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

                                   FORM 10-QSB

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

                  For the quarterly period ended June 30, 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 June 30, 1999
           --------------                            -------------------
Common Stock, $.10 Par Value                              9,592,886

     Transitional Small Business Disclosure Format: Yes _____ No __X__

                            Exhibit Index on Page 18


                                  Page 1 of 17

<PAGE>


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

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION

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

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         results of Operations                                                8



PART II  OTHER INFORMATION



ITEM 1.  Legal Proceedings                                                   15

ITEM 2.  Changes in Securities                                               15

ITEM 3.  Defaults Upon Senior Securities                                     15

ITEM 4.  Submission of Matters to a Vote of Security Holders                 15

ITEM 5.  Other Information                                                   15

ITEM 6.  Exhibits and Reports on Form 8-K                                    15

             Signatures                                                      16


                                  Page 2 of 17

<PAGE>


PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                            Celerity Solutions, Inc.
                      Condensed Consolidated Balance Sheets

                                                        June 30       March 31
                                                         1999           1999
                                                     --------------------------
Assets                                               (Unaudited)        Note 1
Current assets:
   Cash and cash equivalents                         $   779,043    $   401,376
   Short-term investments                                 13,267         13,251
   Accounts receivable, net                            1,593,854      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             117,365        125,915
                                                     --------------------------
Total current assets                                   2,644,541      3,468,381

Property and equipment:                                1,621,189      1,593,133
   Less: accumulated depreciation and amortization    (1,051,142)      (970,149)
                                                     --------------------------
                                                         570,047        622,984

Capitalized software, net                                733,426        785,923
Goodwill, net                                            959,718        995,017
Other long-term assets                                    84,057         84,057
                                                     --------------------------
Total assets                                         $ 4,991,791    $ 5,956,362
                                                     ==========================


See notes to condensed consolidated financial statements.


                                  Page 3 of 17

<PAGE>


PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


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

<TABLE>
<CAPTION>
                                                           June 30        March 31
                                                             1999           1999
                                                        ----------------------------
                                                         (Unaudited)       Note 1
<S>                                                     <C>             <C>
Liabilities and shareholders' equity
Current liabilities:
  Accounts payable and accrued liabilities              $  1,816,378    $  2,437,361
  Current portion of notes payable to related parties        530,897         593,318
  Short Term Notes Payable                                       158         199,186
  Unearned revenue and other current liabilities             278,880         391,684
                                                        ----------------------------
Total current liabilities                                  2,626,313       3,621,549

Notes payable to related parties                           1,019,952       1,019,952
Deferred rent                                                 61,281          62,406
                                                        ----------------------------
Total liabilities                                          3,707,546       4,703,907
                                                        ----------------------------

Shareholders' equity:
  Common stock, $.10 par value (9,592,886 shares
    issued and outstanding)                                  959,289         959,289
  Additional paid-in capital                              19,038,245      19,038,245
  Accumulated deficit                                    (16,787,195)    (16,818,985)
                                                        ----------------------------
                                                           3,210,339       3,178,549

Less treasury stock, at cost (775,088 shares)             (1,926,094)     (1,926,094)
                                                        ----------------------------
Total shareholders' equity                                 1,273,272       1,252,455
                                                        ----------------------------
Total liabilities and shareholders' equity              $  4,991,791    $  5,956,362
                                                        ============================
</TABLE>


See notes to condensed consolidated financial statements.


                                  Page 4 of 17

<PAGE>


                            Celerity Solutions, Inc.
                 Condensed Consolidated Statements of Operations

                                                         Three Months Ended
                                                              June 30
                                                        1999           1998
                                                    -----------     -----------
                                                       -----(Unaudited)-----
Revenue:
  Services                                          $ 2,003,517     $ 1,933,570
  Software licenses                                     330,154         531,136
  Hardware and other                                          0         914,671
                                                    ---------------------------
Total revenue                                         2,333,671       3,379,377

Cost of sales
  Services                                            1,042,159       1,398,234
  Hardware and related                                   15,000         781,396
  Amortization of capitalized software                   52,497          43,266
                                                    ---------------------------
Total cost of sales                                   1,109,656       2,222,896
                                                    ---------------------------
Gross margin                                          1,224,015       1,156,481

Operating expenses:
  Research and development                              514,652         292,400
  General and administrative                            322,944         598,425
  Sales and marketing                                   272,938         355,749
  Amortization of goodwill                               35,299          34,771
                                                    ---------------------------
Total operating expenses                              1,145,833       1,281,345
                                                    ---------------------------

Operating income (loss)                                  78,182        (124,864)

Other income (expense):
  Interest and other income, net                        (29,428)         65,444
  Interest expense                                      (16,965)        (63,877)
                                                    ---------------------------
Income (loss) before income taxes                        31,789        (123,297)
Income tax (expense) benefit                                  0          20,000
                                                    ---------------------------
Net income (loss)                                   $    31,789     $  (103,297)
                                                    ===========================
Income (loss) Per Common Share:
Net income (loss) per share                         $       .00     $      (.01)
                                                    ===========================
Weighted average shares outstanding                   9,592,886       8,017,798
                                                    ===========================
Income (loss) Per Share-Assuming Dilution:
Net income (loss) per share                         $       .00     $      (.01)
                                                    ===========================
Weighted average shares outstanding                   9,592,886       8,017,798
                                                    ===========================


See notes to condensed consolidated financial statements.


                                  Page 5 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.

                            Celerity Solutions, Inc.
                 Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           June 30
                                                                      1999          1998
                                                                  --------------------------
                                                                    ----- (Unaudited) -----
<S>                                                               <C>            <C>
Operating Activities
Net (loss) income                                                 $    31,789    $  (103,297)
Adjustments to reconcile net income (loss) to net cash provided
  by (used in ) operating activities:
  Depreciation of property and equipment                               80,992         73,341
  Amortization of goodwill and developed software                      87,796         78,037
  Changes in operating assets and liabilities:
    Accounts receivable                                             1,180,473       (739,581)
    Prepaid expenses and other current assets                           8,550        (11,146)
    Short-term notes receivable                                        12,500        (43,607)
    Long-term notes receivable and other assets                             0         14,920
    Accounts payable and accrued liabilities                         (620,983)       395,590
    Income taxes payable                                                    0        (45,199)
    Other current liabilities                                               0        (16,323)
    Notes payable to related parties                                  (62,421)       (99,791)
    Short Term Notes Payable                                         (199,028)             0
    Unearned revenue and deferred rent                               (113,929)      (184,650)
                                                                  --------------------------
Net cash provided by (used in) operating activities                   405,739       (681,706)

Investing Activities
Capital expenditures                                                  (28,056)       (28,351)
                                                                  --------------------------
Net cash (used in) investing activities                               (28,056)       (28,351)

Financing Activities
Purchases of short-term investments                                       (16)       (16,930)
Proceeds from sales of short-term investments                               0        300,000
                                                                  --------------------------
Net cash provided by (used in ) financing activities                      (16)       283,070
                                                                  --------------------------

Net increase (decrease) in cash and cash equivalents                  377,667       (426,987)
Cash and cash equivalents at beginning of period                      401,376      1,347,246
                                                                  --------------------------
Cash and cash equivalents at end of period                        $   779,043    $   920,259
                                                                  ==========================
</TABLE>


See notes to condensed consolidated financial statements.


                                  Page 6 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   Basis of Presentation

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.   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 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.  In the  opinion  of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. 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
                                                                              June 30
                                                                     -------------------------
                                                                         1999         1998
                                                                     -------------------------
<S>                                                                  <C>           <C>
Numerator:
Net income (loss)                                                    $    31,789   $  (103,297)
                                                                     -------------------------
Numerator for income (loss) per common share and income
(loss) per
share-assuming dilution                                              $    31,789   $  (103,297)

Denominator:
Denominator for income (loss) per common share-Weighted average
shares  outstanding                                                    9,592,886     8,017,798
Effect of Dilutive securities                                                0 *            **
                                                                     -------------------------
Denominator for diluted income (loss) per share- Adjusted weighted
  average shares                                                       9,592,886     8,017,798
                                                                     =========================
Income (loss)  per common share                                      $      0.00   $      (.01)
                                                                     =========================
Income (loss) per common share-assuming dilution                     $      0.00   $      (.01)
                                                                     =========================
</TABLE>

* No options  are  included  in the  calculation  because all options are priced
above $.50,  which was the closing price of  Celerity's  stock on June 30, 1999.
There  are also  warrant  A to  purchase  344,500  shares  at $3.57  which  were
outstanding  at June 30, 1999,  but not included in the  potential  common share
computations  because their exercise prices were 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 597,285 shares as of the three months
ended June 30,  1998.  In  addition,  there were  options to purchase  1,195,026
shares at exercise prices between $2.42 and $4.66 per share  outstanding at June
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 June 30, 1998, but not included
in the potential  common share  computations  because their exercise prices were
greater than the average  market price of common  shares.  These would have been
antidilutive, even if a profit had been reported in the numerator.


                                  Page 7 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND REULTS
OF OPERATIONS

Business Developments

     The Company acquired CSTI on March 31, 1997 in a transaction  accounted for
under the purchase method of accounting.  This acquisition  provided the Company
an entry into the supply chain management (SCM) sector of the business  software
market.  SCM encompasses the planning and control of material and resources from
customer order entry through warehousing and logistics to customer delivery.

     In April  1997,  the  Company  sold  certain  of its  multimedia  assets to
Davidson & Associates (  Davidson),  a division of Cendant,  Inc. The Company is
focused  on the  business  software  market  and has no  plans  to  develop  new
multimedia products in the foreseeable future.

     In August  1997,  the  Company  established  Paragon,  a limited  liability
company in St. Petersburg, Russia as a wholly owned subsidiary. Paragon develops
software for the Company.  Paragon  employs 10 technical  personnel some of whom
were employed by the Company's subsidiary AMI, which was sold in April of 1997.

     On December 8, 1997, the Company  acquired all of the outstanding  stock of
Somerset Automation,  Inc. (SAI), a privately held warehouse management software
company  based in  Irvine,  California  by means  of a  merger  between  SAI and
Somerset Solutions,  Inc. (Somerset),  a wholly owned subsidiary of the Company.
SAI is a technology leader in the warehouse management software market.

     In March 1999,  the Company  underwent a company wide  restructuring  which
resulted from poor operating performance. This restructuring included management
changes,  changes to the Company's Board of Directors and a 20% reduction in its
domestic work force.

     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.

Effect of Restructuring

     In March of 1999,  the company began a process of  restructuring  to reduce
costs and losses.  Operating  expenses  decreased  10.6% to $  1,145,833  versus
$1,281,345  in the same period in 1998.  A much larger  decrease is evident when
comparing  the quarter  ended June 30, 1999 to the prior quarter ended March 31,
1999.  Operating  expenses  decreased 68.9% from  $3,694,103 to $1,145,833.  The
following table compares  results for the periods ending March 31, 1999 and June
30, 1998 with the period ending June 30, 1999.


                                  Page 8 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


<TABLE>
<CAPTION>
                                            ---------------------------------------------------------------------------
                                                June 30             March 31         %           June 30           %
                                                  1999                1999         Change          1998         Change
                                              (unaudited)          (unaudited)                  (unaudited)
                                            ---------------------------------------------------------------------------
<S>                                            <C>                 <C>             <C>          <C>             <C>
Cost of sales:
  Services                                     $1,042,159          $1,429,558      -27.1%       $1,398,234      -25.0%
  Hardware and related                             15,000              18,046      -16.9%          781,396      -98.1%
  Amortization of capitalized software             52,497              48,178        9.0%           43,266       21.3%
                                            ---------------------------------------------------------------------------
Total cost of sales                             1,109,656           1,495,782      -25.8%        2,222,896      -50.1%

Operating expenses:
  Research and development                        514,652             888,952      -42.1%          292,400       76.0%
  General and administrative                      322,944             698,888      -53.8%          598,425      -46.0%
  Sales and marketing                             272,938           1,632,216      -83.3%          355,749      -23.3%
  Amortization of goodwill                         35,299              34,770        1.5%           34,771        1.5%
  Restructuring Expense                                 0             439,277     -100.0%                0
                                            ---------------------------------------------------------------------------
Total operating expenses                       $1,145,833          $3,694,103      -68.9%       $1,281,345      -10.6%
</TABLE>

Net Sales

     Revenues from services increased $69,947 or 3.6% for the three months ended
June 30, 1999 versus the same period in 1998.  Revenues  from  software  license
sales  decreased  $200,982  or 37.8% for the three  months  ended June 30,  1999
versus the same  period in 1998.  There were fewer  active  projects  during the
three months ended June 30, 1999, the Company anticipates software license sales
to continue to trail last year as a result of delayed sales decisions related to
year 2000 change over.

     Revenues from hardware and related sales  decreased  $914,671 for the three
months  ended June 30,  1999 versus the same  period in 1998.  This  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.


                                  Page 9 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


Net Sales, continued

     The  level  of  net  sales  realized  by the  Company  in  any  quarter  is
principally dependent on the portion of projects completed and the number of new
software  licenses sold.  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  recognition  is subject  to many risks such as  budgetary
cycles,  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,  the number and timing of new
product completions, and multimedia product shipments and returns. 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  for  fiscal  1999,  due to the year 2000  change  over  slowing
purchase decisions for customers and potential customers of the Company.

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  $356,075 or 25.0%
during the three months ended June 30, 1999 versus the same period in 1998. Cost
of services as a percent of revenue from services  decreased 20.3% for the three
months ended June 1999 versus the same period in 1998.  This  decrease is mainly
attributed to using fewer outside  contractors and deploying  employees from R&D
to work on service related revenues.

     Cost of sales from hardware and related decreased $766,396 or 98.1% for the
three months ended June 30, 1999 versus the same period in 1998.  This  decrease
is attributable to the completion of two large hardware sales during the quarter
ended June 30, 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.


                                  Page 10 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


Research and Development

     Research and development (R&D) expenses  increased $222,252 or 76.0% during
the three months ended June 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.

General and Administrative

     General and administrative  expenses decreased $275,481 or 46.0% during the
three months ended June 30, 1999 versus the same period in 1998.  This  decrease
is due to the restructuring that occurred during March of 1999.

Sales and Marketing

     Sales and  marketing  expense  decreased  $82,811 or 23.2% during the three
months  ended June 30, 1999 versus the same period in 1998.  This item  includes
personnel related costs, as well as, those costs related to facilities,  travel,
trade  shows,   advertising  and  promotions.   This  decrease  is  due  to  the
restructuring that occurred during March of 1999.


                                  Page 11 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


Liquidity and Capital Resources

     The Company's  primary sources of liquidity are cash and cash  equivalents.
During the three months ended June 30, 1999, cash and cash equivalents increased
$ 377,683 or 91% to $792,310.

     Accounts  receivable  decreased  $1,180,473 or 42.9% to $1,593,854  for the
three months ended June 30, 1999. Of this $350,000  resulted from the settlement
of a disputed, past due balance with one major customer.

     Accounts  payable and accrued  liabilities  decreased  $620,983 or 25.5% to
$1,816,378  for the three  months  ended June 30,  1999.  The Company had slowed
payments with several  vendors in the last two quarters of fiscal 1999.  Most of
these  vendors  were paid  current  during the  quarter.  All  vendors  with the
potential to disrupt business are current at the date of this report.

     Notes payable to related parties  decreased  $62,421,  for the three months
ended June 30, 1999,  reflecting  scheduled payments.  The Company  renegotiated
payment  schedules with 7 of 8 note holders.  Payments to these note holders are
current at the date of this report.

     Short Term  Notes  payable  has  decreased  $199,028  to $158 for the three
months  ended June 30,  1999.  This  balance was a 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  $113,929,  for the three months ended June 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  $1,019,952 in long-term notes payable to related parties from the
acquisitions  of SAI and  CSTI.  These  notes are  payable  in  various  amounts
beginning  April 15,  1999 and  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.


                                  Page 12 of 17

<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.

     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.

     The  Company  utilizes  outside  providers  for  services  such as  payroll
processing and 401(k) benefit administration,  third party vendor equipment, and
various  software  products  which  may or may not be year 2000  compliant.  The
Company  utilizes  Solomon  software for its internal  financial and  accounting
systems,  and has  verified  with the  vendor  that the  software  is year  2000
compliant. The Company has addressed the issue and taken steps to make sure that
all such  exposure  is  eliminated,  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'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.


                                  Page 13 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


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


                                  Page 14 of 17

<PAGE>


                            CELERITY SOLUTIONS, INC.


PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On July 28, 1999, Ludmila Kopeikina,  the former President of the Company, filed
suit in the Superior  Court in the County of Middlesex  in the  Commonwealth  of
Massachusetts  against the Company and its President,  Paul Carr. Ms.  Kopeikina
seeks  damages and  injunctive  relief  arising from the alleged  failure of the
Company  to pay wages  and  benefits  due of  approximately  $280,000  under the
Employment  Agreement  between the Company and Ms. Kopeikina dated September 18,
1996, as well as interest, costs and treble damages.

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

Not Applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

     27.1 Financial Data Schedule

(b)  Reports on Form 8-K:

     The Company filed a report on form 8-K dated April 9, 1999, relating to the
     resignation  and  appointment  of a new  Chief  Financial  Officer  and the
     extension of the Company's Class A warrants.


                                  Page 15 of 17

<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: August 23, 1999                   /s/  Cheryl McCarthy
                                             -----------------------------------
                                             Cheryl McCarthy
                                             Controller (Principal Accounting
                                             Officer)


Date:  August 23, 1999                  /s/  Paul Carr
                                             -----------------------------------
                                             Paul Carr
                                             President, Chief Financial Officer
                                             & Secretary / Treasurer


                                  page 16 of 17