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

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

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

The interim 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, 2004 are not necessarily indicative of the results to be expected for the entire fiscal year ending March 31, 2005. The year-end balance sheet data at March 31, 2004 was derived from the audited financial statements.

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, 2004.

The accompanying financial statements have been prepared in a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the ordinary course of business. The Company has incurred net losses from operations and at December 31, 2004, the Company had an accumulated deficit of approximately $25.8 million. For the nine months ended December 31, 2004, the Company had a net loss of $274,000 and operating cash outflows of $170,000, and for the fiscal year ended March 31, 2004, the net loss was $1,565,000 and the operating cash outflows were $2,000,000. Cash and cash equivalents at December 31, 2004 were $43,000.

The Company is pursuing litigation against Carrefour S.A. ("Carrefour"), Oracle Corporation and GlobalNetXchange, LLC ("the Carrefour lawsuit"). The complaint was filed in San Diego Superior Court on June 2, 2004. Pursuit of the Carrefour lawsuit and fulfillment of regulatory and administrative requirements comprise the only activities of the Company at this time. In order to fund the litigation, in May 2004 the Company's Board of Directors approved a financing through the sale and issuance of up to $1,300,000 of convertible promissory notes (the "Notes"). During the quarter ended December 31, 2004, $122,000 was received under the Notes. During the quarter ended September 30, 2004, no funds were received under the Notes. During the quarter ended June 30, 2004, $83,000 was received under the Notes. Continued financing, which is necessary to sustain the Company through its lawsuit, is uncertain and there is no assurance that the Company will in fact obtain any additional funds through the debt financing. Without this financing, the Company will not be able to fund the Carrefour lawsuit with existing working capital.

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 for all periods, and for the period ended December 31, 2004, notes payable to a related party that are convertible into common stock.

Basic and diluted earnings (loss) per share are calculated as follows for the three and nine month periods ended December 31, 2004 and 2003 (unaudited):

At December 31, 2004, the Company had 292,950 options and 1,226,111 warrants outstanding to purchase shares of common stock compared to 1,057,071 options and 1,276,430 warrants outstanding at March 31, 2004. In addition, at December 31, 2004, the Company had Notes Payable to a related party of $290,000 that are convertible into common stock at a price of $0.022 per share and would result in the issuance of an additional 13,182,000 shares of common stock upon conversion. These options, warrants and notes payable that are convertible into common stock were not included in the computation of diluted earnings per share because their inclusion would be anti-dilutive.

In March 2004, we sold our operating assets to a separate foreign company in order to continue our operations long enough to pursue litigation against Carrefour S.A. ("Carrefour"), Oracle Corporation and GlobalNetXchange, LLC ("the Carrefour lawsuit"). Our complaint was filed in San Diego Superior Court on June 2, 2004. Pursuit of the Carrefour lawsuit and fulfillment of regulatory and administrative requirements comprise our only activities at this time.

In order to fund the litigation, on May 21, 2004 our Board of Directors approved a financing through the sale and issuance of up to $1,300,000 of convertible promissory notes (the "Notes"). The Notes are convertible into shares of SourcingLink's common stock, based on a conversion price of $0.022 on the maturity date of each Note. As part of this financing, the Company agreed to subsume the note payable balance at March 31, 2004, including $60,000 that was contingent at that time, into, and make it a part of, the Notes, thereby resulting in a $60,000 loan fee, charged as "other expense, net," in the fiscal year 2005 first quarter results of operations. During the quarter ended December 31, 2004, $122,000 was received under the Notes. During the quarter ended September 30, 2004, no funds were received under the Notes. During the quarter ended June 30, 2004, $83,000 was received under the Notes. Continued financing, which is necessary to sustain the Company through its lawsuit, is uncertain. We cannot assure that we will in fact obtain any additional funds through such debt financing on the proposed terms, or at all. Without this financing we will not be able to fund the Carrefour lawsuit with our existing working capital, as we will have no resources.

From our inception in 1993 through December 31, 2004, we have incurred net losses of approximately $25,800,000. As a result of the accumulated losses, we have not recorded any provision for income taxes since inception. As of March 31, 2004, net operating loss carryforwards for United States federal income tax purposes were approximately $19,600,000. Under United States tax laws, the amounts of and benefits from this net operating loss may be impaired or limited in certain circumstances, for example, if there is a cumulative ownership change of more than 50% over a three-year period.

Our discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. These principles require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Estimated amounts may differ under different assumptions or conditions, and actual results could differ from the estimates.

Revenue.  We had no revenues during the three and nine month periods ended December 30, 2004, compared to revenue of $139,000 and $1,087,000 in the three and nine month periods ended December 30, 2003, respectively, prior to the sale of our operating assets in March 2004.

Expenses.  In the three and nine month periods ended December 31, 2004, our only expenses were general and administrative expenses of $81,000 and $214,000, respectively, and other expense, net, consisting of a $60,000 loan fee incurred in the first quarter of fiscal year 2005 that was recorded as an addition to related party notes payable. Together, these costs comprise the $274,000 of total expenses in the first nine months of fiscal year 2005. This compares to selling, general and administrative expenses of $513,000 and $1,792,000, and total expenses of $514,000 and $1,799,000, in the three and nine month periods ended December 31, 2003, respectively, prior to the sale of our operating assets.

Our cash and cash equivalents at December 31, 2004 were $43,000. Cash used in operating activities in the nine months ended December 31, 2004 was $170,000. This includes $22,000 of cash receipts from the collection of accounts receivable and refunds of prepaid expenses, and cash outlays of $192,000 primarily for general and administrative purposes consisting of legal costs related to the pursuit of the Carrefour lawsuit, conducting our year-end audit and filing our annual report with the Securities and Exchange Commission. Cash received from financing activities was $205,000, and consisted of funding received in the first and third quarters of fiscal year 2005 under a convertible note, to be used to finance pursuit of the Carrefour lawsuit.

The outcome of the Carrefour lawsuit is uncertain. Although we seek to recover substantive total damages (including incidental, consequential, exemplary and punitive damages), and although we believe firmly in the merits of our claims, at this stage, we are unable to predict the outcome of this litigation or its ultimate effect, if any, on our financial condition.

Financing is uncertain. As of the date hereof only a small portion of our debt financing, necessary to sustain us through the Carrefour lawsuit, has been completed. We cannot assure that we will in fact obtain any additional funds through such debt financing on the proposed terms, or at all. Without this financing we will not be able to fund the Carrefour lawsuit with our existing working capital, as we will have no resources.

The ability to trade our stock is uncertain. Our common stock is neither listed on any exchange nor on the Nasdaq system. Our common stock is reported on the OTC Bulletin Board. Because our shares are not listed on any exchange nor the Nasdaq system, they are subject to the regulations regarding trading in "penny stocks" which are those securities trading for less than $5.00 per share. An investor's ability to convert shares of our common stock into cash or to sell to a third party may be very limited. We make no guarantee that our current market-makers will continue to make a market in our securities, or that any market for our securities will continue.

The Company performed an evaluation, under the supervision and with the participation of the Company's management, including the Chairman of the Board of Directors (Principal Executive Officer) and President (Principal Financial Officer), of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this report, pursuant to Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon that evaluation, the Chairman and President have concluded that the Company's disclosure controls and procedures, as of the period covered by this report, were effective in timely alerting them to material information required to be included in the Company's periodic filings under the Exchange Act.

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.