UNITED STATES
                       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 APRIL 30, 2001

                                       OR

[     ]     TRANSITION  REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______


                         COMMISSION FILE NO.: 000-30326

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

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

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

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

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 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
                              ---     ---

Number  of  shares of common stock outstanding as of June 5, 2001 . . 18,665,451
Number  of  shares  of  Series 1-A Convertible Preferred Stock
outstanding as of  June  5,  2001  . . . . . . . . . . . . . . . . . . 1,780,509
Number  of  shares  of  Series 2-A Convertible Preferred Stock
outstanding as of June  5,  2001 . . . . . . . . . . . . . . . . . . . 1,350,176


<PAGE>
                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----
                         PART I - FINANCIAL INFORMATION

Item  1.   FINANCIAL  STATEMENTS . . . . . . . . . . . . . . . . . . . . . . .3
Item  2.   MANAGEMENT'S DISCUSSION AND  ANALYSIS OF FINANCIAL
              CONDITION  AND  RESULTS  OF  OPERATIONS . . . . . . . . . . . .14
Item  3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . .27

                           PART II - OTHER INFORMATION

Item  1.   LEGAL  PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . .27
Item  2.   CHANGES  IN  SECURITIES . . . . . . . . . . . . . . . . . . . . . 28
Item  3.   DEFAULTS  UPON  SENIOR  SECURITIES . . . . . . . . . . . . . . . .28
Item  4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . 28
Item  5.   OTHER  INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .28
Item  6.   EXHIBITS  AND  REPORTS  ON  FORM  8-K . . . . . . . . . . . . . . 29
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31


<PAGE>
<TABLE>
<CAPTION>
PART  I  -  FINANCIAL  INFORMATION

                                              VSOURCE, INC.
                                       CONSOLIDATED BALANCE SHEETS


                                                  ASSETS

                                                                      April 30, 2001    January 31, 2001
                                                                     ----------------  ------------------
                                                                       (Unaudited)
<S>                                                                  <C>               <C>
CURRENT ASSETS
     Cash                                                            $     2,799,037   $       5,360,525
     Restricted cash                                                          48,365              47,737
     Funds held in escrow                                                    600,000                  --
     Accounts receivable                                                      10,720               4,200
     Notes receivable-related parties                                        200,000             150,000
     Prepaid expenses                                                        132,075             103,687
                                                                     ----------------  ------------------
          Total current assets                                             3,790,197           5,666,149

PROPERTY AND EQUIPMENT
     Equipment and fixtures                                                  468,697           1,099,628
     Less - accumulated depreciation                                         (66,821)           (167,283)
                                                                     ----------------  ------------------
                                                                             401,876             932,345

OTHER ASSETS
     Goodwill                                                              2,100,000           4,592,863
     Notes receivable-related parties                                             --              50,000
     Other assets                                                             17,438              19,559
                                                                     ----------------  ------------------
                                                                     $     6,309,511   $      11,260,916
                                                                     ================  ==================

                                LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                                $       179,007   $         598,717
     Accrued liabilities                                                     377,831             311,686
                                                                     ----------------  ------------------
                                                                             556,838             910,403

COMMITMENTS AND CONTINGENCIES                                                     --                  --

SHAREHOLDERS' EQUITY
     Preferred stock Series 1-A ($0.01 par value, 2,802,000
          shares authorized; 1,804,105 and 2,437,354 shares issued
          and outstanding as of April 30, 2001 and January 31,
           2001, respectively.)
          (Aggregate liquidation value is $4,510,263)                         18,041              24,374

     Preferred stock Series 2-A ($0.01 par value, 1,672,328
          shares authorized; 1,350,176 and 1,375,917 shares issued
          and outstanding as of April 30, 2001 and January 31,
          2001, respectively.)
          (Aggregate liquidation value is $8,654,628)                         13,502              13,759
</TABLE>


        The accompanying notes are an integral part of these statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                                VSOURCE, INC.
                                         CONSOLIDATED BALANCE SHEETS


                                                             April 30, 2001    January 31, 2001
                                                            ----------------  ------------------
                                                              (Unaudited)
<S>                                                         <C>               <C>
Common stock ($0.01 par value, 100,000,000
     shares authorized; 18,641,857 and 17,938,912
     shares issued and outstanding, as of April 30, 2001
     and January 31, 2001, respectively.)                           186,419             179,389
Additional paid-in capital                                       63,191,737          67,267,483
Deferred compensation                                            (1,180,733)         (5,804,851)
Accumulated deficit                                             (56,049,495)        (50,902,843)
                                                            ----------------  ------------------
                                                                  6,179,471          10,777,311
Less: Notes receivable from the sale of stock                      (426,798)           (426,798)
                                                            ----------------  ------------------
                                                                  5,752,673          10,350,513
                                                            ----------------  ------------------
                                                            $     6,309,511   $      11,260,916
                                                            ================  ==================
</TABLE>


        The accompanying notes are an integral part of these statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                               VSOURCE, INC.
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                                (Unaudited)

                                                              For the three months ended
                                                           April 30, 2001    April 30, 2000
                                                          ----------------  ----------------
<S>                                                       <C>               <C>
Revenue                                                   $        12,720   $            --

General and administrative expenses (including $49,393
     and $2,752,889 of stock-based compensation for the
     three months ended April 30, 2001 and 2000,
     respectively)                                                744,142         3,650,399

Research and development (including $499,419 and
     $601,448 of stock-based compensation for the
     three months ended April 30, 2001 and 2000,
     respectively)                                              2,312,278         2,192,755

Impairment of long-lived asset                                  2,138,019                --
                                                          ----------------  ----------------
     Total expenses                                             5,194,439         5,843,154
                                                          ----------------  ----------------
Loss from operations                                           (5,181,719)       (5,843,154)

Other income (expense):
     Interest expense                                                (380)           (3,699)
     Interest income                                               35,447            38,399
                                                          ----------------  ----------------
Net loss                                                  $    (5,146,652)  $    (5,808,454)
                                                          ================  ================

Loss available to
   common shareholders (See note 5)                       $    (5,146,652)  $   (12,676,851)
                                                          ================  ================

Basic and diluted weighted average number of
   common shares outstanding                                   18,356,829        15,815,421
                                                          ================  ================

Basic and diluted net loss per share
   available to common shareholders                       $         (0.28)  $         (0.80)
                                                          ================  ================
</TABLE>


        The accompanying notes are an integral part of these statements.


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                                           VSOURCE, INC.
                                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                                      Common Stock         Preferred Stock      Additional       Deferred       Notes
                                    Shares     Amount     Shares     Amount   Paid-in-Capital  Compensation  Receivable
                                  ----------  --------  ----------  --------  ---------------  ------------  ----------
<S>                               <C>         <C>       <C>         <C>       <C>              <C>           <C>
Balance at January 31, 2000       15,807,171  $158,071         --        --       10,645,934    (1,780,817)   (178,798)

Issuance of preferred stock               --        --  4,474,328    44,743       16,995,694                  (248,000)
Conversion of preferred stock        661,057     6,610   (661,057)   (6,610)              --
Issuance of common stock-
   acquisition of OTT              1,089,389    10,894                             4,047,360
Issuance of common stock upon
   conversion of demand notes         65,654       657                               163,480
Deemed non-cash dividend to
   preferred stockholders                                                         13,499,177
Compensation related to:
   options granted for services                                                   11,942,646    (6,684,383)
   warrants issued for services                                                   10,966,310
Issuance of stock
   for services                        8,250        83                               319,216
Expired and forfeited options                                                     (2,660,349)    2,660,349
Exercise of stock options            209,334     2,094                             1,348,995
Exercise of warrants                  98,057       980                                  (980)
Net loss
                                  ----------  --------  ----------  --------  ---------------  ------------  ----------
Balance at January 31, 2001       17,938,912  $179,389  3,813,271   $38,133   $   67,267,483   $(5,804,851)  $(426,798)

Conversion of preferred stock        658,990     6,590   (658,990)   (6,590)              --
Compensation related to:
   options granted for services                                                                    548,812
Expired and forfeited options                                                     (4,075,306)    4,075,306
Exercise of warrants                  43,955       440                                  (440)
Net loss
                                  ----------  --------  ----------  --------  ---------------  ------------  ----------
Balance at April 30, 2001         18,641,857  $186,419  3,154,281   $31,543   $   63,191,737   $(1,180,733)  $(426,798)
   (Unaudited)                    ==========  ========  ==========  ========  ===============  ============  ==========


                                                      Total
                                   Accumulated    Shareholder's
                                     Deficit     Equity (Deficit)
                                  -------------  -----------------
<S>                               <C>            <C>
Balance at January 31, 2000         (9,804,904)          (960,514)

Issuance of preferred stock                            16,792,437
Conversion of preferred stock                                  --
Issuance of common stock-
   acquisition of OTT                                   4,058,254
Issuance of common stock upon
   conversion of demand notes                             164,137
Deemed non-cash dividend to
   preferred stockholders          (13,499,177)                --
Compensation related to:
   options granted for services                         5,258,263
   warrants issued for services                        10,966,310
Issuance of stock
   for services                                           319,299
Expired and forfeited options
Exercise of stock options                               1,351,089
Exercise of warrants                                           --
Net loss                           (27,598,762)       (27,598,762)
                                  -------------  -----------------
Balance at January 31, 2001       $(50,902,843)  $     10,350,513

Conversion of preferred stock                                  --
Compensation related to:
   options granted for services             --            548,812
Expired and forfeited options
Exercise of warrants
Net loss                            (5,146,652)        (5,146,652)
                                  -------------  -----------------
Balance at April 30, 2001         $(56,049,495)  $      5,752,673
   (Unaudited)                    =============  =================
</TABLE>


        The accompanying notes are an integral part of these statements.


                                        6
<PAGE>
<TABLE>
<CAPTION>
                                               VSOURCE, INC.
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                (Unaudited)
                                                              For the three months ended
                                                           April 30, 2001    April 30, 2000
                                                          ----------------  ----------------
<S>                                                       <C>               <C>
Increase (decrease) in cash
Cash flows from operating activities:
     Net loss                                             $    (5,146,652)  $    (5,808,454)
     Adjustments to reconcile net loss to
          net cash used by operating activities:
     Depreciation and amortization                                427,433            18,027
     Impairment of fixed assets                                   495,671                --
     Impairment of long-lived assets                            2,138,019                --
     Compensation expense on stock options granted                548,812         1,106,431
     Compensation expense for warrants granted                         --         2,083,250
     Compensation expense stock issued                                 --           164,656
     Funds held in escrow                                        (600,000)               --
     Changes in assets and liabilities:
               Accounts receivable                                 (6,520)               --
               Employee receivables                                    --           (46,000)
               Prepaid expenses                                   (27,852)         (149,280)
               Other assets                                            --              (535)
               Accounts payable                                  (419,710)          591,723
               Deferred revenue                                        --                --
               Accrued liabilities                                 66,145            63,047
                                                          ----------------  ----------------
               Net cash used in operating activities           (2,524,654)       (1,977,135)

Cash flows from investing activities:
     Acquisition of capitalized software                               --           (44,718)
     Increase in goodwill                                         (27,894)               --
     Acquisition of property and equipment                         (8,312)         (126,132)
                                                          ----------------  ----------------
               Net cash used in investing activities              (36,206)         (170,850)

Cash flows from financing activities:
     Proceeds from issuance of preferred stock                         --           893,917
                                                          ----------------  ----------------
               Net cash provided by financing activities               --           893,917
                                                          ----------------  ----------------
Net decrease in cash                                           (2,560,860)       (1,254,068)
                                                          ----------------  ----------------
Cash at beginning of period                                     5,408,262         5,207,167
                                                          ----------------  ----------------
Cash at end of period                                     $     2,847,402   $     3,953,099
                                                          ================  ================
</TABLE>


        The accompanying notes are an integral part of these statements.


                                        7
<PAGE>
                                  VSOURCE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 2001


1.  NATURE  OF  BUSINESS  AND  SUMMARY  OF  SIGNIFICANT ACCOUNTING PRINCIPLES

     The  interim  consolidated  financial  statements as of April 30, 2001 have
been  prepared  by  Vsource,  Inc.  (the  "Company")  pursuant  to the rules and
regulations  of  the  Securities and Exchange Commission (the "SEC") for interim
financial  reporting.  These  consolidated  statements are unaudited and, in the
opinion  of  management, include all adjustments (consisting of normal recurring
adjustments  and  accruals) necessary to present fairly the consolidated balance
sheets,  consolidated  operating  results,  and  consolidated cash flows for the
period  presented in accordance with accounting principles generally accepted in
the  United  States  of  America ("US GAAP").  The consolidated balance sheet at
January  31,  2001  has  been  derived  from  the audited consolidated financial
statements at that date. Operating results for the interim periods presented are
not  necessarily  indicative  of  the  results that may be expected for the year
ending  January  31, 2002. Certain information and footnote disclosures normally
included  in  financial statements prepared in accordance with US GAAP have been
omitted  in  accordance  with  the  rules  and  regulations  of  the  SEC. These
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements,  and  accompanying  notes,  included in the
Company's  Annual  Report  on  Form 10-KSB for the fiscal year ended January 31,
2001  (File  No.  000-030326).

USE  OF  ESTIMATES

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

PRINCIPLES  OF  CONSOLIDATION

     The consolidated financial statements include the accounts of Vsource, Inc.
and  its  wholly  owned subsidiaries Virtual Source, Inc. and Online Transaction
Technologies,  Inc.  Significant  intercompany  accounts  have  been eliminated.

REVENUE  RECOGNITION

     The  Company  accounts  for  revenue  in  accordance  with  the  Financial
Accounting  Standards Board issued EITF00-3, which provides guidance on applying
generally  accepted  accounting principles for recognizing revenues. The Company
provides  Web  based  auction  services  and  presently has one client operating
month-to-month  under  an expired services agreement.  A monthly maintenance fee
is  charged which is recognized currently in the month during which the services
are  performed.

RESEARCH  AND  DEVELOPMENT

     Research  and  development  expenditures  are  charged  to  operations  as
incurred,  until  technological  feasibility has been established, at which time
such costs are capitalized until the product is available for general release to
customers.  To  date,  the  Company's  software  has been not been available for
general  release  concurrent with technological feasibility, and accordingly, no
development  costs  have  been  capitalized.  (See  discussion  under  Software
Development  Costs.)

SOFTWARE  DEVELOPMENT  COSTS

     Software  development  costs  have  been  accounted  for in accordance with
Statement  of  Financial  Accounting  Standard (SFAS) No. 86, Accounting for the
Costs  of Computer Software to be Sold, Leased or Otherwise Marketed. Under that
standard,  capitalization  of  software  development  costs  begins  upon  the
establishment  of  technological  feasibility,  subject  to net realizable value
considerations. Capitalized software costs are amortized over the greater of: 1)
the  amount  computed  using the ratio that current gross revenues for a product
bear  to  the  total  current  and  anticipated  future  gross revenues for that
product; or 2) the straight-line method over the remaining estimated useful life
of  the  product in which the life is generally estimated to be three years. The
Company  has  not incurred any significant capitalizable costs, other than those
acquired  in  the  merger  with  OTT.


                                        8
<PAGE>
                                  VSOURCE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 2001


PROPERTY  AND  EQUIPMENT

     Property and equipment are stated at cost. The assets are depreciated using
the  straight-line  method  over  their  estimated useful lives of five to seven
years.  Carrying values are reviewed periodically for impairment whenever events
or  changes in circumstances indicate that the carrying amount of assets may not
be  recoverable.  The  policy  of  the  Company  is  to  capitalize  significant
improvements  and  to  expense  repairs  and  maintenance.

IMPAIRMENT  OF  LONG-LIVED  ASSETS

     The  Company  evaluates  its  long-lived  assets  by measuring the carrying
amount  of  the  assets  against  the  estimated  undiscounted future cash flows
associated  with them. If such evaluations indicate that the future undiscounted
cash  flows  of  certain  long-lived  assets  are  not sufficient to recover the
carrying  value  of  such  assets, the assets are adjusted to their fair values.

     During  the  three  months  ended  April  30,  2001,  the  Company reviewed
long-lived  Assets  and  other intangibles and made estimates of expected future
cash  flows,  based  on  the  Company  management's  best estimates and based on
reasonable  and  supportable assumptions and projections. All available evidence
was  considered  in  developing these estimates of expected future cash flows. A
range  was  estimated  for the amount and timing of possible cash flows, and the
probability of possible outcomes was considered in determining the best estimate
of  future  cash  flows.

     As  part  of  the  acquisition of OTT, the Company had recorded Goodwill of
$4,620,757,  and was amortizing it over three years. The total recorded value of
the  shares issued was based on the average market price of the Company's stock.
The  Company  is in the process of obtaining a valuation of the acquired assets,
and  the  amounts  recorded  are  subject  to  adjustment.

     During the three months ended April 30, 2001, the Company determined, based
on  the  estimates of future cash flows, that goodwill did not continue to carry
the  value  originally  anticipated.  As  a  result,  and in accordance with the
Statement  of  Financial  Accounting  Standard  (SFAS)  No. 121, the assets were
reduced  to their net realizable value and the Company recorded $2,138,019 as an
impairment  of  intangible  assets.

     While  the  Company  continues  to  evaluate  opportunities  for  raising
additional  capital,  the Company is limiting development and marketing expenses
of  LiquidMarketplace(TM)  products.  The  Company  is  also  evaluating  other
prospects  with  compatible technology companies. There is no guarantee that the
Company  will  generate significant revenue from LiquidMarketplace(TM) products,
and  therefore,  there is an uncertainty of the continuing value of Goodwill. As
such,  the  Company  will  continue  to  evaluate  Goodwill and other long-lived
assets.

     The  Company  incurred  a  $495,671 impairment of fixed assets in the three
months ended April 30, 2001. The Company closed its Washington facilities during
the  three  months  ended  April  30, 2001, and determined that the property and
equipment  did  not  continue  to  carry  the value originally anticipated. As a
result, and in accordance with Statement of Financial Accounting Standard (SFAS)
No.  121,  the  assets were reduced to their net realizable value, less costs of
disposal.  The  related  expense  is  included  in  research  and  development.

INTANGIBLE  ASSETS

     Intangible assets, principally goodwill, are amortized on the straight-line
method  over  a  period  of  three  years. Goodwill represents the excess of the
purchase  price paid over the fair value of tangible and identifiable intangible
net  assets  acquired.  The  Company  regularly assesses the carrying amounts of
intangible  assets  for impairment when operating profit (loss) from the related
business  indicates  the  carrying amounts of the assets may not be recoverable.
Carrying  values  are  reviewed  for  impairment  whenever  events or changes in
circumstances indicate that the carrying amounts of intangible assets may not be
recoverable.  As  such,  an  adjustment  of  $2,138,019  was made to goodwill to
recognize the loss on impairment of long-lived assets for the three months ended
April  30,  2001.

STOCK-BASED  COMPENSATION

     The  Company  accounts  for  stock-based  compensation  in  accordance with
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  ("SFAS  123"),  which  allows companies to continue to recognize
compensation  expense  pursuant  to  Accounting  Principles Board Opinion No. 25
("APB  25"),  "Accounting for Stock Issued to Employees", but requires companies
to  disclose  the  effect  on earnings of compensation expense for stock options
based  on the fair value of the options at the grant date. Accordingly, employee
compensation cost for stock options is measured as the excess of the fair market
value  over  the  exercise  price  at  the  measurement  date.

LOSS  PER  SHARE

     Basic  and  diluted  loss per share of common stock is computed by dividing
the  loss  available  to  common  stockholders by the weighted average number of
common  shares outstanding during the period shown. Common stock equivalents are
not  included in the determination of diluted loss per share, as their inclusion
would  be  antidilutive.


                                        9
<PAGE>
                                  VSOURCE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 2001


2.  ACQUISITION  OF  OTT

     On  January  22,  2001,  the Company closed an Agreement and Plan of Merger
with  OTT  Acquisition  Corp.,  a  California  corporation,  Online  Transaction
Technologies,  Inc.,  a  California  corporation  ("OTT"),  Colin  P. Kruger and
Michael Shirman (the "Merger Agreement"). The merger is recorded on the purchase
method  of  accounting  and is a tax-free reorganization under Section 368(a) of
the  Internal  Revenue  Code.

     The aggregate purchase price payable at closing was 1,089,389 shares of the
Company's  common  stock.  The  number  of  shares  was  calculated based upon a
specific  formula  in  the  Merger  Agreement. The purchase price was subject to
adjustment  based on reductions or increases in the net book value of the assets
of  OTT  from  September 30, 2000 through closing. In accordance with Accounting
Principles  Board  Opinion 16, the total recorded value of the shares issued was
based  on  the  average  market price of the Company's stock for a stated period
both before and after the Company's announcement of the acquisition. The Company
recorded  $3,949,039  of  the  purchase  price of OTT and $671,718 of direct and
accrued  expenses  as  Goodwill.  The  Company  is in the process of obtaining a
valuation  of the acquired assets. Accordingly, the amounts recorded are subject
to  adjustment.  Carrying  values were adjusted $2,138,019 to reduce goodwill to
recognize the loss on impairment of long-lived assets for the three months ended
April  30,  2001.

     Twenty-five  percent  of  the  equity  securities  comprising the aggregate
purchase  price will be held for six months in escrow (the "Escrow Securities").
The  Escrow  Securities  and  the  Company  shares  issued  to  OTT  management
shareholders  will  be  the  sole  recourse  for the Company for indemnification
against  claims  and  losses arising from breaches by OTT of representations and
warranties  or  covenants  made  pursuant  to  the  definitive agreements.  Such
representations  and warranties shall terminate over varying periods. The Escrow
Securities  will  be  valued  for  purposes  of  any such indemnification at the
Acquisition  Price.  OTT shareholders may at their option pay any such indemnity
in  cash  in  lieu  of  Escrow  Securities.

3.   NOTES  RECEIVABLE  -  RELATED  PARTIES

     A.     Notes  receivable-related  parties:

     In  October  2000,  Robert C. McShirley, then the Company's Chief Executive
Officer, borrowed $400,000 from the Company in exchange for a secured ninety-day
promissory  note, which bears interest at a rate of 8% per annum, and was due on
January 9, 2001. In late October 2000, Mr. McShirley repaid the Company $250,000
of  the  original  balance,  leaving  a balance of $150,000 which is included in
current  assets.  On January 30, 2001, the Company's board of directors approved
an  extension of this note for 90 days and on March 8, 2001, concurrent with the
resignation  of  Mr.  McShirley,  the  note  was  extended  to  August 27, 2001.

     In  addition,  the  then  Chief Operating Officer borrowed $50,000 from the
Company  in  exchange  for a two-year promissory note, which bears interest at a
rate  of  8% per annum, and shall become due on demand, 90 days from the date of
termination.

     B.     Notes  receivable  from  the  sale  of  stock:

     The  Company  has  unsecured  notes receivables from several officers which
totaled  $426,798  and $178,798 as of April 30, 2001 and 2000, respectively. The
notes  granted  as  of  April  30,  2000  are  unsecured, due on demand and bear
interest  at an annual rate of 6%. The notes were granted in connection with the
exercise  of  636,100  stock options on May 15, 1999. Notes received in the year
ended January 31, 2001 for $248,000 were granted in connection with the issuance
of  39,002  shares  of  Series  2-A  convertible  Preferred Stock. The notes are
secured  only to the extent of the 39,002 shares of related stock, bear interest
at  an  annual rate of 8% and are due on September 15, 2003. Of these notes, one
note  receivable from the then Chief Operating Officer becomes due on demand, 90
days  from  March  12,  2001,  the  date  of  his  resignation.


                                       10
<PAGE>
                                  VSOURCE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 2001


4.   SHAREHOLDERS'  EQUITY

     On  January  22,  2001,  the Company closed an Agreement and Plan of Merger
with  Online  Transaction  Technologies, Inc., a California corporation ("OTT").
The  aggregate  purchase  price  payable  at Closing was 1,089,389 shares of the
Company's  common stock. The number of shares was calculated based on a specific
formula  in  the  Merger  Agreement.  Such  aggregate  price shall be subject to
adjustment  based on reductions or increases in the net book value of the assets
of  OTT  since  September  30,  2000.  As a result of the acquisition, including
direct  expenses related to the transaction, goodwill was recorded in the amount
of  $4,620,757.

     During  the  three  months  ended  April  30,  2001,  per  the terms of the
agreement,  60,000  warrants  were  converted by Exxir Corporation, at $2.00 per
share,  to  43,957  shares  of  common  stock  of  the  Company,  in  a cashless
transaction.


5.   BASIC  LOSS  AVAILABLE  TO  SHAREHOLDERS

     Basic  earnings  per  share  excludes  dilution and is computed by dividing
income  available  to  common shareholders by the weighted average common shares
outstanding  for  the  period. The loss available to common shareholders for the
three  months  ended  April  30,  2001  and 2000 is the net loss for the period,
adjusted  for  deemed  non-cash  dividends  on  preferred  stock.

<TABLE>
<CAPTION>
     The following table is a calculation of basic and diluted earnings/(loss) per share:

                                                               2001           2000
                                                           ------------   -------------
<S>                                                        <C>            <C>
Net loss                                                   $(5,146,652)   $ (5,808,454)

Less - deemed non-cash dividend to preferred shareholders   (       --)     (6,868,397)
                                                           ------------   -------------
Basic loss available to common shareholders                $(5,146,652)   $(12,676,851)
                                                           ============   =============
</TABLE>

     Weighted  average  common  shares  outstanding for dilution purposes do not
take  into account the exercise of options or warrants because to do so would be
antidilutive.


6.     COMMITMENTS  AND  CONTINGENCIES

LEASES

     The  Company  leases  its  main  office  facilities  under a noncancellable
operating  lease  agreement expiring March 31, 2002. The Company leases a second
facility in Bothell, Washington, under a noncancellable operating lease expiring
October  31,  2002.  The  Company  is  in the process of finding a sub-lessee to
assume  the  liability;  however, the estimated liability is included below. The
company  has  a third location in Los Angeles, California under a noncancellable
operating  lease  expiring  April 6, 2002.  The future minimum rent expense that
will  be  incurred  under  operating  leases  are  as  follows:


                                       11
<PAGE>
                                  VSOURCE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 2001


          Fiscal year ended:
                      2001             $  399,198
                      2002                 71,408
                      2003                     --
                      2004                     --
                                       ----------
                                       $  470,606
                                       ==========

LEGAL

     On  October  23,  2000,  the  Company  filed  a  suit  for  fraudulent
misrepresentation,  fraudulent  concealment,  rescission  and  mutual  mistake,
seeking  to  rescind a contract the Company entered into with Vitria Technology,
Inc.  ("Vitria")  in February 2000. Vitria denied the substantive allegations in
the  complaint  and  sought  monetary  damages against the Company for breach of
contract.  On  April  10,  2001,  the  Santa Clara County Superior Court granted
Vitria's  request  for  a  writ  of  attachment in the sum of $600,000 to secure
potential  recovery  in  this  case.  This  suit was settled on May 22, 2001. In
connection  with the settlement, the company paid Vitria $275,000. (See Note 7 -
Subsequent  Events.)


7.   SUBSEQUENT  EVENTS


     On  May 3, 2001, the Company received a second notice of noncompliance from
Nasdaq,  asserting  that  the  Company's  common  stock has failed to maintain a
minimum  market  value  of  public float ("MVPF") of $5,000,000 over the last 30
trading  days  preceding  the  notice.  If  the Company is unable to demonstrate
compliance  with  the  minimum  MVPF  requirement  for  at least ten consecutive
trading  days  prior to August 1, 2001, the Nasdaq staff will issue notification
to  the  Company  that its securities will be delisted. Previously, on April 24,
2001,  the Company had received notice from Nasdaq, citing the Company's failure
to  maintain  a  minimum  bid  price of $1.00 per share of common stock over the
previous  30  consecutive trading days. The Company will be given until July 23,
2001  to  regain  compliance.

     On May 22, 2001, the Company settled a lawsuit with Vitria Technology, Inc.
In  connection  with  the  settlement,  the  company  paid  Vitria  $275,000.

     On  May  24,  the  Company  announced a definitive acquisition agreement to
acquire  substantially  all  assets  of  Asia-based  NetCel360  Holdings,  Ltd.
("NetCel360"),  a leading pan-Asian provider of Business Process Outsourcing and
Technology  Services.  Vsource  will  exchange  3,709,729,  approximately 19.9%,
common  shares  of the Company for substantially all of the assets of NetCel360,
and  will  assume  approximately  $3.45 million of bridge financing. The company
shall  issue  2,959,729  shares of common stock at closing and 750,000 shares of
common  stock  on or before six months from the date of closing. The merger will
be  recorded on the purchase method of accounting and included with the combined
operations  for  the dates subsequent to closing. The acquisition is expected to
close  in  June.  At closing, Acting Chairman of Vsource, I. Steven Edelson, and
Chairman of NetCel360, Phil Kelly, will serve as Co-Chairmen of the company. Mr.
Kelly will also be named as Chief Executive Officer of the Company at that time.

     Of  the  $3.45 million NetCel360 bridge financing to be assumed by Vsource,
$2.25  million  is  due December 31, 2001 and $1.2 million is due June 30, 2002.
All  of  the  debt is secured by certain of the assets being acquired by Vsource
and  may  be repaid, at Vsource's option, by delivering shares of Vsource common
stock  at  a price per share equal to $0.20 for the $2.25 million portion of the
debt and at a price per share equal to $0.10 for the $1.2 million portion of the
debt.  If  the  $1.2  million  portion  of  the  debt  is  not repaid by issuing
additional shares, then it must be repaid in cash at three times the outstanding
principal  and  accrued  interest.

     Completion  of  the  acquisition is conditioned upon Vsource completing due
diligence,  obtaining  $2 million of financing and a fairness opinion on certain
aspects  of  the transaction. Vsource has received a commitment for $1.5 million
of  the  financing from Mercantile Capital Partners and the senior management of


                                       12
<PAGE>
                                  VSOURCE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 APRIL 30, 2001


NetCel360.  These  commitments  are  subject  to  similar  conditions  as  the
acquisition agreement and will have the same repayment terms as the $1.2 million
portion  of  the  assumed  bridge  financing.

     The  Company  agreed  to  provide  shelf registration rights for all shares
issued  pursuant to the Acquisition Agreement and the financing. The Acquisition
Agreement  also  provides  that  if  either party terminates the Agreement under
certain  circumstances  and  subsequently  completes an alternative transaction,
such  party  will  be  obligated  to  pay  a  break-up  fee  of  $1.0  million.

     After  closing  of  the  NetCel360  acquisition,  Vsource  intends to raise
additional  funds  to  provide  sufficient  funding  through  profitability. The
Company  is  continuing to evaluate other financing options and is considering a
rights  offering  of  common stock to all shareholders with an exercise price of
$0.10  per  share,  the  same  price  at  which  the  new  financings  would  be
convertible.

     The  company  has  been  notified  by  Nasdaq that certain aspects of these
transactions violate Nasdaq's shareholder approval rules. The Company is engaged
in  discussions  with  Nasdaq  about  the applicability of certain exceptions to
these  rules.

     On  May 31, 2001, the Company filed an amended Form 10-KSB for the year-end
January 31, 2001 to include additional information, which would have appeared in
the  Company's  proxy, had the proxy been filed within 120 days of the year end.


                                       13
<PAGE>
Item  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

     The  following discussion and analysis of the Company's financial condition
and  results  of  operations  should  be  read in conjunction with the Company's
financial  statements  and the related notes thereto appearing elsewhere herein.

FORWARD  LOOKING  STATEMENTS

     This Quarterly Report on Form 10-Q and the documents incorporated herein by
reference  contain  forward-looking  statements  based  on current expectations,
estimates and projections about the Company's industry, management's beliefs and
certain  assumptions  made  by management.  All statements, trends, analyses and
other  information  contained  in  this  report relative to trends in net sales,
gross margin, anticipated expense levels and liquidity and capital resources, as
well  as  other  statements  including,  but  not  limited  to,  words  such  as
"anticipate,"  "believe,"  "plan,"  "estimate,"  "expect," "seek," "intend," and
other  similar  expressions,  constitute  forward-looking  statements.  These
forward-looking  statements  are  not  guarantees  of future performance and are
subject  to  certain  risks  and  uncertainties  that  are difficult to predict.
Accordingly,  actual  results  may  differ  materially from those anticipated or
expressed  in such statements.  Potential risks and uncertainties include, among
others,  those  set forth in this Item 2. Particular attention should be paid to
the cautionary statements involving the Company's limited operating history, the
unpredictability  of  its  future  revenues,  the  Company's  need  for  and the
availability  of  capital  resources, the evolving nature of its business model,
the  intensely  competitive  market  for  business-to-business  electronic
procurement,  and  the  risks associated with systems development, management of
growth  and  business  expansion.  Except  as  required  by  law,  the  Company
undertakes  no  obligation to update any forward-looking statement, whether as a
result of new information, future events or otherwise.  Readers, however, should
carefully  review  the  factors set forth in other reports or documents that the
Company  files  from  time  to  time with the Securities and Exchange Commission
("SEC").

OVERVIEW

     Vsource,  Inc.  (the  "Company"), through its subsidiary Online Transaction
Technologies,  Inc.  ("OTT"),  is  an  Application Service Provider ("ASP") that
develops  and  hosts transaction solutions for public (many to many) and private
(one  to  many) exchanges. Among the solutions is LiquidMarketplace(TM), a suite
of  integrated  digital marketplace or transaction solutions, including auctions
and  fixed-price  catalogs.  These solutions are identified as LiquidAuction(TM)
and  LiquidCatalog(TM). This suite allows public exchange clients to handle both
seller  and buyer-initiated transactions in their e-Marketplaces.  The Company's
private  exchange  solution, LiquidStore(TM), offers private catalog and auction
functionality  to LiquidMarketplace(TM) participants or stand-alone clients.  In
addition  to offering a suite, the Company has developed a proprietary framework
that  reduces  customization  and  deployment  time  and simplifies integration.

RECENT  EVENTS

     On  February  7,  2001,  the  Company  had  suspended  registration  of its
securities  under the Form SB-2 registration statement, due to pending inquiries
by  its  board  of directors regarding the status of the VSN product and pending
resignations  of  key  officers,  which  was subsequently announced on March 12,
2001.

     On  February  26,  2001,  the board of directors named I. Steven Edelson as
Acting  Chairman  of  the Board. Mr. Edelson is a managing partner of Mercantile
Capital  Group,  LLC, one of the largest individual shareholders of the Company.

     On  March  12,  2001, the Company announced it had received resignations of
the  Chairman of the Board and Chief Executive Officer, Robert C. McShirley, the
Chief  Operating Officer, P. Scott Turner, and Director, Samuel E. Bradt. On the
same date the Company announced that it was withdrawing its VSN product, closing
its  Bothell,  Washington  development center, and would lay off at least 60% of
its  workforce.  It  also announced that it would move forward with the recently
acquired  LiquidMarketplace(TM)  product  line  while evaluating other strategic
alternatives.


                                       14
<PAGE>
     On  March 8, 2001, in accordance with the above-mentioned resignations, the
Company  approved  a  revision  of the notes receivable from officers. The notes
receivable  from  Robert C. McShirley are collectively collateralized by 300,000
shares  of the Company stock as sole recourse. The terms of the notes receivable
from  Robert C. McShirley were extended to August 27, 2001. The notes receivable
from  P.  Scott  Turner  are collectively collateralized by 19,507 shares of the
Company stock and all associated warrants, as sole recourse. The Turner note for
$50,000, per the terms of the agreement, shall become payable on demand, 60 days
from  the  last  day  of employment.   The Turner note for $124,000 shall become
payable  on  demand,  90  days  from  the  last  day  of  employment.

     On  April  24,  2001,  the  Company received notice from Nasdaq, citing the
Company's  failure  to maintain a minimum bid price of $1.00 per share of common
stock  over the previous 30 consecutive trading days.  The Company will be given
until  July  23,  2001  to  regain  compliance.  If  the  Company  is  unable to
demonstrate  compliance  with the minimum bid price requirement for at least ten
consecutive  trading  days  prior  to July 23, 2001, the Nasdaq staff will issue
notification  to the Company that its securities will be delisted. (See Note 7 -
Subsequent  Events.)

MANAGEMENT'S  DISCUSSION  &  ANALYSIS  OF  RESULTS OF OPERATIONS  - THREE MONTHS
ENDED  APRIL  30,  2001,  COMPARED  TO  THE  THREE  MONTHS ENDED APRIL 30, 2000:

REVENUES

      Revenues  for  the  three months ended April 30, 2001 increased to $12,720
from  no  revenue  for the three months ended April 30, 2000. Revenues increased
primarily  because  the  Company  had  begun  the  implementation  of  the
LiquidMarketplace(TM)  products  in the three months ended April 30, 2001. There
were  no  revenues for the three months ended April 30, 2000 because the Company
had ceased its sales of subscriptions to the software version of VSN in the year
ended  January  31,  2000.

GENERAL  AND  ADMINISTRATIVE  EXPENSES

     General  and  administrative  expenses  decreased to $744,142 for the three
months ended April 30, 2001 from $3,650,399 for the three months ended April 30,
2000,  a  decrease  of  $2,906,257,  or  79.6%.  The  decrease  was due to major
decreases  in  advertising  and  marketing  of  the  product implementation, and
decreased  expenses  associated with a decrease in personnel, including payroll,
rent  and  travel  and  a substantial decrease in the recognition of stock-based
compensation.

RESEARCH  AND  DEVELOPMENT

     Research  and  development  expenses  increased to $2,312,278 for the three
months ended April 30, 2001 from $2,192,755 for the three months ended April 30,
2000,  an  increase  of  $119,523,  or  5.5%.  The increase was primarily due to
recording  the impairment of fixed assets of $495,671, offset by decreased costs
associated  with  the  development  of the Company's Internet version of its VSN
electronic  purchasing  system. Such decreased costs include decreased personnel
and  personnel-related  expenses,  decreased  overhead,  as  well  as  decreased
licensing  fees  for  development-related  tools  and  systems and a substantial
decrease  in  the  recognition  of  stock-based  compensation.

LOSS  ON  IMPAIRMENT  OF  LONG-LIVED  ASSETS

      The  Company incurred a $2,138,019 loss on impairment of long-lived assets
in  the  three  months ended April 30, 2001. No such impairment was incurred for
the  three  months ended April 30, 2000. During the period ended April 30, 2001,
the  Company evaluated its long-lived assets by measuring the carrying amount of
the  assets against the estimated undiscounted future cash flows associated with
them.  The  Company determined that goodwill did not continue to carry the value
originally  anticipated.  As  a  result,  and  in  accordance  with Statement of
Financial  Accounting  Standard (SFAS) No. 121, the assets were reduced to their
net  realizable  value.

TOTAL  EXPENSES

     Total expenses decreased to $5,194,439 for the three months ended April 30,
2001  from  $5,843,154  for the three months ended April 30, 2000, a decrease of
$648,715,  or  11.1%.  The  decrease  in total expenses was due primarily to the
decreases  in  both  research  and  development  and  general and administrative
expenses,  including  a  substantial  decrease in the recognition of stock-based
compensation  partially  offset  by the loss on impairment of long-lived assets.


                                       15
<PAGE>
LOSS  FROM  OPERATIONS

     The  Company  had a loss from operations of $5,181,719 for the three months
ended  April  30,  2001  versus  a loss of $5,843,154 for the three months ended
April  30, 2000, a decrease of $661,435, or 11.3%. The loss decreased because of
decreased  costs  associated  with  developing the Internet version of VSN and a
substantial  decrease  in  the  recognition  of  stock-based  compensation.

INTEREST  INCOME

     Interest  income  decreased to $35,447 for the three months ended April 30,
2001  from  $38,399  for  the  three  months ended April 30, 2000, a decrease of
$2,952,  or  7.7%.  The  decrease  was  due primarily to the decrease in cash in
interest  bearing  accounts.

INTEREST  EXPENSE

     Interest  expense  decreased  to  $380 for the three months ended April 30,
2001  from  $3,699  for  the  three  months  ended April 30, 2000, a decrease of
$3,319,  or 89.7%. The decrease was due primarily to the decrease in Convertible
Demand  Notes.

NET  LOSS

     The  net  loss  of  $5,146,652  for  the  three months ended April 30, 2001
decreased  from $5,808,454 for the three months ended April 30, 2000, a decrease
of  $661,802,  or  11.4%.  This  decrease  was  a result of the decrease in both
research  and  development  and general and administrative expenses, including a
substantial  decrease  in  the  recognition of stock-based compensation, and the
recognition  of  the  loss  on  impairment  of  long-lived  assets.

BASIC  WEIGHTED  AVERAGE  NUMBER  OF  COMMON  SHARES  OUTSTANDING

     The  weighted  average  number of common shares of 18,356,829 for the three
months ended April 30, 2001 increased from 15,815,421 for the three months ended
April 30, 2000, an increase of 2,541,408 shares, or 16.1%. The increase resulted
primarily  from  issuing  307,391  shares  upon  exercise  of  stock options and
warrants,  65,654  shares  upon  conversion  of  convertible  demand  notes, the
conversion  of 1,320,076 shares of preferred stock and the issuance of 1,089,389
shares  in  relation  to  the  acquisition  of  OTT.

NET  LOSS  PER  COMMON  SHARE

     The  net  loss per common share of ($0.28) for the three months ended April
30,  2001  decreased  from  net  loss  per common share of ($0.80) for the three
months  ended April 30, 2000, a decrease of ($0.52), or 65.0%. This decrease was
a  result  of  the  decreased  net  loss  for  the year, partially offset by the
increase  in  outstanding  common  shares,  as  noted  above.

MANAGEMENT'S  DISCUSSION  & ANALYSIS OF FINANCIAL CONDITION - AT APRIL 30, 2001,
COMPARED  TO  JANUARY  31,  2001:

CASH

     On  April 30, 2001, cash totaled $2,847,402, down $2,560,860 or 47.4%, from
$5,408,262 at January 31, 2001. This decrease reflects funds used for operations
and  investing  activities  during  the  three  months  ended  April  30,  2001.


                                       16
<PAGE>
ACCOUNTS  RECEIVABLE

     On  April  30,  2001,  accounts  receivable  totaled  $10,720, up $6,520 or
155.2%,  from  $4,200  at  January  31, 2001. This reflects that the Company had
begun  generating  revenues  and  receivables  from  the  sales  of  the
LiquidMarketplace(TM)  products  in  the  three  months  ended  April  30, 2001.

NOTES  RECEIVABLE  -  RELATED  PARTIES

     On  April  30, 2001 notes receivable - related parties totaled $200,000, up
$50,000  from  $150,000  at  January 31, 2001. This reflects reclassification of
$50,000  from  notes  receivable - related parties, long-term to current, during
the  three  months  ended  April  30,  2001.

PREPAID  EXPENSES

     On  April 30, 2001, prepaid expenses totaled $132,075, up $28,388 or 27.4%,
from  $103,687  at  January  31, 2001.  This increase primarily reflects accrued
insurance  and  other  prepaid  fees  that  will  be expensed in the next twelve
months.

TOTAL  CURRENT  ASSETS

     On April 30, 2001, total current assets totaled $3,790,197, down $1,875,952
or  33.1%,  from  $5,666,149  at  January  31,  2001.  This  decrease  primarily
reflects  the  funds used for operations during the three months ended April 30,
2001.

PROPERTY  AND  EQUIPMENT

     On  April  30, 2001, fixed assets totaled $468,697, a decrease of $630,931,
or  57.4%,  from  $1,099,628  at  January 31, 2001.   This decrease reflects the
recognition  of  loss  on  equipment  and software from the closed facilities in
Washington.

ACCUMULATED  DEPRECIATION

     On April 30, 2001, accumulated depreciation totaled $66,821, down $100,462,
or  60.1%,  from $167,283 at January 31, 2001.  This decrease reflects the write
off  of  equipment  and  software  from  the  closed  facilities  in Washington,
partially offset by normal depreciation expense for the three months ended April
30,  2001.

PROPERTY  AND  EQUIPMENT,  NET

     On  April  30,  2001,  property  and  equipment, net totaled $401,876, down
$530,469,  or  56.9%,  from $932,345 at January 31, 2001. This decrease reflects
the  write  off  of  equipment  and  software  from  the  closed  facilities  in
Washington, partially offset by normal depreciation expense for the three months
ended  April  30,  2001.

GOODWILL

     On  April 30, 2001, goodwill totaled $2,100,000, down $2,492,863, or 54.3%,
from  $4,592,863 at January 31, 2001. This decrease reflects normal amortization
expense,  partially  offset  by  additional  related  expenses,  as  well as the
recognition  of  the  loss  on impairment of long-lived assets, during the three
months  ended  April  30,  2001. (See Note 1 - Impairment of Long-Lived Assets.)

OTHER  ASSETS

     On  April  30,  2001,  other assets totaled $17,438, down $2,121, or 10.8%,
from  $19,559  at  January 31, 2001.  This decrease reflects normal amortization
expense  and  the  write off of other assets during the three months ended April
30,  2001.


                                       17
<PAGE>
TOTAL  ASSETS

     On April 30, 2001, total assets were $6,309,511, down $4,951,405, or 44.0%,
from  $11,260,916  at  January 31, 2001. This decrease primarily reflects normal
depreciation  and amortization expenses and funds used for operations, partially
offset by the write off of property and equipment, as well as the recognition of
the loss in impairment of long-lived assets, during the three months ended April
30,  2001.

ACCOUNTS  PAYABLE

     On April 30, 2001, accounts payable were $179,007, down $419,710, or 70.1%,
from  $598,717  at  January  31,  2001.  This  change is primarily a result of a
decrease of funds used in development of the Internet version of VSN, and also a
decrease  in  the  amounts  due  for  marketing, advertising and legal expenses.

ACCRUED  LIABILITIES

     On April 30, 2001, accrued liabilities were $377,831, up $66,145, or 21.2%,
from  $311,686  at  January  31,  2001.  This change resulted primarily from the
accrual  of  $275,000  in  relation  to  the Vitria litigation and a decrease in
accrued  wages  and  related  compensation  expenses.  (See  Note 7 - Subsequent
Events.)

TOTAL  CURRENT  LIABILITIES

     On  April  30,  2001,  total  current  liabilities  totaled  $556,838, down
$353,565, or 38.8%, from $910,403 at January 31, 2001.  This change is primarily
from the accrual of $275,000 in relation to the Vitria litigation, a decrease of
funds  used  in  development  of  the Internet version of VSN, a decrease in the
amounts  due for marketing, advertising and legal expenses and from the decrease
in  accrued  wages  and  related  compensation  expenses.

PREFERRED  STOCK,  $0.01  PAR  VALUE

     On  April  30,  2001,  preferred  stock  for Series 1-A totaled $18,041 and
preferred  stock  for  Series  2-A  totaled  $13,502  down $6,333 and $257, from
$24,374,  and  $13,759  respectively,  at  January  31, 2001.  This reflects the
conversion  from  preferred stock to common stock, during the three months ended
April  30,  2001.

COMMON  STOCK,  $0.01  PAR  VALUE

     On  April 30, 2001, common stock totaled $186,419, up $7,030, or 3.9%, from
$179,389  at  January  31,  2001.  This  primarily  reflects  the  conversion of
preferred  stock to common stock for $6,590 and the exercise of 43,957 warrants,
for  $440  of common stock, $0.01 par value, during the three months ended April
30,  2001.

ADDITIONAL  PAID-IN-CAPITAL

     On April 30, 2001, paid-in-capital totaled $63,191,737, down $4,075,746, or
6.1%,  from  $67,267,483  at  January  31,  2001.  This  decrease  reflects  the
reduction of stock based deferred compensation of $4,075,306, due to expired and
forfeited  options,  and  by  the exercise of warrants for $440 of common stock,
during  the  three  months  ended  April  30,  2001.

DEFERRED  COMPENSATION

     On  April  30, 2001, deferred compensation was $1,180,733, down $4,624,118,
or  79.7%  from  $5,804,851  at  January  31,  2001.  This decrease reflects the
reduction of stock based deferred compensation of $4,075,306, due to expired and
forfeited  options,  and  $548,812  of  expense  recognized  for  stock  based
compensation.


                                       18
<PAGE>
ACCUMULATED  DEFICIT

     On  April  30, 2001, the accumulated deficit was $56,049,495, up $5,146,652
or  10.1% from $50,902,843 at January 31, 2001.    This change resulted from the
net  loss  of  $5,146,652  during  the  three  months  ended  April  30,  2001.

NOTES  RECEIVABLE  FROM  THE  SALE  OF  STOCK

     On  April  30,  2001,  notes  receivable  from  the  sale  of stock totaled
$426,798,  reflecting  no  change  from January 31, 2001. This amount is used to
offset  the  balance  in stockholders' equity.  Notes received in the year ended
January  31,  2001  for $248,000 were granted in connection with the issuance of
39,002  shares  of Series 2-A convertible Preferred Stock. The notes are secured
by the 39,002 shares of related stock, bear interest at an annual rate of 8% and
are  due  on  September 15, 2003. Notes received prior to the year ended January
31,  2000  for $178,798 are receivable from officers who exercised stock options
during  a  prior  period.  The  Company's  stock option program provides several
alternative  methods  of  paying  for  shares acquired through exercise of stock
options,  and  one  of those alternatives is to provide a demand note payable to
the  Company,  in  the  amount  of  the  purchase.

TOTAL  STOCKHOLDERS'  EQUITY

     On  April  30,  2001,  total  stockholders'  equity  was  $5,752,673,  down
$4,597,840,  or  44.4%,  from  $10,350,513  at  January  31,  2001.  This change
resulted  primarily  from a decrease in deferred compensation due to stock based
compensation  of  $548,812 offset by the net loss of $5,146,652 during the three
months  ended  April  30,  2001.

LIQUIDITY  AND  CAPITAL  RESOURCES

     The  major  source  of  funds  for  the  Company from the date of inception
through  April  30,  2001, has been from sale of equity and debt securities. The
Company's  principal  sources  of cash and cash equivalents for the three months
ended  April  30,  2001  were  from  funds  received  from LiquidMarketplace(TM)
products  of  $12,720,  in  addition  to  small  amounts of interest income, and
certain  non-recurring  items.  While the Company expects to generate revenue in
the  future,  it  is  currently  entirely  dependent  on  investor  funds.

     At  April 30, 2001, the Company had cash balances totaling $2,847,402, (not
including $600,000 held in escrow relating to the Vitria litigation. (See Note 7
-  Subsequent  Events.)

     There  can  be  no  assurances  that  the  Company will continue generating
additional  revenue  from clients. The Company has implemented cash conservation
measures and is currently expending approximately $300,000 per month of cash and
cash  equivalents.  At  this  rate,  without additional capital or revenues, the
Company believes it can continue operations, with minimum cash reserves, through
January  31,  2002.

     The  Company  is  presently  engaged  in  marketing  and  sales  of  its
LiquidMarketplace(TM)  products,  but has not determined at this time that these
products, and the markets toward which they are directed, represent a sufficient
business  opportunity  for a major commitment of the Company's available capital
resources.  While it evaluates opportunities for raising additional capital, the
Company  is  limiting  development  and  marketing  expenses  related  to
LiquidMarketplace(TM).  The  Company  is  also  evaluating  other prospects with
compatible  technology  companies.  There is no guarantee that the Company will
generate significant revenue from LiquidMarketplace(TM) products, and therefore,
there  is  an  uncertainty  of  the  continuing  value of Goodwill. As such, the
Company  will  continue  to  evaluate  Goodwill  and  other  long-lived  assets.

     The  Consolidated Statements of Cash Flows for the three months ended April
30,  2001,  and  2000  show  that  net  losses  were  $5,146,652 and $5,808,454,
respectively.  A non-cash entry was made to operating activities for stock based
compensation  expense  of $548,812 and $3,354,337 respectively. This expense did
not  offset  any  cash requirement directly or indirectly, and there was no such
cash  or  other  consideration  paid as stock based compensation. In addition, a
non-cash  entry was made for recognition of the loss on impairment of long-lived
assets  of  $2,138,019  and fixed assets of $495,671, for the three months ended
April  30,  2001.


                                       19
<PAGE>
RISK  RELATED  TO  THE  COMPANY'S  BUSINESS

Need  For  Additional  Capital
------------------------------

     The  Company has recorded substantial operating losses and, as of April 30,
2001,  has  an  accumulated  deficit  of approximately $56 million. Although the
Company  believes  that  cash funds will provide operating capital until January
31, 2002, the Company anticipates that it will require additional funding before
it  can  finance its operations and growth wholly on internally generated funds.

Uncertainty  of  Realizing  New  Strategic  Relationships
---------------------------------------------------------

     As  an alternative to total dependence of the LiquidMarketplace(TM) product
line  and potential new internally developed products, the Company has announced
a  search  for  strategic  relationships  that  could  result in one or more new
product  lines,  including  businesses  that  are  already producing significant
revenues  and  have  attained  or  are  approaching a cash flow breakeven point.
However, the Company's prior performance and current financial market conditions
present  obstacles  for  the  development  of  such  relationships.  There is no
certainty  that  such a relationship or relationships can be realized within the
foreseeable  future.  (See  Note  7  -  Subsequent  Events.)

Anti-Takeover  Provisions
-------------------------

     In  connection  with the Company's reincorporation in Delaware, the Company
increased  the  number  of  shares  of  common  stock authorized for issuance to
100,000,000.  The  issuance  of additional shares of common stock could have the
effect  of delaying, deferring or preventing a change in control of the Company,
even  if  such  change  in  control  would  be  beneficial  to  the  Company's
stockholders.

     The  terms  of  certain  provisions  of  the  Company's  Certificate  of
Incorporation and Bylaws may have the effect of discouraging a change in control
of  the  Company.  Such  provisions include the requirement that all stockholder
action  must  be  effected at a duly called annual meeting or special meeting of
the  stockholders  and  the  requirement  that  stockholders  follow  an advance
notification  procedure for stockholder business to be considered at any meeting
of  stockholders.

Limited  Operating  History
---------------------------

     The Company has had a limited operating history that makes an evaluation of
the  Company's future prospects very difficult.  There can be no assurances that
the  Company's  products  will meet the needs of potential customers or that the
products  will  operate  correctly.

Risks  of  Early  Stage  Company;  New, Rapidly Changing Market; Need to Attract
--------------------------------------------------------------------------------
Large  Corporations
-------------------

     The  market for Internet applications and services is at an early stage and
changing rapidly.  Internet procurement is a relatively new market.  Its rate of
growth  and  change  is  unpredictable,  as  is  the nature of this change.  The
Company  will  encounter  the  risks and difficulties often encountered by early
stage  companies  in  new  and  rapidly evolving markets.  The Company's initial
success  may  depend,  in  part,  upon attracting several large, technologically
advanced corporations to use the Company's products, and their favorable results
from  this  usage.  Subsequent  success  will depend on the Company's ability to
communicate  these  early  successes  to  the  marketplace,  thus  attracting
significant  numbers of other businesses and buying organizations.  No assurance
can  be  given  that  the  Company  will be successful in the marketplace, or if
successful,  that  it will attract significant numbers of clients.  There can be
no  assurance  that an adequate demand for, and usage of, the Company's products
will  develop.

Complex  Implementation  and  Integration  of  the Company's Products May Impede
--------------------------------------------------------------------------------
Market  Penetration
-------------------

     The  installation  of  the Company's products, including integration with a
client's  systems  currently  in  use,  can  be  a  complex,  time consuming and
expensive  process.  The  Company anticipates that some of its initial customers
will  be  mid-sized or larger organizations that will require that the Company's
products  undergo  substantial  customization  to meet their needs.  These firms
will also likely require that the Company's products be integrated with existing
internal  Enterprise  Resource  Planning  ("ERP") and other operational systems.
The Company's management estimates that the installation and integration process


                                       20
<PAGE>
may take anywhere from one month to six weeks or longer in some cases, depending
on  the size of the client, the complexity of its operations, the configurations
of its current computer systems, and other systems projects that compete for the
time  and  attention  of  the Information Technology departments of the clients.
Management  also expects that most integration projects in larger companies will
involve  various  integrators as outside systems consultants to the client.  The
Company's ability to continually enhance the features of the Company's products,
in  response  to  clients'  widely  differing  needs,  is yet to be proven.  The
Company's ability to develop a simplified version for smaller businesses that is
inexpensive  to implement is also unproven.  As a result, the Company's products
may  not  achieve  significant  market  penetration in the near future, or ever.

Large  Operating  Losses  Expected  to  Continue
------------------------------------------------

     As  discussed  above,  the  Company  has accumulated substantial net losses
through  January  31,  2001.  Since  inception, the Company has not had material
revenues,  and  has  recognized only a small amount of revenue from the Internet
version  of  its  prior product, Virtual Source Network ("VSN") and very limited
revenue  from  the  LiquidMarketplace(TM)  product  acquired  in  January  2001.
Although  the  Company  has  significantly reduced ongoing expenses, there is no
assurance  that  the  Company  will  achieve  positive  cash  flow and operating
profitability  within  the  limits  of  its  available  capital.

Failure  to  Maintain  Listing  on  Major  Stock  Market
--------------------------------------------------------

     Although  the  Company's  common stock began trading on the Nasdaq National
Market  System  on October 30, 2000, there is no assurance that the Company will
continue  to  be  listed  on  the  Nasdaq National Market System.  The Company's
common stock is currently trading below $1.00 per share.  The Company received a
notice  of  noncompliance with the Nasdaq listing maintenance standards on April
24, 2001.  If the stock continues to trade below $1.00 per share consistently or
if  the  Company  is  unable  to  comply  with  any  of the other Nasdaq listing
maintenance  standards,  the  Company  may  be  the  subject  of  delisting.  In
addition,  the  Company received a second notice of noncompliance on May 3, 2001
asserting  that  the  Company's  common  stock  has failed to maintain a minimum
market  value  of  public  float ("MVPF") of $5,000,000 over the last 30 trading
days preceding the notice.  In both instances the Company has a 90-day period to
cure the non-compliance, but it is uncertain if the Company will be able to cure
both within the allotted periods.  While the listing of the Company's stock does
not  have  a  direct effect on the Company's operations, it has an effect on the
perception  of  the  Company among potential investors and can have an effect on
the  ability  of  the Company to raise additional funds.  It can also impact the
dilution  associated  with  any  financing.

Dependence  on  Limited  Product  Line  for  Anticipated  Revenues
------------------------------------------------------------------

     The  Company  expects  that  when revenues do develop, substantially all of
those  revenues  will  come  from  clients  that  buy  or  license its products.
Although  fees  are  believed  by  management  of  the Company to be below those
currently  charged  for  leading  competitive  systems  and  services,  future
reductions  in  competitive  prices  could  negatively impact the demand for, or
usage  of,  the  Company's  products.  These  changes  may  impede the products'
ability  to  achieve  broad  market  acceptance,  thus  negatively impacting the
Company's  opportunity  to  eventually  become  profitable.  There  can  be  no
assurance  that  broad and timely acceptance of the Company's products, which is
critical  to the Company's future success, will be achieved.  Failure to achieve
anticipated  revenues  would  have  adverse  consequences  for  the  Company.

Dependence  on  One  Product
----------------------------

     At the present time all of the Company's resources are being devoted to the
development  and  marketing  of  the  LiquidMarketplace(TM)  product line and to
finding  a strategic partner.  Unless it finds a partner, the Company expects to
depend  on LiquidMarketplace(TM) for substantially all of the Company's revenues
for  the  foreseeable  future.  Accordingly,  if  LiquidMarketplace(TM)  is  not
accepted by customers or potential customers, or does not generate the demand or
revenues  necessary  to  the  Company,  the Company may face significant adverse
financial  consequences.

Dependence  on  Sales  and  Marketing  Relationships  for  Growth
-----------------------------------------------------------------

     The Company's business model includes generating sales through its alliance
and  affiliate  programs.  Consequently,  the  Company  will depend, in part, on
sales  and  marketing  strategic  relationships  for  growth.  The  Company  has


                                       21
<PAGE>
established  and  plans  to  continue to establish sales and marketing strategic
relationships  with  large  organizations  as part of our growth strategy.  Such
relationships  may  not  contribute  to increased use of the Company's services,
help  the  Company  add  new  clients,  or  increase the Company's revenue.  The
Company  may  not  be  able  to  enter  into new relationships or renew existing
relationships  on  favorable terms, if at all.  In addition, the Company may not
be  able  to  recover the costs and the expenses associated with these programs.

Third Party Implementation/Integration of Products; Negative Impact upon Revenue
--------------------------------------------------------------------------------
Goals  If  Third  Parties  Unavailable  or  Do  Not  Perform
------------------------------------------------------------

     The  Company  expects  to  rely,  to  a  large degree, on a number of third
parties  to  propose  and  explain  its  products  to prospective clients and to
integrate  its  products with clients' existing systems, and to train users when
its  products  are rolled out for general usage.  The Company itself is planning
to  work with clients and third parties to implement the pilot projects.  If the
Company  is  unable to establish and maintain effective, long-term relationships
with  these  third  parties, if these third parties are unable to meet the needs
and  expectations  of clients, the Company will likely have difficulty achieving
its  revenue  goals.

Unsuccessful  Acquisitions Could Harm Our Operating Results, Business and Growth
--------------------------------------------------------------------------------

     The  Company  may  acquire  businesses,  products  and  technologies  that
complement  or  augment  the  Company's  existing  businesses,  services  and
technologies.  The  inability  to  integrate  any  newly  acquired  entities  or
technologies  effectively,  including  the  assets  of NetCel360, could harm the
Company's  operating  results,  business  and  growth.  Integrating  any  newly
acquired  businesses  or  technologies  may be expensive and time consuming.  To
finance any acquisitions, the Company may need to raise additional funds through
public  or  private  financings.  Any equity or debt financings, if available at
all,  may  be on terms that are not favorable to the Company and, in the case of
equity  financings,  may  result in dilution to the Company's stockholders.  The
Company  may  not  be  able  to  operate  any  acquired businesses profitably or
otherwise  implement  the  Company's  business  strategy  successfully.

Long  Sales  Cycle  for  Large  Corporate Accounts Could Cause Delays in Revenue
--------------------------------------------------------------------------------
Growth
------

     The  Company's  sales  cycles  for  large  corporate accounts may take many
months to complete and may vary from contract to contract.  Further, the Company
expects  that  a  large number of the Company's clients may be introduced to its
products  through such large accounts.  Lengthy sales cycles for large corporate
accounts  could  cause  delays  in  revenue  growth,  and  result in significant
fluctuations  in  the  Company's quarterly operating results.  The length of the
sales cycle may vary depending on a number of factors over which the Company may
have little or no control, including the internal decision making process of the
potential  customer  and the level of competition that the Company encounters in
its selling activities.  Additionally, since the market for business-to-business
e-commerce  is relatively new, the Company believes that it will have to educate
many  potential  customers  about the use and benefits of the Company's products
and  services,  which can in turn prolong the sales process.  Sales made through
third parties, such as the Company's alliance partners, can further extend sales
cycles.

Quarterly  Results  May  Be Subject to Significant Fluctuations; Expectations of
--------------------------------------------------------------------------------
Investors  and  Analysts  May  Not  Be  Met
-------------------------------------------

     The  Company  expects  that  its quarterly operating results will fluctuate
significantly  due to many factors, many of which are outside the control of the
Company.  Such  factors  include:

-    Demand  for  and  market  acceptance  of  its  products
-    Deletions  from,  additions  to  or  changes  to  its  product  line
-    Inconsistent  growth,  if  any,  of  the  Company's  client  base
-    Loss  of  key  customers  or  strategic  partners
-    Timing  of  the  recognition  of  revenue  for  large  contracts
-    Variations  in  the  dollar  volume  of  transactions  effected through its
     products
-    Intense  and  increased  competition
-    Introductions  of  new  services  or  enhancements,  or  changes in pricing
     policies,  by  the  Company  and  its  competitors
-    The  Company's  ability  to  control  costs
-    Reliable  continuity  of  the  Company's  products'  availability


                                       22
<PAGE>
     The  Company  believes  that  quarterly  revenues,  expenses  and operating
results  are  likely  to vary significantly in the future, that period-to-period
comparisons of results of operations are not necessarily meaningful and that, as
a  result,  such  comparisons should not be relied upon as indications of future
performance.  Due  to  these  and other factors, it is likely that the Company's
operating  results  will  be  below market analysts' expectations in some future
quarters,  which would cause the market price of the Company's stock to decline.

Competitive  "Business-to-Business"  Internet  Commerce Market; Effect on Market
--------------------------------------------------------------------------------
Share  and  Business
--------------------

     The  market  for  the  Company's products is very competitive, evolving and
subject  to  rapid  technological change.  Intensity of competition is likely to
increase in the future.  Increased competition from new competitors is likely to
result  in  loss of any future market share the Company may achieve, which could
negatively  impact  the Company's business. Competitors vary in size, and in the
scope  and  breadth  of  the  products  and  services  offered. The Company will
encounter competition from Ariba, Clarus, Commerce One, GE Information Services,
i2  Technologies,  Intelisys,  PurchasePro, TRADE'ex Electronic Commerce Systems
and  other eProcurement competitors.  The Company may also encounter competition
from  several  major  enterprise software developers, such as Oracle, PeopleSoft
and  SAP who are not presently considered to be direct competitors, but who have
announced  intentions  to enter into the market.  In addition, because there are
relatively  low  barriers  to  entry in this market, additional competition from
other  established  and  emerging  companies  may  develop.

     Many  current  and  potential  competitors have longer operating histories,
significantly  greater  financial, technical, marketing and other resources than
the Company, significantly greater name recognition, and a larger installed base
of  customers.  In  addition,  many  of  the  competitors  have well-established
relationships  with  the  Company's  clients  and  potential  clients,  and have
extensive  knowledge  of  the  industry.  Current and potential competitors have
established  or may establish cooperative relationships among themselves or with
third  parties  to  increase  the  ability of their products to address customer
needs.  Accordingly,  it  is  possible  that new competitors, or alliances among
competitors,  may  emerge and rapidly acquire significant market share.  Actions
taken  by  the  Company  competitors,  including  price  cuts,  new  product
introductions and enhancements, could have material adverse consequences for the
Company.  There  can  be  no  assurance that the Company will be able to compete
with price cuts, or develop, introduce and market enhancements to its service on
a  timely  basis  to  compete  successfully  in  this  market.

Revenues  Expected from a Limited Number of Clients, Meaning Increased Potential
--------------------------------------------------------------------------------
Impact  of  Customer  Loss
--------------------------

     The  Company  expects that revenues, if any, during the current fiscal year
will  come from a small number of clients.  The loss of customers or a change in
a  client's  budget  could have a substantial negative impact on the business of
the  Company.

Vendors  Are  Essential to Success of the Company's Products; Negative Impact of
--------------------------------------------------------------------------------
Vendors'  Failure  to  Join  the  Network
-----------------------------------------

     In  certain  applications,  LiquidMarketplace(TM)  requires  that  vendors
(suppliers)  be able to access the LiquidMarketplace(TM) network and that client
buyers  be able to communicate their requirements electronically to vendors.  It
is  necessary  that  a client's key vendors join the network in order to achieve
the  full  benefits  of  the  system, such as buying from an electronic catalog.

Ability  to Enhance Features and Functionality of Products; Change in the Market
--------------------------------------------------------------------------------

     The success of the Company may depend on the need to tailor its products to
meet  the  requirements  of  its  clients,  not  only  as  such requirements are
presently  known  and understood by the Company and its client base, but also as
such  requirements  evolve.  Such  requirements  may  be  driven  by competitive
products or the changing preferences of the Company's client base.  An inability
to offer enhanced products or features that anticipate or meet such requirements
in  a timely and efficient manner may result in a loss of sales and revenues and
the  obsolescence of the Company's products.  There can be no assurance that the
Company  can make the changes and enhancements to its products necessary to meet
and  satisfy  the  demands  of  its  clients.


                                       23
<PAGE>
     In  addition, the rapid technological changes and rapidly changing industry
standards  that  have characterized the Internet and companies doing business on
the  Internet  may  have the effect of rendering the Company, its business model
and  products  obsolete.  Making  the  adjustments,  changes  and  adaptations
necessary in this market may also require significant expenditures in equipment,
infrastructure  and  product  development.  There  can  be no assurance that the
Company  will  be  able  to  adapt  to  such  rapid  changes.

Failure  to  Maintain  Accurate  Databases
------------------------------------------

     The  Company  must update and maintain extensive databases of the products,
services  and  procurement  network transactions for its clients.  The Company's
computer  systems  and databases must allow for expansion as a client's business
grows  without  losing performance.  Database capacity constraints may result in
data  maintenance  and  accuracy  problems,  which  could  cause a disruption in
service  and  the  Company's  ability  to  provide  accurate  information to its
clients.  These  problems  may  result  in a loss of clients that could severely
harm  the  Company's  business.

Defects  in  Software;  New  Versions
-------------------------------------

     The  Company's  products  are  complex  software.  Software  often contains
defects,  particularly  when first introduced or when new versions are released.
The  Company's  testing procedures may not discover software defects that affect
new  or  current  services  or  enhancements until after they are deployed.  New
versions  of  the  products  may  not have the features or capability originally
believed  to  exist  by the Company or could reveal the lack of such features or
capability  in  earlier  versions  of  the  products.  Such  defects could cause
service  interruptions,  which could damage the Company's reputation or increase
its  service  costs, cause it to lose revenue, delay market acceptance or divert
development  resources, any of which could severely harm the Company's business.

System  Failures,  Service  Delays  and  Interruptions
------------------------------------------------------

     The  Company's  ability  to  provide  acceptable levels of customer service
largely  depends  on  the efficient and uninterrupted operation of the Company's
computer  and  communications  hardware  and  procurement  network systems.  Any
interruptions could severely harm the Company's business and result in a loss of
customers.  The  Company's  computer  and  communications systems are located in
California.  The  Company  does  not  maintain  a  redundant  site,  although is
currently  planning  to  do  so.  The  Company's  systems  and  operations  are
vulnerable  to  damage or interruption from a variety of sources including human
error, sabotage, fire, flood, earthquake, power loss, telecommunications failure
and  similar  events.  The  Company  cannot  give  assurances  that  it will not
experience  system failures in the future.  The occurrence of any system failure
or  similar  event  could  harm  the  Company's  business  dramatically.

Incomplete  Disaster  Recovery  Plan
------------------------------------

     The  Company  has  developed  a disaster recovery plan that is still in the
implementation  process.  A  second  phase  of the plan will include a dedicated
backup  facility in another state.  Until the plan is completed, there are risks
of  localized  Internet  failure.  The  Company  is  also  in  the  process  of
implementing  redundancy  and  other  improvements  in  its  internal  network
operations.  Until these improvements are completed, there will be greater risks
of  periodic  network  disruptions.

Substantial  Costs  of  Any  Product  Liability  Claims;  No  Product  Liability
--------------------------------------------------------------------------------
Insurance
---------

     Errors,  defects  or other performance problems with the Company's products
could  result in financial or other damages to our clients.  Management believes
that contractual limits of liability, indemnification provisions and disclaimers
of  warranties  should  minimize  the  exposure of the Company in the event of a
product  liability  claim.  A  product  liability  claim,  however,  even if not
successful,  would  likely be time consuming and costly and could seriously harm
the  Company.  The  Company  presently  does  not  maintain  product  liability
insurance.  Although  the  terms and conditions in the Company's user agreements
contain  disclaimers  of  warranties designed to limit exposure to these claims,
existing  or  future  laws,  or  unfavorable judicial decisions, could weaken or
negate  these  provisions  and  have  materially  adverse  consequences  for the
Company.


                                       24
<PAGE>
Legal  Liability  for  Communication  on  Procurement  Network
--------------------------------------------------------------

     The  Company  may be subject to legal claims relating to the content in its
procurement  network,  or  the  downloading  and  distribution  of such content.
Claims  could involve matters such as fraud, defamation, invasion of privacy and
copyright  infringement.  Providers  of Internet products and services have been
sued  in  the  past,  sometimes  successfully, based on the content of material.
Even  if  the Company were ultimately successful in its defense of these claims,
any  such  litigation  is  costly  and  these  claims  could  harm the Company's
reputation  and  business.

Success  Depends  on  Key  Personnel;  No  "Key  Man"  Life  Insurance
----------------------------------------------------------------------

     Future  performance  depends on the continued service of key personnel, and
the  ability  to  attract,  train,  and  retain additional technical, marketing,
customer  support,  and  management  personnel.  The  loss  of  one  or more key
employees  could  negatively  impact the Company, and there is no "key man" life
insurance  in  force  at  this  time.  Competition  for  qualified  personnel is
intense,  and  there  can  be  no  assurance  that  the  Company will retain key
employees,  or  attract  and  retain  other  needed  personnel.

Protection  of  Intellectual  Property;  Lack  of  Patents;  Potential  Pirating
--------------------------------------------------------------------------------

     The  Company's  success  depends  to  a  large  extent  on  its  exclusive
technology,  and  relies  on  a  combination  of  contractual  provisions,
confidentiality procedures, trade secrets, copyrights and trademark protections.
The Company has no patents at this point, and the Company's technologies may not
be  patentable.  Despite  efforts  to protect its exclusive rights, unauthorized
parties may attempt to copy aspects of that technology, or to obtain and use our
exclusive  information.  Policing  unauthorized  use  of  this  technology  is
difficult.  While  the  Company  does  not  suspect  that  any  of the Company's
software has been subject to piracy, there can be no assurances that such piracy
will  not  occur.  Further,  competitors  may  independently  develop  similar
technology  or  duplicate the Company's services without violating the Company's
intellectual  property  rights.

     At  present,  the Company's technologies are owned outright by the Company.
However,  the  Company  may  in  the  future have to license or otherwise obtain
access  to intellectual property of third parties in order to remain competitive
in  the  marketplace.

Inability  to  Accurately Predict Usage Rates and Difficulty in Adapting Systems
--------------------------------------------------------------------------------
in  a  Timely  Manner
---------------------

     Traffic  in  the  Company's  marketplace  network may increase to the point
where  the  Company  must  expand and upgrade some of its transaction processing
systems  and  procurement  network hardware and software.  The Company's systems
have limited scalability.  The Company may not be able to accurately predict the
rate  of  increase in the usage of its procurement network.  This may affect the
Company's  timing  and ability to expand and upgrade its systems and procurement
network  hardware  and software capabilities to accommodate increased use of its
network.  If  the  Company  does not upgrade its systems and procurement network
hardware and software in a timely fashion, the Company may experience downgraded
service,  interruptions  or  delays  that  could damage its business reputation,
relationship with clients and its operating results.  It might also be forced to
delay  bringing  additional  customers  onto  the system until such upgrades are
completed.

Risks  of  International  Operation
-----------------------------------

     The  Company  is  exploring  international  markets  and  considering  the
expansion  of  its  operations  and  marketing  efforts to include international
markets.  If  the  Company should elect to expand into such markets, it would be
confronted  with  risks  including:

-     Increased  impact  of recessions in economies outside of the United States
-     Difficulties  staffing  and  managing  foreign  operations
-     Political  instability
-     The  burdens  of  compliance with a wide variety of foreign laws and legal
      regimes
-     Unexpected  changes  in  regulatory  requirements


                                       25
<PAGE>
-     Tariffs,  export  controls  and  other  barriers  to  trade
-     Potentially  adverse  tax  consequences
-     Fluctuations  in  currency  exchange  rates
-     Longer  payment cycles and difficulties in collecting accounts receivables
-     Seasonal  fluctuations  in  business  activity


RISKS  RELATED  TO  THE  INTERNET  AND  E-COMMERCE

Volatility  in  Stock  Price
----------------------------

     The  stock  market  and  especially  the  stock  prices of Internet related
companies  have  been  very volatile.  This volatility may not be related to the
operating  performance  of  the  companies.  The  broad  market  volatility  and
industry  volatility  may reduce the price of the Company's stock without regard
to the Company's operating performance.  The market price of the company's stock
could  significantly  decrease  at  any  time  due  to  this  volatility.  The
uncertainty  that  results  from  such  volatility can itself depress the market
price  of  the  company's  stock.

Substantial  Costs  of  Any  Intellectual  Property  Infringement  Claims
-------------------------------------------------------------------------

     There  has been a substantial amount of litigation in the software industry
and  the  Internet  industry  regarding  intellectual  property  rights.  It  is
possible  that  in  the  future,  third  parties  may  claim  that the Company's
technology may infringe their intellectual property.  Management is not aware of
any  infringement  or  claim  of infringement by a third party.  It is expected,
however,  that  software product developers and providers of electronic commerce
solutions  will  increasingly be subject to infringement claims as the number of
products  and  competitors  grows and the functionality of products in different
industry  segments  overlaps.  Any  claims,  with  or  without  merit,  could be
time-consuming  and  result  in  costly  litigation.

Dependence  Upon,  and  Risks  Related  To,  the  Internet
----------------------------------------------------------

     The  use  of the Company's products and other ASP-based products depends on
the  increased  acceptance  and  use of the Internet as a medium of commerce and
communication.  While  management  believes  that  acceptance  and  use  of  the
Internet  will  continue  to  increase  at  very  rapid  rates,  there can be no
assurances  that  such  increase  will  continue  to develop, or that use of the
Internet as a means of conducting business will continue or increase.  If growth
in the use of the Internet does not continue, clients may not adopt or use these
new  Internet  technologies  at  the  rates  or  for the purposes management has
assumed.  This  could,  in turn, adversely impact the Company and the results of
its  business  operations.  Further,  even if acceptance and use of the Internet
does  increase  rapidly,  but  the  technology underlying the Internet and other
necessary  technology  and  related  infrastructure does not effectively support
that  growth,  the  Company's  future  would  be  negatively  impacted.

Potential  Breaches  of  the  Company's  Security  Systems
----------------------------------------------------------

     A  significant  barrier  to  electronic  commerce and communications is the
secure  transmission of confidential information over public networks.  Advances
in  computer capabilities, new discoveries in the field of cryptography or other
events  or developments could result in compromises or breaches of the Company's
security  systems or those of other web sites to protect the Company's exclusive
information.  If  any  well-publicized compromises of security were to occur, it
could  have the effect of substantially reducing the use of the web for commerce
and  communications.  Anyone  who  circumvents  the  Company's security measures
could  misappropriate  its  exclusive  information  or  cause  interruptions  in
services or operations.  The Internet is a public network, and data is sent over
this  network  from  many  sources.  In  the  past,  computer  viruses, software
programs  that  disable  or  impair  computers,  have  been distributed and have
rapidly  spread  over  the  Internet.  Computer  viruses  could theoretically be
introduced into the Company's systems, or those of our clients or vendors, which
could  disrupt  products  offered  by  the  Company,  or make it inaccessible to
clients  or  vendors.  Although  language  in  its  user  agreement  places
responsibility  with  users to protect the Company's products from such threats,
the Company may be required to expend significant capital and other resources to
protect  against the threat of security breaches or to alleviate problems caused
by  breaches.  To  the  extent  that  the  Company's  activities may involve the
storage  and transmission of exclusive information, such as credit card numbers,


                                       26
<PAGE>
security  breaches  could expose the Company to a risk of loss or litigation and
possible  liability.  Despite  provisions  in its user agreements, which provide
that  the  Company  would  not  be  liable  for security breaches, the Company's
security  measures  may  be  inadequate  to  prevent  security breaches, and the
Company's  business  could  be  seriously  impacted  if  they are not prevented.

Government  Regulation
----------------------

     As  Internet  commerce  continues  to grow, the risk that federal, state or
foreign  agencies  will  adopt regulations covering issues such as user privacy,
pricing,  content  and  quality  of  products  and  services,  increases.  It is
possible that legislation could expose companies involved in electronic commerce
to  liability,  which  could  limit the growth of electronic commerce generally.
Legislation  could  dampen  the  growth  in  Internet  usage  and  decrease  its
acceptance  as  a communications and commercial medium.  If enacted, these laws,
rules  or  regulations  could  limit  the  market  for  the  Company's services.

     One  or  more  states, furthermore, may seek to impose sales tax collection
obligations  on  out-of-state  companies  like  the  Company  that  engage in or
facilitate  electronic commerce throughout numerous states.  These proposals, if
adopted,  could substantially impair the growth of electronic commerce and could
adversely  affect  the  Company's  opportunity  to derive financial benefit from
these  activities.

Item  3.   QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Interest  Rate  Risk

     The  Company's exposure to market risk for changes in interest rates relate
primarily  to  the  Company's  investment  portfolio.  The  Company does not use
derivative  financial  instruments  in  its  investment  portfolio.  The primary
objective  of the Company's investment activities is to preserve principal while
maximizing yields without significantly increasing risk. This is accomplished by
investing in widely diversified investments, consisting only of investment grade
securities.  Due  to  the  nature  of our investments, the Company believes that
there  is  no  material  risk  exposure.  All investments in the table below are
carried  at  market  value,  which  approximates  cost.

     The  table  below represents principal amounts and related weighted-average
interest  rates  by  year  of  maturity  of  the Company's investment portfolio:

<TABLE>
<CAPTION>

                                Year  ended      Years  ended  January  31,
                              January 31, 2002     2003 and thereafter         Total
                             ------------------  --------------------------  ----------
<S>                          <C>                 <C>                           <C>

Cash equivalents. . . . . .  $         679,389                          --   $  679,389
Average interest rate . . .               5.91%                         --         5.91%
Investments      .. . . . .  $       1,990,913                          --   $1,990,913
Average interest rate . . .               4.23%                         --         4.23%
                             ------------------                              -----------
Total investment securities  $       2,670,302                          --   $2,670,302
                             ==================                              ===========
</TABLE>


     The  Company  does  not  derive  income  nor develop product in the foreign
market and thus does not have a foreign currency risk. The Company does not hold
any  equity  investments  in  publicly  traded  companies.

                           PART II - OTHER INFORMATION

Item  1.     LEGAL  PROCEEDINGS

     On  October  23,  2000,  the  Company  filed  a  suit  for  fraudulent
misrepresentation,  fraudulent  concealment,  rescission  and  mutual  mistake,
seeking  to  rescind a contract the Company entered into with Vitria Technology,
Inc.  ("Vitria")  in February 2000. Vitria denied the substantive allegations in
the  complaint  and  sought  monetary  damages against the Company for breach of
contract.  On  April  10,  2001,  the  Santa Clara County Superior Court granted
Vitria's  request  for  a  writ  of  attachment in the sum of $600,000 to secure
potential  recovery  in  this  case.  This  suit was settled on May 22, 2001. In
connection  with the settlement, the company paid Vitria $275,000. (See Note 7 -
Subsequent  Events.)


                                       27
<PAGE>
     There  are  currently no other legal proceedings involving the Company, and
none  threatened.  However,  because  of  the  rapidly  changing  environment
surrounding  the Internet, and the rapid pace with which new businesses enter or
attempt  to enter Internet related businesses, it is possible that disagreements
will develop regarding business names, relationships, markets, technologies, and
other  subjects.  Any  future  disagreement  could  lead  to  legal  action.

Item  2.     CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

     During  the  three  months ended April 30, 2001, warrants were converted to
43,957  shares  of  common  stock of the Company and 658,990 shares of preferred
stock were converted to common stock of the Company. There were no other changes
in  securities  during  three  months  ended  April  30,  2001.

Item  3.     DEFAULTS  UPON  SENIOR  SECURITIES

     None.

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

     None.

Item  5.     OTHER  INFORMATION

     On  May  24,  the  Company  announced a definitive acquisition agreement to
acquire  substantially  all  assets  of  Asia-based  NetCel360  Holdings,  Ltd.
("NetCel360"),  a leading pan-Asian provider of Business Process Outsourcing and
Technology  Services.  Vsource  will  exchange  3,709,729,  approximately 19.9%,
common  shares  of the Company for substantially all of the assets of NetCel360,
and  will  assume  approximately  $3.45 million of bridge financing. The company
shall  issue  2,959,729  shares of common stock at closing and 750,000 shares of
common  stock  on or before six months from the date of closing. The merger will
be  recorded on the purchase method of accounting and included with the combined
operations  for  the dates subsequent to closing. The acquisition is expected to
close  in  June.  At closing, Acting Chairman of Vsource, I. Steven Edelson, and
Chairman of NetCel360, Phil Kelly, will serve as Co-Chairmen of the company. Mr.
Kelly will also be named as Chief Executive Officer of the Company at that time.

     Of  the  $3.45 million NetCel360 bridge financing to be assumed by Vsource,
$2.25  million  is  due December 31, 2001 and $1.2 million is due June 30, 2002.
All  of  the  debt is secured by certain of the assets being acquired by Vsource
and  may  be repaid, at Vsource's option, by delivering shares of Vsource Common
stock  at  a price per share equal to $0.20 for the $2.25 million portion of the
debt and at a price per share equal to $0.10 for the $1.2 million portion of the
debt.  If  the  $1.2  million  portion  of  the  debt  is  not repaid by issuing
additional shares, then it must be repaid in cash at three times the outstanding
principal  and  accrued  interest.

     Completion  of  the  acquisition is conditioned upon Vsource completing due
diligence,  obtaining  $2 million of financing and a fairness opinion on certain
aspects  of  the transaction. Vsource has received a commitment for $1.5 million
of  the  financing from Mercantile Capital Partners and the senior management of
NetCel360.  These  commitments  are  subject  to  similar  conditions  as  the
acquisition agreement and will have the same repayment terms as the $1.2 million
portion  of  the  assumed  bridge  financing.

     The  Company  agreed  to  provide  shelf registration rights for all shares
issued  pursuant to the Acquisition Agreement and the financing. The Acquisition
Agreement  also  provides  that  if  either party terminates the Agreement under
certain  circumstances  and  subsequently  completes an alternative transaction,
such  party  will  be  obligated  to  pay  a  break-up  fee  of  $1.0  million.

     After  closing  of  the  NetCel360  acquisition,  Vsource  intends to raise
additional  funds  to  provide  sufficient  funding  through  profitability. The
Company  is  continuing to evaluate other financing options and is considering a
rights  offering  of  common stock to all shareholders with an exercise price of
$0.10  per  share,  the  same  price  at  which  the  new  financings  would  be
convertible.

     The  company  has  been  notified  by  Nasdaq that certain aspects of these
transactions violate Nasdaq's shareholder approval rules. The Company is engaged
in  discussions  with  Nasdaq  about  the applicability of certain exceptions to
these  rules.


                                       28
<PAGE>
Item  6.  EXHIBIT  AND  REPORTS  ON  FORM  8-K

     (a)     EXHIBITS:

2.1       Acquisition  Agreement  by  and  among  Vsource,  Inc.  and  NetCel360
          Holdings  Limited  dated  as  of  May  24,  2001.
3.1(*)    Certificate  of  Incorporation  incorporated  herein  by  reference to
          Exhibit  3.1 to Registrant's Form 8-K for the period ended October 30,
          2000  (SEC  File  No.  000-30326)
3.2(*)    Bylaws incorporated herein by reference to Exhibit 3.2 to Registrant's
          Form  8-K  for  the  period  ended  October  30,  2000  (SEC  File No.
          000-30326)
4.1(*)    Certificate  of  Designation of Series 2-A Convertible Preferred Stock
          incorporated  herein  by reference to Exhibit 4.1 to Registrant's Form
          8-K  for  the  period  ended October 30, 2000 (SEC File No. 000-30326)
4.2(*)    Certificate  of Merger incorporated herein by reference to Exhibit 4.2
          to  Registrant's  Form  8-K for the period ended October 30, 2000 (SEC
          File  No.  000-30326)
4.3(*)    Form  of  Series  3  Convertible  Demand  Note  incorporated herein by
          reference  to  Exhibit  3.2  to Registrant's Registration Statement on
          Form  10-SB  filed  on  September  21,  1999  (SEC File No. 000-26563)
4.4(*)    Form  of  Series  2  Convertible  Demand  Note  incorporated herein by
          reference  to  Exhibit  3.3  to Registrant's Registration Statement on
          Form  10-SB  filed  on  September  21,  1999  (SEC File No. 000-26563)
4.5(*)    Form of Common Stock Purchase Warrant incorporated herein by reference
          to  Registrant's  Form  8-K  filed  September  26,  2000 (SEC File No.
          000-30326)
4.6(*)    Form of Registration Rights Agreement incorporated herein by reference
          to  Registrant's  Form  8-K  filed  September  26,  2000 (SEC File No.
          000-30326)
10.1(*)   Ventura  Professional  Center First Amendment to Lease between Virtual
          Source,  Inc. and Security National Properties, LLC, dated October 27,
          1998  incorporated  herein by reference to Exhibit 10.2 to Registrants
          Form  10-KSB  filed  May  11,  2000  (SEC  File  No.  000-30326)
10.2(*)   Lease  -  Razore Land Company, Landlord and Interactive Buyers Network
          International,  Tenant,  dated October 11, 1999 incorporated herein by
          reference  to  Exhibit  10.3  to Registrants Form 10-KSB filed May 11,
          2000  (SEC  File  No.  000-30326)
10.3(*)   Promissory  Note  by  Robert  C.  McShirley  dated  October  11,  2000
          incorporated  herein by reference to Exhibit 10.4 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.4(*)   Pledge  and  Security Agreement with Robert C. McShirley dated October
          11,  2000  incorporated  herein  by  reference  to  Exhibit  10.5  to
          Registrant's  Form  10-QSB  filed  December  15,  2000  (SEC  File No.
          000-30326)
10.5(*)   Promissory Note by P. Scott Turner dated October 13, 2000 incorporated
          herein  by reference to Exhibit 10.6 to Registrant's Form 10-QSB filed
          December  15,  2000  (SEC  File  No.  000-30326)
10.6(*)   Promissory  Note  by  Sandford  T.  Waddell  dated  September 18, 2000
          incorporated  herein by reference to Exhibit 10.7 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.7(*)   Pledge and Security Agreement with Sandford T. Waddell dated September
          18,  2000  incorporated  herein  by  reference  to  Exhibit  10.8  to
          Registrant's  Form  10-QSB  filed  December  15,  2000  (SEC  File No.
          000-30326)
10.8(*)   Promissory  Note  by  P.  Scott  Turner  dated  September  18,  2000
          incorporated  herein by reference to Exhibit 10.9 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.9(*)   Pledge and Security Agreement with P. Scott Turner dated September 18,
          2000 incorporated herein by reference to Exhibit 10.10 to Registrant's
          Form  10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.10(*)  Agreement  and  Plan  of  Merger  dated  as  of  December  14,  2000
          incorporated herein by reference to Exhibit 10.11 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.11(*)  Supplement  to  merger agreement with Colin Kruger and Michael Shirman
          dated  December  14,  2000
10.12(*)  Form  of  Warrant  Holder  Agreement  with  OTT  Shareholders


                                       29
<PAGE>
10.13(*)  Form  of  Registration  Rights  Agreement  with  OTT  Shareholders
10.14(*)  At  Will  Employment  Agreement  with  Colin  P.  Kruger
10.15(*)  At  Will  Employment  Agreement  with  Michael  Shirman
10.16(*)  Office  Lease  between  L.A.T.  Investment  Corporation  and  Online
          Transaction  Technologies,  Inc.  dated  March  7,  1999
10.17(*)  First  Amendment  to Lease between L.A.T. Investment Corporation dated
          February  1,  2000
10.18(*)  Alliance Agreement between Registrant and IBM dated September 18, 2000
10.19(*)  IBM PartnerWorld Agreement - International Basic General Terms between
          OTT  and  IBM
21.1(*)   Subsidiaries  of  the  Registrant
99.1(*)   Vsource,  Inc. 2000 Stock Option Plan incorporated herein by reference
          to Exhibit 99.1 to Registrant's Form 10-QSB/A filed September 25, 2000
          (SEC  File  No.  000-30326)
______________
*     Previously  filed  with  Securities  and  Exchange  Commission.



     (b)     REPORTS  ON  FORM  8-K

             1.     Report  on  Form  8-K  dated  May  24,  2001.



                                       30
<PAGE>
                                   SIGNATURES

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


VSOURCE,  INC.




By:  /s/  Sandford  T.  Waddell

     Sandford  T.  Waddell
     Chief  Financial  Officer  and  Secretary
     (Principal  Executive  and  Accounting  Officer)


Date:  June  14,  2001




                                       31
<PAGE>
                                  EXHIBIT INDEX

2.1       Acquisition  Agreement  by  and  among  Vsource,  Inc.  and  NetCel360
          Holdings  Limited  dated  as  of  May  24,  2001.
3.1(*)    Certificate  of  Incorporation  incorporated  herein  by  reference to
          Exhibit  3.1 to Registrant's Form 8-K for the period ended October 30,
          2000  (SEC  File  No.  000-30326)
3.2(*)    Bylaws incorporated herein by reference to Exhibit 3.2 to Registrant's
          Form  8-K  for  the  period  ended  October  30,  2000  (SEC  File No.
          000-30326)
4.1(*)    Certificate  of  Designation of Series 2-A Convertible Preferred Stock
          incorporated  herein  by reference to Exhibit 4.1 to Registrant's Form
          8-K  for  the  period  ended October 30, 2000 (SEC File No. 000-30326)
4.2(*)    Certificate  of Merger incorporated herein by reference to Exhibit 4.2
          to  Registrant's  Form  8-K for the period ended October 30, 2000 (SEC
          File  No.  000-30326)
4.3(*)    Form  of  Series  3  Convertible  Demand  Note  incorporated herein by
          reference  to  Exhibit  3.2  to Registrant's Registration Statement on
          Form  10-SB  filed  on  September  21,  1999  (SEC File No. 000-26563)
4.4(*)    Form  of  Series  2  Convertible  Demand  Note  incorporated herein by
          reference  to  Exhibit  3.3  to Registrant's Registration Statement on
          Form  10-SB  filed  on  September  21,  1999  (SEC File No. 000-26563)
4.5(*)    Form of Common Stock Purchase Warrant incorporated herein by reference
          to  Registrant's  Form  8-K  filed  September  26,  2000 (SEC File No.
          000-30326)
4.6(*)    Form of Registration Rights Agreement incorporated herein by reference
          to  Registrant's  Form  8-K  filed  September  26,  2000 (SEC File No.
          000-30326)
10.1(*)   Ventura  Professional  Center First Amendment to Lease between Virtual
          Source,  Inc. and Security National Properties, LLC, dated October 27,
          1998  incorporated  herein by reference to Exhibit 10.2 to Registrants
          Form  10-KSB  filed  May  11,  2000  (SEC  File  No.  000-30326)
10.2(*)   Lease  -  Razore Land Company, Landlord and Interactive Buyers Network
          International,  Tenant,  dated October 11, 1999 incorporated herein by
          reference  to  Exhibit  10.3  to Registrants Form 10-KSB filed May 11,
          2000  (SEC  File  No.  000-30326)
10.3(*)   Promissory  Note  by  Robert  C.  McShirley  dated  October  11,  2000
          incorporated  herein by reference to Exhibit 10.4 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.4(*)   Pledge  and  Security Agreement with Robert C. McShirley dated October
          11,  2000  incorporated  herein  by  reference  to  Exhibit  10.5  to
          Registrant's  Form  10-QSB  filed  December  15,  2000  (SEC  File No.
          000-30326)
10.5(*)   Promissory Note by P. Scott Turner dated October 13, 2000 incorporated
          herein  by reference to Exhibit 10.6 to Registrant's Form 10-QSB filed
          December  15,  2000  (SEC  File  No.  000-30326)
10.6(*)   Promissory  Note  by  Sandford  T.  Waddell  dated  September 18, 2000
          incorporated  herein by reference to Exhibit 10.7 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.7(*)   Pledge and Security Agreement with Sandford T. Waddell dated September
          18,  2000  incorporated  herein  by  reference  to  Exhibit  10.8  to
          Registrant's  Form  10-QSB  filed  December  15,  2000  (SEC  File No.
          000-30326)
10.8(*)   Promissory  Note  by  P.  Scott  Turner  dated  September  18,  2000
          incorporated  herein by reference to Exhibit 10.9 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.9(*)   Pledge and Security Agreement with P. Scott Turner dated September 18,
          2000 incorporated herein by reference to Exhibit 10.10 to Registrant's
          Form  10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.10(*)  Agreement  and  Plan  of  Merger  dated  as  of  December  14,  2000
          incorporated herein by reference to Exhibit 10.11 to Registrant's Form
          10-QSB  filed  December  15,  2000  (SEC  File  No.  000-30326)
10.11(*)  Supplement  to  merger agreement with Colin Kruger and Michael Shirman
          dated  December  14,  2000
10.12(*)  Form  of  Warrant  Holder  Agreement  with  OTT  Shareholders
10.13(*)  Form  of  Registration  Rights  Agreement  with  OTT  Shareholders
10.14(*)  At  Will  Employment  Agreement  with  Colin  P.  Kruger
10.15(*)  At  Will  Employment  Agreement  with  Michael  Shirman
10.16(*)  Office  Lease  between  L.A.T.  Investment  Corporation  and  Online
          Transaction  Technologies,  Inc.  dated  March  7,  1999
10.17(*)  First  Amendment  to Lease between L.A.T. Investment Corporation dated
          February  1,  2000
10.18(*)  Alliance Agreement between Registrant and IBM dated September 18, 2000


                                       32
<PAGE>
10.19(*)  IBM PartnerWorld Agreement - International Basic General Terms between
          OTT  and  IBM
21.1(*)   Subsidiaries  of  the  Registrant
99.1(*)   Vsource,  Inc. 2000 Stock Option Plan incorporated herein by reference
          to Exhibit 99.1 to Registrant's Form 10-QSB/A filed September 25, 2000
          (SEC  File  No.  000-30326)
______________
*     Previously  filed  with  Securities  and  Exchange  Commission.


                                       33
<PAGE>