<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549
                                 AMENDMENT NO. 1 ON
                                    FORM 10-QSB/A
(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
    For the quarterly period ended September 30, 1997

                                          OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    For the transition period from _____________ to _______________

                           Commission File Number:  0-23279

                                Celerity Systems, Inc.
                 ----------------------------------------------------
          (Exact name of small business issuer as specified in its Charter)

          Delaware                                  52-2050585
         --------                                   ----------
(State or other jurisdiction of        (I.R.S. Employer Identification No.)
incorporation or organization)                   


                         9051 Executive Park Drive, Suite 302
                             Knoxville, Tennessee  37923
               -------------------------------------------------------
                      (Address of principal executive offices)  

                                   (423) 539-5300         
                           --------------------------------
                           (Registrant's telephone number)

          -----------------------------------------------------------------
     (Former name, former address and former fiscal year, if changed since last
                                      report)

Check whether the registrant (1) has 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 / /  No /X/

As of December 19, 1997, 4,104,639 shares of the issuer's common stock were
outstanding.

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

The Registrant hereby amends Part I, Item 1 (Financial Statements) to amend 
the line amount for the nine months ended September 30, 1997 in the item 
captioned "Accrued Expenses" contained in the Condensed Statements of Cash 
Flows.

<PAGE>

                            PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                CELERITY SYSTEMS, INC.
                               CONDENSED BALANCE SHEETS
 
                                                              DECEMBER 31,        SEPTEMBER 30,
ASSETS                                                            1996                1997     
                                                              ------------        -------------
                                                                                   (unaudited)
<S>                                                           <C>                  <C>
Cash and cash equivalents                                     $ 2,344,666          $ 1,030,834
Accounts receivable, less allowance for doubtful accounts
     of $555,050 and $567,119 in 1996 and 1997, respectively      713,232              583,206
Inventories                                                     1,325,903            1,236,449
Prepaid expenses                                                     -                  25,178
Costs in excess of billings on uncompleted contracts              187,749                 -
                                                              -----------          -----------

          Total current assets                                  4,571,550            2,875,667

Property and equipment, net                                       813,290              837,389
Other assets                                                      264,955              454,880
                                                              -----------          -----------

                                                              $ 5,649,795          $ 4,167,936
                                                              ===========          ===========
LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable                                              $   315,832          $ 1,136,845
Accrued liabilities                                               672,740              764,753
Deferred revenue                                                  359,970                 -   
Interest payable                                                  150,000              408,333
Current portion of leases payable                                   7,821                2,185
Reserve for management compensation                               137,500                 -   
Reserve for estimated losses on uncompleted contracts             672,600               94,335
Billings in excess of costs and estimated earnings on 
    uncompleted contracts                                         150,000              128,914
Short term notes payable                                             -               3,800,000
                                                              -----------          -----------

         Total current liabilities                              2,466,463            6,335,365
    
Long term notes payable                                         3,000,000                 -   
Long term leases payable                                           19,009               19,009

Commitments and contingencies (Notes 3 and 7)

Preferred stock, Series A, noncumulative, redeemable, 
    convertible, $0.01 par value, 975,836 shares 
    authorized, issued and outstanding at December 31, 1996 
    and September 30, 1997, respectively                        1,813,412            1,949,987
Preferred stock, Series B, noncumulative, redeemable, 
    convertible, $0.01 par value, 408,479 shares 
    authorized, issued and outstanding at December 31, 1996
    and September 30, 1997, respectively                          932,720            1,004,774

Common stock, $0.001 par value, 15,000,000 shares 
    authorized, 1,836,476 issued and 1,819,113 outstanding
    at December 31, 1996, and 1,865,876 issued and 1,528,513
    outstanding at September 30, 1997                               1,836                1,866
Additional paid-in capital                                      3,280,920            7,058,514
Treasury stock, at cost                                           (67,500)            (227,500)
Accumulated deficit                                            (5,797,065)         (11,974,079)
                                                              -----------          -----------
         Total liabilities and stockholders' equity           $ 5,649,795          $ 4,167,936
                                                              ===========          ===========
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED FINANCIAL
STATEMENTS.


                                          2
<PAGE>


                                CELERITY SYSTEMS, INC.
                          CONDENSED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>

                               THREE MONTHS ENDED                  NINE MONTHS ENDED
                                  SEPTEMBER 30,                      SEPTEMBER 30,
                             1996             1997              1996              1997
                             ----             ----              ----              ----
                                  (unaudited)                         (unaudited)
<S>                       <C>              <C>               <C>              <C>
Revenues                  $   433,978      $   355,870       $ 1,733,877      $ 1,610,373
Cost of revenues              472,600          284,592         1,740,658        1,688,682
                          -----------      -----------       -----------      -----------

    Gross margin              (38,622)          71,278            (6,781)         (78,309)

Operating expenses            903,962        2,084,101         2,674,297        5,627,545
                          -----------      -----------       -----------      -----------

    Loss from operations     (942,584)      (2,012,823)       (2,681,078)      (5,705,854)

Interest expense             (100,925)        (348,739)         (154,695)        (502,125)
Interest income                41,634            9,314            50,297           30,965
                          -----------      -----------       -----------      -----------

    Net loss               (1,001,875)      (2,352,248)       (2,785,476)      (6,177,014)

Accretion of premiums 
  on preferred stock           69,543           69,543           208,631          208,629
                          -----------      -----------       -----------      -----------

    Net loss applicable 
      to common stock     $(1,071,418)     $(2,421,791)      $(2,994,107)     $(6,385,643)
                          ===========      ===========       ===========      ===========

    Primary loss per 
      share (Note 4):           $(.61)          $(1.14)           $(1.57)          $(2.78)
                                =====           ======            ======           ======
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED FINANCIAL
STATEMENTS.

                                        3
<PAGE>

                              CELERITY SYSTEMS, INC.
                    CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                 ADDITIONAL
                                                 COMMON            PAID-IN          TREASURY       ACCUMULATED
                                                  STOCK            CAPITAL            STOCK          DEFICIT
                                                 ------          ----------         --------       -----------
<S>                                             <C>              <C>               <C>             <C>
Balances, December 31, 1996                     $1,836           $3,280,920        $(67,500)       $(5,797,065)

Grant of stock to officer (unaudited)               15                 -               -                  -
Exercise of employee stock options (unaudited)      15                1,448            -                  -
Acquisition of 320,000 shares of 
    common stock held in treasury                 -                    -           (160,000)              -
Accretion of premiums on preferred stock                           (208,629)
Issuance of bridge notes and accompanying 
    common stock warrants(unaudited)              -               1,440,000            -                  -
Grant of stock options at below the
    initial public offering price(unaudited)      -               2,544,775
Net loss (unaudited)                              -                    -               -            (6,177,014)
                                             ---------           ----------       ---------        -----------

Balances, September 30, 1997 (unaudited)     $   1,865           $7,058,514       $(227,500)       $11,974,079
                                             =========           ==========       =========        ===========

</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED FINANCIAL
STATEMENTS.

                                        4
<PAGE>

                           CELERITY SYSTEMS, INC.
                      CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        NINE MONTHS ENDED
                                                                           SEPTEMBER 30,
                                                                     1996                1997
                                                                     ----                ----
                                                                            (unaudited)
<S>                                                                <C>                 <C>
Net cash flows from operating activities:
  Net loss                                                        $(2,785,476)        $(6,177,014)
  Adjustments to reconcile net loss to net
    cash used by operating activities:
       Depreciation and amortization                                  180,024             363,733
       Compensation expense for issuance of stock options                -              2,544,775
       Accretion of interest on notes payable                            -                240,000
       Provision for doubtful accounts receivable                      70,831              12,068
       Changes in current assets and liabilities:
            Accounts receivable                                     2,937,599             117,958
            Prepaid expenses                                             -                (25,178)
            Inventory                                              (1,150,364)             89,454
            Costs in excess of billings on uncompleted
              contracts                                                (1,492)            187,749
            Accounts payable                                       (1,491,004)            821,012
            Accrued expenses                                           (9,912)            (45,487)
            Deferred revenue                                             -               (359,970)
            Interest payable                                          145,098             258,333
            Allowance for estimated losses on uncompleted
                  Contracts                                          (110,015)           (578,265)
            Billings in excess of costs and earnings on 
              uncompleted contracts, net                                 -                (21,086)
                                                                 ------------        ------------
                 Net cash used in
                   operating activities                            (2,214,711)         (2,571,918)
                                                                 ------------        ------------

Cash flows from investing activities:
  Purchases of property and equipment                                (215,967)           (216,826)
  Change in other assets                                                   25               -     
                                                                 ------------        ------------

                 Net cash used in investing activities               (215,942)           (216,826)
                                                                 ------------        ------------

Cash flows from financing activities:
  Proceeds from notes payable and warrants                          3,000,000           2,000,000
  Principal payments on long-term debt, notes payable
    and capital leases                                               (104,841)             (5,636)
  Proceeds from issuance of common stock                            2,533,365               1,478  
  Repurchase of common stock                                             -               (160,000)
  Debt offering costs                                                (338,910)           (360,930)
                                                                 ------------        ------------

                 Net cash provided by
                   financing activities                             5,089,614           1,474,912
                                                                 ------------        ------------

Net increase (decrease) in cash and cash equivalents                2,658,961          (1,313,832)

Cash and cash equivalents, beginning of period                        485,775           2,344,666
                                                                 ------------        ------------

Cash and cash equivalents, end of period                           $3,144,736          $1,030,834
                                                                 ============        ============
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED FINANCIAL
STATEMENTS.
 

                                       5
<PAGE>

                                CELERITY SYSTEMS, INC.
                       NOTES TO CONDENSED FINANCIAL STATEMENTS


1.  PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS - Information in the
    accompanying interim financial statements and notes to the financial
    statements for the interim periods as of September 30, 1996 and 1997 and
    for the three month and nine month periods then ended, is unaudited.  The
    accompanying interim unaudited financial statements have been prepared by
    the Company in accordance with generally accepted accounting principles and
    Regulation S-B.  Accordingly, they do not include all the information and
    footnotes required by generally accepted accounting principles for complete
    financial statements.  In the opinion of management, all adjustments
    (consisting of normal recurring accruals) considered necessary for a fair
    presentation have been included.  Operating results for the nine month
    period ended September 30, 1997, are not necessarily indicative of the
    results that may be expected for the year ending December 31, 1997.  The
    condensed financial statements should be read in conjunction with the
    financial statements and notes thereto included in the audited financial
    statements of the Company as and for the period ended December 31, 1996.  

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    IMPACT OF SFAS 128 - In February 1997, the FASB issued SFAS 128, EARNINGS
    PER SHARE.  The Statement simplifies the standards for computing earnings
    per share (EPS).  Additionally, the Statement requires dual presentation of
    basic and diluted EPS on the face of the income statement and requires a
    reconciliation of the numerator and denominator of the diluted EPS
    calculation.  The Company plans to adopt the provisions of SFAS 128 for the
    year ended December 31, 1998.  Had the pronouncement been in effect for the
    three month periods ended September 30, 1996 and 1997, basic EPS would have
    been $(.89) and $(1.55), respectively.  Basic EPS for the nine month
    periods ended September 30, 1996 and 1997, would have been $(2.23)and
    $(3.68), respectively.  Diluted EPS would have been the same as primary
    loss per share for all periods presented.  

    IMPACT OF SFAS 129 AND SFAS 130 - In February and June 1997, respectively,
    the FASB issued SFAS 129, DISCLOSURE OF INFORMATION ABOUT CAPITAL
    STRUCTURE, which will be effective for periods ending after December 15,
    1997, and SFAS 130, REPORTING COMPREHENSIVE INCOME, which will be effective
    for fiscal years beginning after December 15, 1997.  These standards will
    have no material impact on the Company.

3.  CONTRACTS

    The Company's long-term projects in Korea and Israel have expected
    completion dates in the fourth quarter of 1997.  The Korean project began
    its systems reliability period in September 1997.  The Company met its
    final milestones under the Israel contract during the fourth quarter of
    1997 and is waiting for the final acceptance by the customer. 

    The Company has recorded billings in excess of costs of $129,914 at
    September 30, 1997 related to three short-term contracts accounted for
    under the completed contract method.  

4.  LOSS PER SHARE

    Loss per share has been computed by dividing net loss applicable to common
    stock by the weighted average number of common and common equivalent shares
    outstanding during each period.  Common equivalent shares relating to
    options and warrants issued during the twelve month period preceding the
    filing of a registration statement at a price below the estimated offering
    price have been calculated using the treasury stock method assuming that
    the options were outstanding during each period presented and 


                                          6
<PAGE>

                  NOTES TO CONDENSED FINANCIAL STATEMENTS, CONTINUED

    that the fair value of the Company's common stock during each period was
    equal to the assumed initial public offering price of $7.50 per share. 
    Remaining warrants, options, and preferred stock granted prior to the one
    year period before the initial public offering were considered common stock
    equivalents but were not included for purposes of calculating primary loss
    per share because they were anti-dilutive.

    After giving effect to the items described above, loss per common share has
    been computed based on the assumed weighted average number of shares
    outstanding in each period (1,903,968 and 2,293,735 shares for the nine
    months ended September 30, 1996 and 1997 (unaudited), respectively, and
    1,760,189 and 2,126,476 for the three months ended September 30, 1996 and
    1997(unaudited), respectively).

5.  STOCK OPTIONS

    The Company recorded approximately $1,003,000 in non-cash compensation
    expense in the third quarter of 1997 related to the award of stock options
    below the initial public offering price of $7.50 per share.

6.  SEGMENT INFORMATION

    The Company has two reportable segments:  CD-ROM and interactive video. 
    The CD-ROM segment includes the design, development, installation and
    support of CD-ROM storage and imaging software products for business
    applications.  The interactive video segment products are interactive video
    services hardware and software.  The Company's two reportable segments
    offer different products and services and market such products to different
    customer bases.  The two segments are managed separately because each
    business requires different technology and marketing strategies.  The two
    segments evolved over the life of the Company and have specifically
    identifiable tangible assets.  The segments share certain corporate assets
    and, as such, those are not specifically identified in the segment
    information.

    The segment information for the nine month periods ending September 30,
    1996 and 1997, is as follows:
                                       SEPTEMBER 30,       SEPTEMBER 30,
                                           1996                1997
                                           ----                ----
                                        (unaudited)         (unaudited)
REVENUES FROM EXTERNAL CUSTOMERS
    CD-ROM                             $ 1,244,242         $   854,430
    Interactive video                      489,635             755,943
                                       -----------         -----------

         Total                         $ 1,733,877         $ 1,610,373
                                       ===========         ===========

    SEGMENT LOSS
         CD-ROM                        $  (199,342)        $(1,219,452)
         Interactive video              (2,481,736)         (4,486,402)
                                       -----------         -----------

              Total                    $(2,681,078)        $(5,705,854)
                                       ===========         ===========

    SEGMENT ASSETS
         CD-ROM                      Not applicable        $   478,822
Interactive video                    Not applicable          2,039,897

              Total                  Not applicable        $ 2,518,719
                                                           ===========


                                          7
<PAGE>

                  NOTES TO CONDENSED FINANCIAL STATEMENTS, CONTINUED


    The change in the asset balance at September 30, 1997, for the interactive
    video segment when compared to the December 31, 1996 segment information is
    approximately $393,000.  This change is due to the fact that billings
    exceeded costs on the Company's ongoing projects at September 30, 1997,
    whereas the costs exceeded billings at December 31, 1996 in the amount of
    $187,749.  This also led to the segment's increase in accounts receivable
    of $130,000 at September 30, 1997.  There was a decrease in accounts
    receivable in the CD-ROM segment between December 31, 1996 and September
    30, 1997 of approximately $45,000.

    The accounting policies of the segments are the same as those described in
    the summary of significant accounting policies.  The segment information
    provided contains allocations of certain corporate assets and expenses
    which are shared by each of the segments.  The allocations are generally
    based on a 25%/75% basis for the CD-ROM and interactive video segments,
    respectively.  Neither of the segments have financial operations and,
    therefore, there are no material amounts of interest revenue or expense
    generated.  There was a net interest expense for the Company of $104,398
    and $471,160 for the nine month periods ended September 30, 1996 and 1997,
    respectively.  The segment loss amounts do not contain amounts attributable
    to the Company's net interest expense or accretion of premiums on preferred
    stock.

7.  SUBSEQUENT EVENT

    On November 7, 1997, the Company closed an initial public offering of
    2,000,000 shares of common stock at the purchase price of $7.50 per share,
    which resulted in gross proceeds to the Company of $15,000,000.  A 
    portion of the proceeds of the offering was used to repay indebtedness
    incurred in the Company's 1996 and 1997 private placements, and the balance
    is intended to be used for the hiring of necessary personnel throughout the
    Company, to fund the Company's sales and marketing efforts, and for working
    capital and general corporate purposes.  The repayment of the Company's debt
    resulted in the recognition of an extraordinary loss on the early
    extinguishment of debt related to the 1997 private placement in the amount
    of $1,080,000.  The Company also wrote off the unamortized debt offering
    costs which approximated $300,000.   In addition, upon the effective date of
    the offering, the Company's preferred stock converted into common stock, and
    common stock warrants related to the Company's November 1995 issuance of 
    promissory notes in the amount of $934,500 expired.











                                          8
<PAGE>

                                      SIGNATURE



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

Dated: February 18, 1998




                        CELERITY SYSTEMS, INC.
                             (Registrant)


                        By: /s/ Kenneth D. Van Meter
                            -------------------------------------
                            Kenneth D. Van Meter
                            President and Chief Executive Officer
                              and Chairman of the Board
                            (Principal Executive Officer)


                        By: /s/ Thomas E. Welch
                            -------------------------------------
                            Thomas E. Welch
                            Controller
                            (Principal Financial Officer)








                                          9