related to computer equipment, software and
services leased by Intraco for the amount of $71,608. Intraco filed a
counterclaim based on Banker's failure to provide services agreed to in the
lease and breach of fiduciary duty. Banker's has answered Intraco's counterclaim
and has filed suit against AIM Solutions, Inc. ("AIM"), as successor to
Enterprises Solutions Group, Inc., the third party responsible for setting up
the computer equipment and software and providing services. AIM has responded to
the claim against it. On June 28, 2001, Intraco settled the lawsuit, as a result
of which Intraco agreed to pay Banker's Leasing a total of $40,000 in settlement
of its claim against Intraco and Jack S. Berger.

     There are certain legal proceedings and claims against the company in which
management is vigorously defending itself. Management has quantified and accrued
any potential liability.

ITEM 2.  CHANGES IN SECURITIES

     In January 2001, Intraco issued 5,000 shares of common stock to a preferred
shareholder who converted a like number of shares of preferred stock. The shares
were issued pursuant to an exemption from registration under Section 3(a)(9) of
the Securities Act.

     In March 2001, Intraco issued 13,668 restricted shares of common stock to
one former employee upon the employee's exercise of stock options granted to the
employee under Intraco's stock option plan in connection with the person's
employment with Intraco. Intraco did not receive any proceeds from the exercise
of options because the option holder used the cashless exercise method. The
shares issued were valued at $10,251. The shares were issued pursuant to
exemptions from registration under Section 3(a)(9) and 4(2) of the Securities
Act. The employee had access to the Company's reports filed pursuant to the
Exchange Act and a copy of the stock option plan and was familiar with Intraco's
operations and financial condition. Intraco did not pay any fees or commissions
in connection with this issuance.

     In March 2001, Intraco issued 612,000 shares of common stock at $0.10 per
share for $61,200 to two investors who exercised their warrants. The shares were
issued pursuant to an exemption from registration under Section 4(2) of the
Securities Act. To Intraco's knowledge, the investors were sophisticated in
financial investments and were familiar with Intraco's business and operations.
No offering document was prepared, and no public solicitation or general
advertising was done in connection with these issuances. Intraco did not pay any
fees or commissions in connection with these issuances.

     In April 2001, Intraco issued 68,000 shares of common stock to three
investors who exercised warrants having an exercise price of $0.10 per share.
The shares were issued pursuant to an exemption from registration under Section
4(2) of the Securities Act. To Intraco's knowledge, the investors were
sophisticated in financial investments and were familiar with Intraco's business
and operations. No offering document was prepared, and no public solicitation or
general advertising was done in connection with these issuances. Intraco did not
pay any fees or commissions in connection with these issuances.

     In April 2001, Intraco issued 1,500,000 shares of common stock to Titlest
Investments and 1,500,000 shares of common stock to SBZ Investments in
connection with consulting services provided to Intraco. The shares were valued
at $150,000 The shares were issued pursuant to an exemption from registration
under Section 4(2) of the Securities Act. To Intraco's knowledge, management of

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<PAGE>

the firms were sophisticated in financial investments and were familiar with
Intraco's business and operations. No offering document was prepared, and no
public solicitation or general advertising was done in connection with these
issuances. Intraco did not pay any fees or commissions in connection with these
issuances.

     From April 2001 to June 2001, Intraco issued 2,000,000 shares of common
stock at $0.05 per share for $100,000 to two investors and 1,220,000 shares of
common stock at $0.10 per share for $122,000 to four investors, of which
1,000,000 shares were purchased by Robert Hildreth, Intraco's Chairman of the
Board. The shares were offered and issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act. To Intraco's knowledge,
the investors were sophisticated in financial investments and received a variety
of financial and other information about Intraco in connection with the
investors' due diligence. No public solicitation or general advertising was done
in connection with this offering. Intraco did not pay any fees or commissions in
connection with these issuances

     In June 2001, Intraco issued 794,872 shares of common stock to Broad and
Cassel, its legal counsel, in connection with legal services provided to
Intraco. The shares were valued at $124,000. The shares were issued pursuant to
an exemption from registration under Section 4(2) of the Securities Act. To
Intraco's knowledge, management of the firm was sophisticated in financial
investments and was familiar with Intraco's business and operations. No offering
document was prepared, and no public solicitation or general advertising was
done in connection with this issuance. Intraco did not pay any fees or
commissions in connection with this issuance.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

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

     None.

ITEM 5.  OTHER INFORMATION

     None.


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<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits:

      EXHIBIT NO.                          DESCRIPTION OF EXHIBIT
-------------------------    ---------------------------------------------------



     (b) Reports on Form 8-K:

     Intraco did not file any current reports on Form 8-K for the quarter ended
June 30, 2001.


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<PAGE>

                                   SIGNATURES

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

                                       INTRACO SYSTEMS, INC.

Dated: August 20, 2001                 By: /s/ JACK S. BERGER
                                           ----------------------------------
                                           Jack S. Berger
                                           Chief Executive Officer, President
                                           and Director

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