U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

             [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30,1999

             [ ] Transition Report Under Section 13 or 15(d) of the
                                  Exchange Act
                        For the transition period from to

                         Commission file number: 0-20102

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

                  Delaware                               52-1283993
       (State or other jurisdiction of      (I.R.S. Employer Identification No.)
               incorporation)

                          270 Bridge Street, Suite 301
                                Dedham, MA 02026
                     (Address of principal executive office)

                                 (781) 329-1900
                            Issuer's telephone number


     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes[X] No[_]

     State the number of shares  outstanding of each of the issuer's  classes of
common equity, as of the latest practicable date:

                                                 Number Outstanding Shares
           Title of Class                         as of November 12, 1999
           --------------                         -----------------------
     Common Stock, $.10 Par Value                        9,592,886

Transitional Small Business Disclosure Format: Yes [_] No [X]

                            Exhibit Index on Page 12


                                  Page 1 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.
                               SEPTEMBER 30, 1999
                                   FORM 10-QSB
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                           Page
                                                                                           ----
<S>                                                                                        <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.  Condensed Consolidated Financial Statements (unaudited)
         Condensed Consolidated Balance Sheets as of September 30, 1999 (unaudited)
           and March 31,1999                                                                3
         Condensed Consolidated Statements of Operations for the three
           and six months ended September 30, 1999 and 1998 (unaudited)                     5
         Condensed Consolidated Statements of Cash Flows for the
           six months ended September 30, 1999 and 1998 (unaudited)                         6
         Notes to Condensed Consolidated Financial Statements                               7

ITEM 2.  Management's Discussion and Analysis and Plan of
           Operation                                                                        8


PART II  OTHER INFORMATION

ITEM 1.  Legal Proceedings                                                                 12

ITEM 2.  Changes in Securities                                                             12

ITEM 3.  Defaults Upon Senior Securities                                                   12

ITEM 4.  Submission of Matters to a Vote of Security Holders                               12

ITEM 5.  Other Information                                                                 12

ITEM 6.  Exhibits and Reports on Form 8-K                                                  12

         Signatures                                                                        13
</TABLE>


                                  Page 2 of 13
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                            Celerity Solutions, Inc.
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)

                                                September 30      March 31
                                                    1999            1999
                                                ----------------------------

Assets
Current assets:
   Cash and cash equivalents                     $   148,375    $   401,376
   Short-term investments                             13,391         13,251
   Accounts receivable, net                        1,627,898      2,774,327
   Income taxes receivable                            42,301         42,301
   Notes receivable                                   98,711         98,711
   Notes and guaranteed royalties receivable               0         12,500
   Prepaid expenses and other current assets         124,622        125,915
                                                 ---------------------------
Total current assets                               2,055,298      3,468,381

Property and equipment, at cost                    1,635,810      1,593,133
Less Accumulated depreciation and amortization    (1,132,413)      (970,149)
                                                 ---------------------------
Net Property and equipment                           503,397        622,984

Capitalized software, net                            680,929        785,923
Goodwill, net                                        924,420        995,017
Other long-term assets                               138,134         84,057
                                                 ===========================
Total assets                                     $ 4,302,178    $ 5,956,362
                                                 ===========================


                                  Page 3 of 13
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                            Celerity Solutions, Inc.
                Condensed Consolidated Balance Sheets (continued)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                   September 30              March 31
                                                                       1999                    1999
                                                                  -------------------------------------
<S>                                                               <C>                      <C>
Liabilities and shareholders' equity
Current liabilities:
   Accounts payable and accrued liabilities                       $  1,560,524             $  2,437,361
   Current portion of notes payable to related parties                 445,797                  593,318
   Short term notes payable                                                                     199,186
   Unearned revenue and other current liabilities                      304,484                  391,684
                                                                  -------------------------------------
Total current liabilities                                            2,310,805                3,621,549

Notes payable to related parties                                       619,952                1,019,952
Deferred rent                                                           60,156                   62,406
                                                                  -------------------------------------
Total liabilities                                                    2,990,913                4,703,907

Shareholders' equity:
   Common stock, $.10 par value                                        959,289                  959,289
   Additional paid-in capital                                       19,038,245               19,038,245
   Accumulated deficit                                             (16,760,175)             (16,818,985)
                                                                  -------------------------------------
                                                                     3,237,359                3,178,549

Less treasury stock, at cost                                        (1,926,094)              (1,926,094)
                                                                  -------------------------------------
Total shareholders' equity                                           1,311,265                1,252,455
                                                                  -------------------------------------
Total liabilities and shareholders' equity                        $  4,302,178             $  5,956,362
                                                                  =====================================
</TABLE>


                                  Page 4 of 13
<PAGE>


                            Celerity Solutions, Inc.
                 Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                         Three Months Ended                     Six Months Ended
                                                            September 30                          September 30
                                                      1999                1998               1999              1998
                                                   ------------------------------------------------------------------------
                                                       -----(Unaudited)-----                  -----(Unaudited)-----
<S>                                                <C>                <C>                <C>                <C>
Revenue:
  Services                                         $ 1,500,279        $ 2,189,742        $ 3,503,796        $ 4,123,313
  Software licenses                                    720,500            761,049          1,050,654          1,292,185
  Hardware and other                                    14,995            105,810             14,995          1,020,481
                                                   --------------------------------------------------------------------
Total revenue                                        2,235,774          3,056,601          4,569,445          6,435,979

Cost of sales
  Services                                           1,133,671          1,596,507          2,175,830          2,995,404
  Hardware and related                                  12,500             86,881             27,500            868,277
  Amortization of capitalized software                  52,497             43,266            104,994             86,532
                                                   --------------------------------------------------------------------
Total cost of sales                                  1,198,668          1,726,654          2,308,327          3,950,213
                                                   --------------------------------------------------------------------
Gross margin                                         1,037,106          1,329,947          2,261,121          2,485,766
Operating expenses:
  Research and development                             425,675            270,565            940,327            562,965
  General and administrative                           323,307            706,900            646,251          1,305,325
  Sales and marketing                                  239,243            483,402            512,181            839,677
  Amortization of goodwill                              35,299             34,771             70,597             69,543
                                                   --------------------------------------------------------------------
Total operating expenses                             1,023,524          1,495,638          2,169,356          2,777,510

Operating income (loss)                                 13,582           (165,691)            91,765           (291,744)

Other income (expense):
  Interest and other income                             33,884             22,443              4,455             87,888
  Interest expense                                     (20,445)           (60,572)           (37,410)          (124,450)
                                                   --------------------------------------------------------------------
Income (loss) before income taxes                       27,021           (203,820)            58,810           (328,306)
 Income tax benefit                                          0             33,000                  0             53,000
                                                   --------------------------------------------------------------------
Net income (loss)                                  $    27,021        $  (170,820)            58,810        $  (275,306)
                                                   ====================================================================
ncome (loss) per common share:
Net income (loss) per share                        $      0.00        $     (0.02)       $      0.01        $     (0.03)
                                                   ====================================================================
Weighted average shares outstanding                  9,592,886          8,017,798          9,592,886          8,017,798
                                                   ====================================================================
</TABLE>


                                  Page 5 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.

                            Celerity Solutions, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                       Six Months Ended
                                                                                         September 30
                                                                                   1999                 1998
                                                                               --------------------------------
<S>                                                                            <C>                  <C>
Operating Activities
Net income (loss)                                                              $    58,810          $  (275,306)
Adjustments to reconcile net income (loss) to net cash used in
     operating activities:
     Sale of software license in exchange for notes payable to                    (400,000)
     related parties
     Depreciation and amortization of property and equipment                       162,264              157,759
     Amortization of goodwill and developed software                               175,591              156,074
     Changes in operating assets and liabilities
         Accounts receivable                                                     1,146,429             (937,010)
         Prepaid expenses and other current assets                                   1,293              (80,487)
         Short and long term notes receivable                                       12,500              793,493
         Other long term assets                                                    (54,077)              17,268
         Accounts payable and accrued liabilities                                 (876,837)             274,824
         Income taxes payable                                                                           (79,700)
         Short term notes payable                                                 (199,186)                   0
         Unearned revenue, deferred rent and other current liabilities             (89,450)            (111,341)
                                                                               ---------------------------------
Net cash used in operating activities                                              (62,663)             (84,426)

Investing Activities
Purchase of property and equipment                                                 (42,677)            (171,000)
                                                                               ---------------------------------
Net cash used in investing activities                                              (42,677)            (171,000)

Financing Activities
Purchases of short-term investments                                                   (140)             (25,950)
Notes payable to related parties                                                  (147,521)            (220,130)
Proceeds from sales of short-term investments                                            0              500,000
                                                                               ---------------------------------
Net cash (used in) provided by financing activities                               (147,661)             253,920
                                                                               ---------------------------------

Net decrease in cash and cash equivalents                                         (253,001)              (1,506)
Cash and cash equivalents at beginning of period                                   401,376            1,347,246
                                                                               ---------------------------------
Cash and cash equivalents at end of period                                     $   148,375          $ 1,345,740
                                                                               =================================
</TABLE>


                                  Page 6 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.


1.   Statement of Information Provided

The accompanying unaudited condensed  consolidated  financial statements,  which
are for  interim  periods,  have been  prepared in  accordance  with Form 10-QSB
instructions  and  do  not  include  all  disclosures  provided  in  the  annual
consolidated financial statements. In the opinion of management, all adjustments
consisting of normal recurring accruals and adjustments considered necessary for
a fair presentation have been included.  These unaudited condensed  consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial statements and the footnotes thereto contained in the Annual Report on
Form 10-KSB for the fiscal year ended March 31, 1999 of Celerity Solutions, Inc.
(the  "Company"),  as filed with the Securities and Exchange  Commission.  These
results  have been  determined  on the basis of  generally  accepted  accounting
principles and practices applied consistently with those used in the preparation
of the Company's March 31, 1999 Annual Report on Form 10-KSB. The March 31, 1999
balance sheet was derived from audited consolidated  financial  statements,  but
does not  include all  disclosures  required by  generally  accepted  accounting
principles.

2.   Income (loss) Per Share

The  following  table sets forth the  computation  of basic and  diluted  income
(loss) per share:

<TABLE>
<CAPTION>
                                                       Three Months Ended                     Six Months Ended
                                                          September 30,                         September 30,
                                                  --------------------------------------------------------------------
                                                     1999               1998               1999               1998
                                                  --------------------------------------------------------------------
<S>                                               <C>               <C>                <C>               <C>
Numerator:
Net income (loss)                                 $    27,021       $  (170,820)       $    58,810       $    (275,306)
                                                  ====================================================================
Numerator for income (loss) per common
share and income (loss) per share-assuming
dilution                                          $    27,021       $  (170,820)       $    58,810       $    (275,306)
                                                  ====================================================================

Denominator:
Denominator for income (loss) per common
share-Weighted average shares  outstanding
                                                    9,592,886         8,017,798          9,592,886           8,017,798
Effect of Dilutive securities:
                                                            *                **                  *                  **
                                                  ====================================================================
Denominator for diluted income (loss) per
share- Adjusted weighted average shares             9,592,886         8,017,798          9,592,886           8,017,798
                                                  ====================================================================
Income (loss)  per common share                   $      0.00       $     (0.02)       $      0.01       $       (0.03)
                                                  ====================================================================
Income (loss) per common share-assuming
dilution                                          $      0.00       $     (0.02)       $      0.01       $       (0.03)
                                                  ====================================================================
</TABLE>


* No options  are  included  in the  calculation  because all options are priced
above $0.125,  which was the closing price of Celerity's  stock on September 30,
1999.  There are also warrants to purchase  344,500  shares at $3.57,  which was
outstanding  at September  30, 1999,  but not included in the  potential  common
share  computations  because its  exercise  price was  greater  than the average
market price of common shares.

** Potential  common shares are not included because they would be antidilutive.
Had the numerator been a profit the potential common shares would have increased
the weighted average shares outstanding by 351,579 shares as of the three months
ended  September  30,  1998,  and by 496,599  shares  for the six  months  ended
September 30, 1998. In addition, there were options to purchase 1,193,000 shares
at exercise  prices between $2.469 and $4.66 per share  outstanding at September
30,  1998 that were not  included in the  potential  common  share  computations
because their exercise  prices were greater than the average market price of the
common shares.  There were also warrants to purchase 599,621 shares at $3.57 and
2,500  shares at $2.47 which were  outstanding  at September  30, 1998,  but not
included in the  potential  common share  computations  because  their  exercise
prices were greater than the average


                                  Page 7 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.


2.   Income (loss) Per Share (continued)

market price of common  shares.  These would have been  antidilutive,  even if a
profit had been reported in the numerator.

3.   Related Party Transactions

During March and July 1999, two notes payable to related parties over $20,000.00
were renegotiated as follows:

The note  payable To Mr.  Carr with a balance of  $1,025,798  at March 31,  1999
including  imputed  interest  to be paid has been  reduced  by  $200,000  in the
quarter  ended  September  30, 1999 for the sale of a source code license to Mr.
Carr related to the CSTI software.  The Mr. Carr is prohibited from transferring
this license to a third party by a non-compete agreement which extends 12 months
from  termination  of  employment.  The note  payable  had been  reduced  by the
conversion  of $300,000 of the debt into equity at $.40 per share and  reflected
in the March 31,  1999  results.  The  remaining  $538,048 is to be paid over 42
months at 8% with monthly payments of approximately $14,681.

Another  note  payable to Mr.  Ringuette  with a balance of  $439,960  including
accrued interest has been reduced by $200,000 in the quarter ended September 30,
1999  for the  sale of a  source  code  license  to the  Mr.  Ringuette  for the
warehouse management software acquired in the Somerset acquisition.  The balance
of $239,960 is to be paid over 36 months at 8% with monthly  payments of $7,494.
These  payments  are  offset  by  royalty  fees  earned  from a 5  year  royalty
agreement.  If there is a balance  remaining at the end of the 5 year  agreement
the Company must pay that balance.


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

     The following  discussion  should be read in conjunction with the condensed
unaudited financial  statements included elsewhere within this quarterly report.
Fluctuations in annual and quarterly  operating results may occur as a result of
certain  factors,  such  as the  size  and  timing  of  customer  contracts  and
competition.  Due  to  such  fluctuations,  historical  results  and  percentage
relationships  are not  necessarily  indicative  of the  results  for any future
period. Statements, which are not historical facts contained in this report, are
forward-looking statements that involve risks and uncertainties that could cause
actual  results  to  differ  materially  from  projected  results.  Readers  are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date hereof. The Company undertakes
no  obligation  to  publicly  release  the  results  of any  revision  to  these
forward-looking statements, which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

Business Developments

     During  March and July 1999,  all notes  payable to  related  parties  over
$20,000 were renegotiated.  This resulted in the  reclassification of $1,293,281
of current liabilities to long term, with $700,000 being transferred in the form
of debt conversions into equity and revenue.  All payment schedules also include
provisions  to defer  payments  up to 6  months.  This  deferral  of 6 months of
principal payments results in $205,000 of current liabilities deferred on a roll
forward  basis.  This  deferral  includes note payments as well as severance pay
outs of $80,000  scheduled  over the next year,  which is  reflected  in accrued
liabilities and can also be deferred.


                                  Page 8 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.


Revenue

     Revenues from services decreased  $689,463,  or 32%, and $619,517,  or 15%,
for the three month and six month  periods  ended  September 30, 1999 versus the
same periods in 1998.  These  decreases were  attributable  to the completion of
several projects that incurred  non-billable  time during the second quarter and
the delay in the start of new projects. Management expects that service revenues
for the current fiscal year will decrease versus fiscal 1999 levels.

     Revenues  from  software  license  sales  decreased  $40,549,  or  5%,  and
$241,531,  or 19%, for the three month and six month periods ended September 30,
1999 versus the same periods in 1998.  Management  believes that license revenue
continues to trail last year as a result of delayed sales decisions of customers
related to year 2000 change over.

     Revenues from hardware and related sales  decreased  $90,815 and $1,005,486
for the three and six month  periods  ended  September  30, 1999 versus the same
periods in 1998.  These decreases are  attributable to the completion in 1998 of
two large hardware sales.  Hardware sales fluctuate with the installation of new
systems where the customer  requires  that the Company's  software be integrated
with hardware. Hardware sales are not expected to be significant in fiscal 2000.

     The  level  of  net  sales  realized  by the  Company  in  any  quarter  is
principally  dependent  on the portion of projects  completed.  The  purchase of
supply  chain  and  warehouse   management   solutions  requires  a  significant
commitment  of capital  and  resources  on the part of the  customer,  the sales
cycles are long and average  from six to nine  months.  As a result,  revenue is
subject to many  risks such as  budgetary  cycles of  customers,  changes in the
business of a customer and overall  economic trends that are not controllable by
the Company.  Quarterly  results have varied  significantly  in the past and are
likely to  fluctuate  in the  future as a result  of the  timing of new  orders,
product  development  expenditures,  and the number  and  timing of new  product
completions. A significant portion of the Company's operating expenses are fixed
and  planned  expenditures  in any given  quarter are based on sales and revenue
forecasts.  Accordingly,  if net sales do not meet the Company's expectations in
any given quarter,  operating results and financial condition could be adversely
and  disproportionately  affected.  As a result of these and other factors,  the
Company's  results of  operations  and  financial  condition  for any period are
inherently  difficult to predict.  The Company  expects that  revenues in fiscal
2000 will  decrease  below those  reported in fiscal 1999,  due to the year 2000
change over slowing purchase decisions for customers and potential  customers of
the Company along with a decrease in service  billings  associated with the work
force reductions.

Cost of Sales

     Cost of services are incurred in  connection  with the sale of supply chain
and warehouse management software.  Cost of services consists of costs primarily
associated with consulting and implementation  services that are sold as part of
a total supply chain and warehouse  management  solution,  and costs  associated
with providing support to customers. These costs decreased $462,836, or 29%, and
$819,574,  or 28%,  during the three and six month periods  ended  September 30,
1999 versus the same  periods in 1998.  Cost of services as a percent of revenue
from  services  increased  from 73% to 76% and from 73% to 62% for the three and
six month periods ended  September  30,1999 versus the same periods in 1998. The
Company has  decreased  its  consulting  staff and  subcontractors  and deployed
employees from R&D to work on service related  revenues as a result of decreased
revenue expectations for the current fiscal year.

     Cost of sales  from  hardware  and  related  sales  decreased  $74,381  and
$840,777 for the three and six month periods ended September 30, 1999 versus the
same periods in 1998.  This decrease is  attributable  to the  completion of two
large hardware sales during 1998. Hardware sales fluctuate with the installation
of new  systems  where the  customer  requires  that the  Company's  software be
integrated  with hardware.  Hardware sales are not expected to be significant in
fiscal 2000.

Research and Development

     Research and development expenses increased $155,110, or 57%, and $377,362,
or 67%,  during the three and six month periods ended  September 30, 1999 versus
the same period in 1998. Development increased during fiscal 1999 as the Company
accelerated the project of integrating the supply chain and warehouse management
products. This effort is expected to reach technological feasibility in the next
quarter,  however,  there can be no assurances  that the Company will be able to
develop and market new  products  or product  enhancements  that  respond to the
technological  change or evolving standards,  that new products will be released
on  schedule,  or that  released  products  will  achieve  any  degree of market
acceptance.


                                  Page 9 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.


General and Administrative

     General  and  administrative  expenses  decreased  $383,593,  or  54%,  and
$659,074,  or 50%,  during the three and six month periods  ended  September 30,
1999  versus  the  same  periods  in  1998.  These  decreases  are  due  to  the
restructuring that occurred during March 1999.

Sales and Marketing

     Sales and marketing expenses decreased $244,159,  or 51%, and $327,496,  or
39%,  during the three and six month periods ended September 30, 1999 versus the
same periods in 1998.  This item includes  personnel  related costs,  as well as
those  costs  related  to  facilities,  travel,  trade  shows,  advertising  and
promotions.  These decreases are due to the  restructuring  that occurred during
March 1999.

Liquidity and Capital Resources

     The Company's  primary sources of liquidity are cash, and cash equivalents.
During  the six months  ended  September  30,  1999,  cash and cash  equivalents
decreased $253,001, or 64%, to $148,375.

     Accounts receivable decreased $1,146,429, or 41%, to $1,627,898 for the six
months ended September 30, 1999. Of the total decrease,  approximately  $350,000
resulted  from the  settlement  of a disputed,  past due balance  with one major
customer. Additional decreases can be attributed to the decrease in revenues for
the six months ended September 30, 1999 and the improved cash collection  effort
by the company.

     Other long term assets increased  $54,077,  or 64% for the six months ended
September 30, 1999. This increase was due to an additional rent deposit required
for the renewal of the lease for the corporate  facilities at 270 Bridge Street,
Dedham, MA.

     Accounts payable and accrued  liabilities  decreased  $876,837,  or 36%, to
$1,560,524  for the six months ended  September 30, 1999. The Company had slowed
payments with several  vendors in the last two quarters of fiscal 1999.  Most of
these vendors were brought up to date during the two quarters.

     Notes  payable to related  parties  decreased  $547,521  for the six months
ended  September 30, 1999. The Company  reduced notes payable to related parties
by $400,000 in a non-cash transaction,  as a result of source code sales to Paul
Carr and Luc  Ringuette  in the amount of  $200,000  each.  The  Company has the
option of paying  interest  only on the notes for six  months.  The  Company has
exercised  this  interest only option for two months during the six months ended
September 30, 1999.

     Short term notes  payable has  decreased  $199,186 for the six months ended
September 30, 1999.  The company paid the balance due to Imperial Bank under the
terms of the Company's factoring  agreement.  The Company was notified in August
that Imperial Bank will not fund additional  advances under this agreement until
Celerity provides Imperial with copyright  documentation for Celerity's software
products required under the security provisions of the agreement. The failure of
Imperial Bank to fund future advances on receivables under this agreement is not
expected to have an adverse effect on the Companies operations.

     Unearned revenue  decreased  $89,200 for the six months ended September 30,
1999,  reflecting the net recognition of support maintenance and license revenue
fees that are greater than the  receipts  taken in on new  yet-to-be  recognized
license fees.

     The  Company  believes  its  existing  cash and cash  equivalent  balances,
short-term investment balances,  and cash generated from operations will satisfy
the Company's working capital and capital expenditure  requirements for at least
the next twelve months.

     The Company does not currently  have plans for major capital  expenditures,
but  does  have  $1,065,749  in  notes  payable  to  related  parties  from  the
acquisitions of SAI and CSTI.  These notes are payable in various amounts ending
June 2002. The Company believes that existing cash and cash equivalent balances,
short-term  investment  balances and potential  cash flow from  operations  will
satisfy this long-term liability.

Looking  forward to fiscal  2001,  the  Company  expects  sales to  increase  as
decisions  delayed  by the year  2000  change  over are  made.  The  Company  is
considering if an additional investment in sales and marketing will increase the
rate and  amount of new  sales.  However,  there can be no  assurances  that the
Company will make  investments  in  additional  sales and marketing  areas.  Any
material  investment would require the Company to obtain  additional  sources of
financing.


                                  Page 10 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.


Year 2000 Compliance Issues

     Many  older  computer  systems  and  software  products  in use today  were
programmed with a two -digit date code field. These systems or software products
need to be modified,  upgraded or replaced to distinguish the Year 2000 in order
to avoid the possibility of erroneous results or system failures. The effects of
this issue and the efforts by  companies to address it are  uncertain.  The risk
for  Celerity  exists in four  areas:  systems  used by the  Company  to run its
business,  systems used by the Company's  vendors,  potential  warranty or other
claims from the  Company's  customers,  and the  potential  reduced  spending by
others companies as a result of significant information systems spending on Year
2000 issues.

     The Company has inventoried and evaluated its internal systems,  equipment,
and facilities and established a schedule to replace or upgrade systems that are
known to be Year 2000 non-compliant.  The Company utilizes outside providers for
services such as payroll processing and 401(k) benefit administration, which may
or may not be Year 2000 compliant. The Company has requested and received from a
majority of its vendors written  confirmation of their knowledge of or plans for
Year 2000 compliance. The Company has taken steps to make sure that its internal
systems  will   function  in  the  year  2000,   but  failure  of  any  critical
technological  component  to  operate  properly  may have an  adverse  impact on
business  operations or require the Company to incur  unanticipated  expenses to
remedy any  problems.  The Company does not expect Year 2000 related  compliance
costs  to  be   material,   but  can  not   assure   that  such  costs  will  be
inconsequential.  The Company has not identified alternative  contingency plans,
but will do so as it continues to assess the Year 2000 risk.

     The  Company's  software  products  have  been  modified  to be  Year  2000
compliant.  However,  the  Company's  products  are  complex  and might  contain
undetected  errors or failures even though  intended to be Year 2000  compliant.
There can be no assurance that the Company's  software  products contain or will
contain all necessary  date code changes or that errors will not be found in new
products  or  product  releases,  resulting  in  loss  of or  delay  in  product
acceptance.  If the Company is unable,  or is delayed in its efforts to make the
necessary date code changes,  there could be a material  adverse effect upon the
Company's business, operating results, financial condition and cash flows.

     Many  companies  are expending  significant  resources to modify or upgrade
their existing software and hardware for Year 2000 compliance. This might reduce
funds available to purchase other software products such as the Company's supply
chain  management  software.  Additionally,  Year 2000  problems in a customer's
other  software  products  might  significantly  limit the  customer's  realized
benefit from the supply chain management software.  These events could result in
a  material  adverse  effect  on  the  Company's  business,  operating  results,
financial condition and cash flows.

Future Operating Results (Statutory Safe Harbor Disclosure)

     This report  contains  forward-looking  statements.  For this purpose,  any
statement,  contained  herein that are not statements of historical  fact may be
deemed to be  forward-looking  statements.  Without limiting the foregoing,  the
words "believes", "anticipates", "plans", "expects", and similar expressions are
intended to identify forward-looking statements.

     Numerous  factors  may affect the  Company's  business  and its  results of
operations.  These factors include the potential for significant fluctuations in
quarterly results,  dependence on new products and rapid  technological  change,
risk of software  errors or failures,  the level and  intensity of  competition,
lack of product  diversification,  dependence on certain distribution  channels,
proprietary  intellectual  property  rights,  limited  operating  history in the
supply chain management software industry, integration of acquisitions,  loss of
key  employees,  lack of  profitability,  sustaining  a public  trading  market,
absence of dividends,  and international  operations.  For a discussion of these
and other factors that may affect the  Company's  future  results,  see the Form
10-KSB for March 31, 1999 filed by the Company with the SEC in July 1999.


                                  Page 11 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

See the Companies 10QSB for the period ended June 30, 1999,  filed on August 23,
1999

ITEM 2.   CHANGES IN SECURITIES

Not Applicable.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

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

On  September  10,  1999  the  registrant   held  its  1999  Annual  Meeting  of
Stockholders  at the Company's  corporate  offices  located at 270 Bridge Street
Suite 301, Dedham, Massachusetts.  The following voting matters were approved at
the meeting:

<TABLE>
<CAPTION>
                                                            Against/                        Broker
                                              For           Withheld         Abstain       Non-Vote
                                           ---------        --------         -------       --------
<S>                                        <C>               <C>              <C>             <C>
1.   Election of five persons to the
     Board of Directors to hold office
     until the next Annual Meeting or
     until their successors have been
     elected and qualified or their
     earlier resignation or removal:

     Luc Ringuette                         6,042,898         41,525           --              --
     Paul Carr                             6,040,958         43,465           --              --
     Harold H. Leach Jr                    6,042,898         41,525           --              --
     Richard J. Santigati                  6,042,898         41,525           --              --
     Edward B. Merino                      6,042,898         41,525           --              --

2.   Approval of Amendment to Celerity
     Solutions, Inc.'s Amended and
     Restated 1992 Non-Qualified Stock
     Option Plan for Non-Employee
     Directors increasing compensation
     for director services for the
     director of the Compensation and
     Audit committees from 20,000 stock
     options to 30,000 stock options.      5,910,187        122,851       34,385          17,000

3.   Approval of Ernst & Young LLP as
     Celerity Solutions, Inc. auditors
     for fiscal 2000.                      6,069,823          9,507        5,093
</TABLE>


ITEM 5.  OTHER INFORMATION

Not applicable
 .
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

10.1 Dedham, MA office lease agreement
10.2 Irvine, CA office lease amendment
27.1 Financial Data Schedule

(b)  Reports on Form 8-K:

none


                                  Page 12 of 13
<PAGE>


                            CELERITY SOLUTIONS, INC.


                                   SIGNATURE

     In accordance  with the  requirements  of the Exchange Act, the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                     CELERITY SOLUTIONS, INC.
                                                (Registrant)


Date: November 12, 1999              /s/Cheryl McCarthy
                                     --------------------------------------
                                        Cheryl McCarthy
                                        Controller (Principal Accounting
                                        Officer)

Date:  November 12, 1999             /s/Paul Carr
                                     --------------------------------------
                                        Paul Carr
                                        President & Chief Financial Officer


                                  Page 13 of 13