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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-QSB

(Checkbox)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 30, 2001

(box)  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 0-8164

FOURTHSTAGE TECHNOLOGIES, INC.(Exact name of small business issuer as specified in charter)

|                                                                               |  |                                   
|------------------------------------------------------------------------------ |  | ----------------------------------
|DELAWARE
(State of incorporation or organization)                              |  | 74-2971167
(IRS Employer I.D. No.)
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               |  |                                   
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|3030 N. 3RD ST., 7TH FLOORPHOENIX, AZ
(Address of principal executive offices) |  | 85012
(Zip Code)                  

602-776-0883
(Issuers telephone number)

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

As of October 31, 2001 the Registrant had
25,311,838 shares of common
stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes (Checkbox)  No (box)



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TABLE OF CONTENTS



|                              |                                                                                                        |                                                      |  |  |  |  |  | 
|----------------------------- | ------------------------------------------------------------------------------------------------------ | ---------------------------------------------------- |  |  |  |  |  | 
|PART 1. FINANCIAL INFORMATION
|                              | ITEM 1. FINANCIAL STATEMENTS                                                                          
|                              |                                                                                                        | CONDENSED CONSOLIDATED BALANCE SHEET                
|                              |                                                                                                        | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                              |                                                                                                        | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                              |                                                                                                        | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                              | ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|PART II. OTHER INFORMATION   
|                              | Item 1. Legal Proceedings.                                                                            
|                              | Item 2. Changes in Securities and Use of Proceeds.                                                    
|                              | Item 3. Defaults Upon Senior Securities.                                                              
|                              | Item 4. Submission of Matters to a Vote of Security Holders.                                          
|                              | Item 5. Other Information.                                                                            
|                              | Item 6. Exhibits and Reports on Form 8-K.                                                             
|SIGNATURES                   



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##### Table of Contents



FOURTHSTAGE TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 2001

INDEX

|                               |         |                                                              |                                                           |  |   |    |  |      | 
|------------------------------ | ------- | ------------------------------------------------------------ | --------------------------------------------------------- |  | - | -- |  | ---- | 
|                               |         |                                                              |                                                           |  |   |    |  | PAGE | 
|PART I  FINANCIAL INFORMATION
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 1. |                                                              | Financial Statements (unaudited)                          |  |   | 3  | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               |         | Condensed Consolidated Balance Sheet  September 30, 2001    |                                                           |  |   |   
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               |         | Condensed Consolidated Statements of Operations  Six Months |                                                           |  |   |   
|                              
|                              
|                              
|                              
|                               |         | Ended September 30, 2001 and 2000                            |                                                           |  |   |   
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               |         | Condensed Consolidated Statements of Cash Flows  Six Months |                                                           |  |   |   
|                              
|                              
|                              
|                              
|                               |         | Ended September 30, 2001 and 2000                            |                                                           |  |   |   
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               |         | Notes to Condensed Consolidated Financial Statements         |                                                           |  |   |   
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 2. |                                                              | Management's Discussion and Analysis of Interim Financial |  |   |    | 
|                              
|                              
|                              
|                              
|                               |         | Condition and Results of Operations                          |                                                           |  | 9 |   
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|PART II  OTHER INFORMATION   
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 1. |                                                              | Legal Proceedings                                         |  |   | 11 | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 2. |                                                              | Changes in Securities and Use of Proceeds                 |  |   | 11 | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 3. |                                                              | Defaults upon Senior Securities                           |  |   | 12 | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 4. |                                                              | Submission of Matters to a Vote of Security Holders       |  |   | 12 | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 5. |                                                              | Other Information                                         |  |   | 13 | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|                               | Item 6. |                                                              | Exhibits and Reports on Form 8-K                          |  |   | 13 | 
|                              
|                              
|                              
|                              
|                               |         |                                                              |                                                           |  |   |    |  |     
|                              
|                              
|                              
|                              
|SIGNATURES                     | 14     

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##### Table of Contents









PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS




FOURTHSTAGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)

|                                     |                                            |                                                                                                                                           |                             |            |                    |            | 
|------------------------------------ | ------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ---------- | ------------------ | ---------- | 
|                                     |                                            |                                                                                                                                           |                             |            | September 30, 2001
|                                     |                                            |                                                                                                                                           |                             |            |                   
|ASSETS                               |                                            |                                                                                                                                           |                             |           
|                                    
|                                    
|                                    
|                                    
|                                     | Current assets                             |                                                                                                                                           |                             |            |                   
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Cash                                                                                                                                      |                             | $          | 77,786             |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Accounts receivable  trade                                                                                                               |                             |            | 2,787,277          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Other current assets                                                                                                                      |                             |            | 234,347            |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            |                                                                                                                                           | Total current assets        |            |                    | 3,099,410  | 
|                                    
|                                    
|                                    
|                                    
|                                     | Property, plant, and equipment, net        |                                                                                                                                           |                             | 32,829,760 |                   
|                                    
|                                    
|                                    
|                                    
|                                     | Restricted cash                            |                                                                                                                                           |                             | 627,152    |                   
|                                    
|                                    
|                                    
|                                    
|                                     | Intangible assets                          |                                                                                                                                           |                             | 14,569,264 |                   
|                                    
|                                    
|                                    
|                                    
|                                     | Other assets                               |                                                                                                                                           |                             | 764,145    |                   
|                                     |                                            |                                                                                                                                           |                             |           
|TOTAL ASSETS                         |                                            | $                                                                                                                                         | 51,889,731                  |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                    
|                                    
|                                    
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY |                                            |                                                                                                                                           |                             |           
|                                    
|                                    
|                                    
|                                    
|                                     | Current liabilities                        |                                                                                                                                           |                             |            |                   
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Accounts payable  trade                                                                                                                  |                             | $          | 5,731,638          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Other accrued expenses                                                                                                                    |                             |            | 1,566,232          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Restructuring accrual                                                                                                                     |                             |            | 635,020            |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Current maturities of long term debt                                                                                                      |                             |            | 1,828,822          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Current maturities of notes payable                                                                                                       |                             |            | 3,035,000          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Current portion of obligations under capital leases                                                                                       |                             |            | 463,072            |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            |                                                                                                                                           | Total current liabilities   |            |                    | 13,259,784 | 
|                                    
|                                    
|                                    
|                                    
|                                     |                                            |                                                                                                                                           |                             |           
|                                    
|                                    
|                                    
|                                    
|                                     | Long-term liabilities                      |                                                                                                                                           |                             |            |                   
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Notes payable                                                                                                                             |                             |            | 204,150            |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Long Term Debt                                                                                                                            |                             |            | 6,527,291          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Obligations under capital leases                                                                                                          |                             |            | 5,288,278          |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Deferred rent                                                                                                                             |                             |            | 1,413,779          |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            |                                                                                                                                           | Total long-term liabilities |            |                    | 13,433,498 | 
|                                    
|                                    
|                                    
|                                    
|                                     |                                            |                                                                                                                                           |                             |           
|                                    
|                                    
|                                    
|                                    
|                                     | Commitments and Contingencies              |                                                                                                                                           |                             |           |                   
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            | Total liabilities                                                                                                                         |                             |            | 26,693,282         |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            |                                                                                                                                           |                             |           
|                                    
|                                    
|                                    
|                                    
|                                     | Stockholders equity                       |                                                                                                                                           |                             |            |                   
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Common stock at $.01 par value; 75,000,000 authorized, 25,311,838
shares (excluding 1,696 shares held in treasury) issued and outstanding |                             |            | 253,116            |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Additional paid-in-capital                                                                                                                |                             |            | 125,283,946        |           
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Deferred compensation                                                                                                                     |                             |            | (255,597           | )         
|                                    
|                                    
|                                    
|                                    
|                                     |                                            | Accumulated deficit                                                                                                                       |                             |            | (100,085,016       | )         
|                                     |                                            |                                                                                                                                           |                             |           
|                                     |                                            |                                                                                                                                           | Total stockholders equity  |            |                    | 25,196,449 | 
|                                     |                                            |                                                                                                                                           |                             |           
|                                     | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                           | $                           | 51,889,731 |                   
|                                     |                                            |                                                                                                                                           |                             |           

See accompanying notes.

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##### Table of Contents






FOURTHSTAGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |             |            | 
|------------------------------------------------------------------------ | ---------------------------------- | -------------------------------------------------- | ---------- | ------------------ | --------- | ---------------- | ---------- | ---------- | --------- | ---- | ----------- | ----------- | ---------- | - | ----------- | ----------- | ---------- | 
|                                                                         |                                    |                                                    |            | Three months ended |           | Six months ended |           
|                                                                         |                                    |                                                    |            | September 30,      |           | September 30,    |           
|                                                                         |                                    |                                                    |            | 2001               |           | 2000             |            | 2001       |           | 2000 |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |            
|Revenues                                                                 |                                    | $                                                  | 5,204,884  |                    |           | $                | 1,806,112  |            |           | $    | 12,435,215  |             |            | $ | 2,715,557   |            
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Costs of revenues                                                        |                                    |                                                    | 5,723,414  |                    |           |                  | 2,478,538  |            |           |      | 14,134,728  |             |            |   | 4,111,622   |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|                                                                         | Gross margin (deficit)             |                                                    |            | (518,530           | )         |                  |            | (672,426   | )         |      |             | (1,699,513  | )          |   |             | (1,396,065  | )         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Selling, general and administrative expenses:                            |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Sales, general, and administrative |                                                    |            | 4,833,866          |           |                  |            | 7,640,601  |           |      |             | 11,205,627  |            |   |             | 11,680,228  |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Goodwill amortization              |                                                    |            | 843,987            |           |                  |            | 237,983    |           |      |             | 2,152,368   |            |   |             | 237,983     |           
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|                                                                         | Restructuring charge               |                                                    |            | (601,068           | )         |                  |            |           |           |      |             | 5,298,932   |            |   |             |            |           
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|                                                                         |                                    | Total selling, general and administrative expenses |            |                    | 5,076,785 |                  |            |            | 7,878,584 |      |             |             | 18,656,927 |   |             |             | 11,918,211 | 
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|                                                                         | Operating loss                     |                                                    |            | (5,595,315         | )         |                  |            | (8,551,010 | )         |      |             | (20,356,440 | )          |   |             | (13,314,276 | )         
|                                                                        
|                                                                        
|                                                                        
|                                                                        
|Interest income (expense), net                                           |                                    |                                                    | (545,647   | )                  |           |                  | 379,829    |            |           |      | (1,344,261  | )           |            |   | 883,856     |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Net
loss before extraordinary items                                      |                                    |                                                    | (6,140,962 | )                  |           |                  | (8,171,181 | )          |           |      | (21,700,701 | )           |            |   | (12,430,420 | )          
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Extraordinary
gain from extinguishment of debt                           |                                    |                                                    | 18,409,166 |                    |           |                  |           |            |           |      | 18,409,166  |             |            |   |            |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Net
income (loss)                                                        |                                    | $                                                  | 12,268,204 |                    |           | $                | (8,171,181 | )          |           | $    | (3,291,535) |             |            | $ | (12,430,420 | )          
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Basic
and diluted net loss per share before extraordinary items          |                                    |                                                    | (0.30)     |                    |           |                  | (0.66)     |            |           |      | (1.19)      |             |            |   | (1.01       | )          
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Basic
and diluted extraordinary gain on extinguishment of debt per share |                                    |                                                    | 0.90       |                    |           |                  |           |            |           |      | 1.01        |             |            |   |            |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Basic
and diluted net income (loss) per share                            |                                    | $                                                  | 0.60       |                    |           | $                | (0.66)     |            |           | $    | (0.18)      |             |            | $ | (1.01)      |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            
|Basic
and diluted weighted average shares outstanding                    |                                    |                                                    | 20,490,869 |                    |           |                  | 12,444,209 |            |           |      | 18,237,150  |             |            |   | 12,313,379  |            
|                                                                         |                                    |                                                    |            |                    |           |                  |            |            |           |      |             |             |            |   |             |            

See accompanying notes.

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##### Table of Contents






FOURTHSTAGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |             |             |             |  
|------------------------------------------------ | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------- | ---------- | ---------------- | ----------- | ---------- | ----------- | ----------- | ----------- | -
|                                                 |                                                                              |                                                                              |                                           |            | Six months ended
|                                                 |                                                                              |                                                                              |                                           |            | September 30,   
|                                                 |                                                                              |                                                                              |                                           |            |                 
|                                                 |                                                                              |                                                                              |                                           |            | 2001             |             | 2000      
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |           
|Cash flows from operating activities:            |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 | Net loss                                                                     |                                                                              | $                                         | (3,291,535 | )                |             | $          | (12,430,420 | )          
|                                                
|                                                
|                                                
|                                                
|                                                 | Adjustments to reconcile net loss to net cash used in operating activities:  |                                                                              |                                           |            |                  |             |            |             |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Depreciation, including amortization of leased assets                        |                                           |            | 3,546,635        |             |            |             | 1,534,318   |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Amortization of intangibles                                                  |                                           |            | 2,181,976        |             |            |             | 237,983     |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Amortization of deferred compensation                                        |                                           |            | 646,969          |             |            |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Accretion of debt discount                                                   |                                           |            | 73,885           |             |            |             | 109,812     |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Accrued interest on debt                                                     |                                           |            | 246,681          |             |            |             | 43,750      |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Gain on extinguishment of debt                                               |                                           |            | (18,409,166      | )           |            |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Loss on disposal of property, plant and equipment                            |                                           |            |                 |             |            |             | 16,002      |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Common stock and options issued for compensation                             |                                           |            | 290,500          |             |            |             | (189,904    | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Restructuring charge                                                         |                                           |            | 5,298,932        |             |            |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Cash paid for restructuring                                                  |                                           |            | (2,310,696       | )           |            |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 | Changes in operating assets and liabilities, net of effects of acquisitions: |                                                                              |                                           |            |                  |             |            |             |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Accounts receivable  trade                                                  |                                           |            | (53,428          | )           |            |             | (1,553,654  | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Other current assets                                                         |                                           |            | 868,195          |             |            |             | (2,799,709  | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Restricted Cash                                                              |                                           |            | 62,848           |             |            |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Other assets                                                                 |                                           |            | (164,851         | )           |            |             | (138,735    | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Accounts payable  trade                                                     |                                           |            | 1,460,113        |             |            |             | (5,558,896  | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Deferred rent                                                                |                                           |            | (9,568           | )           |            |             | 318,487     |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Other accrued expenses                                                       |                                           |            | (2,384,012       | )           |            |             | (320,224    | )          
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                 |                                                                              |                                                                              | Net cash used in operating activities     |            |                  | (11,946,522 | )          |             |             | (20,731,190 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                
|                                                
|                                                
|                                                
|Cash flows from investing activities:            |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Purchase of property, plant, and equipment                                   |                                           |            | (678,211         | )           |            |             | (17,505,888 | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Proceeds from sale of property, plant, and equipment                         |                                           |            | 63,933           |             |            |             | 16,885      |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Business acquired, net of cash received                                      |                                           |            |                 |             |            |             | (77,691     | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Payment for purchase of Fourthstage Technologies, Inc., net of cash acquired |                                           |            | (1,439,667       | )           |            |             |            |            
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                 |                                                                              |                                                                              | Net cash used in investing activities     |            |                  | (2,053,945  | )          |             |             | (17,566,694 | )
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                
|                                                
|                                                
|                                                
|Cash flows from financing activities:            |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Payments on obligations under capital leases                                 |                                           |            | (849,665         | )           |            |             | (414,278    | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Payments on notes payable                                                    |                                           |            | (8,005,086       | )           |            |             | (606,500    | )          
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Proceeds  equipment financing                                               |                                           |            |                 |             |            |             | 5,304,247   |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Proceeds  notes payable                                                     |                                           |            | 10,000,000       |             |            |             | 10,000,000  |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Proceeds  issuance of common stock                                          |                                           |            | 322,680          |             |            |             |            |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Proceeds  exercise of warrants                                              |                                           |            |                 |             |            |             | 528,000     |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Proceeds  exercise of stock options                                         |                                           |            | 25,375           |             |            |             | 228,844     |            
|                                                
|                                                
|                                                
|                                                
|                                                 |                                                                              | Repayment of shareholder receivable                                          |                                           |            |                 |             |            |             | 500,000     |            
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                 |                                                                              |                                                                              | Net cash provided by financing activities |            |                  | 1,493,304   |            |             |             | 15,540,313  |  
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|                                                 |                                                                              |                                                                              | Net change in cash and cash equivalents   |            |                  | (12,507,163 | )          |             |             | (22,757,571 | )
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                                              |                                                                              | 12,584,949                                |            |                  |             | 48,759,109 |            
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            
|Cash and cash equivalents at end of period       |                                                                              | $                                                                            | 77,786                                    |            |                  | $           | 26,001,538 |            
|                                                 |                                                                              |                                                                              |                                           |            |                  |             |            |            

See accompanying notes.

5



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##### Table of Contents



FOURTHSTAGE TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)

|                                                                      |                                                     |                   |   |                     |  |      |            |        |           |   |            |  
|--------------------------------------------------------------------- | --------------------------------------------------- | ----------------- | - | ------------------- |  | ---- | ---------- | ------ | --------- | - | ---------- | -
|                                                                      |                                                     |                   |   |                     |  | 2001 |            | 2000  
|                                                                      |                                                     |                   |   |                     |  |      |            |       
|Supplemental disclosure:                                              |                                                     |                   |   |                     |  |      |            |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   |                     |  |      |            |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Cash paid during the period for interest:           |                   | $ | 26,250              |  |      | $          | 90,600 |          
|                                                                      |                                                     |                   |   |                     |  |      |            |       
|                                                                      | Common stock exchanged for payment of payroll taxes |                   | $ | 390,936             |  |      | $          | 0      |          
|                                                                      |                                                     |                   |   |                     |  |      |            |       
|                                                                      |                                                     |                   |   |                     |  |      |            |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Supplemental schedule of non-cash investing and financing activities: |                                                     |                   |   |                     |  |      |            |       
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Stock warrants issued for:                          |                   |   |                     |  |      |            |        |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Debt issuance       |  | $    | 1,709,643  |        |           | $ |            |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Debt extinguishment |  |      | 167,500    |        |           |   |            |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Acquisition of Webvision                            |                   |   |                     |  |      |            |        |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Assets acquired     |  |      | 1,762,441  |        |           |   |            |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Liabilities assumed |  |      | (1,564,230 | )      |           |   |            |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Warrants issued     |  |      | (215,000   | )      |           |   |            |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Goodwill recorded   |  |      | 16,789     |        |           |   |            |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Acquisition of Outernet                             |                   |   |                     |  |      |            |        |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Assets acquired     |  |      |            |        |           |   | 732,559    |  
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Liabilities assumed |  |      |            |        |           |   | (752,056   | )
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     |                   |   | Common stock issued |  |      |            |        |           |   | (7,120,000 | )
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                     | Goodwill recorded |   |                     |  |      |            |        | 7,139,497 |  

See accompanying notes.

6



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##### Table of Contents






FOURTHSTAGE TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principals for interim financial information and have been prepared on
substantially the same basis as our audited annual consolidated
financial statements. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, necessary for the fair
presentation of financial position and results of operations and cash flows
for the interim periods presented have been reflected herein. The results
of operations for the three and six months ended September 30, 2001 are not
necessarily indicative of the results to be expected for the full year.
Certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.

For further information, refer to the consolidated financial
statements and footnotes thereto included in our annual report on
Form 10-KSB for the fiscal year ended March 31, 2001.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets, effective
for fiscal years beginning after December 15, 2001. Under the new rules,
goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized but will be subject to annual impairment tests in
accordance with the statements. Other intangible assets will continue to
be amortized over their useful lives. We are currently reviewing
the impact of SFAS No. 141 and 142 and will be performing a fair-value
analysis at a later date in connection with the adoption of SFAS No. 142 on
January 1, 2002.

CHANGE IN A ESTIMATE

Due to a change in estimates, starting the quarter ended September 30,
2001 the useful life of goodwill has been increased from 3 years
to 5 years. The effect of this change on net income (loss)
before and after extraordinary items is an increase in net income of
$540 thousand or $0.03 per share for the three-month period ended
September 30, 2001.

2. FINANCING AGREEMENT

On
July 26, 2001, we entered into a $10.0 million loan agreement with the Swiss
bank Pictet & Cie. The loan is partially guaranteed by
Goldman Sachs Bank AG. Interest is payable quarterly and was calculated based
on a three-month average of LIBOR plus 1.0%. The term of the loan was one
year. Funds from this loan were used in the restructuring of our existing debts and capital lease obligations. Subsequently, on November 2,
2001, the term and interest rate on the $10.0 million loan with the
Swiss bank Pictet & Cie was renegotiated. The interest rate has been renegotiated to
8% and the term of the loan was increased from 1 year to 4 years with monthly
principal and interest payments. In connection with the loan, warrants were
issued to purchase 2,947,660 shares of our common stock with an exercise price of
$0.93 per share. The warrants were valued at $1,709,643 as a debt discount, and are being
amortized to interest expense over the new 4-year term of the loan.

3. EXTINGUISHMENT OF DEBT

During
the quarter ended September 30, 2001, we renegotiated a
significant portion of our existing debts and capital lease obligations. As
part of this restructuring, we repaid and fully satisfied our
$20.0 million convertible preferred note payable and accrued interest with
Hewlett-Packard Company (HP) through a one-time cash
payment of $7.5 million. We also settled our entire obligations

7



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##### Table of Contents



relating to a $3.8 million master capital lease and accrued
interest with Cisco Capital Corporation (Cisco) by entering into a $1.26
million note payable and issuing warrants to purchase 250,000 shares
of our common
stock with an exercise price of $1.15 per share. A $300,000 cash payment for the note
payable was made on October 23, 2001 and a second payment in the amount of
$960,000 is due on December 31, 2001. The warrants were determined to have
a value of $167,500. A total of $18.4 million has been recognized as a gain
on extinguishment of debt on the income statement.

4. ACQUISITIONS

On
April 9, 2001, we consummated a merger with Fourthstage
Technologies, Inc. (Fourthstage), a technology integration and development
company that provides enterprise integration, professional and managed
services, as well as enterprise product development to its enterprise
customers. Fourthstage is now a wholly-owned subsidiary of the Company. The
acquisition was accounted for as a purchase. Under the terms of the Merger
Agreement, the Fourthstage shareholders were entitled to receive total
consideration of (i) cash equal to $3,000,000, half of which was paid at
closing; (ii) 2,698,423 shares of our common stock; and (iii) 8,396,067 shares
of our Series A Preferred Stock with the rights and preferences set forth on
the Certificate of Designation for the Series A Preferred Stock (the
Certificate of Designation).

Upon approval of the shareholders on August 15, 2001, each share of Series
A Preferred Stock was converted automatically into one share of our common
stock, and the former Fourthstage shareholders were not entitled to receive
any accrued but unpaid dividends on the Series A Preferred Stock
that would have been
otherwise payable to them.

On
August 12, 2001, we acquired certain assets and liabilities of
Webvision, Inc. (Webvision), a web hosting and software development company.
The acquisition was accounted for as a purchase. Under the terms of the Asset
Purchase Agreement, as total consideration in the purchase, we issued
warrants to purchase 250,000 shares of our common stock with an exercise price of
$1 per share. The warrants were determined to have a value of $215,000.

5. CONVERSION OF PREFERRED STOCK

As
of August 15, 2001, the shareholders approved the conversion of
8,396,067 shares of our Series A Preferred Stock into 8,396,067
shares of our common stock.

6. EARNINGS PER SHARE

Earnings per share is computed in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share. Basic earnings per share
is computed using the weighted average number of common shares. Diluted
earnings per share is computed using the weighted average number of common
share equivalents outstanding during the period. Dilutive common share
equivalents consist of stock options and warrants using the treasury method and
dilutive convertible securities using the if-converted method. Net
income (loss) per
share is presented in the consolidated statements of operations.

7. RESTRUCTURING

During
the quarter ended June 30, 2001, we recorded a
restructuring charge of $5.9 million related to the transition
from our web-hosting and co-location business model to the Fourthstage business
model, which provides integration, professional and managed services to
enterprise customers.

This restructuring eliminated redundant and unnecessary positions and
resulted in a reduction in our workforce of approximately 45%. Employee
termination benefits include severance and other benefits as well as the
compensation expense related to restricted stock that vested upon the
termination of certain employees. The cost of rent for facilities that are
to be closed was accrued and is included in lease termination costs.

During
the quarter ended September 30, 2001, the restructuring accrual
was reduced by $601 thousand based on changes in estimates.

8



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##### Table of Contents



The restructuring is summarized as follows:

|                              |  |                    |       |                  |  |      |         |                          |  |   |     | 
|----------------------------- |  | ------------------ | ----- | ---------------- |  | ---- | ------- | ------------------------ |  | - | --- | 
|                              |  | Charged to expense |       |                  |  |      |         | Balance
at September 30,
|                              |  | in 2001            |       | Utilized in 2001 |  | 2001
|                              |  |                    |       |                  |  |     
|                              |  | (in
thousands)    
|Employee termination
benefits |  | $                  | 4,220 |                  |  |      | ($3,885 | )                        |  | $ | 335 | 
|                             
|                             
|                             
|                             
|Lease termination costs       |  |                    | 1,079 |                  |  |      | (779    | )                        |  |   | 300 | 
|                              |  |                    |       |                  |  |      |         |                          |  |   |     | 
|Restructuring charge          |  | $                  | 5,299 |                  |  |      | ($4,664 | )                        |  | $ | 635 | 
|                              |  |                    |       |                  |  |      |         |                          |  |   |     | 

8. SUBSEQUENT EVENTS

In November 2001, additional debt settlements were completed which will be
paid in full subsequent to quarter end. These additional settlements will
result in an additional gain from debt extinguishment in the coming quarter.

On
November 2, 2001, the term and interest rate on the $10.0
million loan with the Swiss
bank Pictet & Cie was renegotiated. The interest rate has
been renegotiated to 8% and the term of the loan was increased from 1 year to 4
years with monthly principal and interest payments.




ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This quarterly report on Form 10-QSB contains forward-looking statements,
which reflect our current views with respect to future events and
financial performance. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or those anticipated. Words used in this report such as
believe, anticipate, expect, may, will and similar expressions are
intended to identify forward-looking statements but are not the exclusive means
of identifying such statements. Our actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. We do not undertake any
obligation to update or revise these forward-looking statements to reflect any
future events or circumstances. Readers are urged to carefully review and
consider the various disclosures we made in this report, including
those under the section entitled Risk Factors, Business and elsewhere in
our Securities and Exchange Commission filings, including our Annual Report on
Form 10-KSB for the fiscal year ended March 31, 2001.

9



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##### Table of Contents



Overview

As a result of the April 9, 2001 merger between Aperian, Inc. and
Fourthstage, a privately held Arizona-based company, we have begun a
transition from our former web-hosting and co-location business model toward the
Fourthstage business model, which provides integration, professional and
managed services to enterprise customers. Fourthstage has demonstrated
this business model to be profitable and capable of producing positive cash
flows in their fiscal year 2000 performance, which ended December 31, 2000.
Much of this business transition has been completed since the merger.

Related
to the merger, our board has approved the relocation of
its headquarters to the main office of Fourthstage, in Phoenix. The board has
also adopted a calendar-based fiscal year, which will result in a shortened
year (stub year) over the remainder of calendar year 2001. Adoption of the
change in name from Aperian, Inc. to Fourthstage Technologies, Inc. has been
approved by our shareholders during the Annual Meeting held on
August 15, 2001. In conjunction with the change in our company
name, the board approved a change in the company ticker symbol to
FOUR.

Going
forward, we intend to provide integration, professional
and managed services to enterprise-level customers. Aspects of our
former stand-alone business will be retained, such as the
capabilities of our Network Operations Control Center, although our business will
increasingly resemble the Fourthstage business. In the process, we
will target a different set of customers, offering a different set of products
and services than has formerly characterized its business. We will
also establish a broader physical presence in the continental United States.
Together, we now operate from offices in Phoenix, Arizona; Austin,
Houston and Dallas, Texas; Atlanta, Georgia; Tampa, Florida; and Torrance,
California.

Results of Operations

Revenues. Total revenues increased from $1.8 million in the three months ended
September 30, 2000 to $5.2 million in the three months ended September 30,
2001, an increase of $3.4 million or 188%. Total revenues increased from $2.7
million in the six months ended September 30, 2000 to $12.4 million in the six
months ended September 30, 2001, a increase of $9.7 million or 358%. The
increase in revenues is due primarily from a shift in focus from our
data center and co-location business model to the Fourthstage business model, which
provides integration and professional as well as managed services to
our enterprise customers.

Costs of Revenues. Total costs of revenues increased from $2.5 million in the
three months ended September 30, 2000 to $5.7 million in the three months ended
September 30, 2001, an increase of $3.2 million 131%. Total costs of revenues
increased from $4.1 million in the six months ended September 30, 2000 to $14.1
million in the six months ended September 30, 2001, an increase
of $10.0 million
or 244%. The increase in costs of revenues is due to the completion of
additional data centers since the same period of the last fiscal year. The current gross
deficit reflects the high fixed cost structure of our co-location and
data center business model.

Operating Expenses

Sales, general and administrative expenses. Total sales, general and
administrative expenses decreased from $7.6 million in the three months ended
September 30, 2000 to $4.8 million in the three months ended September 30,
2001, a decrease of $2.8 million or 37%. Total sales, general and
administrative expenses decreased from $11.7 million in the six months ended
September 30, 2000 to $11.2 million in the six months ended September 30, 2001,
a decrease of $475 thousand or 4%. The decrease is largely due to
layoffs in the six months ended September 30, 2001 and a favorable use tax judgment
that allowed the Company to reverse a $400 thousand tax accrual in the quarter ended
September 30, 2001.

Goodwill amortization. Goodwill amortization increased from $238 thousand for
the quarter ended September 30, 2000 to $844 thousand for the quarter ended
September 30, 2001, an increase of $606 thousand. Goodwill amortization
expenses increased from $238 thousand for the six months ended September 30,
2000 to $2.15 million for the six months ended September 30, 2001, an increase
of $1.9 million. The increase is entirely due to the goodwill
resulting from the Fourthstage merger.

10



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##### Table of Contents



Restructuring Charge. In the three months ended
September 30, 2001, we recorded a restructuring credit of $0.6 million related to changes in estimates
of the previous quarters restructuring accrual. In the quarter ended June 30,
2001, we recorded a restructuring charge of $5.9 million related to
the transition of our web-hosting and co-location business model to the
Fourthstage business model, which provides integration, professional and
managed services to enterprise customers.

Interest income (expense). Net interest expense for the three and six months
ended September 30, 2001 was $546 thousand and $1.3 million, respectively,
resulting primarily from interest on outstanding notes payable and capital
leases. Net Interest income for the three and six months ended September 30,
2000, was $380 thousand and $884 thousand, respectively. This is attributable
to interest earned on the proceeds from the various private placement
of our common stock.

Liquidity and Capital Resources

As of September 30, 2001, we had cash of $78 thousand, a decrease of $12.5
million from March 31, 2001, our previous fiscal year end.

Our operating activities resulted in net cash outflows of $11.9 million in
the six months ended September 30, 2001, compared to $20.7 million in the six
months ended September 30, 2000. The cash outflows from operating losses,
decreases in accrued expenses were partially offset by decreases in other
current assets, depreciation, amortization of intangibles, including goodwill
from the Fourthstage merger, and a net restructuring charge of $5.3 million
less cash paid of $2.3 million.

Cash
used in investing activities was $2.1 million for the six months ended
September 30, 2001, resulting from the Fourthstage merger and the purchase of
property, plant and equipment. Net cash used in investing activities was $17.6
million for the six months ended September 30, 2000, resulting primarily from
the purchase of property, plant and equipment.

Cash provided in financing activities was $1.5 million for the six months
ended September 30, 2001, resulting primarily from the proceeds of the Pictet &
Cie notes payable, offset by payments on the HP notes payable and capital
leases. Net cash provided by financing activities was $15.5 million for the six
months ended September 30, 2000, resulting primarily from proceeds received
from a $10.0 million notes payable, equipment financing, exercises of warrants
and options and the repayment of a shareholder receivable, offset by payments
on notes payable and capital leases

Our
management believes we will need to raise additional capital as well as
continue to reduce expenses to sustain our operations in 2001.
Management has been in discussions with several financing alternatives
utilizing both equity and debt alternatives. The failure of management to
accomplish these initiatives will adversely affect our business,
financial conditions, results of operations and its ability to continue as
a going concern.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings.

There are no material changes to the information included in Item 3 
Legal Proceedings of our Annual Report on Form 10-KSB for the fiscal year ended
March 31, 2001.




Item 2. Changes in Securities and Use of Proceeds.

(a)  None

(b) 
At the Annual Shareholders Meeting, our shareholders
approved the conversion of 8,396,067 shares of our Series A Preferred Stock paid to
the shareholders of Fourthstage Technologies, Inc. into 8,396,067
shares of our common stock.

11



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##### Table of Contents



(c) 
On September 24, 2001, we issued 645,362 shares of our common stock
to employees and board members for a total consideration of $322,681.

The
issuance of the above securities was determined to be exempt from
registration under the Securities Act in reliance on Regulation D promulgated
under the Securities Act as a transaction by an issuer not involving any public
offering. In addition, the recipients of securities represented their
intentions to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof, or were informed of
the restrictions on resale of such securities, and appropriate legends were
affixed to the share certificates issued in these transactions. All recipients
had adequate access to information about us.




Item 3. Defaults Upon Senior Securities.

None.




Item 4. Submission of Matters to a Vote of Security Holders.

The 2001 Annual Meeting of Shareholders (the Meeting) was held in
Scottsdale, Arizona on August 15, 2001. Shareholders were asked to approve the
following four initiatives: (1) elect five directors to the board; (2) approve
an amendment to the certificate of incorporation to change our company name
from Aperian, Inc. to Fourthstage Technologies, Inc.; (3) approve the
conversion of the Series A Cumulative Convertible Preferred Stock into shares
of commons stock; and, (4) approve an amendment to the 2000 Stock Option Plan
to increase the number of shares that may be issued under the Plan from
4,000,000 to 7,500,000.

Shareholders approved each of the four proposals submitted for
consideration. There were 3,635 accounts representing 16,197,050 shares as of
the July 9, 2001 record date. Of the total, shareholders holding 11,718,509, or
approximately 72 percent of the shares eligible to vote were present in person
or by proxy at the meeting.

With respect to proposal one, regarding the election of directors,
shareholders approved the election of the following five nominees: Kevin Craig,
David Ghermezian, Davinder Sethi, Joe Tippens and Mark Weiss. Each nominee
received support from at least 70 percent of the total shares outstanding, and
more than 95 percent of the shares represented at the meeting. The term for
each director will expire at the 2002 Annual Meeting of Shareholders.

With respect to proposal two, concerning the amendment to the certificate
of incorporation, wherein we sought to change our name to Fourthstage
Technologies, Inc., more than 99 percent of the shares represented at the
meeting were voted in support for our proposal. Of the total shares
outstanding, we received support from over 72 percent of the shares. Under
Delaware law, the affirmative vote of the holders of a majority of the
outstanding shares entitled to vote is required to adopt an amendment to the
certificate of incorporation to change the company name.

With respect to proposal three, wherein we sought approval to convert the
Companys Series A Cumulative Convertible Preferred Stock into shares of common
stock, the holders of the 2,698,423 shares of preferred stock were not eligible
to vote. Thus, with respect to proposal three, 13,498,627 shares were eligible
to vote. Of the shares represented at the meeting, 54 percent voted in support
of our proposal. For approval, this matter required the affirmative vote of a
majority of the total votes cast in person or by proxy at the meeting.

With respect to proposal four, regarding an amendment to increase in the
number of shares that may be issued under the Companys 2000 Stock Option Plan,
more than 57 percent of the shares represented at the meeting voted in support
of this initiative. The amendment increased the maximum number of shares that
may be issued under the Plan to 7,500,000 shares. For approval, this matter
required the affirmative vote of a majority of the total votes cast in person
or by proxy at the meeting.

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Item 5. Other Information.

None.




Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits.

None.

(b)  Reports on Form 8-K.August 15,
2001  Item 5. Other Events and Item 7. ExhibitsAugust 17, 2001  Item 5. Other Events

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

FOURTHSTAGE TECHNOLOGIES, INC.

|                        |  |     |  |                                                                    
|----------------------- |  | --- |  | -------------------------------------------------------------------
|Date: November 14, 2001 |  | By: |  | /s/ Kevin Craig

Kevin Craig, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
this Registrant and in the capacities and on the dates indicated.

|                                          |  |                                       |  |                  
|----------------------------------------- |  | ------------------------------------- |  | -----------------
|Signature                                 |  | Title                                 |  | Date             
|                                          |  |                                       |  |                  
|                                          |  |                                       |  |                  
|                                         
|/s/ Kevin Craig
      Kevin Craig         |  | President and Chief Executive Officer |  | November 14, 2001
|                                         
|                                          |  |                                       |  |                  
|                                         
|/s/ Michelle Merhar
      Michelle Merhar |  | Chief Accounting Officer              |  | November 14, 2001

14