<PAGE>

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                  FORM 10-QSB


(X)  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934
     For the quarterly period ended September 30, 1999.

( )  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
     For the transition period from ___________ to ___________.

                      Commission File Number:   33-18600-D
                                                ----------


                             SourcingLink.net, Inc.
--------------------------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)


     DELAWARE                                    98-0132465
     --------------------------------            ----------------
     (State or other jurisdiction                (IRS Employer
     of incorporation or organization)           Identification No.)


          16855 WEST BERNARDO DRIVE, SUITE 260, SAN DIEGO, CA  92127
--------------------------------------------------------------------------------
                   (Address of principal executive offices)

                                (858) 385-8900
--------------------------------------------------------------------------------
                          (Issuer's telephone number)

     FORMER ADDRESS: 650 CASTRO STREET, SUITE 210, MOUNTAIN VIEW, CA 94041
--------------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    report)

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.

                                X    YES        NO
                             -------     ______

Shares of Common Stock outstanding as of November 9, 1999: 7,082,661 shares
<PAGE>

                            SourcingLink.net, Inc.


                                   CONTENTS
                                   --------

<TABLE>
<CAPTION>
                                                                                     Page
<S>                                                                                  <C>
PART I         FINANCIAL INFORMATION

Item 1         Financial Statements

                 Consolidated Condensed Balance Sheets as of
                 September 30, 1999 (unaudited) and March 31, 1999                      3

                 Consolidated Condensed Statements of Operations
                 for the three and six months ended September 30, 1999
                 and 1998 (unaudited)                                                   4

                 Consolidated Condensed Statements of Cash Flows
                 for the six months ended September 30, 1999 and 1998 (unaudited)       5

                 Notes to Consolidated Unaudited Financial Statements                   6

Item 2         Management's Discussion and Analysis of Financial Condition and Results
               of Operations                                                            7

PART II        OTHER INFORMATION

Item 2         Changes in Securities and Use of Proceeds                               14

Item 4         Submission of Matters to a Vote of Security Holders                     15

Item 5         Other Information                                                       16

Item 6         Exhibits and Reports on Form 8-K                                        16

               Signature                                                               18
</TABLE>

                                       2
<PAGE>

PART I    FINANCIAL INFORMATION

Item 1    Financial Statements

                            SourcingLink.net, Inc.
                     Consolidated Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                                  September 30,                     March 31,
ASSETS                                                                1999                            1999
                                                                 ---------------                ----------------
Current assets:                                                    (Unaudited)
<S>                                                              <C>                            <C>
    Cash and cash equivalents                                     $    7,259,463                  $    1,266,880
    Accounts receivable, net                                             191,008                         222,769
    Other current assets                                                 166,375                           7,111
                                                                  --------------                  --------------
         Total current assets                                          7,616,846                       1,496,760

Property and equipment, net                                              197,513                         185,286
Other non-current assets                                                  81,642                          12,839
                                                                  --------------                  --------------
         Total assets                                             $    7,896,001                  $    1,694,885
                                                                  ==============                  ==============

LIABILITIES
Current liabilities:
    Accounts payable and accrued liabilities                      $    1,058,066                  $      707,121
    Deferred revenue and other                                           115,911                          42,437
                                                                  --------------                  --------------
         Total current liabilities                                     1,173,977                         749,558

STOCKHOLDERS' EQUITY
Series A convertible preferred stock                                       3,233                           3,816
Common stock                                                               7,051                           5,631
Additional paid-in capital                                            22,687,133                      15,315,395
Common stock note receivable                                             (40,000)                        (40,000)
Accumulated deficit                                                  (16,016,394)                    (14,420,409)
Cumulative foreign currency translation adjustments                       81,001                          80,894
                                                                  --------------                  --------------
    Total stockholders' equity                                         6,722,024                         945,327
                                                                  --------------                  --------------
         Total liabilities and stockholders' equity               $    7,896,001                  $    1,694,885
                                                                  ==============                  ==============
</TABLE>

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

                                       3
<PAGE>

                            SourcingLink.net, Inc.
                Consolidated Condensed Statements Of Operations
                                  (Unaudited)


<TABLE>
<CAPTION>
                                           Three months ended September 30,        Six months ended September 30,
                                           -------------------------------        -------------------------------
                                              1999                  1998              1999                1998
                                           ---------             ---------        ------------         ----------
<S>                                        <C>                   <C>              <C>                  <C>
Revenue:
     Network                               $ 197,938             $ 149,146        $   402,565          $  291,367
     Consulting                               89,749                98,144            154,498             203,144
                                           ---------             ---------         ----------          ----------
                                             287,687               247,290            557,063             494,511

Cost of revenue:
     Network                                  80,681                61,172            164,032             119,630
     Consulting                               64,749                98,144            129,498             203,144
                                           ---------             ---------         ----------          ----------
                                             145,430               159,316            293,530             322,774

Gross profit                                 142,257                87,974            263,533             171,737

Operating expenses:
    Selling, general and
     administrative                          824,300               400,728          1,436,989           1,265,596
    Product development                      286,923               144,619            484,848             270,188
                                           ---------             ---------         ----------          ----------
Total operating expenses                   1,111,223               545,347          1,921,837           1,535,784

Operating loss                              (968,966)             (457,373)        (1,658,304)         (1,364,047)

Other income (expense), net                    2,592                82,678             (1,735)            103,391
Interest income                               53,220                 3,108             64,054               4,242
                                           ---------             ---------         ----------          ----------
Net loss                                    (913,154)             (371,587)        (1,595,985)         (1,256,414)

Preferred dividend                                 -                     -                  -             (68,463)
                                           ---------             ---------         ----------          ----------
Net loss attributed to common
 stockholders                              $(913,154)            $(371,587)       $(1,595,985)        $(1,324,877)
                                           =========             =========         ==========          ==========

Net loss per share (basic and
 diluted)                                  $   (0.14)            $   (0.08)        $    (0.26)         $    (0.28)
                                           =========             =========         ==========          ==========

Weighted average number of shares
used in per share calculation
 (basic and diluted)                       6,482,378             4,752,840          6,101,628           4,672,803
                                           =========             =========         ==========          ==========
</TABLE>

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

                                       4
<PAGE>

                            SourcingLink.net, Inc.
                Consolidated Condensed Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                                 Six months ended September 30,
                                                                                               ----------------------------------
                                                                                                   1999                 1998
                                                                                               ------------         -------------
<S>                                                                                            <C>                  <C>
Cash flows from operating activities:
   Net loss                                                                                    $ (1,595,985)        $  (1,256,414)
Adjustments to reconcile net loss to net cash used  in operating activities:
   Depreciation and amortization expense                                                             55,369                39,496
   Unrealized exchange (gain) loss                                                                    1,209              (107,738)
   Loss on disposal of fixed assets                                                                       -                71,243
   Expense related to stock options and warrants                                                          -               370,693
   Changes in operating assets liabilities-net                                                      232,158               103,891
                                                                                               ------------         -------------
     Net cash used in operating activities                                                       (1,307,249)             (778,829)

 Cash flows from investing activities:
    Purchases of fixed assets                                                                       (67,596)             (143,370)
    Proceeds from disposal of fixed assets                                                                -                 4,413
                                                                                               ------------         -------------
      Net cash used in investing activities                                                         (67,596)             (138,957)

Cash flows from financing activities:
   Proceeds from issuance of common stock                                                         7,309,076               846,159
   Proceeds from exercise of stock options                                                           63,500                     -
   Payments on capital leases                                                                        (4,045)               (4,874)
                                                                                               ------------         -------------
      Net cash provided by financing activities                                                   7,368,531               841,285

Effect of exchange rate changes on cash                                                              (1,103)              (13,622)
                                                                                               ------------         -------------
      Net increase (decrease) in cash and cash equivalents                                        5,992,583               (90,123)

Cash and cash equivalents, beginning of the period                                                1,266,880               475,145

                                                                                               ------------         -------------
Cash and cash equivalents, end of the period                                                   $  7,259,463         $     385,022
                                                                                               ============         =============
</TABLE>

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

                                       5
<PAGE>

                            SourcingLink.net, Inc.
             NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS

1.   Basis of presentation:
---------------------------

On July 20, 1999, the stockholders of the Company approved a proposal to change
the Company's name from QCS.net Corporation to SourcingLink.net, Inc.  The name
change became effective as of that date upon the Company's filing of its Amended
and Restated Certificate of Incorporation with the Delaware Secretary of State.

The interim consolidated condensed financial statements of SourcingLink.net,
Inc. ("SourcingLink" or the "Company") are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments), which are, in the opinion of
management, necessary for a fair presentation, in all material respects, of the
financial position and operating results of the Company for the interim periods.
The results of operations for the three and six months ended September 30, 1999
are not necessarily indicative of the results to be expected for the entire
fiscal year ending March 31, 2000.  The year-end balance sheet data at March 31,
1999 was derived from the audited financial statements. All prior period share
and per share amounts have been restated to reflect the 1 for 4 reverse stock
split, which was effective August 25, 1999.

The consolidated financial statements include the accounts of SourcingLink.net,
Inc. and its wholly owned subsidiary.  All significant intercompany transactions
and account balances have been eliminated in consolidation.

This financial information should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Form 10-KSB for
the fiscal period ended March 31, 1999.

Effective April 1, 1999, the Company changed its year end to March 31, from June
30. The corresponding comparative Statements of Operations and Cash Flows for
the six months ended September 30, 1998 have been presented accordingly.

2.   Computation of net loss per share:
---------------------------------------

Net loss per share is presented on a basic and diluted basis.  Basic earnings
per share is computed by dividing the income available to holders of Common
Stock by the weighted average number of shares of Common Stock outstanding for
the period.  Diluted earnings per share are computed by giving effect to all
dilutive potential shares of Common Stock that were outstanding during the
period.  For the Company, dilutive potential shares of Common Stock consist of
incremental shares of Common Stock issuable upon the exercise of stock options
and warrants and conversion of preferred stock for all periods.

Basic and diluted earnings per share are calculated as follows for the three and
six months ended September 30, 1999 and 1998 (unaudited):

<TABLE>
<CAPTION>
                              Three months ended September 30,              Six months ended September 30,
                          ----------------------------------------      ----------------------------------------
Basic and diluted:              1999                   1998                   1999                    1998
                          -----------------     ------------------      -----------------     ------------------
<S>                       <C>                   <C>                     <C>                   <C>
Net loss attributed to
 Common shareholders      $        (913,154)    $         (371,587)     $      (1,595,985)    $       (1,324,877)
                          =================     ==================      =================     ==================
Weighted average shares
 outstanding for the
 period                           6,482,378              4,752,840              6,101,628              4,672,803
                          -----------------     ------------------      -----------------     ------------------
Net loss per share        $           (0.14)    $            (0.08)     $           (0.26)    $            (0.28)
                          =================     ==================      =================     ==================
</TABLE>


All prior period share and per share amounts have been restated to reflect the 1
for 4 reverse stock split, which was effective August 25, 1999.

                                       6
<PAGE>

At September 30, 1999, the Company had 944,250 options and 896,059 warrants
outstanding to purchase shares of Common Stock compared to 896,270 options and
844,660 warrants outstanding at March 31, 1999. These options and warrants were
not included in the computation of diluted earnings per share because their
inclusion would be anti-dilutive.

3.   Reclassification:
----------------------

Certain prior period balances have been reclassified to conform to the current
period's presentation. These reclassifications did not affect the loss or total
stockholders' equity for the periods presented.

4.  Comprehensive loss:
-----------------------

Comprehensive loss for the three months ended September 30, 1999 and 1998 was
$919,111 and $461,917, respectively. For the six months ended September 30, 1999
and 1998 the comprehensive loss was $1,595,878 and $1,376,435, respectively. The
principal difference between comprehensive loss and net loss is the treatment of
cumulative foreign currency translation adjustments.

5.  Issuance of Common Stock:
-----------------------------

In August 1999, the Company completed a private placement of Common Stock,
primarily to institutional investors. The investment banking firm of Needham and
Co. acted as placement agent for the offering which totaled 1,258,000 Common
shares at a price of $6.40 per share, as adjusted for the August 25, 1999 1 for
4 reverse stock split. Gross proceeds were $8.1 million, and net proceeds, after
placement agent fees and other offering costs, were approximately $7.3 million.
The net proceeds of the offering are expected to be used primarily for general
working capital and corporate purposes, including product development and sales
and marketing of the Company's Internet solutions.

6.   Recent pronouncements:
---------------------------

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." The Company has
adopted SOP No. 98-1 as of the first quarter of fiscal year 2000. The adoption
of SOP No. 98-1 did not have a material impact on the Company's financial
statements.

Item 2    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Certain statements contained in this Report, including, without limitation,
statements containing the words "believes," "anticipates," "expects" and the
like, constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. These factors include, but are not limited to,
the factors discussed under the caption "Risk Factors" below, and are discussed
in more detail in the Risk Factors section of the Company's Annual Report on
Form 10-KSB for the fiscal year ended March 31, 1999. Given these uncertainties,
readers are cautioned not to place undue reliance on such forward-looking
statements. The Company disclaims any obligation to update any such factors or
to announce publicly the results of any revisions of the forward-looking
statements contained or incorporated by reference herein to reflect future
events or developments.

Overview

The Company has developed an Internet-based turnkey solution for business-to-
business eCommerce that enables retailers to organize, automate and
significantly reduce the cost of their merchandise sourcing activities by
connecting directly with their retail merchandise suppliers around the globe.
The Company's revenues are generated principally from network revenues
consisting of fees for access to and use of the Company's solutions. These fees
include initial registration fees, fixed monthly or annual subscription fees or
"pay-as-you-go" transactional fees.

                                       7
<PAGE>

Effective April 1, 1999, the Company discontinued offering the pay-as-you-go
transactional fee option for new subscribers.

Historically, network revenues have been primarily from customer use of the
Company's private network desktop solution. In February 1999, the Company began
a rollout of its new Internet solution to selected merchandise suppliers of the
Company's retailer subscribers. While there continues to be revenue from the
desktop solution, the Company's focus is now centered on the broad Internet
solution, and current retailer customers are either adopting or have committed
to convert to the Internet solution.

The Company entered into a multi-faceted eCommerce agreement with IBM in the
third quarter of fiscal 1998, as an amendment to an earlier 1996 agreement under
which the Company became an active participant in IBM's e-commerce group. Under
the 1998 contract, referred to as the IBM Agreement or the Agreement in the
discussion below, IBM has been providing most of the sales and marketing effort,
worldwide help desk support and project management for the Company, as well as
the network and server infrastructure supporting the Company's solution.
Payments to IBM for these services have been based on a percentage of sales
under a revenue sharing provision of the Agreement. These payments to IBM
comprise the majority of cost of sales for network revenue.

The Company has assisted IBM with sales and marketing of the Company's solution,
and has billed IBM at cost for such services. These billings to IBM have been
recorded as consulting revenue. The Company's new strategy and intent is to
bring sales and project management in-house; therefore, the Company does not
expect to continue providing or billing these consulting services to IBM after
September 30, 1999.

Accounting for New IBM Agreements

Effective October 1, 1999, the Company entered into a new network services and
infrastructure agreement with IBM. In addition, the Company believes it has
nearly completed negotiations on a new agreement to define its on-going co-
marketing relationship with IBM. As mentioned above, the cost of these services
was historically based on revenue sharing, and was all included in cost of
revenue. Effective October 1, 1999, the Company expects that payments to IBM
will be accounted for as described below.

For the infrastructure agreement, which includes the housing of servers in IBM's
secure data management center, the Company will pay IBM under a combined fixed
and variable price structure, based upon the level of service. Payments for
these services will be accounted for as cost of revenue.

For the co-marketing agreement, which is anticipated to include service for the
active promotion of the Company's merchandise sourcing solution in the US, use
of the IBM logo and e-business mark on Company marketing material and our
website, and participation with IBM at its e-commerce trade show booths,
payments will be made on a revenue sharing basis and will be accounted for as
sales and marketing expense.

Accumulated Losses

From its inception in 1993 through September 30, 1999, the Company has generated
an accumulated deficit of $16.0 million. Since inception, the Company has
incurred substantial costs to develop its technology, to create, introduce and
enhance its sourcing solution, to establish marketing and distribution
relationships, to recruit and train a sales and marketing group and to build an
administrative organization. The Company's prospects must be considered in light
of its operating history, and the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new, unproved and rapidly evolving markets. The limited operating
history of the Company makes the prediction of future results of operations
difficult or impossible and, therefore, there can be no assurance that the
Company will grow or that it will be able to achieve or sustain profitability.
The Company's success depends to a significant degree upon the Company's ability
to raise additional capital, and continued contributions of key management,
engineering, sales and marketing, and finance personnel, certain of whom would
be difficult to replace. The loss of the services of any of the key personnel or
the inability to attract or retain qualified management and other personnel in
the future, or delays in hiring required personnel, could have a material
adverse effect on the Company's business, operating results or financial
condition. Also, the Company's success is highly dependent on its ability to
execute in a timely manner its new sales and marketing plan, of which no
assurance can be made.

                                       8
<PAGE>

Change in Fiscal Year

In May 1999, the Company's Board of Directors approved a change in the Company's
fiscal year end from June 30 to March 31, commencing April 1, 1999.  In the
comparison of the three and six-month periods ended September 30, 1999 and 1998,
the current fiscal year's periods represent the second quarter and first six
months of fiscal year 2000. The 1998 comparative three-month period is the first
quarter of old fiscal year 1999. The 1998 comparative six-month period is the
fourth quarter of old fiscal year 1998 plus the first quarter of old fiscal year
1999.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1999
AND 1998

Revenues

Total revenues for the three months ended September 30, 1999 increased $40,000,
or 16%, to $288,000 from $247,000 in the three months ended September 30, 1998.
This includes an increase in Network revenues of $49,000, or 33%, to $198,000
from $149,000, which was primarily attributable to revenue from the Company's
new Internet sourcing solution. The Company began rolling-out its Internet
solution in February 1999, and therefore was not receiving revenue from this
solution in the three-month period ended September 30, 1998. Consulting revenues
decreased $8,000, or 9%, to $90,000 for the three months ended September 30,
1999 from $98,000 for the same period one year ago. Consulting revenues are
derived primarily from the IBM Agreement, for sales, marketing and project
management assistance provided to IBM by the Company. This assistance to IBM has
been reduced in scope as compared to the prior year's three month period, and,
as mentioned above, the Company has reduced both its reliance on, and its
assistance to, IBM's sales and project management efforts. Under the new IBM
agreements discussed above, effective October 1, 1999 the Company will not
receive any further Consulting revenue from IBM. In addition to the IBM revenue
during the quarter, the Company also received Consulting revenue from one of its
retailer customers for custom modifications to the desktop solution. These fees
offset a portion of the decline, as compared to the prior year, in Consulting
revenue from IBM.

Total revenues for the six months ended September 30, 1999 increased $63,000, or
13%, to $557,000 from $495,000 in the six months ended September 30, 1998.  The
six-month increase in Network revenues was $111,000, or 38%, to $403,000 from
$291,000 last year.  As in the three-month period, this increase is primarily
attributable to the new Internet sourcing solution which the Company began
rolling-out in February 1999.  Consulting revenues for the current year's six-
month period decreased $49,000, or 24%, to $154,000 from $203,000 for the six-
month period one year ago.  This decrease is attributable to the reduction in
the assistance to IBM this year, as described above.

Sales of the Company's Internet solution generally require adoption by retailers
and then a roll-out to the retailer's merchandise suppliers which the Company
expects will result in lengthy sales and implementation cycles.  Revenues from
the Internet solution in the current year are primarily from subscriptions among
the groups of suppliers that have been made available for roll-out by two of the
Company's current retailer customers.

Cost of Revenues

For the quarter ended September 30, 1999, the cost of Network revenues increased
$20,000, or 32%, to $81,000 from $61,000 in the quarter ended September 30,
1998.  For the six months ended September 30, 1999, the cost of Network revenues
increased $44,000, or 37%, to $164,000 from $120,000 during the comparable six-
month period one year ago.  The cost of Network revenues consists primarily of
revenue sharing payments under the IBM Agreement, and the increase in these
costs for both the three and six-month periods is largely due to the increase in
revenue.

The cost of Consulting revenue was $65,000 in the second quarter of this year,
compared to $98,000 in the quarter ended September 30, 1998. For the six-month
periods, the cost of Consulting revenue was $129,000 in the current year
compared to $203,000 in the six months ended September 30, 1998. Consulting
revenues from IBM, which comprise the majority of the total Consulting revenues
received, have a cost of the revenue equal to the revenues received. The
reduction in these costs for both the three and six-month periods is due to the
decrease in the Consulting activities with IBM, as previously described.

                                       9
<PAGE>

Overall, gross profit in the current quarter increased $54,000 to $142,000, or
49% of revenues, from $88,000, or 36% of revenues, in the three months ended
September 30, 1998.  For the six-month periods, overall gross profit increased
to $264,000, or 47% of revenues in the current year, from $172,000, or 35% of
revenues in the six months ended September 30, 1998.  The increase in gross
profit as a percent of sales for both the three and six-month periods is largely
attributable to the reduction in consulting revenue, as the majority of such
revenue is billed at cost and there is no associated gross profit margin.

Under the new infrastructure agreement with IBM, effective October 1, 1999,
network and other infrastructure support costs will not be as closely tied to
revenue sharing, and will be relatively fixed over varying levels of activity;
accordingly, future fluctuations in revenue may have a greater impact on gross
profit margins than in prior periods.


Operating Expenses

Selling, General and Administrative Expenses. In the quarter ended September 30,
1999, the Company's selling, general and administrative expenses increased
$424,000, or 106%, to $824,000 from $401,000 in the quarter ended September 30,
1998. The Company has expanded its management team, and began hiring an internal
sales and project management staff during the second quarter of the current
year. The associated labor and travel costs, as well as costs related to
shareholder relations and directors and officers' insurance, comprise the
majority of the increase in selling, general and administrative expenses
compared to the same period in the prior year. For the six months ended
September 30, 1999, selling, general and administrative expenses increased
$171,000, or 14%, to $1.44 million from $1.27 million in the same six months of
the prior year. The increase in these costs for the six-month period is not as
great as the current quarter increase because of charges taken in the three
months ended June 30, 1998 with no similar charges this year. The charges taken
in the quarter ended June 30, 1998 related to the issuance of warrants, and to
legal and accounting fees associated with the closure of offices in France and
Hong Kong. Such costs more than offset the increased expenses associated with
the expanded management team in the first quarter of the current fiscal year.

Product Development Expenses.  Product development expenses during the three
months ended September 30, 1999 increased by $142,000, or 98%, to $287,000 from
$145,000 in the three months ended September 30, 1998.  For the six months,
product development expenses increased $215,000, or 79%, to $485,000 from
$270,000 for the same period last year.  The increase in product development
expenses for both the three and six-month periods is primarily labor and support
costs associated with continued enhancement of the Company's Internet solution,
including new management and development personnel.

The Company expects that product development and selling, general and
administrative expenses will increase as it expands its operations, increases
its in-house sales and project management capabilities, and incurs additional
labor and other costs related to the enhancement and sales of its solutions.

Other Income (Expense), net and Interest Income

The principal component of other income (expense), net is the exchange gain or
loss on foreign currency translations with the Company's subsidiary in France.
Primarily as a result of these foreign currency translations, other income
(expense), net was income of $3,000 in the current year's second quarter
compared to income of $83,000 in the same period one year ago. For the six-month
periods, the current year result is an expense of $2,000 compared to income of
$103,000 in the prior year. Interest income increased to $53,000 in the current
year's second quarter from $3,000 in the quarter ended September 30, 1998. For
the six months ended September 30, 1999 and 1998, interest income was $64,000
from $4,000, respectively. During August 1999, the Company completed a private
placement of 1,258,000 shares of its Common Stock, primarily to a limited number
of institutional investors. Gross proceeds of the offering were $8.1 million,
and after placement agent fees and other offering costs, net proceeds of $7.3
million were received by the Company. The increases in interest income for the
three and six-month periods are primarily attributable to the increased cash
available for investment as a result of this private placement.

Income Taxes

The Company recorded net losses of $1.6 million and $1.3 million during the six
months ended September 30, 1999 and 1998, respectively. Accordingly, no
provision for income taxes was recorded in any of these periods. As of

                                       10
<PAGE>

September 30, 1999, the Company had net operating loss carryforwards for United
States income tax purposes of approximately $9 million.  These losses expire at
various dates between 2002 and 2020.  As of September 30, 1999, the Company also
had net operating loss carryforwards for income tax purposes in France of
approximately $3.7 million which expire at various dates between 1999 and 2003.
A valuation allowance has been recorded for the tax benefit of the net operating
loss carryforwards and the deferred tax assets of the Company due to the fact
that, as of the present time, it is more likely than not that such assets will
not be realized.

Fluctuations in Quarterly Operating Results

Our quarterly operating results have varied significantly in the past and will
likely vary significantly in the future. We believe that period-to-period
comparisons of our results of operations are not meaningful and should not be
relied upon as indicators of future performance. Our operating results could
fall below the expectations of securities analysts or investors in some future
quarter or quarters. Our failure to meet these expectations would likely
adversely affect the market price of our Common Stock.

Our quarterly operating results may vary depending on a number of factors,
including: demand for our solution and services; actions taken by our
competitors, including new product introductions and enhancements; delays or
reductions in spending for, or the implementation of, supply chain management
solutions by our potential customers as companies attempt to stabilize their
computer systems prior to January 1, 2000 in order to reduce the risk of
computer system problems associated with the year 2000; ability to scale our
network and operations infrastructure; ability to develop, introduce and market
new solutions and enhancements to our existing solution on a timely basis;
changes in our pricing policies or those of our competitors; ability to expand
our sales and marketing operations, including hiring additional sales personnel;
size and timing of sales of our solution and services; success in maintaining
and enhancing existing relationships and developing new relationships with
strategic partners; ability to control costs; technological changes in our
markets; deferrals of customer subscriptions in anticipation of new enhancements
or features of our solution; customer budget cycles and changes in these budget
cycles; and general economic factors.

We have increased our operating expenses substantially, and plan to continue to
do so, to expand our sales and marketing operations, fund greater levels of
product development, increase general and administrative support, develop new
partnerships, increase our professional services and support capabilities and
improve our operational and financial systems.  If our revenues do not increase
along with these expenses, our business, operating results and financial
condition could be seriously harmed and net losses in a given quarter could be
even larger than expected.  In addition, because our expense levels are
relatively fixed in the near term and are based in part on expectations of our
future revenues, any decline in our revenues to a level that is below our
expectations would have a disproportionately adverse impact on our operating
results.

Liquidity and Capital Resources

The Company's cash and cash equivalents at September 30, 1999 were $7.3 million,
an increase of $6.0 million from March 31, 1999. During August 1999, the Company
completed a private placement of its Common Stock through a placement agent to a
limited number of institutional investors. The offering included 1,258,000
Common shares and gross proceeds were $8.1 million. Net proceeds, after
placement agent fees and other offering costs, were $7.3 million, and are
expected to be used primarily for general working capital and corporate
purposes, including product development and the expansion of the sales,
marketing and management functions. Cash used in operating activities for the
six months ended September 30, 1999 was $1.3 million, compared to $779,000 for
the six months ended September 30, 1998. While the cash usage in each period was
primarily due to the net losses, approximately $540,000 less cash was used in
operations in the six-month period one year ago even though the net operating
loss was only $340,000 lower in that period. This is primarily due to non-cash
stock options and warrants expense in the six-month period ended September 30,
1998, with no similar no-cash expense in this year's six-month period. The
Company plans to continue investing in product development and sales and
marketing of its Internet sourcing solution, and use of cash to fund such
activities is expected to continue at or above current levels for the
foreseeable future.

The Company believes that its current working capital will be sufficient to meet
its working capital requirements for the next 15 months.  The Company plans to
actively seek additional equity investment to fund operations beyond that

                                       11
<PAGE>

period. If such efforts are unsuccessful, the Company will need to reduce
operating spending significantly, which would materially and adversely affect
the Company's business.

Subsequent to the end of the second quarter, the Company moved its headquarters
and operations from Mountain View, California to San Diego, California.  The
majority of the employees located in Mountain View also relocated to San Diego.
There was no significant impact on operations or cash flow from the move.

The Company currently does not have a bank credit line. The Company does not
intend to pay cash dividends with respect to capital stock in the foreseeable
future.

Recent Pronouncements

In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position ("SOP") No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use."  The Company has
adopted SOP No. 98-1 as of the first quarter of fiscal year 2000.  The adoption
of SOP No. 98-1 did not have a material impact on the Company's financial
statements.

Year 2000 Compliance

The "Year 2000" issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As such, computer
programs that have date sensitive software might recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in program failure or
miscalculation causing disruptions of operations including, among other things,
a temporary inability to process transactions, send invoices, operate equipment
or engage in similar normal business activities.

The Company has reviewed its internal computer systems, its Internet solution
and its desktop software solution that could be affected by the "Year 2000"
issue. The Company's Internet solution is "Year 2000" compliant. Within its
internal computer systems and its desktop software solution the Company
identified some systems and software applications that would be affected. The
Company presently believes that "Year 2000" issues relating to internal computer
systems and the desktop software solution have been resolved, and therefore will
not cause significant operational or customer problems. However, if the
modifications and conversions that have been made are not adequate, "Year 2000"
related problems could have a material adverse effect on the business, financial
condition and results of operations of the Company.

The Company began initiating formal communications with its significant
suppliers and large customers in fiscal 1999 to determine the extent to which
the Company is vulnerable to those third parties' failure to remediate their own
"Year 2000" issues.  However, there can be no guarantee that the systems of
other companies on which the Company directly or indirectly relies will be
timely converted, or that a failure to convert by another company or a
conversion that is incompatible with the Company's systems will not have a
material adverse impact on the Company.

RISK FACTORS
------------

We have a history of losses and expect to incur losses in the future.

We incurred net losses of $1.5 million in fiscal 1999 and $1.6 million in the
first six months of fiscal 2000. As of September 30, 1999, we had an accumulated
deficit of approximately $16.0 million. We expect to derive substantially all of
our revenues for the foreseeable future from subscription fees of our Internet
sourcing solution, which is based on an unproven business model. Although these
revenues have grown in the most recent quarter, we may not be able to sustain
this growth in the future. In fact, we may not have any revenue growth, and our
revenues could decline. Moreover, we expect to incur significant sales and
marketing, product development, and general and administrative expenses. As a
result, we expect to incur significant losses for the foreseeable future.

The Company believes that its current working capital will be sufficient to meet
its working capital requirements for the next 15 months. The Company plans to
actively seek additional equity investment to fund operations beyond that
period. If such efforts are unsuccessful, the Company will need to reduce
operating spending significantly, which would materially and adversely affect
the Company's business.

                                       12
<PAGE>

We expect to depend on our Internet solution for substantially all of our
revenues for the foreseeable future.

Our solution and related services account for substantially all of our revenues.
We anticipate that revenues from our solution and related services will continue
to constitute substantially all of our revenues for the foreseeable future.
Consequently, a decline in the price of, or demand for, our solution, or its
failure to achieve broad market acceptance, would seriously harm our business.

Implementation of our solutions by large retailers is complex, time consuming
and expensive. We frequently experience long sales and implementation cycles.

Our supply chain management solution is an enterprise-wide solution that must be
deployed with many users within a large retailer's sourcing organization. Its
adoption by large retailers is characterized by long sales cycles beginning with
pilot studies and concluding with retailers strongly encouraging their
merchandise suppliers to subscribe to our solution. In many cases, our customers
must change established business practices and conduct business in new ways. In
addition, they must generally consider a wide range of other issues before
committing to purchase our product, including product benefits, integration,
interoperability with existing computer systems, scalability, functionality and
reliability. As a result, we must educate potential customers on the use and
benefits of our solution. It frequently takes several months to finalize a sale
and the sale must often be approved by a number of management levels within the
customer organization. The implementation of our solution requires a commitment
of resources by our customers and third-party and our professional services
organizations. Delay of these commitments may adversely affect our financial
results of any particular quarter.

We currently depend on IBM for marketing of our solution and for the management
and security of our network infrastructure.

We have a marketing alliance with IBM, and are currently dependent on IBM for a
significant portion of our marketing activities. Therefore, IBM's decisions and
performance with respect to these matters have a material impact on our ability
to market our solution. While our current plans call for us to take over a
substantial portion of our sales and marketing activities, we may not be able to
do so effectively. Our agreement with IBM will permit IBM to discontinue
marketing our solution upon specified notice. A decision by IBM to cease or
reduce substantially its marketing efforts would have an immediate and material
adverse effect on our financial condition and results of operations.

In addition, we depend on IBM Global Network, or IGN, for certain services
relating to our infrastructure, including maintenance of communications lines
and management of network data centers. IGN may terminate its performance of
these services for us at any time on 90 days notice to us. If IGN were to
terminate these services, we would have to obtain them from another service
provider or perform them ourselves. There can be no assurance that we would be
able to obtain or perform these services on a timely or cost-effective basis. If
we were able to obtain such services from a third party, we would be entirely
dependent on them to manage and maintain our network infrastructure and to
provide security for it.

We depend on our key personnel.

Our future performance depends on the continued service of our senior
management, product development and sales personnel. The loss of the services of
one or more of our key personnel could seriously harm our business. Our future
success also depends on our continuing ability to attract, hire, train and
retain a substantial number of highly skilled managerial, technical, sales,
marketing and customer support personnel. We are particularly dependent on
hiring additional personnel to increase our direct sales and product development
organizations. In addition, new hires frequently require extensive training
before they achieve desired levels of productivity. Competition for qualified
personnel is intense, and we may fail to retain our key employees or to attract
or retain other highly qualified personnel.

                                       13
<PAGE>

We depend on increasing use of the Internet and on the growth of eCommerce. If
the use of the Internet and eCommerce do not grow as anticipated, our business
will be seriously harmed.

Our success depends on the increased acceptance and use of the Internet as a
medium of commerce on a global basis. Rapid growth in the use of the Internet is
a recent phenomenon. As a result, acceptance and use may not continue to develop
at historical rates and a sufficiently broad base of business customers may not
adopt or continue to use the Internet as a medium of commerce. Demand and market
acceptance for recently introduced services and products over the Internet are
subject to a high level of uncertainty, and there exist few proven services and
products.

Our business would be seriously harmed if:
     .    Use of the Internet, the web and other online services does not
          continue to increase or increases more slowly than expected;
     .    The infrastructure for the Internet, the web and other online services
          does not effectively support expansion that may occur; or
     .    The Internet, the web and other online services do not create a viable
          commercial marketplace, inhibiting the development of eCommerce and
          reducing the need for our solution.

The market for our solution is at an early stage. We need a critical mass of
retailers and their merchandise suppliers to implement and use our solution.

The market for Internet-based supply chain management solutions and services is
at an early stage of development. Our success depends on a significant number of
large retailers implementing our solution and requiring their merchandise
suppliers to subscribe to our solution. The implementation of our solution by
major retailers and their merchandise suppliers is controlled by multiple
parties in the retail organization. In many cases, these organizations must
change established business practices and conduct business in new ways. Our
ability to attract additional customers for our solution will depend on
leveraging our existing customers as reference accounts. Our solution may not
achieve significant market acceptance. Unless a critical mass of retailers and
their merchandise suppliers implement our solution, our solution may not achieve
widespread market acceptance and our business would be seriously harmed.

We face intense competition. If we are unable to compete successfully, our
business will be seriously harmed.

The market for business-to-business eCommerce solutions in general, and supply
chain management solutions in particular, is extremely competitive, evolving and
characterized by continuous rapid development of technology. Competition to
capture business users is intense and is expected to increase dramatically in
the future, which will likely result in price reductions, reduced profit margins
and a decrease in our market share, which could have a serious adverse impact on
our business.

Indirect competitors are traditional Value Added Network, or VAN, solution
providers that have extended their VAN connections over the Internet and new
Internet companies that are focused on trading exchanges that allow merchandise
buyers and sellers to access each other on channels within existing portals. One
or more of these companies may develop and add preorder merchandise sourcing
capabilities to their existing product offerings, giving them a more
comprehensive solution than our solution, which could adversely affect our
business. We expect that additional established and emerging companies will seek
to enter our market as it continues to develop and expand. We may not be able to
compete successfully against future competitors, especially those with
significantly greater financial, marketing, service, support, technical and
other resources.

Additional risk factors are discussed in more detail in the risk factor section
of the Company's Annual Report on Form 10-KSB for the fiscal year ended March
31, 1999.

PART II        OTHER INFORMATION

Item 2         Changes in Securities and Use of Proceeds

On August 9, 1999 the Company issued 1,257,970 shares of Common Stock in a
private placement to certain existing and new stockholders of the Company at a
price of $6.40 per share (as adjusted for the August 25, 1999 1 for 4 reverse
stock split). Net proceeds to the Company, after placement agent fees and other
offering costs, were approximately

                                       14
<PAGE>

$7.3 million. This private placement transaction was effected in reliance upon
the exemption from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), as contained in Section 4(2) of the
Securities Act on the basis that such transaction did not involve a public
offering.

On August 10, 1999, the Company issued 24,272 (post split) shares of Common
Stock in exchange for 97,088 of Series A preferred shares at the election of the
series A shareholder. These preferred shares were converted to Common Stock
under the terms and conditions of the November 22, 1994 Series A Convertible
Preferred Stock Purchase Agreement. This private placement transaction was
effected in reliance upon the exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), as contained in
Section 4(2) of the Securities Act on the basis that such transaction did not
involve a public offering.

On August 25, 1999 the Company executed a 1 for 4 reverse split of its Common
Stock.

Item 4         Submission of Matters to a Vote of Security Holders

The Company held a Meeting of Stockholders on July 20, 1999, at which time the
following matters were submitted to a vote of the Company's stockholders:

Proposal 1:    The election of the following persons as directors to serve until
the next succeeding Meeting of Stockholders and until their respective
successors have been elected and qualified, or until their earlier resignation
or removal:

<TABLE>
<CAPTION>
                                                                     Number of Shares
                                            ----------------------------------------------------------------------
                                                     For                  Against                   Withheld
                                            ------------------        -----------------         ------------------
          <S>                               <C>                       <C>                       <C>
          Marcel van Heesewijk                   22,541,661                 -0-                       34,300
          Sean M. Maloy                          22,541,661                 -0-                       34,300
          Mattheus Wegbrans                      16,551,940              5,989,061                    34,300
          Johan A. Vunderink                     22,541,661                 -0-                       34,300
          Louis A. Delmonico                     22,541,661                 -0-                       34,300

Proposal 2:    To ratify the adoption of the 1999 Stock Incentive Plan.

                                                                     Number of Shares
                                            ----------------------------------------------------------------------
                                                   For                     Against                   Withheld
                                            ------------------        -----------------         ------------------
                                            <S>                       <C>                       <C>
                                                17,606,880                  59,175                   2,116,800

Proposal 3:    To ratify the adoption of the Employee Stock Purchase Plan.

                                                                     Number of Shares
                                            ----------------------------------------------------------------------
                                                  For                     Against                   Withheld
                                            ------------------        -----------------         ------------------
                                            <S>                       <C>                       <C>
                                                17,638,380                  31,675                   2,114,800
</TABLE>

Proposal 4(a): To approve the filing of an Amended and Restated Certificate of
Incorporation to change the Company's name to SourcingLink.net, Inc.



<TABLE>
<CAPTION>                                                         Number of Shares
                                            ----------------------------------------------------------------------
                                                  For                     Against                   Withheld
                                            ------------------        -----------------         ------------------
                                            <S>                       <C>                       <C>
                                                20,375,101                  86,280                   2,114,600
</TABLE>

                                       15
<PAGE>

Proposal 4(b):  To approve the filing of an Amended and Restated Certificate of
Incorporation to increase the number of authorized shares of common stock to
60,000,000.

<TABLE>
<CAPTION>
                                                                      Number of Shares
                                            ----------------------------------------------------------------------
                                                    For                     Against                Withheld
                                            ------------------        -----------------         ------------------
                                            <S>                       <C>                       <C>
                                              20,413,651                     45,550                 2,116,100
</TABLE>

Proposal 4(c):  To approve the filing of an Amended and Restated Certificate of
                Incorporation to authorize 10,000,000 shares of blank check
                preferred stock.

<TABLE>
<CAPTION>
                                                                      Number of Shares
                                            ----------------------------------------------------------------------
                                                    For                     Against                Withheld
                                            ------------------        -----------------         ------------------
<S>                                         <C>                       <C>                       <C>
                                              17,632,370                     35,505                 2,114,300
</TABLE>

Proposal 4(d):  To approve the filing of an Amended and Restated Certificate of
Incorporation for other technical and clarifying amendments.


<TABLE>
<CAPTION>
                                                                      Number of Shares
                                            ----------------------------------------------------------------------
                                                    For                     Against                Withheld
                                            ------------------        -----------------         ------------------
                                           <S>                        <C>                       <C>
                                              20,438,251                     15,850                 2,121,180
</TABLE>

Proposal 5:     To approve the filing of an amendment to the Company's
Certificate of Incorporation to effect a 1 for 4 reverse stock split.

<TABLE>
 <CAPTION>
                                                                       Number of Shares
                                            ----------------------------------------------------------------------
                                                    For                     Against                Withheld
                                            ------------------        -----------------         ------------------
                                            <S>                       <C>                       <C>
                                              19,669,930                     2,902,551              2,700
</TABLE>

Proposal 6:     To approve and ratify the appointment of PricewaterhouseCoopers
LLP as independent auditors of the Company for the fiscal year ending March 31,
2000.

<TABLE>
<CAPTION>
                                                                      Number of Shares
                                            ----------------------------------------------------------------------
                                                    For                     Against                Withheld
                                            ------------------        -----------------         ------------------
                                            <S>                       <C>                       <C>
                                              20,434,501                     26,600                 2,114,780
</TABLE>

Item 5          Other Information

Effective October 15, 1999, the Company moved its operations and corporate
headquarters to San Diego, California. Its new address is 16855 West Bernardo
Drive, Suite 260, San Diego, California 92127 (telephone 858-385-8900).


Item 6          Exhibits and Reports on Form 8-K

         a.     Exhibits

3.1      Amended and Restated Certificate of Incorporation of the Company, as
filed July 20, 1999 (incorporated by reference to Exhibit C to the Company's
definitive proxy materials filed with the Commission on June 17, 1999 - the
"1999 Proxy Statement").

10.1     1999 Stock Option Plan (incorporated by reference to Exhibit A to the
1999 Proxy Statement).

10.2     Employee Stock Purchase Agreement (incorporated by reference to Exhibit
B to the 1999 Proxy Statement).

                                       16
<PAGE>

10.3   Form of Common Stock Purchase Agreement (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-3, File Number
333-87051) between the Company and each of the Investors in the Company's 1999
Private Placement of Common Stock

10.4   Bernardo Executive center Gross Office Lease dated August 25, 1999
between the Company and Bernardo Three Flags, Inc.

10.5   Employment Agreement dated April 30, 1999 between the Company and Gary
Davidson.

27.1   Financial Data Schedule

       b.  Reports on Form 8-K

On July 30, 1999, the Company filed a Current Report on Form 8-K reporting that
it had changed its corporate name to SourcingLink.net, Inc. and had changed its
trading symbol on the OTC Bulletin Board to SNET.

                                       17
<PAGE>

                                   SIGNATURE

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

Dated:  November 15, 1999          SourcingLink.net, Inc.


                                   By: /s/ Gary Davidson
                                       -----------------
                                   Gary Davidson,
                                   Vice President Finance and Administration,
                                   Chief Financial Officer

                                       18