U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                    FORM 10-Q
(MARK ONE)

|X|      Quarterly Report Pursuant to Section 13 or 15(d) of Securities Exchange
         Act of 1934 For the quarterly period ended MARCH 31, 2004

|_|      Transition report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934
                For the transition period from _______ TO _______

                          Commission File No. 814-00631

                             CELERITY SYSTEMS, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in Its charter)

               DELAWARE                                    52-2050585
  -------------------------------                     -------------------
  (State or Other Jurisdiction of                      (I.R.S. Employer
   Incorporation or Organization)                     Identification No.)


122 PERIMETER PARK DRIVE, KNOXVILLE, TENNESSEE               37922
----------------------------------------------             ----------
    (Address of Principal Executive Offices)               (Zip Code)

                                 (865) 539-5300
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:   NONE
                                                              ----

<TABLE>
<CAPTION>
<S>                                                          <C>
Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK, PAR VALUE $0.001 PER SHARE
                                                             ----------------------------------------
                                                                           (Title of Class)
</TABLE>

         Indicate by check mark 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, and (2) has been subject to such filing  requirements for the past 90
days.

                                Yes |X|   No |_|

         Indicate by check mark whether the registrant is an  accelerated  filed
(as defined in Rule 12b-2 of the Exchange Act).

                                Yes |_|   No |X|

         There were 4,806,051,556 shares of common Stock outstanding as of April
23, 2004.



                                       1
<PAGE>

                                     PART I


FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                           (unaudited)
                                                                          March 31, 2004   December 31,2003
                                                                          --------------   ----------------
<S>                                                                        <C>               <C>
 Assets
  Cash                                                                     $     42,891      $     56,156
  Other current assets                                                            5,244             6,764
                                                                           ------------      ------------
        Total current assets                                                     48,135            62,920
                                                                           ------------      ------------

Fixed assets, net                                                                39,418            38,317
Investment in Yorkville Advisors Management, LLC, at cost which
   approximates fair value                                                    5,240,000         5,240,000
Investment in and advances to Celerity Systems-NV, at fair value                     --                --
Debt offering costs, net                                                        128,779           165,903
                                                                           ------------      ------------

     Total assets                                                          $  5,456,332      $  5,507,140
                                                                           ============      ============

Liabilities and Stockholders' Equity

Accounts payable                                                           $    492,374      $    463,552
Judgments and defaults payable (including $213,400 to a related party)          538,372           570,781
Accrued interest (including $133,516 and $126,416 to a related party)           273,000           270,746
Notes payable - related party                                                    10,000           115,000
Other current liabilities                                                        19,631            16,867
                                                                           ------------      ------------

     Total current liabilities                                                1,333,377         1,436,946

Convertible debentures - related party, net                                     574,724           570,727
Convertible debentures, net                                                   1,419,087         1,518,758
                                                                           ------------      ------------
                                                                              1,993,811         2,089,485
                                                                           ------------      ------------

     Total liabilities                                                        3,327,188         3,526,431
                                                                           ------------      ------------

Commitments and contingencies                                                        --                --

Stockholders' Equity
Common stock, $.001 par value, 5,000,000,000 shares authorized,
     4,806,051,556 issued and outstanding at March 31, 2004 and
     4,553,473,409 issued and outstanding at December 31, 2003                4,806,051         4,553,473
Additional paid-in capital                                                   40,655,261        40,544,690
Net unrealized depreciation on investments                                     (945,504)         (842,121)
Accumulated deficit                                                         (42,386,664)      (42,275,333)
                                                                           ------------      ------------
     Total stockholders' equity                                               2,129,144         1,980,709
                                                                           ------------      ------------

     Total liabilities and stockholders' equity                            $  5,456,332      $  5,507,140
                                                                           ============      ============
</TABLE>

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements

                                       2
<PAGE>

CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations (unaudited)

<TABLE>
<CAPTION>
                                                                                               Prior to
                                                                                              becoming a
                                                                       As a Business           Business
                                                                        Development          Development
                                                                          Company              Company
                                                                      ---------------      ---------------
                                                                        Three Months         Three Months
                                                                        Ended March          Ended March
                                                                          31, 2004             31, 2003
                                                                      ---------------      ---------------
<S>                                                                   <C>                  <C>
  Unrealized loss on investments                                      $      (103,383)     $            --
  Dividend income                                                             345,000                   --
                                                                      ---------------      ---------------
                                                                              241,617                   --
     General and administrative expenses                                      196,788              159,791
                                                                      ---------------      ---------------
           Operating income (loss)                                             44,829             (159,791)
  Other income (expense)
     Amortization of debt offering costs                                      (37,124)             (41,618)
     Beneficial conversion feature - convertible debentures                  (175,326)             (69,078)
     Interest expense                                                         (48,207)            (100,818)
     Settlement of debt                                                            --              162,816
     Other income                                                               1,114                   --
                                                                      ---------------      ---------------
  Total other income (expense)                                               (259,543)             (48,698)
                                                                      ---------------      ---------------
          Net loss attributable to common stockholders                $      (214,714)     $      (208,489)
                                                                      ===============      ===============

Loss per common share, basic and diluted
Net loss per common share attributable to common stockholders         $            --      $            --
                                                                      ===============      ===============

          Weighted average shares outstanding - basic and diluted       4,768,446,271          248,552,839
                                                                      ===============      ===============
</TABLE>

              The accompanying notes are an integral part of these
                   condensed consolidated financial statements



                                        3
<PAGE>

 CELERITY SYSTEMS, INC. AND SUBSIDIARY
 Condensed Consolidated Statements of Cash Flows (unaudited)

<TABLE>
<CAPTION>
                                                                                              Prior to
                                                                                             becoming a
                                                                           As a Business      Business
                                                                            Development     Development
                                                                              Company         Company
                                                                           -------------    ------------
                                                                            Three Months    Three Months
                                                                            Ended March     Ended March
                                                                              31, 2004        31, 2003
                                                                           -------------    ------------
<S>                                                                          <C>             <C>
Cash flows from operating activities:
   Net loss                                                                  $(214,714)      $(208,489)
   Adjustments to reconcile net loss to net
        cash used in operating activities:
            Settlement of debt                                                      --        (162,816)
            Unrealized loss on investments                                     103,383              --
            Depreciation and amortization                                        2,075          11,851
            Beneficial conversion - convertible notes                          175,326          69,078
            Amortization of debt offering costs                                 37,124          41,618
            Changes in operating assets and liabilities:
                Other assets                                                     1,520              --
                Accounts payable                                                28,822          10,646
                Judgments and defaults payable                                 (32,409)             --
                Accrued interest                                                 9,403         100,818
                Other current liabilities                                        2,764         (15,869)
                                                                             ---------       ---------
                    Net cash provided by (used in) operating activitities      113,294        (153,163)

Cash flows from investing activities:
   Purchase of fixed assets                                                     (3,176)             --
   Advances to Celerity Systems-NV                                            (103,383)             --
                                                                             ---------       ---------
                    Net cash used in investing activitities                   (106,559)             --

Cash flows from financing activities:
   Proceeds from notes payable - related party                                                  30,000
   Payments on  notes payable - related party                                 (105,000)             --
   Proceeds from convertible debentures                                                        139,000
   Principal payments on debt                                                 (125,000)             --
   Proceeds from issuance of common stock                                      210,000              --
                                                                             ---------       ---------
                    Net cash (used in) provided by financing activitities      (20,000)        169,000

Net increase (decrease) in cash                                                (13,265)         15,837
Cash, beginning of period                                                       56,156           5,012
                                                                             ---------       ---------

Cash, end of period                                                          $  42,891       $  20,849
                                                                             =========       =========

Cash paid for:
     Interest                                                                $  38,806       $      --
                                                                             =========       =========
     Taxes                                                                   $   1,450       $      --
                                                                             =========       =========
</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements


                                        4
<PAGE>

CELERITY SYSTEMS, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Changes in Stockholders' Equity (unaudited)

<TABLE>
<CAPTION>

                                                    Common Stock                Additional      Net Unrealized
                                          --------------------------------        Paid-In        Depreciation       Accumulated
                                               Shares            Amount           Capital       on Investments        Deficit
                                          --------------    --------------    --------------    --------------    --------------
<S>                                        <C>              <C>               <C>               <C>               <C>
Balance, December 31, 2003                 4,553,473,409    $    4,553,473    $   40,544,690    $     (842,121)   $  (42,275,333)

Issuance of common stock                     150,000,000           150,000            60,000
Conversion of convertible debentures to
  shares of common stock                     102,578,147           102,578            50,571
Net loss                                                                                              (103,383)         (111,331)
                                          --------------    --------------    --------------    --------------    --------------
Balance, March 31, 2004                    4,806,051,556    $    4,806,051    $   40,655,261    $     (945,504)   $  (42,386,664)
                                          ==============    ==============    ==============    ==============    ==============
</TABLE>


<TABLE>
<CAPTION>

                                              Total
                                           Stockholders'
                                              Equity
                                          --------------
<S>                                       <C>
Balance, December 31, 2003                $    1,980,709

Issuance of common stock                         210,000
Conversion of convertible debentures to
  shares of common stock                         153,149
Net loss                                        (214,714)
                                          --------------
Balance, March 31, 2004                   $    2,129,144
                                          ==============
</TABLE>




  The accompanying notes are an integral part of these condensed consolidated
                              financial statements



                                       5

<PAGE>

                      CELERITY SYSTEMS, INC. AND SUBSIDIARY


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

OVERVIEW

         The Company is a business  development  company  that has elected to be
regulated  pursuant  to Section 54 of the  Investment  Company  Act of 1940.  We
intend to focus our  investments in developing  companies,  but do not intend to
limit our focus on  investment  in any  particular  industry.  We intend to seek
investments in companies that offer attractive investment opportunities.


1.       PRESENTATION OF UNAUDITED INTERIM FINANCIAL STATEMENTS

         The accompanying  interim condensed  consolidated  financial statements
and notes to the financial  statements  for the interim  periods as of March 31,
2004 and for the three months ended March 31, 2004 and 2003, are unaudited.  The
accompanying  interim unaudited  financial  statements have been prepared by the
Company in  accordance  with  accounting  principles  generally  accepted in the
United States for interim financial  statements and pursuant to the requirements
for reporting on Form 10-Q and Article 10 of Regulation S-X.  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  adjustments)
considered  necessary  for a fair  presentation  have been  included.  Operating
results for the three month  period ended March 31,  2004,  are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2004.  The  condensed  consolidated  financial  statements  should  be  read  in
conjunction with the financial statements and notes thereto included in the Form
10-K of the  Company as of and for the year ended  December  31,  2003.  Certain
March 31, 2003  balances  have been  reclassified  to conform with the March 31,
2004 financial statement presentation.

         On May 20, 2003,  the Company  formed a subsidiary,  Celerity  Systems,
Inc. (a Nevada corporation), ("Celerity NV"). The assets and liabilities related
to the existing  interactive  video business were transferred to Celerity NV for
100% of the common stock. As this subsidiary is not an investment company, after
June 2, 2003 it is not  consolidated  with the  parent  company.  The  Company's
investment in Celerity NV is recorded at fair value,  represented as cost,  plus
or minus unrealized appreciation or depreciation, respectively.

         In accordance with Article 6 of Regulation S-X under the Securities Act
of 1933 and Securities  Exchange Act of 1934,  the Company does not  consolidate
portfolio company investments in which the Company has a controlling interest.

         The  Company's  financial  statements  have  been  prepared  on a going
concern basis,  which  contemplates the realization of assets and the settlement
of liabilities and commitments in the normal course of business. The Company has
had  recurring  losses and  continues  to suffer cash flow and  working  capital
shortages.  Since  inception in January,  1993 through March 31, 2004 the losses
total  approximately  $43,332,000.  As of March  31,  2004,  the  Company  had a
negative net working capital of  approximately  $1,285,000.  These factors taken
together  with  the lack of  sales  and the  absence  of  significant  financial
commitments raise substantial doubt about the Company's ability to continue as a
going concern.

         On June 3, 2003, the Company  elected to become a Business  Development
Company  which is regulated  under Section 54 of the  Investment  Company Act of
1940. On June 4, 2003 the Company filed an Offering  Circular Under Regulation E
to sell up to  $4,500,000  of its common stock at a minimum price of $0.001 to a
maximum  price of $0.02.  Between  June 30,  2003 and March 31, 2004 the Company
sold 1,299,833,333 shares resulting in net proceeds of $1,376,500.

         There can be no  assurances  that the Company will be successful in its
attempts to raise sufficient  capital  essential to its survival.  To the extent
that the  Company  is unable to raise the  necessary  operating  capital it will
become  necessary  to  further  curtail  operations.  Additionally,  even if the
Company does raise  operating  capital,  there can be no assurances that the net
proceeds  will be  sufficient  enough to enable it to develop its  business to a
level where it will  generate  profits and positive  cash flows.  The  financial
statements  do not  include  any  adjustments  relating  to the  recovery of the
recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.


                                       6
<PAGE>

         CONVERSION TO BUSINESS DEVELOPMENT COMPANY

         The operating results for the three months ended March 31, 2004 reflect
the Company's  results as a business  development  company under the  Investment
Company Act of 1940,  as amended,  whereas the  operating  results for the three
months ended March 31, 2003 reflect the Company's  results prior to operating as
a business development company. Accounting principles used in the preparation of
the consolidated  financial  statements for these two periods are different and,
therefore,  the results of operations are not directly  comparable.  The primary
differences   in  accounting   principles   relate  to  the  carrying  value  of
investments.

         CONSOLIDATION POLICY

         The condensed consolidated financial statements include the accounts of
Celerity Systems, Inc. (a Delaware corporation) and its wholly-owned  subsidiary
Celerity Systems,  Inc. (a Nevada corporation)  collectively  referred to as the
"Company".  All significant  inter-company  transactions  and balances have been
eliminated in consolidation.

         STOCK-BASED COMPENSATION

         The Company had no stock options granted in 2004 and 2003. There was no
stock-based compensation determined under the fair value method during the three
months ended March 31, 2004 and 2003 and there is no difference between net loss
as reported and proforma net loss.

         In January 2003,  the Financing  Accounting  Standards  Board  ("FASB")
issued  Interpretation  Number 46, "Consolidation of Variable Interest Entities"
("FIN No. 46"). This  interpretation of Accounting Research Bulletin ("ARB") No.
51,  "Consolidated  Financial  Statements,"  provides guidance for identifying a
controlling  interest in a variable interest entity ("VIE") established by means
other than voting interests.  FIN No. 46 also requires consolidation of a VIE by
an enterprise that holds such a controlling interest. In December 2003, the FASB
completed its  deliberations  regarding the proposed  modification to FIN No. 46
and issued  Interpretation  Number 46(R),  "Consolidation  of Variable  Interest
Entities - an  Interpretation  of ARB No. 51" ("FIN No.  46(R)").  The decisions
reached  included a deferral of the effective date and provisions for additional
scope exceptions for certain types of variable interests. Application of FIN No.
46(R) is required in financial statements of public entities that have interests
in VIEs or potential VIEs commonly referred to as  special-purpose  entities for
periods ending after December 15, 2003.  Application by public  entities  (other
than small  business  issuers)  for all other  types of  entities is required in
financial  statements  for periods  ending after March 15, 2004. The adoption of
FIN No. 46(R) did not impact on the Company's  consolidated  financial position,
results of operations or cash flows.

2.       INVESTMENT IN CELERITY SYSTEMS, INC. (A NEVADA CORPORATION)

         The following  table  represents  Celerity NV's statement of operations
for the three months ended March 31, 2004.

                  Sales                                   $      --
                  Cost of Sales                                  --
                  Gross loss                                     --
                  General and administrative expenses        81,368
                                                            -------
                  Net loss                                  (81,368)
                                                            =======


                                       7
<PAGE>

         The following table represents  Celerity NV's balance sheet as of March
31, 2004.

                  Accounts receivable, net              $     24,319
                  Inventories, net                           299,200
                                                        ------------
                    Total current assets                     323,519
                  Fixed assets, net                           60,433
                  Other                                        1,600
                                                        ------------
                  Total assets                          $    385,552
                                                        ============

                  Accounts payable                      $    883,084
                  Other current liabilities                   23,601
                                                        ------------
                  Total liabilities                          906,685

                  Stockholder Deficit
                  Common stock                                   250
                  Additional paid-in capital                 499,750
                  Accumulated deficit                    (1,021,133)
                                                        ------------
                  Total stockholder deficit                (521,133)
                                                        ------------
                  Total liabilities and deficit         $    385,552
                                                        ============


         Celerity NV develops and manufacturers,  at third party plants, digital
set top boxes and digital video servers for the interactive  television and high
speed Internet  markets.  Celerity NV can also provide a  comprehensive  content
package for education users with over 1,300 titles  available.  Due to a lack of
funding Celerity NV has been targeting the education market, to the exclusion of
other markets available to us.

         The education  market,  particularly the public schools  segment,  is a
growing  area.  Celerity NV believes  that its  products  and  services are more
effective  than tradition VCR or analog media storage  systems,  and at a better
cost.

         During the fourth quarter of 2003 an informal arrangement  concerning a
pending  sale was  terminated  and the  Company  determined  that a  significant
portion of the inventory was not salable.  As a result during the fourth quarter
of 2003 Celerity NV recorded a reserve adjustment of $1,068,870.  The write down
results from a lower of cost of market  valuation on certain  parts and finished
goods.  Without  additional sales,  there is a substantial risk that Celerity NV
will not be able to continue operations.

         The Company charges Celerity NV for salaries and benefits and a portion
of costs as a  facility  charge.  During  the first  three  months of 2004,  the
Company  advanced  $103,383  to  Celerity  NV to fund  operations.  This  amount
resulted  in an  unrealized  depreciation  on the  investment  in Celerity NV of
$103,383 as reflected in the statement of operations of the Company as a BDC.

3.       LOSS PER SHARE

         Basic and diluted  loss per share were  computed  by dividing  net loss
attributable  to common stock by the weighted  average  number of common  shares
outstanding  during each  period.  Potential  common  equivalent  shares are not
included in the  computation  of per share  amounts in the  periods  because the
Company reported a net loss and their effect would be anti-dilutive.

4.       ISSUANCE OF CONVERTIBLE DEBENTURES

         The long-term debt of the Company includes the following items:

                                                      March 31,    December 31,
                                                        2004            2004
                                                    ------------   ------------
           4% convertible debentures                $     12,500   $     67,500
           5% convertible debentures                   1,374,000      1,475,000
           10% secured convertible debenture           1,055,000      1,170,000
                                                    ------------   ------------
                                                       2,441,500      2,712,500
           Less:    Unamortized debt discount          (447,689)       (623,015)
                                                    ------------   ------------
           Long-term debt less current maturities   $  1,993,811   $  2,089,485
                                                    ============   ============


                                       8
<PAGE>

         During  the three  months  ended  March  31,  2004 the  Company  issued
52,186,027  shares of its  common  stock  upon the  conversion  of $91,000 of 5%
convertible  debentures  and  50,392,120  shares of its  common  stock  upon the
conversion of $55,000 of 4% convertible debentures.

5.       JUDGMENTS AND DEFAULTS PAYABLE

         In January  2002,  the  Company  terminated  the Equity  Line of Credit
entered  into on  September  14,  2001 due to delays in getting  related  shares
registered  and in order to pursue other types of financing  arrangements.  As a
result, the Company does not have an effective  registration statement including
common shares to be issued in connection with certain  debentures issued in 2001
and the first  quarter  of 2002  under the 1999  Line of Credit  Agreement.  The
Company is required to pay liquidated  damages in the form of increased interest
on  the  convertible   debentures  as  a  result  of  not  filing  an  effective
registration  statement  for these  debentures  at a rate of 2% of the principle
plus interest per month.  The liability for liquidated  damages will continue to
accrue until the earlier of one year from the issuance  date of the  convertible
debentures  or the date a new  registration  statement  becomes  effective.  The
Company has accrued $342,400 for liquidated damages at March 31, 2004.

         In December, 2001, Veja Electronics,  Inc. d/b/a Stack Electronics sued
the Company for breach of contract and is seeking damages in excess of $106,000.
This action  relates to amounts  alleged to be owed from the  cancellation  of a
purchase order.  During 2003 a judgment was rendered  against the Company in the
amount of $71,000, which has been accrued at March 31, 2004.

         On October 27, 2001,  we  defaulted  on payment due of  $100,000,  plus
accrued  interest,  on a  certain  unsecured  note.  We are  seeking  to make an
arrangements with this note holder.

         In March,  2003, R. R. Donnelly & Sons sued the Company for non-payment
of expenses  related to printing  services.  During 2003 a judgment was rendered
against the Company in the amount of  $16,972,  which has been  accrued at March
31, 2004.

         In 2003,  Del Rio  Enterprises  sued the  Company  for  non-payment  of
services  rendered.  During 2003 a judgment was rendered  against the Company in
the amount of $8,000. This amount has been accrued at March 31, 2004.

         In addition,  certain creditors have threatened litigation if not paid.
The Company is seeking to make arrangements  with these creditors.  There can be
no assurance  that any claims,  if made,  will not have an adverse effect on the
Company.  These amounts are included in the Company's  accounts  payable and are
accruing applicable late fees and interest.

6.       COMMON STOCK

         During  the three  months  ended  March  31,  2004 the  Company  issued
150,000,000  shares of its  common  stock  for cash  proceeds  in the  amount of
$210,000 to third party investors.



                                       9
<PAGE>

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

INTRODUCTORY STATEMENTS

         Forward-Looking  Statements and Associated  Risks. This filing contains
forward-looking statements,  including statements regarding, among other things,
(a) our Company's  projected sales and  profitability,  (b) our company's growth
strategies,  (c) anticipated trends in our company's industry, (d) our company's
future  financing  plans and (e) our  company's  anticipated  needs for  working
capital.  In  addition,   when  used  in  this  filing,  the  words  "believes,"
"anticipates," "intends," "in anticipation of," "expects," and similar words are
intended  to  identify   forward-looking   statements.   These   forward-looking
statements are based largely on our company's  expectations and are subject to a
number of risks and  uncertainties,  including those described in "Business Risk
Factors" of our Form 10-K for the year ended  December 31, 2003.  Actual results
could differ  materially  from these  forward-looking  statements as a result of
changes in trends in the  economy  and our  company's  industry,  demand for our
company's products, competition, reductions in the availability of financing and
availability  of raw materials,  and other factors.  In light of these risks and
uncertainties,  there can be no assurance  that the  forward-looking  statements
contained in this filing will in fact occur.

RESULTS OF OPERATIONS

         THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS ENDED
         MARCH 31, 2003

         UNREALIZED LOSS ON INVESTMENTS

         Since the  election  to operate as a BDC the  Company  has  recorded an
unrealized loss on its investment in Celerity Systems-NV. This loss is comprised
of two elements:

             Effect of recording advances at fair value              $  445,504
             Effect of recording equity investments at fair value       500,000
                                                                     ----------
                                                                     $  945,504
                                                                     ==========

         During the three month period ended March 31, 2004,  the Company had an
unrealized  loss on  investments  of $103,383.  Celerity NV recorded no sales or
gross profit, but incurred general and administrative  expenses that resulted in
a net loss of $81,368  for the same  period.  During  this  period,  Celerity NV
received  parent  company  advances  of  $103,383  to fund its  working  capital
requirements.  Management  recorded a write-down of the Company's advances since
without  additional sales,  there is a substantial risk that NV will not be able
to continue operation.

         DIVIDEND INCOME

         During the three month period ended March 31, 2004 the Company received
$345,000 in proceeds from its investment in Yorkville Advisors  Management,  LLC
("Yorkville")  which has been  recorded as dividend  income in the  statement of
operations.  Since its  investment in Yorkville on December 1, 2003, the Company
has  received a total of $410,000 in  proceeds.  Yorkville  has no set  dividend
policy.  Dividends are declared  based on the  discretion  of the  management of
Yorkville.

         GENERAL AND ADMINISTRATIVE EXPENSES

         Operating  expenses  for the first three  months of 2004 were  $196,788
compared  to the first three  months of 2003 of  $159,791.  Increased  operating
expenses in 2004 can be attributed  to higher  payroll  expenses  (approximately
$35,000) and increased  expenses for legal,  accounting  and other  professional
services  (approximately  $16,000).  Expenses were reduced by lower depreciation
and office costs (approximately $14,000).

         AMORTIZATION OF DEBT OFFERING COSTS

         Amortization  of debt offering costs for the first three months of 2003
was $37,124 compared to $41,618 in same period of 2003.


                                       10
<PAGE>

         BENEFICIAL CONVERSION FEATURE - CONVERTIBLE DEBENTURES

         Non-cash  interest  expense  relating to  amortization  of a beneficial
conversion  feature for the various  convertible  debentures  issues amounted to
$175,326  and  $69,078  for the three  months  ended  March  31,  2004 and 2003,
respectively.  This increase  results  primarily  from the conversion in 2004 of
certain debt to equity  securities  which caused full recognition of the related
beneficial conversion feature in this period compared to the longer amortization
period for debt not converted.

         INTEREST EXPENSE

         Interest  expense for the three months ended March 31, 2004 was $48,207
compared to $100,818 for the same period in 2003. Part of this reduction is from
liquidated  damages  incurred  due to the late  filing of  certain  registration
statements  resulting in a charge of $-0- in the first  quarter of 2004 compared
to a charge of  $28,520  in for the same  period in 2003.  Interest  expense  on
borrowings  decreased  from $72,298 in the first three months of 2003 to $48,207
in for the first three months of 2004. This results from the lower level of debt
outstanding during the three months ended March 31, 2004 as compared to the same
period in 2003.

         SETTLEMENT OF DEBT

         For the three months ended March 31, 2003, the Company  settled certain
trade  payables  wherein the total amount due was reduced by  $162,816.  For the
three months ended March 31, 2004 there were no additional settlements of debt.

         NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

         As a result of the foregoing,  Celerity had a net loss of $214,714,  or
$0.00 per share,  for the three  months  ended March 31, 2004  compared to a net
loss of $208,489, or $0.00 per share, for the three months ended March 31, 2003.

LIQUIDITY AND CAPITAL RESOURCES

         The primary  source of financing  for us since our  inception  has been
through  the  issuance  of common  and  preferred  stock  and debt.  We had cash
balances on hand of $42,891 as of March 31, 2004 and $56,156 as of December  31,
2003. Our cash position continues to be uncertain.  Our primary need for cash is
to fund our ongoing  operations until such time that income from our investments
generate  enough  proceeds to fund  operations.  In addition,  our need for cash
includes satisfying current liabilities of $1,333,377,  consisting  primarily of
accounts  payable of $492,374,  accrued  interest of $273,000 and  judgments and
defaults  payable of $538,372,  including a judgment of $16,972 obtained by R.R.
Donnelley  Corporation  for  non-payment of printing fees, a judgment of $71,000
obtained by Veja  Electronics,  Inc. for breach of  contract,  and a judgment of
$8,000 obtained by Del Rio Enterprises for non-payment of services. Additionally
this also includes notes payable in default of $100,000 and  liquidated  damages
resulting from the lack of filing a registration  statement  relating to certain
convertible debentures of $342,400. We do not currently have sufficient funds to
pay these  obligations.  We will need  significant  new funding from the sale of
securities or from proceeds from our investments to fund our ongoing  operations
and to satisfy the above obligations. We anticipate the dividend income from our
investment in Yorkville  Advisors  Management  will be sufficient to operate the
Company. We currently do not have any commitments for funding.

         As  discussed  in the  overview  section,  on June 3, 2003 the  Company
elected to become a BDC which is regulated  under  Section 54 of the  Investment
Company Act of 1940. As a BDC the Company may sell shares of its common stock up
to $5,000,000 in a twelve month period. Shares sold are exempt from registration
under  Regulation E of the  Securities  Act of 1933.  To that end, at our Annual
Meeting of Shareholders  held on January 14, 2003, the shareholders  approved an
increase in our authorized capital stock to 5 billion shares of common stock. On
June 4, 2003 the Company filed an Offering  Circular Under  Regulation E to sell
up to  $4,500,000  of its common stock at a minimum price of $0.001 to a maximum
price of $0.02.  Between  June 4, 2003 and March 31,  2004 the  Company has sold
1,299,833,333 shares resulting in net proceeds of $1,376,500.

         We are also looking at several  other options in terms of improving our
cash  shortage.  We are  continuing  to seek  to  arrange  financing,  including
possible strategic investment opportunities or opportunities to sell some or all
of our assets and business,  while continuing to pursue sales opportunities.  We
have granted a security  interest in our personal  property to the  investors in
the 10%  convertible  debentures  issued in 2002.  Such  security  interests may
hinder  our  efforts  to obtain  financing.  The lack of sales or a  significant
financial commitment raises substantial doubt about our ability to continue as a
going concern or to resume a full-scale level of operations.

         During the three months ended March 31, 2004,  we had a net decrease in
cash of $13,265. Our sources and uses of funds were as follows:


                                       11
<PAGE>

         CASH  PROVIDED  BY  OPERATING  ACTIVITIES.  We  generated  net  cash of
$113,294 from our operating activities in the three months ended March 31, 2004.
Our net cash provided from operating activities resulted primarily from non-cash
expenses  of  $317,908  related to the  amortization  of  beneficial  conversion
feature of debt,  amortization of debt offering costs and the unrealized loss on
an investment.  These  non-cash items were directly  offset due to the Company's
net loss of $214,714.

         CASH USED IN  INVESTING  ACTIVITIES.  We used net cash of  $106,559  in
investing  activities in the three months ended March 31, 2004 of which $103,383
was used to fund the operating activities of Celerity NV.

         CASH PROVIDED BY FINANCING ACTIVITIES.  We used $20,000 in net cash for
financing  activities,  consisting  primarily of principal payments on long-term
debt of  $125,000  and  notes  payable  - related  party of  $105,000.  This was
partially offset by proceeds from issuance of common stock of $210,000.

         As of  March  31,  2004  we  had a  negative  net  working  capital  of
approximately $1,285,000.  Celerity NV has ceased purchasing any material amount
of  inventory  until  inventory  levels can be reduced and has reduced  overhead
expenses,  which  will  have a  favorable  impact on cash  required  to fund the
business.  We had no  significant  capital  spending or purchase  commitments at
March 31, 2004 other than a certain lease of corporate office space.

         We have no existing bank lines of credit.

         There can be no  assurances  that we will be successful in our attempts
to raise sufficient capital essential to our survival. To the extent that we are
unable to raise the  necessary  operating  capital it will become  necessary  to
further curtail  operations.  Additionally,  even if we raise operating capital,
there can be no assurances  that the net proceeds  will be sufficient  enough to
enable us to develop our business to a level where we will generate  profits and
positive cash flows.  These matters raise substantial doubt about our ability to
continue as a going concern.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE SENSITIVITY

         The Company  does not have any exposure to market risk as it relates to
changes in interest rates as all of the borrowings of the Company are at a fixed
rate of interest.

         The Company has no cash equivalents or short-term  investment which are
subject to market risk.

FOREIGN CURRENCY RISK

         The  Company  does not do any  business  that  has any risk of  foreign
exchange rate fluctuations.

EQUITY SECURITY PRICE RISK

         We  do  not  have  any  investment  in  marketable  equity  securities;
therefore, we do not have any direct equity price risk.

COMMODITY PRICE RISK

         We no not do any business involving commodities;  therefore,  we do not
have any commodity price risk.

ITEM 4.  CONTROLS AND PROCEDURES

(A)      EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         As of the end of the period covered by this report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of the
Company's  Principal Executive  Officer/Acting  Principal Financial Officer (one
person),  of the  effectiveness  of the design and  operation  of the  Company's
disclosure  controls  and  procedures.  The  Company's  disclosure  controls and
procedures are designed to provide a reasonable  level of assurance of achieving
the Company's  disclosure control objectives.  The Company's Principal Executive
Officer/Acting  Principal  Accounting  Officer has concluded  that the Company's
disclosure  controls and procedures  are, in fact,  effective at this reasonable
assurance level. In addition, we reviewed our internal controls,  and there have
been no  significant  changes in our internal  controls or in other factors that


                                       12
<PAGE>

could  significantly  affect those controls subsequent to the date of their last
valuation or from the end of the reporting period to the date of this Form 10-Q.

(B)      CHANGES IN INTERNAL CONTROLS

         There were no significant changes in the Company's internal controls or
in other  factors  that could  significantly  affect these  controls  during the
quarter  covered by this report or from the end of the  reporting  period to the
date of this Form 10-Q.





                                       13
<PAGE>

                                     PART II


                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         There is no pending  litigation  against  us,  other than those  claims
described below:

     o    In December 2001, Veja Electronics,  Inc. d/b/a Stack Electronics sued
          us for  breach  of  contract  and is  seeking  damages  in  excess  of
          $106,000.  This action relates to amounts  alleged to be owed from the
          order of products not received by us. We intend to defend this action.

     o    On October 27, 2001,  we  defaulted on payments due of $150,000,  plus
          accrued interest,  on certain unsecured notes. Written demand has been
          received  from one of the two note  holders.  We are  seeking  to make
          arrangements with these note holders.  In addition,  certain creditors
          have  threatened  litigation  if not  paid.  We are  seeking  to  make
          arrangements with these creditors.  There can be no assurance that any
          claims, if made, will not have an adverse effect on us.

     o    On  March  25,  2003,  R R  Donnelly  & Sons  sued the  Company  for a
          delinquent  account.  The action was brought in the Chancery Court for
          Knox County,  Tennessee.  In this action the plaintiff, R R Donnelly &
          Sons,  has sued the Company for  non-payment  of invoices for printing
          services  and is  seeking  $16,972.  In  September,  2003,  a  default
          judgment was entered against the Company.

     o    In 2003,  Del Rio  Enterprises  sued the  Company for  non-payment  of
          services  rendered.  During 2003 a judgment was  rendered  against the
          Company in the amount of $8,000. This amount has been accrued at March
          31, 2004.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         On October 27, 2001, we defaulted on payments due of $150,000, of which
$100,000 is remaining unpaid, plus accrued interest, on certain unsecured notes.
We are seeking to make arrangements with this note holder.

         In January  2002,  the  Company  terminated  the Equity  Line of Credit
entered  into on  September  14,  2001 due to delays in getting  related  shares
registered  and in order to pursue other types of financing  arrangements.  As a
result, the Company does not have an effective  registration statement including
common shares to be issued in connection with certain  debentures issued in 2001
and the first  quarter  of 2002  under the 1999  Line of Credit  Agreement.  The
Company is required to pay liquidated  damages in the form of increased interest
on  the  convertible   debentures  as  a  result  of  not  filing  an  effective
registration  statement  for these  debentures  at a rate of 2% of the principle
plus interest per month.  The liability for liquidated  damages will continue to
accrue until the earlier of one year from the issuance  date of the  convertible
debentures  or the date a new  registration  statement  becomes  effective.  The
Company has accrued $342,400 for liquidated damages at March 31, 2004.

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

         None.

ITEM 5.  OTHER INFORMATION

         Not applicable.



                                       14
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT NO.  DESCRIPTION                                         LOCATION
-----------  -------------------------------------------------   -------------------------------------------------
<S>          <C>                                                 <C>
3.1          Certificate of Incorporation of Celerity Systems,   Incorporated by reference to Exhibit 3.1 to the
             Inc.                                                Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

3.2          By laws of Celerity Systems, Inc.                   Incorporated by reference to Exhibit 3.2 to the
                                                                 Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

3.3          Certificate of Designation of Series C Preferred    Incorporated by reference to the Registration
             Stock                                               Statement on Form SB-2 filed with the SEC on
                                                                 October 18, 2001

3.4          Certificate of Designation of Series D Preferred    Incorporated by reference to Exhibit 3.4 to the
             Stock                                               Form 10-KSB for the year ended December 31, 2001
                                                                 filed with the SEC on March 27, 2002

3.5          Certificate of Designation of Series E Preferred    Incorporated by reference to Exhibit 3.5 to the
             Stock                                               Form 10-KSB for the year ended December 31, 2001
                                                                 filed with the SEC on March 27, 2002

4.1          Form of Underwriter's Warrant                       Incorporated by reference to Exhibit 4.1 to
                                                                 Amendment No. 1 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 8, 1997

4.2          1995 Stock Option Plan                              Incorporated by reference to Exhibit 4.2 to the
                                                                 Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

4.3          1997 Stock Option Plan                              Incorporated by reference to Exhibit 4.3 to the
                                                                 Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

4.4          Form of Stock Certificate                           Incorporated by reference to Exhibit 4.4 to
                                                                 Amendment No. 2 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 28, 1997

4.5          Form of Bridge Warrant                              Incorporated by reference to Exhibit 4.5 to the
                                                                 Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

4.6          Form of 1996 Warrant                                Incorporated by reference to Exhibit 4.6 to
                                                                 Amendment No. 2 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 28, 1997

4.7          Form of Hampshire Warrant                           Incorporated by reference to Exhibit 4.7 to
                                                                 Amendment No. 1 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 8, 1997

4.8          Form of 1995 Warrant                                Incorporated by reference to Exhibit 4.8 to the
                                                                 Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

4.9          Letter Agreement dated July 15, 1997, between       Incorporated by reference to Exhibit 4.9 to the
             Celerity and Mahmoud Youssefi, including exhibits   Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

4.10         Letter Agreement, dated July 11, 1997, between      Incorporated by reference to Exhibit 4.10 to the
             Celerity and Dr. Fenton Scruggs                     Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997

4.11         Form of 9% Convertible Debenture                    Incorporated by reference to Exhibit 4.11 to
                                                                 Amendment No. 1 to Form 10-KSB for the year
                                                                 ended December 31, 1998 filed with the SEC on
                                                                 April 30, 1999

4.12         Form of 7% Promissory Note                          Incorporated by reference to Exhibit 4.12 to
                                                                 Amendment No. 1 to Form 10-KSB for the year
                                                                 ended December 31, 1998 filed with the SEC on
                                                                 April 30, 1999

4.13         Form of Registration Rights Agreement, between      Incorporated by reference to Exhibit 4.13 to
             Celerity and each of RNI Limited Partnership,       Amendment No. 1 to Form 10-KSB for the year
             First Empire Corporation, Greg A. Tucker and        ended December 31, 1998 as filed with the SEC on
             Michael Kesselbrenner                               April 30, 1999

4.14         Form of Warrant issued April 27, 1999               Incorporated by reference to Exhibit 4.2 to the
                                                                 Registration Statement on S-3 filed with the SEC
                                                                 on September 18, 1999

4.15         Shareholders Agreement, dated August 10, 1999,      Incorporated by reference to Exhibit 99.2 to the
             between Celerity Systems, Inc., FutureTrak Merger   Form 8-K filed with the SEC on September 14, 1999
             Corp. and certain parties listed therein
</TABLE>


                                       15
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.  DESCRIPTION                                         LOCATION
-----------  -------------------------------------------------   -------------------------------------------------
<S>          <C>                                                 <C>
4.16         Registration Rights Agreement, dated September      Incorporated by reference to Exhibit 99.2 to the
             30, 1999, between Celerity and GMF Holdings         Form 8-K filed with the SEC on October 8, 1999

4.17         Form of Debenture in connection with Line of        Incorporated by reference to Exhibit 99.4 to the
             Credit Agreement, dated September 30, 1999          Form 8-K filed with the SEC on October 8, 1999

4.18         Form of Warrant issued September 30, 1999           Incorporated by reference to Exhibit 4.10 to the
                                                                 Registration Statement on S-3 filed with the SEC
                                                                 on February 15, 2000

4.19         Form of 4% Convertible Debenture due 2002 between   Incorporated by reference to Exhibit 4.2 to the
             Celerity and each of John Bridges, John Faure,      Registration Statement on S-3 filed with the SEC
             Loni Spurkeland, Robert Dettle, Michael Genta,      on February 15, 2000
             Lennart Dallgren

4.20         Form of 8% Convertible Debenture due 2002 between   Incorporated by reference to Exhibit 4.3 to the
             Celerity and each of Richard T. Garrett, W. David   Registration Statement on S-3 filed with the SEC
             McCoy, Dominick Chirarisi, Gilda R. Chirarisi,      on February 15, 2000
             Joseph C. Cardella, Carl Hoehner

4.21         Form of 8% Convertible Debenture due 2003 between   Incorporated by reference to Exhibit 4.4 to the
             Celerity and John Bolliger                          Registration Statement on S-3 filed with the SEC
                                                                 on February 15, 2000

4.22         Form of Registration Rights Agreement, between      Incorporated by reference to Exhibit 4.6 to the
             Celerity and each of John Bridges, John Faure,      Registration Statement on S-3 filed with the SEC
             Loni Spurkeland, Robert Dettle, Michael Genta,      on February 15, 2000
             Lennart Dallgren

4.23         Form of Registration Rights Agreement, between      Incorporated by reference to Exhibit 4.7 to the
             Celerity and each of Richard T. Garrett, W. David   Registration Statement on S-3 filed with the SEC
             McCoy, Dominick Chirarisi, Gilda R. Chirarisi,      on February 15, 2000
             Joseph C. Cardella, Carl Hoehner

4.24         Form of Registration Rights Agreement, between      Incorporated by reference to Exhibit 4.8 to the
             Celerity and John Bolliger                          Registration Statement on S-3 filed with the SEC
                                                                 on February 15, 2000
4.25         Form of 8% Convertible Debenture due 2003 between   Incorporated by reference to Exhibit 99.7 to the
             Celerity and each of Sui Wa Chau, Qinu Guan,        Form 8-K filed with the SEC on March 23, 2000
             Peter Chenan Chen, K&M Industry, Inc., Michael
             Dahlquist, Denise and Vernon Koto and Rance Merkel

4.26         Form of Registration Rights Agreement, between      Incorporated by reference to Exhibit 99.8 to the
             Celerity and each of Sui Wa Chau, Qinu Guan,        Form 8-K filed with the SEC on March 23, 2000
             Peter Chenan Chen, K&M Industry, Inc., Michael
             Dahlquist, Denise and Vernon Koto and Rance Merkel

4.27         Securities Purchase Agreement, dated August 31,     Incorporated by reference to Exhibit 99.1 to the
             2000, between Celerity and the Investors            Form 8-K filed with the SEC on September 5, 2000
             specified therein

4.28         Registration Rights Agreement, dated August 31,     Incorporated by reference to Exhibit 99.2 to the
             2000, between Celerity and the Investors            Form 8-K filed with the SEC on September 5, 2000
             specified therein

4.29         Form of Warrant issued September 30, 2000           Incorporated by reference to Exhibit 99.3 to the
                                                                 Form 8-K filed with the SEC on April 5, 2000

10.1         Employment Agreement, dated January 7, 1997, as     Incorporated by reference to Exhibit 10.1 to
             amended, between Celerity and Kenneth D. Van Meter  Amendment No. 1 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 8, 1997

10.2         Employment, Non-Solicitation, Confidentiality and   Incorporated by reference to Exhibit 10.2 to the
             Non-Competition Agreement, dated as of May 1,       Registration Statement on SB-2 filed with the
             1996, between Celerity and Glenn West               SEC on August 13, 1997
10.3         Termination Agreement, dated as of April 5, 1997,   Incorporated by reference to Exhibit 10.3 to the
             between Celerity and Mahmoud Youssefi               Registration Statement on SB-2 filed with the
                                                                 SEC on August 13, 1997
10.4         [Reserved]

10.5         Letter Agreement, dated March 13, 1997, between     Incorporated by reference to Exhibit 10.5 to
             Celerity and William Chambers                       Amendment No. 1 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 8, 1997

10.6         Letter Agreement, dated July 24, 1997, between      Incorporated by reference to Exhibit 10.6 to
             Celerity and Mark. C. Cromwell                      Amendment No. 1 to Registration Statement on
                                                                 SB-2 filed with the SEC on October 8, 1997

10.7         Exclusive OEM/Distribution Agreement, dated         Incorporated by reference to Exhibit 10.7 to the
             March 10, 1995, between Celerity and InterSystem    Registration Statement on SB-2 filed with the
             Multimedia, Inc.                                    SEC on August 13, 1997

10.8         Purchase Order Agreement, dated September 26,       Incorporated by reference to Exhibit 10.8 to the
             1995, between Tadiran Telecommunications Ltd. and   Registration Statement on SB-2 filed with the
             Celerity                                            SEC on August 13, 1997
</TABLE>


                                       16
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.  DESCRIPTION                                         LOCATION
-----------  -------------------------------------------------   -------------------------------------------------
<S>          <C>                                                 <C>
10.9         License Agreement, dated as of September 26,        Incorporated by reference to Exhibit 10.9 to the
             1996, between Celerity and En Kay Telecom Co.,      Registration Statement on SB-2 filed with the
             Ltd.                                                SEC on August 13, 1997

10.10        License Agreement, dated as of February 21, 1997,   Incorporated by reference to Exhibit 10.10 to
             between Celerity and En Kay Telecom Co., Ltd.       the Registration Statement on SB-2 filed with
                                                                 the SEC on August 13, 1997

10.11        Remarketer Agreement, dated as of September 15,     Incorporated by reference to Exhibit 10.11 to
             1997, between Celerity and Minerva Systems, Inc.    the Registration Statement on SB-2 filed with
                                                                 the SEC on August 13, 1997

10.12        Memorandum of Understanding, dated April 25,        Incorporated by reference to Exhibit 10.12 to
             1996, between Integrated Network Corporation and    the Registration Statement on SB-2 filed with
             Celerity                                            the SEC on August 13, 1997

10.13        Letter of Agreement, dated September 30, 1993,      Incorporated by reference to Exhibit 10.13 to
             between Celerity and Herzog, Heine & Geduld, Inc.   the Registration Statement on SB-2 filed with
             and Development Agreement attached thereto          the SEC on August 13, 1997

10.14        Subcontract Agreement, dated September 26, 1997,    Incorporated by reference to Exhibit 10.14 to
             between Unisys Corporation and Celerity             the Registration Statement on SB-2 filed with
                                                                 the SEC on August 13, 1997

10.15        Lease Agreement for Crossroad Commons, dated        Incorporated by reference to Exhibit 10.15 to
             November 25, 1996, as amended, between Lincoln      Amendment No. 1 to Registration Statement on
             Investment Management, Inc., as attorney in fact    SB-2 filed with the SEC on October 8, 1997
             for the Lincoln National Life Insurance Company,
             and Celerity

10.16        Lease Agreement, dated November 25, 1997, between   Incorporated by reference to Exhibit 10.16 to
             Centerpoint Plaza, L.P. and Celerity                the Form 10-KSB for the year ended December 31,
                                                                 1997 filed with the SEC on September 30, 1998

10.17        Letter Agreement, dated October 3, 1997, between    Incorporated by reference to Exhibit 10.17 to
             Dennis Smith and Celerity                           the Form 10-KSB for the year ended December 31,
                                                                 1997 filed with the SEC on September 30, 1998

10.18        Letter Agreement, dated January 8, 1998, between    Incorporated by reference to Exhibit 10.18 to
             James Fultz and Celerity                            the Form 10-KSB for the year ended December 31,
                                                                 1997 filed with the SEC on September 30, 1999

10.19        Amendment to Employment, Non-Solicitation,          Incorporated by reference to Exhibit 10.19 to
             Confidentiality and Non-Competition Agreement,      the Form 10-KSB for the year ended December 31,
             dated January 1, 1999, between Celerity and Glenn   1997 filed with the SEC on April 30, 1998
             West

10.20        Form of Subscription Agreement, between Celerity    Incorporated by reference to Exhibit 10.20 to
             and each of RNI Limited Partnership, First Empire   Amendment No. 1 to Form 10-KSB for the year
             Corporation, Greg A. Tucker and Michael             ended December 31, 1998 filed with the SEC on
             Kesselbrenner                                       April 30, 1999

10.21        Form of Subscription Agreement, between Celerity    Incorporated by reference to Exhibit 10.21 to
             and each of Donald Alexander, Leo Abbe,             Amendment No. 1 to Form 10-KSB for the year
             Centerpoint Plaza, L.P., William Chambers, Fenton   ended December 31, 1998 filed with the SEC on
             Scruggs, Dennis Smith, Kenneth Van Meter, George    April 30, 1999
             Semb and Rodney Conard

10.22        Form of Royalty Agreement, between Celerity and     Incorporated by reference to Exhibit 10.22 to
             each of Donald Alexander, Leo Abbe, Centerpoint     Amendment No. 1 to Form 10-KSB for the year
             Plaza, LP, William Chambers, Fenton Scruggs,        ended December 31, 1998 filed with the SEC on
             Dennis Smith, Kenneth Van Meter, George Semb and    April 30, 1999
             Rodney Conard

10.23        Agreement and Plan of Merger, dated August 10,      Incorporated by reference to Exhibit 99.1 to the
             1999, between Celerity Systems, Inc., FutureTrak    Form 8-K filed with the SEC on September 14, 1999
             Merger Corp. and FutureTrak International, Inc.

10.24        Line of Credit Agreement, dated September 30,       Incorporated by reference to Exhibit 99.1 to the
             1999, between GMF Holdings, May Davis Group and     Form 8-K filed with the SEC on October 8, 1999
             Celerity

10.25        Termination Agreement, dated December 7, 1999,      Incorporated by reference to Exhibit 99.1 to the
             between Celerity, FutureTrak Merger Corp. and       Form 8-K filed with the SEC on December 8, 1999
             FutureTrak International, Inc.

10.26        Manufacturing Agreement, dated November 30, 1999,   Incorporated by reference to Exhibit 99.2 to the
             between Celerity, Primax Electronics, Ltd and       Form 8-K filed with the SEC on January 5, 2000
             Global Business Group, Ltd.

10.27        Lease, dated December 17, 1999, between Andy        Incorporated by reference to Exhibit 99.1 to the
             Charles Johnson, Raymond Perry Johnson, Tommy F.    Form 8-K filed with the SEC on January 5, 2000
             Griffin and Celerity

10.28        Amendment to the Line of Credit Agreement between   Incorporated by reference to Exhibit 10.28 to
             Celerity and GMF Holdings, Inc. dated October 16,   the Registration Statement on SB-2 filed with
             2000                                                the SEC on October 27, 2000

10.29        Purchase Agreement, dated September 22, 2000,       Incorporated by reference to Exhibit 99.2 to the
             between Celerity and WIT Technologies Inc.          Form 8-K filed with the SEC on July 11, 2000
</TABLE>


                                       17
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT NO.  DESCRIPTION                                         LOCATION
-----------  -------------------------------------------------   -------------------------------------------------
<S>          <C>                                                 <C>
10.30        Manufacturing Service Agreement, dated January 4,   Incorporated by reference to Exhibit 99.1 to the
             2001, between Celerity and Nextek, Inc.             Registration Statement on SB-2 filed with the
                                                                 SEC on December 27, 2000

10.31        Broadband Services Agreement, dated January 4,      Incorporated by reference to Exhibit 99.2 to the
             2001, between Celerity and DeserScape L.P.          Form 8-K filed with the SEC on January 10, 2001

10.32        Cooperative Marketing Agreement, dated January 4,   Incorporated by reference to Exhibit 99.3 to the 2001,
             between Celerity and In4Structures LLC              Form 8-K filed with the SEC on January 10, 2001

10.33        Equity Line of Credit Agreement dated as of         Incorporated by reference to the Registration
             September 14, 2001 between Celerity Systems, Inc.   Statement on Form SB-2 filed with the SEC on
             and Cornell Capital Partners, L.P.                  October 18, 2001

10.34        Registration Rights Agreement dated as of           Incorporated by reference to the Registration
             September 14, 2001 between Celerity Systems, Inc.   Statement on Form SB-2 filed with the SEC on
             and Cornell Capital Partners, L.P.                  October 18, 2001

10.35        Consulting Services Agreement dated as of           Incorporated by reference to the Registration
             September 14, 2001 between Celerity Systems, Inc.   Statement on Form SB-2 filed with the SEC on
             and Cornell Capital Partners, L.P.                  October 18, 2001

10.36        Escrow Agreement dated as of September 14, 2001     Incorporated by reference to the Registration
             among Celerity Systems, Inc. Meir Levin and         Statement on Form SB-2 filed with the SEC on
             Cornell Capital Partners, L.P.                      October 18, 2001

10.37        Warrant to purchase 2,500,000 shares of common      Incorporated by reference to the Registration
             stock dated as of September 14, 2001 given by       Statement on Form SB-2 filed with the SEC on
             Celerity Systems to Cornell Capital Partners, L.P.  October 18, 2001

10.38        Warrant to purchase 3,500,000 shares of common      Incorporated by reference to the Registration
             stock dated as of August, 2001 given by Celerity    Statement on Form SB-2 filed with the SEC on
             Systems to Cornell Capital Partners, L.P.           October 18, 2001

10.39        Letter Agreement dated August, 2001 between         Incorporated by reference to the Registration
             Celerity Systems and Yorkville Advisors             Statement on Form SB-2 filed with the SEC on
             Management, LLC                                     October 18, 2001

10.40        Consulting Services Agreement dated as of August,   Incorporated by reference to the Registration
             2001 between Celerity Systems, Inc. and Yorkville   Statement on Form SB-2 filed with the SEC on
             Advisors, LLC                                       October 18, 2001

10.41        Consulting Services Agreement dated as of           Incorporated by reference to the Registration
             September, 2001 between Celerity Systems, Inc.      Statement on Form SB-2 filed with the SEC on
             and Yorkville Advisors, LLC                         October 18, 2001

10.42        Advisory Agreement dated September 6, 2001          Incorporated by reference to the Registration
             between Celerity Systems, Inc. and Internet         Statement on Form SB-2 filed with the SEC on
             Finance International Corporation                   October 18, 2001

10.43        Financing Agreement dated as of August, 2001        Incorporated by reference to the Registration
             between Celerity Systems, Inc. and Artesian         Statement on Form SB-2 filed with the SEC on
             Direct Holdings Corporation                         October 18, 2001

10.44        Partial Guaranty Agreement dated August, 2001       Incorporated by reference to the Registration
             given by Ed Kidston to Celerity Systems, Inc.       Statement on Form SB-2 filed with the SEC on
                                                                 October 18, 2001

10.45        Termination Agreement                               Incorporated by reference to Exhibit 10.45 to
                                                                 the Form 10-KSB for the year ended December 31,
                                                                 2001 filed with the SEC on March 27, 2002

10.46        Letter Agreement dated as of April 26, 2002         Incorporated by reference to Exhibit 10.46 to
             regarding the Purchase Order Financing              form SB-2 filed with the SEC on September 28,
                                                                 2002

10.47        Letter Agreement dated September 12, 2002 between   Incorporated by reference to Exhibit 10.47 to
             Cornell Capital Partners and Celerity Systems,      form SB-2 filed with the SEC on September 28,
             Inc.                                                2002

31.1         Certification re: Section 302                       Provided herewith

32.1         Certification re: Section 906                       Provided herewith

          (b)      REPORTS ON FORM 8-K.

          None.
</TABLE>


                                       18
<PAGE>

                                   SIGNATURES


         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.

Date:  May 13, 2004                        CELERITY SYSTEMS, INC.

                                           By:  /s/ Robert Legnosky
                                                --------------------------------
                                                Robert Legnosky, President and
                                                Interim Chief Financial Officer



                                       19