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 December 31,1999

             [   ] 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 February 12, 2000
              --------------                          -----------------------
   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.
                                DECEMBER 31, 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 December 31, 1999
               and March 31,1999 (unaudited)                                              3
            Condensed Consolidated Statements of Operations for the three
               and nine months ended December 31, 1999 and 1998 (unaudited)               5
            Condensed Consolidated Statements of Cash Flows for the
               nine months ended December 31, 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)

<TABLE>
<CAPTION>
                                                              December 31         March 31
                                                                  1999              1999
                                                              -----------------------------
<S>                                                           <C>                <C>
Assets
Current assets:
     Cash and cash equivalents                                $   209,993        $  401,376
     Short-term investments                                        13,557            13,251
     Accounts receivable, net                                   1,011,889         2,774,327
     Income taxes receivable                                            -            42,301
     Notes receivable                                              98,711            98,711
     Notes and guaranteed royalties receivable                          -            12,500
     Prepaid expenses and other current assets                    136,443           125,915
                                                              -----------------------------
Total current assets                                            1,470,593         3,468,381

Property and equipment, at cost                                 1,647,271         1,593,133
Less accumulated depreciation and amortization                 (1,213,053)         (970,149)
                                                              -----------------------------
Net property and equipment                                        434,218           622,984

Capitalized software, net                                         710,259           785,923
Goodwill, net                                                     889,121           995,017
Other long-term assets                                            113,134            84,057
                                                              -----------------------------
Total assets                                                  $ 3,617,325        $5,956,362
                                                              =============================
</TABLE>

                                  Page 3 of 13


<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


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

<TABLE>
<CAPTION>
                                                                     December 31          March 31
                                                                         1999               1999
                                                                    --------------------------------
<S>                                                                 <C>                 <C>
Liabilities and shareholders' equity
Current liabilities:
     Accounts payable and accrued liabilities                       $  1,067,062        $  2,437,361
     Current portion of notes payable to related parties                 426,099             593,318
     Short term notes payable                                                  -             199,186
     Unearned revenue and other current liabilities                      178,448             391,684
                                                                     -------------------------------
Total current liabilities                                              1,671,609           3,621,549

Notes payable to related parties net of current portion                  719,952           1,019,952
Deferred rent                                                             59,031              62,406
                                                                    --------------------------------
Total liabilities                                                      2,450,592           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                                             (16,904,707)        (16,818,985)
                                                                    --------------------------------
                                                                       3,092,827           3,178,549

Less treasury stock, at cost                                          (1,926,094)         (1,926,094)
                                                                    --------------------------------
Total shareholders' equity                                             1,166,733           1,252,455
                                                                     -------------------------------
Total liabilities and shareholders' equity                          $  3,617,325        $  5,956,362
                                                                    ================================
</TABLE>

                                  Page 4 of 13


<PAGE>


                            Celerity Solutions, Inc.
                 Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                     Three Months Ended                   Nine Months Ended
                                                                         December 31                          December 31
                                                                   1999               1998              1999              1998
                                                               --------------------------------------------------------------------
                                                                   ------Unaudited------                  ------Unaudited------
<S>                                                            <C>                <C>                <C>                <C>
Revenues:
  Services                                                     $ 1,054,219        $ 2,236,310        $ 4,558,015        $ 6,359,623
  Software licenses                                                293,674            346,577          1,344,328          1,638,762
  Hardware and other                                                44,377              2,508             59,372          1,022,989
                                                               --------------------------------------------------------------------
Total revenue                                                    1,392,270          2,585,395          5,961,715          9,021,374

Cost of revenues:
  Services                                                         903,768          1,427,901          3,079,598          4,423,305
  Hardware and related                                              15,000              5,594             42,500            873,871
  Amortization of capitalized software                              52,497             43,266            157,491            129,798
                                                               --------------------------------------------------------------------
Total cost of revenues                                             971,265          1,476,761          3,279,589          5,426,974
                                                               --------------------------------------------------------------------
Gross margin                                                       421,005          1,108,634          2,682,126          3,594,400
Operating expenses:
  Research and development                                         128,806            255,408          1,069,133            818,373
  General and administrative                                       284,630            582,905            930,881          1,888,230
  Sales and marketing                                              213,419            509,322            725,600          1,348,999
  Amortization of goodwill                                          35,299             34,770            105,896            104,313
  Restructuring expense                                            (81,783)              --              (81,783)              --
                                                               --------------------------------------------------------------------
Total operating expenses                                           580,371          1,382,405          2,749,727          4,159,915

Operating loss                                                    (159,366)          (273,771)           (67,601)          (565,515)

Other income (expense):
  Interest and other income                                         35,214             30,404             39,667            118,292
  Interest expense                                                 (20,378)           (56,383)           (57,788)          (180,833)
                                                               --------------------------------------------------------------------
Loss before income taxes                                          (144,530)          (299,750)           (85,722)          (628,056)
 Income tax benefit                                                   --               69,250               --              122,250
                                                               --------------------------------------------------------------------
Net loss                                                       $  (144,530)       $  (230,500)       $   (85,722)       $  (505,806)
                                                               ====================================================================
Loss per common share:
Net loss per share                                             $     (0.02)       $     (0.03)       $     (0.01)       $     (0.06)
                                                               ====================================================================
Weighted average shares outstanding                              9,592,886          8,035,189          9,592,886          8,023,616
                                                               ====================================================================
</TABLE>


                                  Page 5 of 13


<PAGE>



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

<TABLE>
<CAPTION>
                                                                                                            Nine Months Ended
                                                                                                                 December 31
                                                                                                          1999              1998
                                                                                                       ----------------------------
<S>                                                                                                    <C>              <C>
Operating Activities
    Net loss                                                                                           $   (85,722)     $  (505,806)
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
      Sale oflsoftwaretlicensecinsexchangehforenotesnpayableytolrelatedlpartiesrties                      (400,000)            --
      Depreciation and amortization of property and equipment                                              244,090          241,157
      Amortization of goodwill and developed software                                                      263,387          234,110
      Changes in operating assets and liabilities unsold:
         Accounts receivable                                                                             1,762,438       (1,416,292)
         Prepaid expenses and other current assets                                                         (10,528)         (37,690)
         Short and long-term notes receivable                                                               12,500          914,093
         Other long-term assets                                                                            (29,077)         (53,232)
      Accounts payable and accrued liabilities                                                          (1,370,299)         506,668
      Income tax receivable (payable)                                                                       42,301         (148,950)
      Short-term notes to related parties                                                                 (199,186)        (570,710)
      Unearned revenue, deferred rent and other current liabilities                                       (216,611)        (240,272)
                                                                                                       ----------------------------
      Net cash provided by (used in) operating activities                                                   13,293       (1,076,924)

Investing Activities
    (Purchase) proceeds from short term investments                                                           (306)         983,834
    Purchase of property and equipment                                                                     (55,324)        (298,652)
    Capitalized software costs                                                                             (81,827)        (160,012)
                                                                                                       ----------------------------
    Net cash (used in) provided by investing activities                                                   (137,457)         525,170

Financing Activities
    Proceeds from sale of stock                                                                               --             18,603
    Notes payable to related parties, net                                                                  (67,219)            --
                                                                                                       ----------------------------
    Net cash (used in) provided by financing activities                                                    (67,219)          18,603

    Net decrease in cash and cash equivalents                                                             (191,383)        (533,151)
    Cash and cash equivalents at beginning of period                                                       401,376        1,347,246
                                                                                                       ----------------------------
    Cash and cash equivalents at end of period                                                         $   209,993      $   814,095
                                                                                                       ============================
</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           Nine Months Ended
                                                                  December 31                   December 31
                                                              1999           1998            1999          1998
                                                           --------------------------    --------------------------
<S>                                                        <C>            <C>            <C>            <C>
Numerator:
Net loss                                                   $  (144,530)   $  (230,500)   $   (85,722)   $  (505,806)

Numerator for loss per common share - assuming dillution   $  (144,530)   $  (230,500)   $   (85,722)   $  (505,806)
                                                           --------------------------    --------------------------

Denominator:
Denominator for income (loss) per common
share, weighted-average shares outstanding                   9,592,886      8,035,189      9,592,886      8,023,616

Effect of Dilutive securities:                                       *              *              *              *

Denominator for diluted loss per share- Adjusted
weighted-average shares                                      9,592,886      8,035,189      9,592,886      8,023,616
                                                           --------------------------    --------------------------

Loss per common share                                      $     (0.02)   $     (0.03)   $     (0.01)   $     (0.06)
                                                           ==========================    ==========================

Loss per common share - assuming dilution                  $     (0.02)   $     (0.03)   $     (0.01)   $     (0.06)
                                                           ==========================    ==========================
</TABLE>


* Options and warrants to purchase shares of common stock were excluded from the
calculation of diluted net loss per share as the effect of their inclusion would
be antidilutive.

                                  Page 7 of 13


<PAGE>


                            CELERITY SOLUTIONS, INC.


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 $0.40 per share and reflected
in the March 31,  1999  results.  The  remaining  $538,048 is to be paid over 42
months at an interest rate of 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.

During  November  1999 Mr.  Ringuette  and Mr.  Carr each  loaned an  additional
$50,000 to the  Company.  The proceeds  were used to  partially  fund a $125,000
payment to Ms. Luda Kopekina,  the former CEO of Celerity.  The payment was made
as  part of a  settlement  agreement  reached  with  Ms.  Kopekina  regarding  a
severance claim. These loans were added to the outstanding  balance on the notes
held by Mr. Ringuette and Mr. Carr described above.

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 1999 through July 1999,  all notes payable to related  parties over
$20,000 were renegotiated.  This renegotiation  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.  As of
December 31, 1999, five note payments have been deferred. The severance payments
have not been deferred. The final severance payment is due in February of 1999.


                                  Page 8 of 13


<PAGE>


                            CELERITY SOLUTIONS, INC.


Revenues

     Revenues from services  decreased  $1,182,091,  or 53%, and $1,801,608,  or
28%,  for the  three  month and nine  month  periods  ended  December  31,  1999
respectively, 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 by the  Company  in the  start of new  projects.
Management  expects that as a result of workforce  reductions,  service revenues
for the current fiscal year will decrease below fiscal 1999 levels.

     Revenues  from  software  license  sales  decreased  $52,903  or  15%,  and
decreased  $241,584,  or 18%, for the three-month  and nine-month  periods ended
December  31, 1999  respectively,  versus the same  periods in 1998.  Management
believes  that  license  revenues  continue  to trail  last  year as a result of
delayed sales decisions of customers related to the year 2000 changeover.

     Revenues from hardware and related  sales  increased  $41,869 and decreased
$963,617  for  the  three  and  nine-month   periods  ended  December  31,  1999
respectively.  Management  believes that the nine month decrease is 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.  Significant portions 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 Revenues

     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 $524,133, or 37%, and
$1,343,707,  or 30%, during the three and nine-month  periods ended December 31,
1999  respectively,  versus the same  periods  in 1998.  Cost of  services  as a
percent of revenue from services  increased  from 64% to 86% and decreased  from
70%  to 68%  for  the  three  and  six  month  periods  ended  December  31,1999
respectively,  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  increased  $9,406  and
decreased  $831,371 for the three and nine month periods ended December 31, 1999
respectively,  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 decreased $126,602, or 50%, and increased
$250,760,  or 31%,  during the three and nine month periods  ended  December 31,
1999 respectively,  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 has reached  technological
feasibility,  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  $298,275,  or  51%,  and
$957,349,  or 51%,  during the three and  nine-month  periods ended December 31,
1999  respectively,  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 $295,903,  or 58%, and $623,399,  or
46%,   during  the  three  and  nine  month  periods  ended  December  31,  1999
respectively,  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 nine  months  ended  December  31,  1999,  cash and cash  equivalents
decreased $191,383, or 48%, to $209,993.

     Accounts  receivable  decreased  $1,762,438,  or 64%, to $1,011,889 for the
nine months  ended  December  31,  1999.  Of the total  decrease,  approximately
$350,000  resulted from the settlement of a disputed,  past due balance with one
major customer.  The Company can attribute  additional decreases to the decrease
in revenues  for the nine months ended  December 31, 1999 and the improved  cash
collection effort.

     Other long term assets  increased  $29,077,or 35% for the nine months ended
December 31, 1999.  This increase was due to a $54,827 rent deposit related to a
new lease signed for the Company's  corporate offices in Dedham MA. This deposit
was  partially  offset  by a  $25,000  decrease  in the  lease  deposit  for the
Company's Irvine California facility.

     Accounts payable and accrued liabilities decreased  $1,370,299,  or 56%, to
$1,067,062  for the nine months ended  December 31, 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 first nine months of fiscal
2000.

     Notes  payable to related  parties  decreased  $300,000 for the nine months
ended December 31, 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  increased
notes  payable to related  parties by  $100,000  as the result of an  additional
$50,000  each  loaned to the Company by Paul Carr and Luc  Ringuette  during the
three month period ended December 31, 1999. The Company has the option of paying
interest  only on the notes for six  months.  The  Company  has  exercised  this
interest only option for five months  during the nine months ended  December 31,
1999.

     Short-term  notes payable has decreased  $199,186 for the nine months ended
December 31, 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 Bank 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 Company's operations.

     Unearned revenue decreased  $213,236 for the nine months ended December 31,
1999,  reflecting  the net  recognition  of  support  maintenance  fees that are
greater than the receipts taken in on new yet-to-be recognized support 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  $1,146,051  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
investigating as to whether 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

                                 Page 10 of 13



<PAGE>


                            CELERITY SOLUTIONS, INC.


investments in additional  sales and marketing  areas.  Any material  investment
would require the Company to obtain additional sources of financing.

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.

The Company settled a claim filed by Ms. Luda Kopekina the former  President and
CEO of the  Company,  related  to a  severance  dispute.  Under the terms of the
settlement  Ms.  Kopekina  received a payment of  $120,000 in  November,  and is
scheduled  to receive an  additional  $100,000 in 12 monthly  payments of $8,750
beginning January 2000.

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.


                                 Page 12 of 13


<PAGE>


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

                                    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: February 12, 1999             /s/Tricia McGillicudy
                                    -------------------------------------------
                                         Tricia McGillicudy
                                         Chief Accountant (Principal Accounting
                                         Officer)

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

                                 Page 13 of 13