<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 December 31, 2000.

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

                      Commission File Number:   000-28391
                                                ---------


                            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 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 February 6, 2001: 8,069,154 shares
<PAGE>

                            SourcingLink.net, Inc.


                                   CONTENTS
                                   --------

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

Item 1        Financial Statements

                Consolidated Condensed Balance Sheets as of
                December 31, 2000 (unaudited) and March 31, 2000                     3

                Consolidated Condensed Statements of Operations
                for the three and nine months ended December 31, 2000
                and 1999 (unaudited)                                                 4

                Consolidated Condensed Statements of Cash Flows
                for the nine months ended December 31, 2000 and 1999 (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 6        Exhibits and Reports on Form 8-K                                      15

              Signature                                                             15
</TABLE>

                                       2
<PAGE>

PART I      FINANCIAL INFORMATION

Item 1       Financial Statements

                                                 SourcingLink.net, Inc.
                                          Consolidated Condensed Balance Sheets

<TABLE>
<CAPTION>
                                                   December 31,      March 31,
                                                       2000            2000
                                                   -------------   ------------
<S>                                                <C>             <C>
                                                    (Unaudited)
ASSETS
Current assets:
  Cash and cash equivalents                        $   3,548,876   $  3,870,362
  Short-term investments                                       -      1,955,040
  Accounts receivable, net                               943,587        354,767
  Other current assets                                    87,301         81,662
                                                   -------------   ------------
    Total current assets                               4,579,764      6,261,831

Property and equipment, net                              524,080        375,463
Other non-current assets                                  59,675         64,873
                                                   -------------   ------------
    Total assets                                   $   5,163,519   $  6,702,167
                                                   =============   ============

LIABILITIES
Current liabilities:
  Accounts payable and accrued liabilities         $   1,148,066   $  1,388,538
  Deferred  revenue and other                            238,403        288,741
                                                   -------------   ------------
    Total current liabilities                          1,386,469      1,677,279

STOCKHOLDERS' EQUITY
Series A convertible preferred stock                         246            246
Common stock                                               8,069          8,056
Additional paid-in capital                            24,138,134     24,086,938
Unearned stock-based compensation                        (20,407)      (219,255)
Accumulated deficit                                  (20,435,244)   (18,938,586)
Accumulated other comprehensive income                    86,252         87,489
                                                   -------------   ------------
  Total stockholders' equity                           3,777,050      5,024,888
                                                   -------------   ------------
    Total liabilities and stockholders' equity     $   5,163,519   $  6,702,167
                                                   =============   ============
</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 December 31,    Nine months ended December 31,
                                     -------------------------------    ------------------------------
                                           2000           1999              2000             1999
                                     --------------  ---------------    -------------   --------------
<S>                                  <C>             <C>                <C>             <C>

Revenue:
 eCommerce applications                  $   97,310       $  184,084       $  418,840       $  586,649
 Professional services                    1,113,404                -        2,414,515          154,498
                                         ----------       ----------       ----------       ----------
                                          1,210,714          184,084        2,833,355          741,147

Cost of revenue:
    eCommerce applications                   66,681          206,345          577,253          370,377
    Professional services                   330,119                -          639,106          129,498
                                         ----------       ----------       ----------       ----------
                                            396,800          206,345        1,216,359          499,875

Gross profit                                813,914          (22,261)       1,616,996          241,272

Operating expenses:
    Selling, general and
     administrative                         749,217        1,080,596        2,343,347        2,517,585
    Product development                     192,291          300,780          760,117          785,628
    Amortization of warrants
     issued to strategic partners             6,803           91,628          198,848           91,628
                                         ----------       ----------       ----------       ----------
Total operating expenses                    948,311        1,473,004        3,302,312        3,394,841

Operating loss                             (134,397)      (1,495,265)      (1,685,316)      (3,153,569)

Other expense, net                           (4,956)         (18,911)          (6,005)         (20,646)
Interest income                              56,404           92,396          194,663          156,450
                                         ----------      -----------      -----------      -----------
Net loss                                 $  (82,949)     $(1,421,780)     $(1,496,658)     $(3,017,765)
                                         ==========      ===========      ===========      ===========
Net loss per share (basic and
diluted)                                 $    (0.01)     $     (0.20)     $     (0.19)     $     (0.47)
                                         ==========      ===========      ===========      ===========
Weighted average number of shares
used in per share calculation (basic
and diluted)                              8,069,154        7,135,123        8,064,537        6,447,405
                                         ==========      ===========      ===========      ===========

</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>
                                                                                Nine months ended December 31,
                                                                               --------------------------------
                                                                                   2000                1999
                                                                               -----------          -----------
<S>                                                                            <C>                  <C>
Cash flows from operating activities:
   Net loss                                                                    $(1,496,658)         $(3,017,765)
Adjustments to reconcile net loss to net cash used in operating activities:
   Depreciation and amortization expense                                           181,073               89,056
   Unrealized foreign exchange loss                                                  2,005                4,157
   Loss on retirement of fixed assets                                                    -                9,177
   Amortization of warrants issued to strategic partners                           198,848               91,628
   Changes in operating assets and liabilities-net                                (880,071)             399,353
                                                                               -----------          -----------
         Net cash used in operating activities                                  (1,994,803)          (2,424,394)

Cash flows from investing activities:
   Purchases of fixed assets                                                      (329,690)            (198,057)
   Maturities of short-term investments                                          1,955,040                    -
                                                                               -----------          -----------
          Net cash provided by (used in) investing activities                    1,625,350             (198,057)

Cash flows from financing activities:
   Proceeds from exercise of stock options                                          29,127              571,873
   Proceeds from issuance of common stock                                           22,082            7,309,076
   Payments on capital lease                                                             -               (6,246)
                                                                               -----------          -----------
         Net cash provided by financing activities                                  51,209            7,874,703

Effect of exchange rate changes on cash                                             (3,242)                 316
                                                                               -----------          -----------
         Net increase (decrease) in cash and cash equivalents                     (321,486)           5,252,568

Cash and cash equivalents, beginning of the period                               3,870,362            1,266,880

                                                                               -----------          -----------
Cash and cash equivalents, end of the period                                   $ 3,548,876          $ 6,519,448
                                                                               ===========          ===========
</TABLE>
  The accompanying notes are an integral part of these consolidated condensed
                             financial statements.

                                       5
<PAGE>

                             SourcingLink.net, Inc.
                    NOTES TO 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 nine months ended December 31, 2000
are not necessarily indicative of the results to be expected for the entire
fiscal year ending March 31, 2001.  The year-end balance sheet data at March 31,
2000 was derived from the Company's 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 condensed 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 year ended March 31, 2000.

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

Net loss per share is presented on a basic and diluted basis.  Basic earnings
(loss) per share is computed by dividing the income (loss) 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 (loss) per share are calculated as follows for the
three and nine months ended December 31, 2000 and 1999 (unaudited):

<TABLE>
<CAPTION>
                               Three months ended December 31,    Nine months ended December 31,
                               -------------------------------    ------------------------------
                                  2000                 1999            2000             1999
                               ----------         ------------    ------------      ------------
<S>                            <C>                <C>             <C>               <C>
Net loss                       $ (82,949)         $(1,421,780)    $(1,496,658)      $(3,017,765)
                               ==========         ============    ============      ============
Weighted average shares
outstanding for the period     8,069,154            7,135,123       8,064,537         6,447,405

Net loss per share             $   (0.01)         $     (0.20)    $     (0.19)      $     (0.47)
                               ==========         ============    ============      ============
</TABLE>

At December 31, 2000, the Company had outstanding options and warrants to
purchase 685,939 and 768,824 shares of Common Stock, respectively, compared to
847,125 and 768,824 options and warrants outstanding at March 31, 2000. These
options and warrants were not included in the computation of diluted earnings
per share because their inclusion would be anti-dilutive.

3.  Comprehensive loss:
-----------------------

Comprehensive loss for the three months ended December 31, 2000 and 1999 was
$84,527 and $1,417,414, respectively. For the nine months ended December 31,
2000 and 1999 the comprehensive loss was $1,497,895 and

                                       6
<PAGE>

$3,013,292, respectively. The difference between comprehensive loss and net loss
is the treatment of cumulative foreign currency translation adjustments.

4.  Recent pronouncements:
-------------------------

Effective July 1, 2000 the Company adopted the Emerging Issues Task Force No.
00-2 "Accounting for Web Site Development Costs" ("EITF 00-2"). EITF 00-2 sets
forth the requirements for capitalization or expense treatment of various web
site development costs depending on certain criteria. During the second and
third quarters of fiscal year 2001, the Company capitalized a total of $106,000
of web site development costs and will amortize such costs over their estimated
useful life of two years.

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Statement No. 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities.
This statement was to become effective for all quarters of fiscal years
beginning after June 15, 1999. In June 1999, the FASB issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments -
Deferral of the Effective Date of Statement No. 133." Statement No. 137 defers
the effective date of Statement No. 133 until fiscal years beginning after June
15, 2000. The Company will adopt Statement No. 133 on April 1, 2001, and does
not expect such adoption to affect our results of operations, financial position
or cash flows.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), providing the staff's views in applying generally accepted accounting
principles to selected revenue recognition issues.  The Company is applying SAB
101 to its financial statements as of the first quarter of fiscal year 2001. The
adoption of SAB 101 did not have a material impact on our results of operations,
financial position or cash flows.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an
interpretation of APB Opinion No. 25."  This interpretation has provisions that
were effective after staggered dates, including provisions that were effective
after December 15, 1998 and others that became effective after June 30, 2000.
The adoption of this interpretation has not and will not have a material impact
on our results of operations, financial position or cash flows.

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 "may," "will," "believes," "anticipates,"
"expects" or the negative or other variations thereof or comparable terminology,
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.  In addition, any statements that refer to
expectations, projections, or other characterizations of future events or
circumstances are forward-looking statements.  Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of SourcingLink 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 "Risks Related to Our Business" section of
SourcingLink's Annual Report on Form 10-KSB for the fiscal year ended March 31,
2000.  Given these uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.  SourcingLink 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

SourcingLink is an application service provider, or ASP, and 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
preorder merchandise sourcing activities by searching for and connecting
directly with retail merchandise suppliers around the globe.  For merchandise
suppliers, the solution provides a sales tool and electronic forms for the
exchange of company and product information.

                                       7
<PAGE>

Through fiscal 2000, SourcingLink's revenues were generated principally from
eCommerce Applications consisting of fees for access to and use of
SourcingLink's solutions.  A portion of this revenue is derived from desktop
solutions, primarily from use of the InspectLink(TM) inspection data application
with one long-standing customer.  Our focus for eCommerce applications, however,
is our core Internet sourcing solution, MySourcingCenter(TM), which was released
on a Microsoft platform in the first quarter of fiscal year 2001.

In March 2000, SourcingLink entered into a services contract with Paris, France-
based Carrefour S.A. (the "Carrefour contract"), under which SourcingLink will
receive a minimum of $9 million for services to be performed over a three-year
period which began April 1, 2000.  The Carrefour contract followed an
announcement by Carrefour, the world's second largest retailer, that it, Sears,
Roebuck & Co. and Oracle Corporation were forming a new company named
GlobalNetXchange ("GNX"), for the purpose of connecting electronically and
facilitating certain merchandise buying activities with suppliers worldwide.
Under our contract, we will assist Carrefour with its implementation of GNX
functionality and processes.

IBM Agreements

Original IBM Agreements.  SourcingLink entered into a multi-faceted eCommerce
agreement with IBM in the third quarter of fiscal year 1998, as an amendment to
an earlier 1996 agreement under which SourcingLink became an active participant
in IBM's e-commerce group.  Under the 1998 contract, referred to in the
discussion below as the "IBM agreement" or the "Agreement," IBM had been
providing most of the sales and marketing effort, worldwide help desk support
and project management for SourcingLink through the expiration of the contract
on September 30, 1999.  Under the same Agreement, IBM also provided the network
and server infrastructure supporting SourcingLink's solutions.  Payments to IBM
for these services were based on a percentage of sales under a revenue sharing
provision of the Agreement, and were accounted for as cost of sales.  Through
September 30, 1999, SourcingLink assisted IBM with certain sales and marketing
efforts for the Company's solution, and billed IBM at cost for such services.
These billings to IBM have been recorded as Professional Services revenue, and
amounted to $129,000 in the nine months ended December 31, 1999.  As these
services were on a cost-reimbursement basis, there was an equal and offsetting
cost of revenue, and thus no gross profit margin associated with this
Professional Services revenue.  Effective October 1, 1999, SourcingLink began
performing its sales and project management in-house; therefore, there is no
further revenue from professional services to IBM after September 30, 1999.  New
agreements were entered into with IBM as of October 1, 1999, as discussed below.

New IBM Agreements.  Effective October 1, 1999, SourcingLink entered into a new
network services and infrastructure agreement with IBM.  In addition, the
Company entered into a separate 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.
Beginning October 1, 1999, the accounting for these new agreements was as
follows:

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

   .  For the co-marketing agreement, which includes 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, there are no
      payments required under SourcingLink's present status as a premier IBM e-
      business partner.

The Company elected not to renew the infrastructure portion of its agreement
with IBM upon expiration of that agreement on September 30, 2000.  The Company
has accommodated its infrastructure needs at lower cost by acquiring equipment
and locating it at a third-party hosted site.

Accumulated Losses

From its inception in 1993 through December 31, 2000, SourcingLink has incurred
net losses of approximately $20.4 million, primarily as a result of costs to
develop its technology, to develop and introduce its sourcing solutions, 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

                                       8
<PAGE>

companies in new, unproven 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 plans, including
obtaining a critical mass of retail buyers and their suppliers as users of our
application services and obtaining additional customers for our professional
services, of which no assurance can be made.

Results of operations for the three and nine months ended December 31, 2000 and
1999

Revenue.  Total revenue for the three months ended December 31, 2000 increased
$1.0 million, or 558%, to $1.2 million, from $184,000 in the three months ended
December 31, 1999.  This includes an increase in Professional Services revenue
to $1.1 million this year with no such revenue in the same three-month period
one year ago.  This services revenue is attributable to the Carrefour contract,
a three-year, $9 million services agreement that began April 1, 2000.  Revenue
from eCommerce Applications decreased by $87,000 to $97,000 from $184,000 in the
prior year's third quarter.  The majority of this decrease is related to the
desktop solutions SourcingLink provides for use by its major customer in
managing inspection and shipping tracking data.  Revenue from these applications
is based on the number of transactions and amount of data routed over the
network, and the quantity of and charges for such data was less in this year's
third quarter than in the same period a year ago.

Total revenue for the nine months ended December 31, 2000 increased $2.1
million, or 282%, to $2.8 million, from $741,000 in the nine months ended
December 31, 1999.  The nine-month increase in Professional Services revenue was
$2.2 million, to $2.4 million from $154,000 last year.  As in the three-month
period, this increase is attributable to the services provided under the
Carrefour contract.  The Professional Services revenue in the prior year was
primarily for sales and marketing services paid for by IBM under an agreement
that was concluded by SourcingLink effective September 30, 1999, as described
above.  Revenue from eCommerce Applications decreased by $168,000 to $419,000
from $587,000 for the nine-month period one year ago.  This decrease is
attributable to the reduced quantity of and charges for data routed over the
Company's desktop solution in the second and third quarters of this year.  A
portion of the eCommerce revenue in both the current and prior years is from
subscriptions of suppliers that have been made available to SourcingLink by
Paris, France-based Promodes, which was acquired by Carrefour late in calendar
1999.  As previously mentioned, Carrefour has contracted with GNX for
facilitating certain buying activities electronically with its merchandise
suppliers.  Therefore, the potential exists that these subscribers will not
renew their subscriptions to our application in the future.  The Company is
pursuing new retail customers with suppliers that could adopt our solution, and
has recently released a version of its solution targeted at the Home Improvement
segment of the retail market.  The Company is working with House2Home (formerly
HomeBase, Inc.) in the U.S and Baumax in Europe to register their buyers and
suppliers for the use of MySourcingCenter(TM) for Home Improvement, and will be
marketing the solution to other buyers and suppliers in that vertical market.
The Company also has a multi-year consulting contract with Carrefour that will
provide revenue over a three-year period, as previously described, and is
actively seeking additional customers for our professional services.

Due to the Carrefour contract, the Company expects that Professional Services
revenue will continue to comprise a significant portion of the Company's overall
revenue in the fourth quarter of the fiscal year ending March 31, 2001.
However, the current phase of the project was in full deployment throughout the
third quarter, and revenue under the contract is not likely to maintain the
quarter-to-quarter growth evident through the first three quarters of this
fiscal year.  In the eCommerce Application area, the Company's solution for the
Home Improvement industry involves marketing directly to merchandise suppliers,
a group that includes small and highly dispersed target customers.

Cost of Revenue.  For the three months ended December 31, 2000, the cost of
revenue increased $191,000, or 92%, to $397,000 from $206,000 in the prior
three-month period.  This increase in total cost of revenue includes
Professional Services costs of $330,000, with no such costs in last year's third
quarter.  The addition of these costs was partially offset by a decrease in
eCommerce Applications cost of revenue of $139,000, or 68%, to $67,000 from
$206,000 in the same period one year ago.  In the services area, the cost of
revenue is attributable to the labor and other expenses related

                                       9
<PAGE>

to the Carrefour contract. In eCommerce Applications, the decrease in cost of
revenue is primarily due to the completion on September 30, 2000 of the most
recent IBM agreement for infrastructure support and hosting. Last year's third
quarter marked the commencement of that agreement, which included substantially
higher hosting costs than the Company obtained under a co-location arrangement
that went into effect October 1, 2000, and thus this year's third quarter cost
of eCommerce Applications revenue is less than that of the prior year. Total
gross profit for the three-month period increased $836,000 to $814,000, or 67%
of revenue, from a loss of $22,000 in the three months ended December 31, 1999.
The increase in gross profit is attributable to the increase in Professional
Services revenue, and associated profit, under the Carrefour contract, as well
as to the decrease in the cost of infrastructure support, as described above.

For the nine-month period, the cost of revenue increased $716,000, or 143%, to
$1.2 million from $500,000 last year.  This includes an increase in cost of
revenue for both eCommerce Applications and Professional Services.  As in the
third quarter, the nine-month cost increase in Professional Services is
attributable to labor and related expenses for the Carrefour contract.  For
eCommerce Applications, SourcingLink's cost of revenue for both the current and
prior year nine-month periods consists primarily of fees paid to IBM for
infrastructure support of the Company's application services within the IBM
Global Network.  The prior year included three months under the most recent
Agreement, and six months under a prior arrangement with IBM in which fees were
based on revenue sharing, and were substantially less.  The current year
includes six months under the new Agreement, through its completion on September
30, 2000, resulting in the higher costs this year.  As previously mentioned, the
Company obtained lower costs for its network infrastructure under a co-location
arrangement, and did not renew its infrastructure contract with IBM after it
expired in September 2000.  Accordingly, the cost of eCommerce Applications
revenue decreased substantially in this year's third quarter as compared to the
first two quarters of the current year.  Total gross profit in this year's nine
months increased $1.4 million to $1.6 million, or 57% of revenue, from $241,000,
or 33% of revenue, in the nine months ended December 31, 1999.  As in the three-
month period, the increase in gross profit is primarily attributable to the
increase in Professional Services revenue and its associated profit.


Operating Expenses

Selling, General and Administrative Expenses.  In the quarter ended December 31,
2000, the Company's selling, general and administrative expenses decreased by
$331,000, or 30%, to $749,000 from $1.1 million in the quarter ended December
31, 1999.  The decrease in these expenses is primarily due to reduced overall
wages and legal fees, and the deployment of certain employees to work on the
Carrefour contract with the classification of their related expense as Cost of
Revenue.  For the nine months ended December 31, 2000, selling, general and
administrative expenses decreased $174,000, or 7%, to $2.3 million from $2.5
million in the same nine months of the prior year.  For the nine-month period,
the impact of expanding the management team and hiring an administrative, sales
and project management staff during the last half of fiscal year 2000, with such
personnel costs carrying forward into the current fiscal year, nearly offset the
recent cost decreases, associated with the shift of certain expenses to cost of
sales and other expense reductions described above.

The Company expects that its sales and marketing expenses will increase as it
begins to market its new solution to buyers and suppliers in the Home
Improvement retail industry, and incurs additional labor and other costs related
to its management and the marketing of its solutions and professional services.

Product Development Expenses.  Product development expenses during the three
months ended December 31, 2000 decreased by $109,000, or 36%, to $192,000 from
$301,000 in the three months ended December 31, 1999.  The decrease in product
development expenses is primarily due to a reduction in labor costs, as well as
the capitalization and amortization of website development costs beginning July
1, 2000 under the guidance provided in Emerging Issues Task Force Issue No. 00-
2.  For the nine-month period, product development expenses decreased $26,000,
or 3%, to $760,000 from $786,000 for the same period last year.  The Company
completed a major enhancement of its Internet product during the first quarter
of this fiscal year, and higher management and development personnel costs were
incurred in that quarter as compared to the same period last year, nearly
offsetting on a nine-month basis the recent decreases in product development
costs described above.

Stock-based Compensation.  The cost of warrants for the purchase of SourcingLink
common stock issued to two strategic partner companies during fiscal year 2000
is being amortized over the periods associated with the business agreements
underlying the warrants.  The amount of expense was determined under the Black-
Scholes valuation method, and the related amortization amounted to $7,000 in the
third quarter of fiscal year 2001, and $199,000 for the first nine

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<PAGE>

months of this fiscal year. Such amortization began in the third quarter of last
year, and the related expense amounted to $92,000 for both the three and nine-
month periods ended December 31, 1999. The remaining unamortized compensation
expense of $20,000 will be amortized over the next three fiscal quarters.

Other Expense, net and Interest Income. The principal component of other
expense, net is the exchange loss on foreign currency transactions with
SourcingLink's subsidiary in France. Primarily as a result of these foreign
currency transactions, other expense, net was $5,000 in the current year's
third quarter compared to $19,000 in the same period one year ago. For the nine-
month periods, the current year result is an expense of $6,000 compared to an
expense of $21,000 in the prior year. Interest income was $56,000 and $92,000
for the three months ended December 31, 2000 and 1999, respectively, and
$195,000 and $156,000 for the nine months ended December 31, 2000 and 1999,
respectively. In August 1999, SourcingLink completed a private placement of
1,258,000 shares of its common stock and received net proceeds of $7.3 million
after offering costs. While a portion of these proceeds have been consumed in
operations since the offering, the increase in interest income in the prior
year's three-month period and the current year's nine-month period is primarily
attributable to the increase in cash available for investment as a result of
this private placement.

Income Taxes.  SourcingLink recorded a net loss of $1.5 million during the nine
months ended December 31, 2000, and had net losses of $4.5 and $1.5 million in
fiscal 2000 and 1999, respectively.  Accordingly, no provision for income taxes
was recorded in any of these periods.  As of December 31, 2000, SourcingLink had
net operating loss carryforwards for United States income tax purposes of
approximately $13 million.  These losses expire at various dates between 2011
and 2020.  The Internal Revenue Code of 1986, as amended, contains provisions
that limit the use in any future period of net operating loss and credit
carryforwards upon the occurrence of certain events, including a significant
change in ownership interests.  A valuation allowance has been recorded for the
tax benefit of the net operating loss carryforwards and the deferred tax assets
of SourcingLink 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 solutions 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 customers and potential customers as companies review eCommerce
applications; ability to scale our network and operations infrastructure;
ability to develop, introduce and market our solutions and services 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
personnel; size and timing of sales of our solutions 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 developments or features of our solutions; customer budget cycles and
changes in these budget cycles; and general economic factors.

We have incurred operating expenses to expand our management team and 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

SourcingLink's cash and cash equivalents at December 31, 2000 were $3.5 million,
a decrease of $321,000 from March 31, 2000.  However, this decrease is net of $2
million from the maturity during the first quarter of funds that were in

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<PAGE>

short-term investments at March 31, 2000. Cash used in operating activities for
the nine months ended December 31, 2000 was $2.0 million, compared to $2.4
million for the nine months ended December 31, 1999. The cash usage in each
period was primarily due to the operating losses. Accounts receivable at
December 31, 2000 is nearly entirely attributable to amounts due under our
services contract with Carrefour.

We believe that our current working capital, including cash to be received in
the quarter ending March 31, 2001 under our services contract with Carrefour,
will be sufficient to meet our working capital requirements for the next 12
months.  We plan to actively seek additional equity investment to fund
operations beyond that period.  If such efforts are unsuccessful, we will need
to reduce operating spending significantly, which would materially and adversely
affect SourcingLink's business.

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 Accounting Pronouncements

Effective July 1, 2000 the Company adopted the Emerging Issues Task Force No.
00-2 "Accounting for Web Site Development Costs" ("EITF 00-2").  EITF 00-2 sets
for the requirements for capitalization or expense treatment of various web site
development costs depending on certain criteria.  During the second and third
quarters of fiscal year 2001, the Company capitalized a total of $106,000 of web
site development costs and will amortize such costs over their estimated useful
life of two years.

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Statement No. 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities.
This statement was to become effective for all quarters of fiscal years
beginning after June 15, 1999. In June 1999, the FASB issued Statement of
Financial Accounting Standards No. 137, "Accounting for Derivative Instruments -
Deferral of the Effective Date of Statement No. 133." Statement No. 137 defers
the effective date of Statement No. 133 until fiscal years beginning after June
15, 2000. The Company will adopt Statement No. 133 on April 1, 2001, and does
not expect such adoption to affect our results of operations, financial position
or cash flows.

In December 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101), providing the staff's views in applying generally accepted accounting
principles to selected revenue recognition issues.  The Company is applying SAB
101 to its financial statements as of the first quarter of fiscal year 2001. The
adoption of SAB 101 did not have a material impact on our results of operations,
financial position or cash flows.

In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44, "Accounting for Certain Transactions Involving Stock Compensation - an
interpretation of APB Opinion No. 25."  This interpretation has provisions that
were effective after staggered dates, including provisions that were effective
after December 15, 1998 and others that became effective after June 30, 2000.
The adoption of this interpretation has not and will not have a material impact
on our results of operations, financial position or cash flows.

RISK FACTORS

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 retailers and their merchandise suppliers implementing 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 solution has not yet achieved significant
market acceptance.  Unless a critical mass of retailers and their merchandise
suppliers implement our solution, our solution may not achieve market acceptance
and our business would be seriously harmed.

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<PAGE>

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

We incurred net losses of $4.5 million in fiscal 2000 and $1.5 million in the
first nine months of fiscal 2001.  As of December 31, 2000, we had an
accumulated deficit of approximately $20.4 million. While the Carrefour contract
will provide a total of $9 million of revenue over the three-year period that
began April 1, 2000, we still expect to derive a portion of our future revenues
from subscription fees of our Internet sourcing solution, which is based on an
unproven business model.  With Carrefour's acquisition of Promodes and
subsequent formation, along with Sears, Roebuck & Co. and Oracle Corporation, of
GlobalNetXchange, we may lose current subscribing suppliers of the former
Promodes central buying organization.  While we are seeking additional customers
for our professional services, no contract other than the Carrefour contract has
yet been secured. 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 in the future unless additional revenue is
obtained.

We believe that our current working capital, including amounts to be received
under the Carrefour contract, will be sufficient to meet our working capital
requirements for the next 12 months. We plan to actively seek additional equity
investment to fund operations beyond that period. If such efforts are
unsuccessful, we will need to reduce operating spending significantly, which
would materially and adversely affect our business.

We expect to depend on our solution to augment revenue from our consulting
contract with Carrefour in the future.

Our solution and related services have accounted for substantially all of our
prior revenues.  We anticipate that revenues from our solution will constitute
substantially all of our non-service revenues for the foreseeable future.
Consequently,  an inability to achieve our target pricing or to generate demand
or a failure to achieve market acceptance for our solution would seriously harm
our business.  Likewise, if we fail to perform under the Carrefour contract, our
ability to collect the minimum payments due to us under the contract, which
amount to a total of $9 million over the three-year period that began April 1,
2000, would be seriously harmed.

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 often viewed as an enterprise-wide
solution that must be deployed with many users within a large retailer's
sourcing organization. An enterprise-wide 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 use 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 takes
several months to finalize an enterprise-wide adoption and the implementation
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 professional services organizations.
Entering into an agreement with a customer for the adoption of our solution does
not assure that the customer will in fact make such adoption or assure the time
frame in which the adoption may occur. A delay or change of these commitments
may adversely affect our financial results of any particular quarter.

We are currently planning to market our solutions to buyers within a retail
company, and directly to suppliers, in addition to targeting enterprise-wide
rollouts for large retailers.  There can be no assurance that such a strategy
will shorten sales cycles or result in significant new subscribing customers for
our solutions.

We derive most of our revenue from one retailer, and if we are not able to
retain this retailer as a customer our revenues would be reduced and our
financial results would suffer.

Our largest customer accounts for a substantial majority of our revenues.  We
may not be able to retain our key retail customers or these customers may
decrease their commitment to require their suppliers to use our solution.  Any
substantial decrease or delay in sales to suppliers of one or more of our key
retail customers, or sales of services to a key customer, could harm our sales
or financial results.

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<PAGE>

Our customers are all in, or supplying goods to, the retail industry.  A
significant change or downturn in this industry could adversely affect our
business.

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 solution providers that
have extended their network connections over the Internet and both new and
traditional companies that are focused on trading exchanges that allow
merchandise buyers and sellers to access each other on channels within new or
existing portals. One or more of these companies may develop and add preorder
merchandise sourcing capabilities to their existing product offerings, and new
exchanges such as GlobalNetXchange will focus on retail merchandise procurement,
giving these companies a broader or 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. In the professional services area there are many
established consulting companies, several of which are large or multi-national,
with extensive experience and personnel. We may not be able to compete
successfully against competitors, especially those with significantly greater
financial, marketing, service, support, technical and other resources.

We depend on our key personnel.

Our future performance depends on the continued service of our senior
management, product development and sales and product marketing personnel. The
loss of the services of one or more of our key personnel could seriously harm
our business. As described in our report on Form 10-QSB for the quarter ended
September 30, 2000, our Chief Executive Officer, Sean Maloy, passed away in
October 2000.  Our founder and Chairman of the Board, Marcel van Heesewijk, has
been appointed CEO on an interim basis.  Our future success depends on our
ability to retain a CEO for the Company on a permanent basis, and on our
continuing ability to attract, hire, train and retain a substantial number of
highly skilled managerial, technical, sales, marketing, customer support and
professional services personnel. 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.

Our software may contain errors or defects.

Our software is complex and, accordingly, may contain undetected errors or
failures when first introduced.  This may result in loss of, or delay in, market
acceptance of our solution.  We have in the past discovered programming errors
in our new releases after their introduction.  We have experienced delays in
release and customer frustration during the period required to correct these
errors. We may discover errors in the future, including scalability limitations,
in new versions after release.

In order to manage our growth and the expansion of our services business, we
will need to improve and implement new systems, procedures and controls.

We have retained, and plan to hire additional, new personnel in an expanded
geographic scope to service our customer base.  We are performing services for
Carrefour in France and elsewhere around the world.  These activities subject us
to certain regulations in such countries and involve difficulties and expense in
staffing and managing such operations, resulting in substantial demands on our
management resources. Our ability to compete effectively and to manage future
expansion of our services and operations, if any, will require us to continue to
improve our financial and management controls, reporting systems, project
management and procedures on a timely basis, and expand, train and manage our
employee work force. We may encounter difficulties in transitioning a portion of
our business to a services focus, and our personnel, systems, procedures and
controls may be inadequate to support our future operations.


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<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 solutions.

Additional risk factors are discussed in more detail in the "Risks Related to
Our Business" section of the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2000.


PART II  OTHER INFORMATION

Item 6    Exhibits and Reports on Form 8-K

      b.  Reports on Form 8-K

      No reports on Form 8-K were filed with the Securities and Exchange
      Commission during the quarter for which this report is filed.



                                   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:  February 14, 2001     SourcingLink.net, Inc.


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

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